NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
FOR
THREE AND NINE MONTHS ENDED MAY 31, 2022 AND 2021
NOTE
1 – ORGANIZATION AND BUSINESS OPERATIONS
Unex
Holdings Inc (the “Company”, “Unex”, “we”, “us”, or “our”) is a corporation
established under the corporation laws in the State of Nevada on February 17, 2017. The Company has adopted an August 31 fiscal year
end.
On
December 20, 2021, the Company and Low Wai Koon (“Dr. Low”) entered into a share transfer agreement, (the “EvoAir International
Share Transfer Agreement”), pursuant to which Dr. Low agreed to sell all of his ordinary shares of EvoAir International Limited
(“EvoAir International”) to the Company for the consideration of US$100 (“EvoAir Transaction”). EvoAir International,
through its subsidiaries upon completion of the Transactions (defined hereunder), is engaged in the sale of heating, ventilation and
air conditioning (“HVAC”) products in Asia.
Pursuant
to the terms of a share transfer agreement dated December 20, 2021, Dr. Low, the then sole executive officer and director of the
Company and the owner of 2,000,000
restricted shares of the Company’s ordinary shares representing approximately 67.34%
of the Company’s then issued and outstanding shares, sold his entire shareholding of the Company to WKL Global Limited
(“WKL Global”) for an aggregate consideration of $100 (“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 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
was 101,779,323 (“Enlarged Share Capital”):
| (A) |
On
December 20, 2021, Dr. Low and Chan Kok Wei entered into a share exchange agreement with WKL Eco Earth Holdings, pursuant to which
Dr. Low and Chan Kok Wei agreed to sell all their ordinary shares of WKL Green Energy Sdn Bhd (“WKL Green Energy”) to
WKL Eco Earth Holdings Pte Ltd (“WKL Eco Earth Holdings”) in consideration for the allotment and issuance to WKL Global
Limited and Allegro Investment (BVI) Limited of 24,000
shares and 6,000
shares of common stock, respectively, or approximately 0.02%
and 0.01%
of the Enlarged Share Capital, respectively. |
| |
|
| (B) |
On
December 20, 2021, Dr. Low, Chan Kok Wei, Ong Bee Chen and certain sellers (“WKLEE Sellers”) entered into a share
exchange agreement with WKL Eco Earth Holdings, pursuant to which Dr. Low, Chan Kok Wei, Ong Bee Chen and WKLEE Sellers agreed to
sell all their ordinary shares of WKL Eco Earth Sdn Bhd (“WKL Eco Earth”) to WKL Eco Earth Holdings in consideration for
the allotment and issuance to WKL Global Limited, Allegro Investment (BVI) Limited and WKLEE Sellers of 49,320
shares, 8,280
shares and in aggregate 14,400
shares, respectively, of the common stock of the Company, or approximately 0.05%, 0.009%
and in aggregate 0.014%,
respectively, of the Enlarged Share Capital. |
| |
|
| (C) |
On
December 20, 2021, Tan Soon Hock, Ivan Oh Joon Wern and certain relevant interest holders (“Relevant Interest Holders”)
entered into an investment exchange agreement with WKL Eco Earth Holdings, pursuant to which the Tan Soon Hock, Ivan Oh Joon Wern
and the Relevant Interest Holders agreed to sell all relevant interests in the WKL Group (defined hereunder) to WKL Eco Earth
Holdings in consideration for the allotment and issuance of 7,037,762
shares, 2,520,000
shares and in aggregate 6,001,794
shares, respectively, of the common stock of the Company, or approximately 6.91%, 2.48%
and in aggregate 5.90%,
respectively, of the Enlarged Share Capital. The board of directors and majority shareholders of the Company have approved the
transaction. |
| |
|
| (D) |
On
December 20, 2021, Dr. Low entered into two deeds of assignment of intellectual properties with WKL Eco Earth Holdings, in respect
of Dr. Low’s patents relating to eco-friendly air-conditioner condenser (external unit), evoairTM and the trademarks
described in the deed of assignment thereunder, and in respect of Dr. Low’s patents relating to the portable air-conditioner,
e-Cond EVOTM and the trademarks as described in the deed of assignments thereunder (together, the “IP Assignments”).
Pursuant to the IP Assignments, WKL Global Limited, Allegro Investment (BVI) Limited and certain nominees shall be allotted and issued
63,362,756 shares, 14,297,259 shares and in aggregate 5,487,752 shares, respectively of the Company’s common stock or approximately
62.25%, 14.05% and in aggregate 5.39%, respectively of the Enlarged Share Capital in consideration for the IP Assignments. |
EvoAir
Transaction, Change of Control Transaction and Allotment Transactions are collectively to be referred to as the “Transactions”.
The closing of the Transaction (the “Closing”) occurred on December 20, 2021 (the “Closing Date”).
From
and after the Closing Date, at which time EvoAir International transferred its HVAC business to the Company, the Company’s primary
operations will consist of the prior operations of EvoAir International.
EvoAir
International is a company incorporated in the British Virgin Islands on November 17, 2021 and the parent company of WKL Eco Earth Holdings,
WKL Eco Earth, WKL Green Energy, EvoAir Manufacturing (M) Sdn Bhd (“EvoAir Manufacturing”),
WKL EcoEarth Indochina Co. Ltd (“WKL EcoEarth Indochina”), WKL Guanzhe Green Technology Guangzhou Co Ltd (“WKL Guanzhe)
and Evo Air Marketing (M) Sdn. Bhd. (“Evo Air Marketing”) (together with Unex and Evo Air International, the “WKL Group”
or “the Group”).
The
WKL Group is principally engaged in the research and development, manufacturing sale and marketing of HVAC products for residential,
commercial and industrial uses. WKL Group’s activities include engineering, manufacturing, assembling, marketing and distributing
an extensive line of HVAC and related products focusing on providing eco-friendly air conditioning and air purifying solutions through
our proprietary heat emission control (“HECS”) technology. The WKL Group utilizes its patented-pending air conditioning technology
in its eco-friendly air conditioning products marketed through its evoairTM and Econ EVO brands, while it partners with OEMs
as well as operate its own supply chain to produce air purifier solutions under its own brand, Econ Life. The Group also licenses its
proprietary air purifying technology to be incorporated into products of other brands. The WKL Group operates manufacturing plants and
assembly lines in China and Malaysia in order to develop and manufacture its HVAC products.
The
Company consolidates the following subsidiaries:
SUMMARY
OF CONSOLIDATED SUBSIDIARIES
| Subsidiaries
of Unex | |
Attributable
interest | |
| EvoAir
International Limited (British Virgin Islands) | |
| 100 | % |
| Subsidiary
of EvoAir International Limited | |
| | |
| WKL
Eco Earth Holdings Pte Ltd (Singapore) | |
| 100 | % |
| Subsidiaries
of WKL Eco Earth Holdings Pte Ltd | |
| | |
| WKL
Eco Earth Sdn Bhd (Malaysia) | |
| 100 | % |
| WKL
Green Energy Sdn Bhd (Malaysia) | |
| 100 | % |
| EvoAir
Manufacturing (M) Sdn Bhd (Malaysia) | |
| 67.5 | % |
| WKL
EcoEarth Indochina Co Ltd (Cambodia) | |
| 55 | % |
| WKL
Guanzhen Green Technology Guangzhou Co Ltd (China) | |
| 55 | % |
| Subsidiary
of EvoAir Manufacturing (M) Sdn Bhd | |
| | |
| Evo
Air Marketing (M) Sdn Bhd (Malaysia) | |
| 100 | % |
NOTE
2 – CHANGE OF CONTROL
Pursuant
to the terms of a share transfer agreement dated December 20, 2021, Dr. Low, the then sole executive officer and director of the Company
and the owner of 2,000,000 restricted shares of the Company’s ordinary shares representing 67.34% of the then Company’s 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 Limited then 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.
NOTE
3 – GOING CONCERN
The
Company’s financial statements as of May 31, 2022, 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 business. The Company has not yet established a sustainable ongoing source of revenues
sufficient to cover its operating costs and allow it to continue as a going concern.
As
of May 31, 2022 and August 31, 2021, the Company had an accumulated deficit of $5,906,875 and $2,233,496 respectively. The Company incurred
net loss of $4,001,086 and $803,996 for nine months ended May 31, 2022 and May 31, 2021, respectively. The cash used in operating activities
for the nine months ended May 31, 2022, was $1,023,037. It was brought to the attention of the Management to assess going concern considering
all facts and circumstances about the foreseeable future of the Company as well as its assets and liabilities on the basis that it will
be able to realize and discharge them in the normal course of business.
With
the injection of a viable business into the Company (“New Business”) contemplated under the Transaction (defined in Note
1), the Management believes that the actions to be taken by the new Management to further implement the business plans for the New Business
including expansion in product offerings, geographical expansion, generate revenue through expansion of revenue streams and customer
base (retail, commercial and industrial as well as private label and licensing clientele), improvement of profitability by achieving
economies of scale provide the opportunity for the Company to continue as a going concern. In addition, the Company is also working on
raising additional funding to finance the operations as well as business expansion.
The
consolidated financials have been prepared assuming that the Company will continue as a going concern and, accordingly financial statements
do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going concern.
NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Principles of Consolidation:
The
accompanying unaudited condensed consolidated financial statements have been prepared by Unex and its subsidiaries (the “Group”
or “WKL Group”) in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for financial
information and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited
condensed consolidated financial statements are presented on a comparative basis.
The
unaudited condensed consolidated financial statements include the accounts of the WKL Group, which comprises (i) Unex, (ii) EvoAir
International, (iii) WKL Eco Earth Holdings, its 100% owned (a) WKL Eco Earth, (b) 100% owned WKL Green Energy, (c) 67.5%
owned EvoAir Manufacturing, which in turn holds 100%
owned subsidiary Evo Air Marketing, (d) 55%
owned WKL EcoEarth Indochina, and (e) 55%
owned WKL Guanzhe as part of the Transaction contemplated in Note 1.
As
WKL Eco Earth and WKL Green Energy were under common control at the time of the Transaction, it is required under U.S. GAAP to account
for this common control acquisition in a manner similar to the pooling of interest method of accounting. Under this method of accounting,
Unex’s consolidated balance sheets as of May 31, 2022 and August 31, 2021 reflect WKL Eco Earth and WKL Green Energy on a historical
carryover basis in the assets and liabilities instead of reflecting the fair market value of the assets and liabilities.
The
unaudited condensed consolidated balance sheet at August 31, 2021 includes the accounts of Unex, and WKL Group (see Note 1 above) on
a pro forma basis. The unaudited condensed consolidated statement of operations and comprehensive loss, the unaudited condensed
consolidated statement of changes in equity, (deficit), and unaudited condensed consolidated statement of cash flows for the period
ending May 31, 2021 are consolidated on a pro forma basis.
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 unaudited condensed 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
unaudited condensed consolidated statements of operations and comprehensive loss as an allocation of the total loss for the periods
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 unaudited
condensed consolidated financial statements include, among others, revenue recognition, allowances for doubtful accounts, product
returns, provisions for obsolete inventory, valuation of intangible assets and long-lived assets, and deferred income tax asset
valuation allowances. Actual results could differ materially from these estimates.
Fiscal
Year End
The
Company operates on a fiscal year basis with the fiscal year ending on August 31.
Cash
and Cash Equivalents
The
Company considers all highly-liquid investments with a maturity of three months or less to be cash equivalents. The Company places its
cash with a high credit quality financial institution.
WKL
Guanzhe conducts its business primarily in China and substantially all of revenues are denominated in RMB. The
government of People’s Republic of China (“PRC”) imposes control over its foreign currency reserves in part
through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade.
Comprehensive
Gain or Loss
ASC
220 “Comprehensive Income,” establishes standards for the reporting and display of comprehensive income and its
components in the financial statements. As of May 31, 2022, and May 31, 2021, the Company established that there are items that
represented components of comprehensive income and, therefore, has included a statement of operations and comprehensive income in
the financial statements.
Beneficial
Conversion Features (“BCF”)
In
accordance with FASB ASC 470-20, “Debt with Conversion and Other Options”, the BCF for the convertible instruments is recognized
and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The
intrinsic value is generally calculated at the commitment date as the difference between the conversion price and the fair value of the
common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is
convertible. If certain other securities are issued with the convertible security, the proceeds are allocated among the different components.
The portion of the proceeds allocated to the convertible security is divided by the contractual number of the conversion shares to determine
the effective conversion price, which is used to measure the BCF. The effective conversion price is used to compute the intrinsic value.
The value of the BCF is limited to the basis that is initially allocated to the convertible security.
Foreign
Currency Translation
The
functional currency of China 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 dates. 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 shareholders’ equity in the statement of change in
shareholders’ equity/(deficit).
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable are recorded at the net value of face amount less any allowance for doubtful accounts. The allowance for doubtful accounts
is the Company’s best estimate of the amount of probable credit losses in our existing accounts receivable. The Company reviews
the allowance for doubtful accounts on a regular basis, and all past due balances are reviewed individually for collectability. Account
balances are charged against the allowance when placed for collection. Recoveries of receivables previously written off are recorded
when received. Interest is not charged on past due accounts.
As
of May 31, 2022, and August 31, 2021, our accounts receivable amounted to $60,978
and $127,802,
respectively, with no allowance for doubtful accounts for both periods.
Inventories
Inventories
consist primarily of finished goods, raw materials, and work-in-progress from WKL Eco Earth, WKL EcoEarth Indochina,
WKL Guanzhe Green, and EvoAir Manufacturing.
We
value inventory at the lower of cost or net realizable value. We determine the cost of inventory using the standard cost method, which
approximates actual cost based on a first-in, first-out method. All other costs, including administrative costs, are expensed as incurred.
Deposit,
Prepayments and Other Receivables
Deposits
paid in advance for set up cost for factory in China are accounted for as deposit. Amounts paid in advance for expenses are
accounted for as prepaid expenses.
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 discounted cash flows the assets are expected
to generate. If identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the
carrying value of the assets exceeds its fair market value.
Revenue
Recognition
Revenue
is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration
that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature,
amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company does not disaggregate its
revenue streams as the economic factors underlying the contracts are similar and provide no significant distinction. The amount of revenue
that is recorded reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company
applies the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the
contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct
in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv)
allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies
each performance obligation.
The
Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled
to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606
at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which
of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated
to the respective performance obligation when (or as) the performance obligation is satisfied.
Deferred
Revenue
The
Company collects deposits from customers in advance for some business contracts. The customer payments received in advance are recorded
as deferred revenue on the balance sheet. The deferred revenue of $426,777 recorded as of August 31, 2021, was subsequently recognized
as revenue in October 2021.
Leases
We
have entered into operating agreements primarily for office and factory. We determine if an arrangement is a lease at inception. For
all classes of underlying assets, we elect not to recognize right of use assets or lease liabilities when a lease has a lease term of
12 months or less at the commencement date and does not include an option to purchase the underlying asset that we are reasonably certain
to exercise. Operating lease assets and liabilities are included on our condensed consolidated balance sheet as of May 31, 2022.
Operating
lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest
rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit
in most of our leases is not readily determinable. Our incremental borrowing rate is estimated to approximate the interest rate on a
collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease
assets also include any prepaid lease payments and lease incentives. Our lease terms include periods under options to extend or terminate
the lease when it is reasonably certain that we will exercise that option. We generally use the base, non-cancellable, lease term when
determining the lease assets and liabilities. Operating lease expense is recognized on a straight-line basis over the lease term.
Our
lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and
utilities. We combine fixed payments for non-lease components with our lease payments and account for them together as a single lease
component, which increases the amount of our lease assets and liabilities.
Income
Taxes
The
Company utilizes ASC Topic 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. The Company
accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities
and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely-than-not”
that a deferred tax asset will not be realized.
The
Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in
the consolidated statements of operations.
Measurement
of Fair Value
The
fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities
are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the
quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on
the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined in the following three
categories:
Level
1: Quoted market prices in active markets for identical assets or liabilities.
Level
2: Observable market-based inputs or inputs that are corroborated by market data.
Level
3: Unobservable inputs that are not corroborated by market data.
Recently
Issued Accounting Pronouncements
Except
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 GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the
aforementioned rules and releases and believes any effect will not have a material impact on the Company’s present or future
financial statements.
In
October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities
from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized
and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. This ASU should
be applied prospectively to acquisitions occurring on or after the effective date of December 15, 2022, and early adoption is permitted.
There is no material impact on the Company’s financial statements.
In June 2016, the FASB issued ASU No. 2016-13 “Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”; In November 2019, the FASB issued
ASU No. 2019-10 “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):
Effective Dates”; In March 2020, the FASB issued ASU No. 2020-03 “Codification Improvements to Financial Instruments”;
which modifies the measurement of expected credit losses of certain financial instruments. This ASU is effective for fiscal years and
interim periods within those years beginning after December 15, 2022. The Company is currently assessing the impact of these ASUs on its
consolidated financial statements.
NOTE
5 INVENTORIES
Inventories
consist of the following:
SUMMARY OF INVENTORIES
| | |
| | | |
| | |
| | |
May
31, 2022 | | |
August
31, 2021 | |
| | |
| | |
| |
| Finished
goods | |
$ | 412,409 | | |
$ | 79,306 | |
| Raw
materials and supplies | |
| 98,176 | | |
| 63,213 | |
| Work-in-progress | |
| 40,224 | | |
| - | |
| | |
| | | |
| | |
| Total
inventory on hand | |
$ | 550,809 | | |
$ | 142,519 | |
NOTE
6 DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES
Deposit,
prepayments and other receivables consists of the following:
SCHEDULE OF DEPOSIT PREPAYMENTS AND OTHER RECEIVABLES
| | |
| | | |
| | |
| | |
May
31, 2022 | | |
August
31, 2021 | |
| | |
| | |
| |
| Deposits
and prepayment | |
| 198,740 | | |
| 15,208 | |
| Other
receivables (Advances to suppliers) | |
| 845,943 | | |
| 1,224,353 | |
| Total | |
| 1,044,683 | | |
| 1,239,561 | |
NOTE
7 PROPERTY, PLANT AND EQUIPMENT
Property,
plant and equipment consist of the following:
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
| | |
| | | |
| | |
| | |
May
31, 2022 | | |
August
31, 2021 | |
| Plant
and machineries | |
$ | 212,320 | | |
$ | - | |
| Office
equipment | |
| 321,435 | | |
| 46,375 | |
| Vehicles | |
| 73,446 | | |
| 58,247 | |
| Furniture
and equipment | |
| 27,642 | | |
| 23,864 | |
| Renovation | |
| 122,928 | | |
| 62,551 | |
| Property
plant and equipment gross | |
| 757,771 | | |
| 191,037 | |
| Less:
accumulated depreciation | |
| (114,426 | ) | |
| (54,439 | ) |
| Property,
plant and equipment, net | |
$ | 643,345 | | |
$ | 136,598 | |
Depreciation
expense for the year ended August 31, 2021 was $25,414. Depreciation expense for the nine month ended May 31, 2022 was $59,987.
NOTE
8 – INTANGIBLE ASSETS
The
below table summarizes the identifiable intangible assets as of May 31, 2022 and August 31, 2021:
SUMMARIZES OF INTANGIBLE ASSETS
| | |
| | | |
| | |
| | |
May
31, 2022 | | |
August
31, 2021 | |
| | |
| | |
| |
| Technology
1-portable air cooler | |
$ | 27,438,763 | | |
$ |
- | |
| Technology
2-condensing unit | |
| 55,709,004 | | |
| - | |
| Finite-
lived intangible assets, gross | |
| 83,147,767 | | |
| - | |
| Less:
Accumulated amortization | |
| (1,732,245 | ) | |
| - | |
| Intangible
assets, net | |
$ | 81,415,522 | | |
$ | - | |
Amortization
expense for intangible assets for the nine month ended May 31, 2022 was $1,732,245.
NOTE
9 CONVERTIBLE BONDS
Convertible
bonds consist of the following:
SCHEDULE OF CONVERTIBLE BONDS
| | |
May
31, 2022 | | |
August
31, 2021 | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 66,667 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
$ | - | | |
$ | 44,601 | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 66,667 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
$ | - | | |
$ | 44,601 | |
| | |
| | | |
| | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 277,778 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
| - | | |
| 185,840 | |
| | |
| | | |
| | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 2,223 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
| - | | |
| 1,487 | |
| | |
| | | |
| | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 111,112 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
| - | | |
| 74,336 | |
| | |
| | | |
| | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 33,334 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
| - | | |
| 22,301 | |
| | |
| | | |
| | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 277,778 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
| - | | |
| 185,841 | |
| | |
| | | |
| | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 444,445 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
| - | | |
| 297,345 | |
| | |
| | | |
| | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 277,778 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
| - | | |
| 185,841 | |
| | |
| | | |
| | |
| Convertible
bonds payable to a private investor bearing interest at 10%. Accrued interests are due November 2020. The Company is obligated to
issue 15,556 shares of common stock as an inducement on the issuance of this bond upon internal re-organization completion | |
| - | | |
| 10,407 | |
| | |
$ | - | | |
$ | 1,007,999 | |
All
accrued interests from above convertible bonds were settled on November 15, 2020. All principal were converted at the conversion
date at S$0.90
per share. The Company determined that these convertible bonds contained a contingent BCF triggered by future events upon completion
of corporate re-organization. The contingent BCF existed at the date of issuance of the convertible bonds, which allowed the holders
to purchase equity at a discount to the offering price. While such contingent BCF is measured on the basis of the commitment-date
stock price, it is not recognized until the contingency occurs. As such, the total 1,116,055
shares issuable upon conversion at a price of S$0.90
per share created an S$1,356,000
or U$1,005,645
contingent beneficial conversion upon completion of the Company’s corporate re-organization. Such contingent BCF is measured on
the basis of the commitment-date stock price; it is not recognized until the contingency occurs.
Upon the completion of the Transactions,
the conversion feature has been realized. The Company recorded the beneficial conversion feature of U$1,005,645.
NOTE
10 RELATED PARTY TRANSACTIONS
Amounts
due to shareholders
Amounts
due to shareholders are non-interest bearing, unsecured, have no fixed repayment term, and are not evidenced by any written agreement.
As of August 31, 2021, the Company reported amounts due to shareholders of $52,481. As of May 31, 2022, the Company reported amounts due
to shareholders of $20,735.
ECo
Awareness Sdn Bhd
ECo
Awareness Sdn Bhd is related to a common shareholder. ECo Awareness Sdn Bhd was our main distributor for E-condLife product.
Eco Awareness Sdn Bhd has been re-designated as distributor in October 2021.
The
sales generated from ECo Awareness Sdn Bhd amounted to $172,475 and $95,188 during the nine months ended May 31, 2022 and May 31, 2021,
respectively. The accounts receivable from ECo Awareness Sdn Bhd amounted to $0 and $77,830 as of May 31, 2022 and August 31, 2021, respectively.
The
purchases from ECo Awareness Sdn Bhd amounted to $71,162 and $16,103 during the nine months ended May 31, 2022 and May 31, 2021, respectively. The accounts payable due to ECo
Awareness Sdn Bhd amounted $0 and $70,650 as of May 31, 2022 and August 31, 2021, respectively.
NOTE
11 STOCKHOLDERS’ EQUITY
On
December 16, 2021, the Company has increased the authorized common stock from 75,000,000 shares with a par value of $0.001 per share
to 1,000,000,000 shares with a par value of $0.001 per share.
During
the nine months ended May 31, 2022, the Company issued 1,116,055 shares of common stock in connection with the conversion of $1,007,999
in principal related to its convertible bonds.
During
the nine months ended May 31, 2022, the Company issued 83,147,767 shares of common stock in connection with Dr. Low’s two deeds
of assignment of intellectual properties.
During
the nine months ended May 31, 2022, the Company issued 14,443,501
shares of common stock pursuant to investment exchange agreements with relevant interest holders in relation to capital raising undertaken by WKL Eco
Earth Holdings in prior years.
During
the nine months ended May 31, 2022, the Company issued 30,000
shares of common stock pursuant to share exchange agreement with WKL Eco Earth Holdings for acquisition of WKL Green Energy and issued 72,000
shares of common stock pursuant to share exchange agreement for the acquisition of WKL Eco Earth.
During
the nine months ended May 31, 2022, the Company issued 74,074
shares of common stock, par value $0.001
per share (“Common Stock”), at a
per share purchase price of $2.50
(the “Offering”) for gross proceeds
of $185,185, as part of a series of offerings by the Company for an aggregate of up to 6,000,000
shares of Common Stock at a per share purchase
price of $2.50.
As
of May 31, 2022 and August 31, 2021, the Company has 101,853,397 and 2,970,000 shares of common stock issued and outstanding, respectively.
NOTE
12 INCOME TAXES
The
Company’s operating subsidiaries are governed by the Income Tax Law, which is concerning Foreign Investment Enterprises and Foreign
Enterprises and various local income tax laws (“the Income Tax Laws”).
EvoAir
International is incorporated in BVI, and a BVI Business Company is exempt from the BVI income tax.
WKL
Eco Earth Holdings is incorporated in Singapore, and under the current tax laws of Singapore, its standard corporate income tax rate
is 17%.
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%.
WKL
EcoEarth Indochina is incorporated in Cambodia, and under the current tax laws of Cambodia, its standard corporate tax rate is 20%.
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.
The
components of net deferred tax assets are as follows:
SCHEDULE OF COMPONENTS ON NET DEFERRED TAX ASSET
| | |
| | | |
| | |
| | |
May
31, 2022 | | |
August
31, 2021 | |
| Net
operating loss carry-forward | |
$ | 5,910,000 | | |
$ | 2,230,000 | |
| Less:
valuation allowance | |
| (5,910,000 | ) | |
| (2,230,000 | ) |
| Net
deferred tax asset | |
| - | | |
| - | |
The
Company had net operating loss carry forwards for tax purposes of approximately $5,910,000 as of May 31, 2022, and approximately
$2,230,000 as of August 31, 2021, which may be available to offset future taxable income. Utilization of the net operating loss carry forwards
may be subject to substantial annual limitations due to the ownership change limitations provided by Section 381 of the Internal Revenue
Code of 1986, as amended. The annual limitation may result in the expiration of net operating loss carry forwards before utilization.
NOTE
13 RIGHT-OF-USE (“ROU”) ASSET AND LEASES
A
lease is defined as a contract that conveys the right to control the use of identifiable tangible property for a period of time in exchange
for consideration. On February 28, 2022, the Company adopted ASC Topic 842 which primarily affected the accounting treatment for operating
lease agreements in which the Company is the lessee of office and factory. The Company elected to not recognize
right of use lease assets and liabilities arising from short-term leases with initial lease terms of twelve months
or less (deemed immaterial) on the accompanying unaudited condensed consolidated balance sheets.
ROU
assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum
lease payments is recognized on the effective interest, the effective amortization on the lease liability. The lease terms may include
options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.
When
measuring lease liabilities for leases that were classified as operating leases as of May 31, 2022, the Company discounted lease payments
using its estimated incremental borrowing rate of 10%.
The
following is a summary of ROU asset and operating lease liabilities:
SUMMARY OF ROU ASSET AND OPERATING LEASE LIABILITIES
| | |
| | | |
| | |
| | |
May
31, 2022 | | |
August
31, 2021 | |
| Assets: | |
| | | |
| | |
| ROU
asset | |
$ | 478,798 | | |
$ | - | |
| | |
| | | |
| | |
| Liabilities: | |
| | | |
| | |
| Current: | |
| | | |
| | |
| Operating
lease liabilities | |
$ | 44,590 | | |
$ | - | |
| Non-current | |
| | | |
| | |
| Operating
lease liabilities | |
| 458,470 | | |
| - | |
| Total
lease liabilities | |
$ | 503,060 | | |
$ | - | |
As
of May 31, 2022, remaining maturities of lease liabilities were as follows:
SCHEDULE OF MATURITIES OF LEASE LIABILITIES
| | |
| | |
| | |
Operating | |
| 2022 | |
$ | 111,174 | |
| 2023 | |
| 123,651 | |
| 2024 | |
| 126,809 | |
| 2025 | |
| 98,555 | |
| 2026
and thereafter | |
| 42,871 | |
| Total | |
$ | 503,060 | |
NOTE
14 SUBSEQUENT EVENTS
In
accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to May 31, 2022 to the date these
consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in
these consolidated financial statements, except as follow:
On
June 3, 2022, the Company entered into certain share subscription agreement (the “SPA”) with Mr. Wong Hon Wai who is a “non-U.S.
Persons” (the “Investor”) 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 5,000 shares (the “Shares”) of its common stock, par value
$0.001 per share (“Common Stock”), at a per share purchase price of $2.50 (the “Offering”), as part of a series
of offerings by the Company for an aggregate of up to 6,000,000 shares of Common Stock at a per share purchase price of $2.50. The gross
proceeds from the Offering will be $12,500. The Shares have yet to be issued to the Investor as of the reporting date.
On
June 15, 2022 Unex Holdings Inc. filed a certificate of amendment with the Nevada Secretary of State to change the name of the Company
from “ Unex Holdings Inc. to EvoAir Holding Inc., pending approval from the Financial Industry Regulatory Authority (“FINRA”).
Following receipt of FINRA’s approval, the Company’s name will be changed to EvoAir Holdings Inc.
NOTE
15 CONTINGENCIES AND COMMITMENTS
The
Company is subject to a filing (the “Filing”) which was made with the Kuala Lumpur High Court by a reseller (the “Reseller”)
of the Company’s INCU ionic nano copper solution (the “Solution”) and the Reseller’s related party (together
with the Reseller, the “Plaintiffs”).
The
Reseller was authorized by WKL Eco Earth’s sole distributor of the Solution (the “WKL Distributor”) to resell the Solution
together with a diffuser with a capacity of not more than 1000ml through a tripartite agreement (the “Tripartite Agreement”)
entered into between (a) the Reseller, (b) the WKL Distributor and (c) a solution packaging company (the “Packaging Company”).
WKL Eco Earth was not a party to the Tripartite Agreement and did not directly authorize or engage the Reseller in the resale of the
Solution.
In
the Filing, the Plaintiffs claimed against (i) WKL Eco Earth; (ii) Dr. Low; (iii) Chan Kok Wei, (iv) the Packaging Company and (v) two
directors of the Packaging Company for loss and damages arising from an alleged breach of contract, defamation and tort of inducement.
The Plaintiffs also alleged that pursuant to the Tripartite Agreement, WKL Eco Earth was prohibited from selling the Solution to any
party other than the WKL Distributor and allow for the resale of the Solution by the Plaintiffs without limitation, and that the Plaintiffs
were not confined in their resale of the Solution to a diffuser with a capacity of not more than 1000ml.
The
Company believes the claims will not have a material adverse effect on the consolidated financial position or results of operations of
the Company.