Forward-looking Statements

This quarterly report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.

In this report unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common shares" refer to the common shares of our capital stock.

The management's discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP.





General Overview

Unex was incorporated in the State of Nevada on February 17, 2017 and was formed to provide geodesy services. On December 20, 2021, EvoAir International transferred its HVAC business to Unex. The Company through its subsidiaries upon completion of the Transactions (defined hereunder), is engaged in the sale of ("HVAC") products in Asia.

EvoAir International is a company incorporated in the BVI on November 17, 2021 and the parent company of WKL Eco Earth Holdings, WKL Eco Earth, WKL Green Energy, EvoAir Manufacturing, WKL EcoEarth Indochina, WKL Guanzhe and Evo Air Marketing (M) Sdn. Bhd. ("Evo Air Marketing") (together with Unex, EvoAir International, to be referred to as 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.

The WKL Group operates manufacturing plants and assembly lines in China and Malaysia in order to develop and manufacture its HVAC products, totaling approximately 60,000 square feet of manufacturing space. With the rise of the Covid-19 pandemic, the Group has been engaged as an authorized exclusive distributor of the INCU branded Ionic Nano Copper Solution Technology ("INCU Technology"). The Group partners with various original equipment manufacturers ("OEMs") in producing air purifier products that incorporate the INCU Technology under the brand e-CondLife, as well as distributes the INCU Technology to other brands for incorporation into their products.





Results of Operations

The following summary of our operations should be read in conjunction with our unaudited condensed consolidated financial statements for the three and nine months ended May 31, 2022, as compared to the three and nine months ended May 31, 2021.





19 | Page



Three months Quarter Ended May 31, 2022, versus Three months Quarter Ended May
31, 2021



                            Three Months Ended
                                  May 31,
                            2022            2021          Changes          %
Revenue                 $    194,954     $  171,798     $     23,156        13 %
Cost of revenue              173,842         95,953           77,889        81 %
Gross profit / (loss)         21,112         75,845          (54,733 )     (72 )%
Operating expenses        (1,440,623 )     (245,919 )      1,194,704       486 %
Loss from operation       (1,419,511 )     (170,074 )     (1,249,437 )     735 %
Other expense                 (9,845 )            -            9,845       100 %
Net Loss                $ (1,429,356 )   $ (170,074 )     (1,259,282 )     740 %

The Company generated revenues of $194,594 in the three months ended May 31, 2022 as compared to $171,798 in the same financial period for 2021, a change in revenue of $23,156. The three month change of the sales is attributable to the expansion of customers base, increase of sales from existing customers and expansion of product offering of evoairTM line of products.

Cost of revenue was $173,842 or 89% of revenue in the three months ended May 31, 2022 as compared to $95,953 or 56% of revenue in the same financial period for 2021. Cost of revenues includes production costs and purchases of goods. Higher cost of revenue is attributable to manufacturing and related costs for evoairTMproducts, comprising material costs, labor cost, research and development ("R&D") for product improvement, product testing and inspection, factory rental, depreciation expense as well as sample products for market penetration.

Gross profit was $21,112 or 11% of revenue for the three months ended May 31, 2022 as compared to gross profit of $75,845 in the same financial period in 2021 or 44% of revenues. The decrease of gross profit in 2022 is attributable to the commercialization of evoair productsTM with higher cost of revenue from manufacturing and related costs as well as lack of economy of sales during commercialization stage. The Company anticipates improvement of income and gross profit margin with the improvement of revenue streams from distributor and dealership model and projects.

Operating expenses were $1,440,623 for the three months ended May 31, 2022 compared to $245,919 in the corresponding period in 2021, an increase of $1,194,794. The increases in operating expenses were in line with the growth in business operations and business development, professional fee and compliance cost in relation to our financial reporting, patent and trademark filings.

The net loss for the three months ended May 31, 2022 was $1,429,356 as compared to $170,074 for the corresponding period in 2021. The continuous net loss is attributable to the Group's focused effort in creating the infrastructure and resource to meet the business expansion needs of the Group's as well as lack of economies of scale.





Nine Months Quarter Ended May 31, 2022, versus Nine months Quarter Ended May 31,
2021



                               Nine Months Ended
                                    May 31,
                              2022            2021          Changes            %
Revenue                   $  1,306,717     $  393,029     $    913,688           232 %
Cost of revenue              1,075,841       (213,179 )        862,662           405 %
Gross Profit                   230,876        179,850           51,026            28 %
Operating expenses          (3,253,759 )     (985,295 )      2,268,464           230 %
Loss from operation         (3,022,883 )     (805,445 )     (2,217,438 )         275 %
Other (expense)/ income       (978,203 )        1,449         (979,652 )     (67,609 )%
Net Loss                  $ (4,001,086 )   $ (803,996 )     (3,197,090 )         398 %

The Company generated revenue of $1,306,717 for the nine months ended May 31, 2022 as compared to $393,029 in the corresponding financial period in 2021, an increase in revenues of $913,688 which is attributable to the expansion of customers base, increase of sales from existing customers and expansion of product offerings of evoairTM line of products.





20 | Page

Cost of revenues was $1,075,841 or 82% of revenues in the nine months ended May 31, 2022 as compared to $213,179 or 54% of revenue in the corresponding period in 2021. Cost of revenues includes production cost and purchases of goods. Higher cost of revenue is attributable to manufacturing and related costs for evoairTM products, comprising material costs, labor cost, R&D for product improvement, product testing and inspection, factory rental, depreciation expense as well as sample products for market penetration.

Gross profit was $230,876 or 18% of revenue for the nine months ended May 31, 2022 as compared to $179,850 in the corresponding period in 2021 or 46% of revenue. The decrease of gross profit in 2022 is attributable to the commercialization of evoair productsTM with higher cost of revenue from manufacturing and related costs as well as lack of economy of sales during commercialization stage. The Company anticipates improvement of income and gross profit margin with improvement of revenue streams from distributor and dealership model and projects.

Operating expenses were $3,253,759 for the nine months ended May 31, 2022 compared to $985,295 in the corresponding period in 2021, an increase of $2,268,464. Increased in operating expense was in line with the growth in business operations and business development, professional fee and compliance cost in relation to our financial reporting, patent and trademark filings.

Other expense were $978,203 for the first nine months ended May 31, 2022, including amortization of beneficial conversion feature of convertible bonds $1,005,645, and $154 interest expense, offset with other income $27,596.

The net loss for the first nine months ended May 31, 2022 was $4,001,086 as compared to $803,996 for the corresponding period in 2021. The continuous net loss is attributable to the infrastructure and resource to meet the business expansion needs of the Group's as well as lack of economies of scale.

Liquidity and Capital Resources





Working Capital



                         As of           As of
                        May 31,       August 31,
                         2022            2021          Changes         %

Current Assets $ 2,600,987 $ 3,224,772 $ (623,785 ) (19 )% Current Liabilities 1,004,967 1,665,879 (660,912 ) (40 )% Working Capital 1,596,020 1,558,893 37,127 2 %

As at May 31, 2022, our company's liabilities stood at $1,004,967, which included accounts payable and accruals of $27,013, other payable of $881,654, hire purchase creditor $30,975, amount due to shareholders $20,735 and current portion operating lease liabilities of $44,590, and the non-current portion operating lease liabilities of $458,470.

As at May 31, 2022 our company had a positive working capital of $1,596,020 compared with the positive working capital of $1,558,893 as at August 31, 2021. The increase in working capital was primarily due to a decrease in convertible bonds balance at current financial period end.

© Edgar Online, source Glimpses