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 six
months ended February 28, 2022, as compared to the three and six months ended
February 28, 2021.
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Three months Quarter Ended February 28, 2022, versus Three months Quarter Ended
February 28, 2021
Three Months Ended
February 28,
2022 2021 Changes %
Revenue $ 302,884 $ 27,568 $ 275,316 999 %
Cost of revenue (194,585 ) (67,730 ) 126,855 187 %
Gross profit / (loss) 108,299 (40,162 ) 148,461 (370) %
Operating expenses (1,303,079 ) (558,986 ) 744,093 133 %
Loss from operation (1,194,780 ) (599,148 ) 595,632 99 %
Other income/ (expense) income (993,618) 622 994,240 (159864) %
Net Loss $ (2,188,398 ) $ (598,526 ) 1,589,872 266 %
The Company generated revenues of $302,884 in the three months ended February
28,2022 as compared to $27,568 in the same financial period for 2021, a change
in revenue of $275,316. The sales increases in the 2022 are attributable to the
expansion of customer base, increase sales to existing customers as well as
expansion of product offering.
Cost of revenue was $194,585 or 64% of revenue in the three months ended
February 28 as compared to $67,730 or 246% of revenue in the same financial
period for 2021. Cost of revenues includes production cost and purchases of
goods.
Gross profit was $108,299 or 36% of revenue for the three months ended February
28 ,2022 as compared to gross loss of $40,162 in the same financial period in
2021 or 146% of revenues. The improvement in gross profit in the corresponding
period in 2022 is attributable to the economies of scale resulting in higher
level of sales
Operating expenses were $1,303,079 for the three months ended February 28, 2022
compared to $558,986 in the corresponding period in 2021, an increase of
$744,093. The increase of operating expenses were in line with the growth in
business operations and business development, professionals fee and compliance
cost in relation to our financial reporting, patent and trademark filings.
The net loss from operations for the three months ended February 28,2022 was
$2,188,398 as compared to $598,526 for the corresponding period in 2021. The
continuous operating 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.
Six Months Ended February 28, 2022, versus Six months Ended February 28, 2021
Six Months Ended
February 28,
2022 2021 Changes %
Revenue $ 1,111,763 $ 221,231 $ 890,532 403 %
Cost of revenue (901,999 ) (117,226 ) 784,773 669 %
Gross income 209,764 104,005 105,759 102 %
Operating expenses (1,813,136 ) (739,376 ) 1,073,760 145 %
Loss from operation (1,603,372 ) (635,371 ) (968,001 ) 152 %
Other income /(expense) (968,358 ) 1,453 (969,811 ) (66745 )%
Net Loss $ (2,571,730 ) $ (633,918 ) (1,937,812 ) 306 %
The Company generated revenue of $1,111,763 for the six months ended February
28, 2022 as compared to $221,231 in the corresponding financial period in 2021,
an increase in revenues of $890,532 which is attributable to the expansion of
customers base, increase of sales from existing customers and expansion of
product offerings as well as increased sales to existing customers.
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Cost of revenues was $901,999 or 81% of revenues in the six months ended
February 28, 2022 as compared to $117,226 or 53% of revenue in the corresponding
period in 2021. Cost of revenues includes production cost and purchases of
goods.
Gross profit was $209,764 or 19% of revenue for the six months ended February
28, 2022 as compared to $104,005 in the corresponding period in 2021 or 47% of
revenues. The improvement of gross income in the corresponding period in 2022 is
attributable to the increase in sales of higher margin products and economy of
scale resulting from higher level of sales.
Operating expenses were $1,813,136 for the six months ended February 28, 2022
compared to $739,376 in the corresponding period in 2021, an increase of
$1,073,760. An increased operating expense was in line with the growth in
business operations and business development, professionals fee and compliance
cost in relation to our financial reporting, patent and trademark filings.
The net loss from operations for the six month first half of fiscal 2022 was
$1,603,372 as compared to $635,371for the comparable period of the prior year.
The continuous operating 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
February 28, August 31,
2022 2021 Changes %
Current Assets $ 2,666,244 $ 3,224,772 $ (558,528 ) (17 )%
Current Liabilities 779,286 1,665,879 (886,593 ) (53 )%
Working Capital 1,886,958 1,558,893 328,065 21 %
As at February 28, 2022, our company's liabilities stood at $1,279,058, which
included account payable and accruals of $17,694, other payable of $655,946,
hire purchase creditor $34,372, amount due to related party $22,204 and current
portion operating lease liabilities of $49,070, and the non-current portion
operating lease liabilities of $499,772.
As at February 28, 2022 our company had a positive working capital of $1,886,958
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 period end.
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