AB International 10Q/A 2022 Q2 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1


☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended February 28, 2022
☐	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from __________ to__________
	Commission File Number: 000-55979

AB International Group Corp.

(Exact name of registrant as specified in its charter)

Nevada	37-1740351
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
48 Wall Street, Suite 1009, New York, NY 10005
(Address of principal executive offices)
(212) 918-4519
(Registrant’s telephone number)
_______________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such fi les). [X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

☐ Large accelerated filer	☐ Accelerated filer
☒ Non-accelerated Filer	☒ Smaller reporting company
	☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [X] No

State the number of shares outstanding for each of the issuer’s classes of common stock, as of the latest practicable date: 328,103,030 common shares as of May 30, 2022.

Table of Contents

TABLE OF CONTENTS
		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements (Unaudited)	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	8
Item 4:	Controls and Procedures	8
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	9
Item 1A:	Risk Factors	9
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3:	Defaults Upon Senior Securities	10
Item 4:	Mine Safety Disclosures	10
Item 5:	Other Information	10
Item 6:	Exhibits	10

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited consolidated financial statements included in this Form 10-Q are as follows:

F-1	Consolidated Balance Sheets as of February 28, 2022 and August 31, 2021 (unaudited);
F-2	Consolidated Statements of Operations for the three and six months ended February 28, 2022 and 2021 (unaudited);
F-3	Consolidated Statements of Changes in Stockholders’ Equity for three and six months ended February 28, 2022 and 2021 (unaudited).
F-4	Consolidated Statements of Cash Flows for the six months ended February 28, 2022 and 2021 (unaudited); and
F-5	Notes to Consolidated Financial Statements (unaudited).

Table of Contents

AB INTERNATIONAL GROUP

Consolidated Balance Sheets

(Unaudited)

	February 28,			August 31,
	2022			2021

ASSETS
Current Assets
Cash and cash equivalents	$	131,654		$	132,253
Prepaid expenses		24,478			13,566
Related party receivable		—			1,439
Subscription receivable		25,300			87,239
Other receivable		991,040			644,785
Total Current Assets		1,172,472			879,282

Fixed assets and leasehold improvement, net		27,105			53,705
Right of use operating lease assets, net		1,008,595			47,827
Intangible assets, net		2,625,671			3,998,805
Long-term prepayment		2,365,665			761,600
Other assets		45,241			16,508
TOTAL ASSETS	$	7,244,749		$	5,757,727

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	147,443		$	118,283
Related party payable		878,466			933,434
Current portion of obligations under operating leases		177,451			48,226
Due to stockholders		18,795			2,347
Other payable		3,827			3,827
Dividend payable		4,673			1,834
Total Current Liabilities		1,230,655			1,107,951

Obligations under operating leases, non-current		902,973			—
Total Liabilities		2,133,628			1,107,951

Stockholders’ Equity
Preferred stock, $0.001 par value, 10,000,000 preferred shares authorized;		—			—
Series A preferred stock, 100,000 and 100,000 shares issued and outstanding, as of February 28, 2022 and August 31, 2021, respectively		100			100
Series B preferred stock, 20,000 and 20,000 shares issued and outstanding, as of February 28, 2022 and August 31, 2021, respectively		20			20
Series C preferred stock, 422,115 and 0 shares issued and outstanding, as of February 28, 2022 and August 31, 2021, respectively		422			—
Series D preferred stock, 37 and 0 shares issued and outstanding, as of February 28, 2022 and August 31, 2021, respectively		—			—
Common stock, $0.001 par value, 1,000,000,000 shares authorized; 295,158,062 and 226,589,735 shares issued and outstanding, as of February 28, 2022 and August 31, 2021, respectively		295,158			226,590
Additional paid-in capital		12,398,694			11,009,517
Accumulated deficit		(7,181,922	)		(6,578,978	)
Unearned compensation		(401,351	)		(7,473	)
Total Stockholders’ Equity		5,111,121			4,649,776
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,244,749		$	5,757,727

The accompanying notes are an integral part of these financial statements.

F-1

Table of Contents

AB INTERNATIONAL GROUP CORP.

Consolidated Statements of Operations

(Unaudited)


	Six Months Ended						Three Months Ended
	February 28						February 28,
	2022			2021			2022			2021

Revenue	$	1,800,000		$	153,600		$	1,800,000		$	76,800
Cost of revenue		(1,373,134	)		(454,927	)		(686,567	)		(298,841	)
Gross Profit (Loss)		426,866			(301,327	)		1,113,433			(222,041	)

OPERATING EXPENSES
General and administrative expenses		(736,054	)		(764,796	)		(423,337	)		(578,651	)
Related party salary and wages		(290,917	)		(184,337	)		(239,667	)		(132,987	)
Total Operating Expenses		(1,026,971	)		(949,134	)		(663,004	)		(711,638	)

Income (Loss) From Operations		(600,105	)		(1,250,461	)		450,429			(933,679	)

OTHER INCOME (EXPENSES)
Interest expense, net		—			(128,653	)		—			(46,902	)
Rent income		—			1,920						1,920
Gain (Loss) from change in fair value		—			19,094			—			117,881
Loss from lease termination		—			(3,251	)		—			—
Loss from warrant termination		—			(12,343	)		—			—
Gain/(Loss) from prepaid convertible note		—			(128,316	)		—			(128,316	)
Loss from warrant exercise		—			(75,000	)		—			(62,460	)
Total Other Expenses		—			(326,549	)		—			(117,877	)

Loss Before Income Tax Provision		(600,105	)		(1,577,010	)		450,429			(1,051,556	)

Income tax benefit		—			55,347			—			55,347
NET (LOSS) INCOME		(600,105	)		(1,521,663	)		450,429			(996,209	)
Preferred shares dividend		(2,839	)		—			(1,328	)		—
Net (loss) income available to common stockholders	$	(602,944	)	$	(1,521,663	)	$	449,101		$	(996,209	)

NET (LOSS) INCOME PER SHARE: BASIC	$	(0.00	)	$	(0.01	)	$	0.00		$	(0.01	)
NET (LOSS) INCOME PER SHARE: DILUTED	$	(0.00	)	$	(0.01	)	$	0.00		$	(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC		240,076,815			137,158,120			248,359,943			137,158,120
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: DILUTED		240,076,815			149,594,775			298,337,526			137,735,830

The accompanying notes are an integral part of these financial statements.

F-2

Table of Contents

AB INTERNATIONAL GROUP CORP.

Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)


	Common Stock			Preferred Stock
	Number of Shares		Amount	Number of Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Unearned Compensation		Total Equity

Balance - November 30, 2020	124,346,838	$	124,347	100,000	$	100	$	6,997,136	$	(3,496,335)		$	—	$	3,625,248
Common shares issued for cash at $0.0140 per share	19,000,000		19,000	—		—		247,000		—			—		266,000
Common shares issued from warrant exercises	9,337,628		9,338	—		—		53,122		—			—		62,460
Put Shares issued for cash	9,750,000		9,750	—		—		646,510		—			—		656,260
Common shares issued to officers for services	1,500,000		1,500	—		—		43,500		—			(14,973)		30,027

Common shares issued for consulting services	9,500,000		9,500	—		—		275,500		—			—		285,000
Series B Preferred Shares issued	—		—	20,000		20		319,980		—			—		320,000
Series C Preferred Shares issued	—		—	280,025		280		243,220		—			—		243,500
Net loss	—		—	—		—		—		(996,209)			—		(996,209)
Balance – February 28,2021	173,434,466	$	173,434	400,025	$	400	$	8,825,968	$	(4,492,544	)	$	(14,973)	$	4,492,286

Balance - August 31, 2020	46,661,417	$	46,661	—		—	$	7,271,983	$	(2,970,881)		$	(391,667)	$	3,956,097
Common shares issued for cash at $0.0140 per share	19,000,000		19,000	—		—		247,000		—			—		266,000
Common shares issued from note conversions	25,406,238		25,406	—		—		158,347		—			—		183,753
Common shares issued from warrant exercises	56,407,922		56,408	—		—		81,358		—			—		137,766
Common shares returned due to officer resignations	(261,111)		(261)	—		—		(391,405)		—			391,666		—
Put Shares issued for cash	15,220,000		15,220	—		—		721,908		—			—		737,128
Common shares issued to officers for services	1,500,000		1,500	—		—		43,500		—			(14,973)		30,027
Common shares issued for consulting services	9,500,000		9,500	—		—		275,500		—			—		285,000
Series A Preferred Shares issued	—		—	100,000		100				—			—		100
Series B Preferred Shares issued	—		—	20,000		20		319,980		—			—		320,000
Series C Preferred Shares issued	—		—	280,025		280		243,220		—			—		243,500
Warrants termination and Exercised	—		—	—		—		(145,423)		—			—		(145,423)
Net loss	—		—	—		—		—		(1,521,663)			—		(1,521,663)
Balance – February 28,2021	173,434,466	$	173,434	400,025	$	400	$	8,825,968	$	(4,492,544)		$	(14,973)	$	4,492,286


Balance –November 30, 2021	235,236,589	$	235,237	452,703	$	453	$	11,581,263	$	(7,631,023)		$	(3,723)	$	4,182,207
Put Shares issued for cash	9,400,000		9,400	—		—		135,006		—			—		144,406
Series C Preferred Shares issued	—		—	89,490		89		77,946		—			—		78,035
Series D Preferred Shares issued	—		—	34		—		34,000		—			—		34,000
Preferred shares and dividend shares converted into common shares	5,521,473		5,521	(75)		—		(5,521)		—			—		--
Common shares issued to officers for services	45,000,000		45,000	—		—		576,000		—			(397,628)		223,372
Net income	—		—	—		—		—		449,101			—		449,101
Balance at February 28, 2022	295,158,062	$	295,158	542,152	$	542	$	12,398,694	$	(7,181,922)		$	(401,351)	$	5,111,121


Balance - August 31, 2021	226,589,735	$	226,590	120,000	$	120	$	11,009,517	$	(6,578,978)		$	(7,473)	$	4,649,776
Put Shares issued for cash	14,900,000		14,900	—		—		268,282		—			—		283,182
Series C Preferred Shares issued	—		—	422,115		422.		366,563		—			—		366,985
Series D Preferred Shares issued	—		—	187		—		187,000		—			—		187,000
Preferred shares and dividend shares converted into common shares	86,668,327		8,668	(150)		—		(8,668)		—			—		—
Common shares issued to officers for services	45,000,000		45,000	—		—		576,000		—			(393,878)		227,122
Net loss	—		—	—		—		—		(602,944)			—		(602,944)
Balance - February 28, 2022	295,158,062	$	295,158	542,152	$	542	$	12,398,694	$	(7,181,922)		$	(401,351)	$	5,111,121

The accompanying notes are an integral part of these financial statements.

F-3

Table of Contents

AB INTERNATIONAL GROUP CORP.

Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended
	February 28,
	2022			2021

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(602,944	)	$	(1,521,663	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Executive salaries and consulting fees paid in stock		227,122			315,127
Depreciation of fixed asset		26,600			26,448
Amortization of intangible asset		1,373,134			424,207
Loss/(gain) from change in fair value of derivatives		—			(19,094	)
Loss/(gain) from lease termination		—			3,251
Loss/(gain) from warrant termination		—			12,343
Loss/(gain) from warrant exercise		—			75,000
Non-cash interest for convertible notes		—			128,661
Loss/(gain) prepaid convertible note		—			128,316
Non-cash note conversion fees		—			8,750
Non-cash dividend expense for preferred shares		2,839			—
Non-cash lease expense		71,430			1,190
Changes in operating assets and liabilities:
Accounts receivable		—			86,362
Interest receivable		—			26,240
Related party receivable		1,439			86,142
Other receivable		(346,255	)		—
Prepaid expenses		(10,912	)		6,024
Rent security & electricity deposit		(28,733	)		3,891
Purchase of movie and TV series broadcast right and copyright		(1,604,065	)		(2,839,049	)
Accounts payable and accrued liabilities		29,160			(250,649	)
Related party payable		(54,968	)		—
Due to / from stockholders		16,448			63,113
Tax payable		—			(56,750	)
Other payable		—			243
Net cash used in operating activities		(899,705	)		(3,291,897	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment		—			(5,000	)
Net cash used in investing activities		—			(5,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of convertible notes		—			233,017
Proceeds from common stock issuances		345,121			793,729
Proceeds from preferred share C issuances		366,985			563,500
Proceeds from preferred share D issuances		187,000			—
Payments for warrant termination		—			(95,000	)
Prepayments of convertible notes		—			(428,606	)
Net cash provided by financing activities		899,106			1,066,639

Net increase (decrease) in cash and cash equivalents		(599	)		(2,230,258	)
Cash and cash equivalents –beginning of the period		132,253			2,455,061
Cash and cash equivalents – end of the period	$	131,654		$	224,804

Supplemental Cash Flow Disclosures
Cash paid for interest	$	—		$	—
Cash paid for income taxes	$	—		$	—

Non-Cash Investing and Financing Activities:
Cashless warrant exercises	$	—		$	137,766
Convertible notes converted to common shares	$	—		$	(183,752	)
Additions to ROU assets from operating lease liabilities	$	1,080,156		$	20,038
Common shares returned due to officer resignations	$	—		$	(391,666	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Table of Contents

AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended February 28, 2022 and 2021

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements of AB International Group Corp. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information and footnote disclosures normally included in consolidated financial statements have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of August 31, 2021 derives from the audited consolidated financial statements at that date, but does not include all the information and footnotes required by GAAP. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2021.

The unaudited consolidated financial statements as of and for the three and six months ended February 28, 2022 and 2021, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition, results of operations and cash flows. The results of operations for the three and six months ended February 28, 2022 and 2021 are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

Foreign Currency Transactions

Currently the Company does not use derivative instruments to reduce its exposure to foreign currency risk. Non-monetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates in effect at the end of the year. Revenues and expenses are translated at average rates for the year. Gains and losses from translation of foreign currency financial statements into U.S. dollars are included in current results of operations.

Fair Value of Financial Instruments

ASC 820, “Fair Value Measurements” (ASC 820) and ASC 825, “Financial Instruments” (ASC 825), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 – Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 – Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 – Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The carrying values of cash, accounts payable, and accrued liabilities approximate fair value due to their short-term nature. The fair values of warrant liabilities and derivative liabilities embedded in convertible notes are determined by level 3 inputs.

F-5

Table of Contents

Accounting for Derivative Instruments

The Company accounts for derivative instruments in accordance with ASC Topic 815, “Derivatives and Hedging” (ASC 815) and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet.

The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company's policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads (including for the Company's liabilities), relying first on observable data from active markets. Additional adjustments may be made for factors including liquidity, credit, bid/offer spreads, etc., depending on current market conditions. Transaction costs are not included in the determination of fair value. When possible, the Company seeks to validate the model's output to market transactions. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. Changes in fair value are recognized in the period incurred as either gains or losses.

Basic and Diluted Income (Loss) Per Share

The Company computes income (loss) per share in accordance with FASB ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. The earnings per share after the reverse stock split is presented retrospectively as if the reverse split had occurred at the very beginning of the business. Basic loss per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed using the weighted average number of common shares and potential common shares outstanding during the period for warrants, options and restricted shares under treasury stock method, and for convertible debts and convertible preferred stock under if-convertible method, if dilutive. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period and excludes all potential common shares if their effects are anti-dilutive.

The Company had preferred shares and had no convertible notes and warrants as of February 28, 2022. As such, 49,977,583 potentially diluted shares from preferred shares were included in the computation of diluted earing per share for the three months ended February 28, 2022. For the three months ended February 28, 2021, and for the six months ended February 28, 2022 and 2021, no potentially diluted shares were included in the diluted loss per share as they would be anti-dilutive.

F-6

Table of Contents

NOTE 2 – GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As of February 28, 2022, the Company had an accumulated deficit of approximately $7.18 million and a negative working capital of $58,183. For the six months ended February 28, 2022, the Company incurred a net loss of approximately $0.6 million and had negative cash flows of approximately $0.9 million from its operations. Although, the Company generated net income of approximately $0.45 million as the result of selling the broadcast right for three movies (“Love over the world”, “Our treasures” and “Confusion”) for the three months ended February 28, 2022, the future operations of the Company depend on its ability to realize forecasted revenues, achieve profitable operations, and depend on whether or not the Company could obtain the continued financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet the Company’s obligations as they become due. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.

These factors, among others, raise the substantial doubt regarding the Company’s ability to continued as a going concern. The financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.

NOTE 3 –PREPAID EXPENSES

Prepaid expense was $24,478 and $13,566 as of February 28, 2022 and August 31, 2021, respectively. Prepaid expense as of February 28, 2022 primarily includes prepayment of the OTC market annual fee and rent.

NOTE 4 – SUBSCRIPTION RECEIVABLE

Subscription receivable is cash not yet collected from the stockholders for issuance of common stock. As of February 28, 2022, the company had $25,300 subscription receivable balance forecast to be collected from 2.3 million Put shares to Peak One Opportunity Fund LP. As of August 31, 2021, the subscription receivable balance of $87,239 was cash to be collected from 3 million Put shares to Peak One Opportunity Fund LP.

NOTE 5 – FIXED ASSETS AND LEASEHOLD IMPROVEMENT

The Company capitalized the renovation cost as leasehold improvement and the cost of furniture and appliances as fixed asset. Leasehold improvement relates to renovation and upgrade of an office and an offline display store. The leasehold improvement is depreciated over 3 years which equal the terms of the operating lease for renting an office. The furniture and appliances are depreciated over 7 and 5 years, respectively.

The depreciation expense was $26,600 and $26,448 for six months February 28, 2022 and February 28, 2021, respectively.

	February 28, 2022			August 31, 2021
Leasehold improvement	$	146,304		$	146,304
Appliances and furniture		25,974			25,974
Total cost		172,278			172,278
Accumulated depreciation		(145,173	)		(118,573	)
Property and equipment, net	$	27,105		$	53,705

F-7

Table of Contents

NOTE 6 – INTANGIBLE ASSETS

As of February 28, 2022 and August 31, 2021, the balance of intangible assets are as follows;

	February 28, 2022			August 31, 2021
Patent license right	$	500,000		$	500,000
Movie copyrights - Love over the world		853,333			853,333
Sitcom copyrights - Chujian		640,000			640,000
Movie copyrights - Huafeng		422,400			422,400
Movie copyrights - Our treasures		936,960			936,960
Movie and TV series broadcast rights		2,439,840			2,439,840
Total cost		5,792,533			5,792,533
Less: Accumulated amortization		(3,166,862	)		(1,793,728	)
Intangible asset, net	$	2,625,671		$	3,998,805

Intangible assets include 1) a patent license right obtained from Guangzhou Shengshituhua Film and Television Company Limited as a worldwide license to a video synthesis and release system for mobile communications equipment (See Note 10), 2) copyrights for the movie “Love over the world”, “Huafeng”, “Our treasures” and the sitcom “Chujian”, and 3) broadcast rights for fifty-nine movie and TV series. The amortization expense for three months ended February 28, 2022, and February 28, 2021 was $686,567 and $283,481 respectively. The amortization expense for six months ended February 28, 2022, and February 28, 2021 was $1,373,134 and $424,207 respectively.

On January 24, 2022, the company sold the mainland China copyright and broadcast right of the movie “Love over the world”, “Our treasures” and “Confusion” received $1,800,000. The Company remains to have all copyright of outside of mainland China.

The estimated amortization expense for each of the two succeeding years is as follows. The intangible assets as of February 28, 2022 will be fully amortized in the fiscal year of 2023.

Year ending February 28,		Amortization expense
	2022	$	1,348,133
	2023	$	1,277,539

NOTE 7 – RIGHTS-TO-USE OPERATING LEASE ASSETS, NET

Rights-to-use lease assets, net consisted of the following:

	February 28, 2022			August 31, 2021
Right-to-use gross asset	$	1,303,392		$	223,237
Less: accumulated amortization		(294,797	)		(175,410	)
Right-to-use asset, net	$	1,008,595		$	47,827

F-8

Table of Contents

NOTE 8 – LONG-TERM PREPAYMENT

The long-term prepayment balance relates to movie copyrights and broadcast rights for movies as below:

Name of movie	February 28, 2022		August 31, 2021
Prepayment of Movie LuShang	$	256,000	$	256,000
Prepayment of Movie QiQingKuaiChe		838,400		505,600
Prepayment of Movie Too Simple		1,271,265		—
Total long-term prepayment	$	2,365,665	$	761,600

•

In October 2019, the Company acquired a broadcast right of “Lushang” (English name: “On the Way”) from All In One Media Ltd for online streaming at a price of $256,000 This broadcast right permits online streaming globally and has been fully paid. “Lushang” has been approved for screening by the Chinese government in February 2022. Prepayment of $256,000 will be recognized as intangible assets upon available for online broadcasting after one month it’s released in mainland China cinemas.

	•	In November 2019, the Company acquired a broadcast right of “Qi Qing Kuai Che” (English name: “Confusion”) from All In One Media Ltd for online streaming at a price of $115,200. This broadcast right only allows online streaming outside China. In July 2021, the Company acquired the full movie copyright for both domestic and overseas with an additional cost of $908,800, and the total price is $1,024,000. As of February 28, 2022, the Company made payment of $838,400 had the remaining balance paid in March 2022. This movie copyright will be recognized as intangible asset when released for online broadcast in March 2022. The Company sold the mainland China copyright and broadcast right of this movie in January 2022 (See Note 6).

	•	The Company acquired a movie copyright of “Too Simple” from Guang Dong Honor Pictures Ltd in July 2021 at a price of $1,271,265, which was to be paid in installments. As of February 28, 2022 and August 31, 2021, $1,271,265 and $644,785 was paid and recorded in long-term prepayment. On December 31, 2021, the Company entered into a termination contract with Guang Dong Honor Pictures Ltd to cancel the purchase of this movie copyright and will receive a full refund before May 31, 2022. The Company negotiated with Guang Dong Honor Pictures and orally agreed to resume the purchase transaction. The Company received the copy of the movie in May 2022 and will recognize this into intangible assets once the copyright received. The Company reclassified the amount paid to long-term prepayment account.

NOTE 9 – FAIR VALUE MEASUREMENTS

The Company applies ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures to be provided on fair value measurement.

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.
Level 3 — Unobservable inputs which are supported by little or no market activity.

ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

Derivative liabilities of conversion features in convertible notes are classified within Level 3. We estimate the fair values of these liabilities at February 28, 2021 by using Monte Carlo simulation based on the remaining contractual terms, risk-free interest rates, and expected volatility of the stock prices, etc. The assumptions used, including the market value of stock prices in the future and the expected volatilities, were subjective unobservable inputs.

F-9

Table of Contents

Liabilities measured at fair value on a recurring basis are summarized below:

Fair value measurement using:

Quoted prices in active markets for identical assets (Level 1)

Significant other observable inputs

( Level 2)

Unobservable inputs

( Level 3)

Total Fair value at February 28, 2022

Derivative liabilities

—

	Derivative liabilities embedded in convertible notes

Fair value at August 31, 2020	$	64,584
Increase from note issuances		74,187
Decrease from note conversions		(33,490	)
Changes in the fair value		58,090
Fair value at November 30, 2020	$	163,371
Increase from note issuances		—
Decrease from note prepayment		(136,320	)
Changes in the fair value		18,439
Fair value at February 28, 2021	$	45,490

NOTE 10– RELATED PARTY TRANSACTIONS

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by stockholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note. As of February 28, 2022 and August 31, 2021, the Company had due to stockholders of $18,795 and $2,347, respectively.

Youall Perform Services Ltd, owned by the son of the Company’s Chief Executive Offer and the Company’s former Secretary and Treasurer Jianli Deng, collects revenue from the performance matching platform “Ai Bian Quan Qiu” via a Wechat official account on behalf of the Company. Due to the COVID-19 impact, the Company ceased operation of the “Ai Bian Quan Qiu” platform in January 2020. For the three and six months ended February 28, 2022 and 2021, the Company didn’t recognize any revenue from this performance matching platform, respectively. The balance of related party receivable from Youall Perform Services Ltd was $0 and $1,439 as of February 28, 2022 and August 31, 2021, respectively.

In September 2019, the Company entered into an agreement with Youall Perform Services Ltd for two transactions. 1) The Company pays Youall Perform Services Ltd. 10% of the revenue generated from the “Ai Bian Quan Qiu” platform every month to reimburse the valued-added tax, tax surcharges, and foreign transaction fee Youall Perform Services Ltd. has been paying on behalf of the Company. 2) Youall Perform Services Ltd. will provide IT consulting service for “Ai Bian Quan Qiu” platform upgrade and maintenance at a total cost of $128,000, out of which $108,800 has been paid. As there has been no revenue from the “Ai Bian Quan Qiu” platform due to COVID-19 since mid-January, 2020, $108,800 long-term prepayment was expensed as research and development expense in FY2020. In July 2020, the Company changed the service scope of this agreement and turned it into a website maintenance contract over the next two years. The major website of this Company is ABQQ.tv for video streaming. The contract amount remains to be $128,000, out of which $108,800 was previously paid and $19,200 will be due on the twenty first month after the launch of the website www.abqq.tv. The website maintenance service began on January 1, 2021 and will end on December 31, 2022. The Company will pay Youall Perform Services Ltd the remaining balance of $19,200 in September, 2022.

F-10

Table of Contents

The Company has entered into a patent license agreement with a related party Guangzhou Shengshituhua Film and Television Company Limited (“Licensor”) 100% owned by the Chief Executive Officer Chiyuan Deng. The agreement is for a term of 5 years commencing on the effective date on June 1, 2017 and may be renewed at the Company’s written election conveyed to Licensor before the end of the term for a further term of five years. The Company has already paid the licensor a non-refundable, up-from payment of $500,000 and shall pay a royalty of 20% of the gross revenue realized from the sale of licensed products and sub-licensing of this patent every year. The royalty expenses during the six months ended February 28, 2022 and 2021 are $0 and $30,720, respectively, during the three months ended February 28, 2022 and 2021 are $0 and $15,360, respectively. In January 2021, the Company’s sublicensing agreement to generate royalty revenues was terminated with Anyone Picture. As such, there has been no royalty expenses since the end of December 2020 given there has been no sublicensing royalty revenue generated from the patent.

The Company rented an office from ZESTV STUDIOS LIMITED, a Hong Kong entity 100% owned by the Chief Executive Officer Chiyuan Deng (See Note 14). On December 1, 2020, the Company entered an agreement with ZESTV STUDIOS LIMITED to grant ZESTV STUIDIOS LIMITED the distribution right for the movie “Love over the world” and charge ZESTV STUIDIOS LIMITED movie royalties. The Company’s royalties revenue is stipulated to equal 43% of the after-tax movie box office revenue deducting movie issuance costs. The movie box office revenue is tracked by a movie distributor Huaxia Film Distribution Co. Ltd (hereafter “Hua Xia”) in China as it connects with all movie theaters in China and can track the total movie box office revenue online in real time. Although ZESTV STUDIOS LIMITED has paid royalties revenue to the Company, ZESTV STUDIOS LIMITED failed to collect cash from Hua Xia. The Company will refund ZESTV STUDIOS LIMITED the movie royalties. As of February 28, 2022 and August 31, 2021, the Company had related party payable to ZESTV STUDIOS LIMITED of $878,466 and $933,434, respectively, for refund of the movie royalties revenue net of the movie distribution commission fee to ZESTV STUDIOS LIMITED.

On September 11, 2020, the Company entered into an amended employment agreement with Chiyuan Deng, our Chief Executive Officer. Pursuant the amended agreement, the Company amended the compensation to Mr. Deng to include a salary of $180,000 annually, a reduction in common stock issued to Mr. Deng, a potential for a bonus in cash or shares, and the issuance of 100,000 shares of our newly created Series A Preferred Stock at par value $0.001.. Mr. Deng returned 261,111 shares common stock to the Company received under his initial employment agreement.

During the six months ended February 28, 2022 and February 2021, the Company paid CEO and CFO total salary of $290,917 and $184,337, respectively. During the three months ended February 28, 2022 and February 2021, the Company paid CEO and CFO total salary of $239,667 and $132,987, respectively.

NOTE 11 – STOCKHOLDERS’ EQUITY

The Company has the following equity activities during the six months ended February 28, 2022:

Common shares

	•	The Company issued 2,500,000 and 3,000,000 shares of put shares to Peak One for cash at $0.02288, and $0.02719, respectively, per share during Q1 2022.
	•	The Company issued 3,146,854 of common shares to GHS Investments, LLC, from preferred shares series D conversion during Q1 2022.
	•	The Company issued 1,800,000 shares of common stock for cash at $0.01548 per share, and 3,000,000 shares of common stock for cash at $0.01716 per share, and 2,300,000 shares of common stock for cash at $0.01729 per share, and 2,300,000 shares of common stock for cash at $0.0110 per share to Peak One during Q2 2022.
	•	As stock-based compensation for annual bonus for calendar year of 2021, the Company issued 5,000,000 shares restricted common stock to the Chief Investment Officer and 10,000,000 shares restricted common stock to the Chief Executive Officer all at market price $0.0138 per share Q2 2022.
	•	The Company issued 5,521,473 of common shares to GHS Investments, LLC from preferred shares series D conversion Q2 2022.
	•	The Company issued 30,000,000 shares of restricted stock at market price $0.0138 per share to seven consultants for 6 months to 18 months consulting services of movies and NFT related business in Q2 2022.

F-11

Table of Contents

Preferred shares

On September 3, 2021, the Company entered into a securities purchase agreement with an accredited investor, whereby the investor purchased from the Company 234,300 shares of Series C Convertible Preferred Stock of the Company for a purchase price of $203,500. The closing occurred on September 3, 2021. After payment of transaction-related expenses, net proceeds to the Company from the sale and issuance of the Series C Preferred Stock totaled $184,000.

On October 21, 2021, the Company entered into a securities purchase agreement with an accredited investor, whereby investor purchased from the Company 98,325 shares of Series C Convertible Preferred Stock of the Company for a purchase price of $85,450. The closing occurred on October 21, 2021. After payment of transaction-related expenses, net proceeds to the Company from the sale and issuance of the Series C Preferred Stock totaled $75,368.

During the quarter ended November 30, 2021, the Company issued 153 shares of series D preferred stock to the investor for the purchase price of $153,000. After the payment of transaction-related expenses, net proceeds to the Company from the issuance of the Series D Preferred Stock was $140,760.

On December 20, 2021, the Company issued 34 shares of series D preferred stock to the investor for the purchase price of $34,000. After the payment of transaction-related expenses, net proceeds to the Company from the issuance of the Series D Preferred Stock was $31,267.

On January 21, 2022, the Company entered into a securities purchase agreement with an accredited investor, whereby investor purchased from the Company 89,490 shares of Series C Convertible Preferred Stock of the Company for a purchase price of $78,035. The closing occurred on January 21, 2022. After payment of transaction-related expenses, net proceeds to the Company from the sale and issuance of the Series C Preferred Stock totaled $68,529.

NOTE 12 – INCOME TAXES

Components of net deferred tax assets, including a valuation allowance, are as follows:

	February 28,2022			August 31, 2021
Deferred tax asset attributable to:
Net operating loss carry over	$	998,118		$	871,681
Less: valuation allowance		(998,118	)		(871,681	)
Net deferred tax asset	$	—		$	—

The valuation allowance for deferred tax assets was $998,118 as of February 28, 2022 and $871,681 as of August 31, 2021. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of February 28, 2022 and August 31, 2021

Reconciliation between the statutory rate and the effective tax rate is as follows:


	Six months ended
		February 28,
		2022		2021
Federal statutory tax rate		21	%	21%
Change in valuation allowance		(21	%)	(21%)
Effective tax rate		0	%	0%

The Company's future business will focus on local cinemas and websites in the United States. During the six months ended February 28, 2022 and February 28, 2021, the Company and its subsidiary have incurred a consolidated net loss of $600,105 and $1,521,663, respectively and had net loss carryforward from prior years. As a result, the Company and its subsidiary did not incur any income tax during the three and six months ended February 28, 2022 and February 28, 2021.

F-12

Table of Contents

NOTE 13 – CONCENTRATION OF RISK

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. The Hong Kong Deposit Protection Board pays compensation up to a limit of HKD 500,000 (approximately $64,000) if the bank with which an individual/a company hold its eligible deposit fails. As of February 28, 2022 and August 31, 2021, cash balance of $114,747 and $131,796, respectively, were maintained at financial institutions in Hong Kong, and were subject to credit risk. In the US, the insurance coverage of each bank is $250,000. The Company didn’t deposit with financial institutions located in US and were not subject to credit risk. While management believes that these financial institutions and third-party fund holders are of high credit quality, it also continually monitors their creditworthiness.

NOTE 14 – COMMITMENTS AND CONTINGENCIES

Contingencies

From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business. There are no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of its operations and there are no proceedings in which any of the Company’s directors, officers, or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to the Company’s interest.

Operating lease

On November 22, 2020, the Company closed down a display store and terminated its lease, which has an original term from February 23, 2019 to February 22, 2022, as a result of the COVID-19 impact and uncertainties of the economy in Hong Kong.

The Company leased certain office space in Hong Kong from ZESTV STUDIOS LIMITED, a Hong Kong entity 100% owned by the Chief Executive Officer Chiyuan Deng, under operating lease for three years from May 1, 2019 to April 30, 2022 with annual rental of $66,048 (HK$ 516,000). On May 1, 2022, the Company signed a new operating lease agreement with ZESTV STUDIOS LIMITED to lease its Hong Kong office premise for two years from May 1, 2022 to April 2024 with annual rental of $66,048 (HK$ 516,000).

The Company lease office space in Singapore under operating lease from April 13, 2021 to March 31, 2022 with monthly rental of $716 (SGD 974).

The Company leases office space at 48 Wall Street, New York, under operating lease for one year from September 1, 2021 to August 31, 2022 with annual rental of $20,400.

On October 21, 2021, the Company signed a lease agreement to lease “the Mt. Kisco Theatre”, a movie theater, for five years plus the free rent period which commences four months from the lease commencement date. The theatre consists of approximately 8,375 square feet, and the total monthly rent is $14,366 for the first year, including real estate related taxes and landlord’s insurance.

The cash lease expense for the six months ended February 28, 2022 and 2021 was $53,121 and $48,293, respectively. The cash lease expense for the three months ended February 28, 2022 and 2021 was $29,313 and $21,612, respectively. All leases are on a fixed payment basis. None of the leases include contingent rentals. The Company had lease commitment of $ 1,099,892 as of February 28, 2022.

In accordance with ASC 250-10-45-14, the adoption of ASC 842 lease accounting standard has resulted in $124,551 and $49,483 lease expenses for the six months ended February 28, 2022 and 2021, respectively, including both cash and non-cash lease expenses.


	February 28, 2022			August 31, 2021
Total Lease Payments	$	1,099,892		$	48,822
Less: imputed interest	$	(19,468	)	$	(596	)
Present value of lease liabilities	$	1,080,424		$	48,226
Current portion of obligations under operating leases	$	177,451		$	48,226
Obligations under operating leases, non-current	$	902,973		$	0

For future lease payment for next five years as follow

Year	Amount
FY2023	$	184,088
FY2023		178,677
FY2024		248,168
FY2025		252,954
FY2026		236,005
Total lease payments	$	1,099,892

F-13

Table of Contents

NOTE 15 – SUBSEQUENT EVENTS

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to February 28, 2022 to the date these financial statements were issued.

On March 1, 2022, the Company acquired 5 movies copyright at a price of $1,500,000 from All In One Media Limited. The Company acquired 15 parts sitcom web series copyright at a price of $190,000 from All In One Media Limited.

On March 2, 2022, the Company acquired 25 parts web drama series copyright at a price of $525,000 from Anyone Pictures Ltd.

On April 27, 2022, the Company acquired NFT MMM from Stareastnet Portal Ltd, at a price of $280,000. The Company hold STAREASTnet NFT Movies and Music Marketplace (NFT MMM), a decentralized application based on the NFT (Non-Fungible Token) for a movie and music marketplace with the option to buy physical, digital download or both, in one place. The digital copyrights of movies and music are generalized through NFTs, whose smart contracts facilitate the verifications of digital copyrights saved on the blockchain.

On May 3, 2022, the Company sold the mainland China copyright and broadcast right of the movie “Lushang” to a third party at a price of $128,000.

Subsequent cash receipt for Put share issuance:

On March 3, 2022, the Company received $19,560 for the issuance of 2,300,000 shares. On March 19, 2022, the Company received $73,579 for the issuance of 96,075 shares of Series C Convertible Preferred Stock.

Issuance of Common Stock:

On March 10, 2022, the Company issued 5,638,298 shares for the conversion of Series C preferred stock.

On March 11, 2022, the Company issued 3,639,345 shares for the conversion of Series D preferred stock.

On March 15, 2022, the Company issued 2,819,149 shares for the conversion of Series C preferred stock.

On March 16, 2022, the Company issued 2,329,670 shares for the conversion of Series C preferred stock.

On March 21, 2022, the Company issued 4,764,045 shares for the conversion of Series C preferred stock.

On March 24, 2022, the Company issued 6,235,294 shares for the conversion of Series C preferred stock.

On March 30, 2022, the Company issued 4,416,667 shares for the conversion of Series C preferred stock.

On April 7, 2022, the Company issued 2,841,389 shares for the conversion of Series C preferred stock.

F-14

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Actof 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly anyforwardlooking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

AB International Group Corp. (the "Company", "we" or "us") was incorporated under the laws of the State of Nevada on July 29, 2013 and originally intended to purchase used cars in the United States and sell them in Krygyzstan. The Company's fiscal year end is August 31.

We are an intellectual property (IP) and movie investment and licensing firm, focused on acquisitions and development of various intellectual property, including the acquisition and distribution of movies. We have a Patent License as per a license agreement to a video synthesis and release system for mobile communications equipment, in which the technology is the subject of a utility model patent in the People's Republic of China . In February 2019, we launched a business application (Ai Bian Quan Qiu) through smartphones and official social media accounts based on the WeChat platform, utilizing Artificial Intelligence. It is a matching platform for performers, advertiser merchants, and owners for more efficient services. We previously generated revenues through an agency service fee from each matched performance. Due to the quarantine and continuous control imposed by the state and local governments in areas affected by COVID-19, merchant advertising events have been suspended for 7 months. The Company decided to suspend the Ai Bian Quan Qiu platform, which, at the time, created an adverse impact on the business and financial condition and hampered its ability to generate revenue and access sources of liquidity on reasonable terms. Starting in January 2021, however, the Company started generating movie box-office revenue from the movie “Ai Bian Quan Qiu” as a result in the easing of COVID-19 restrictions.

Our License to the technology previously generated revenue through sub-license monthly fees from a smartphone app on Android devices. This smartphone app was already existing and licensed at the time we acquired the License to the video synthesis. The sub-licensing revenue was recognized monthly based upon the number of users who download the APP that utilizes the Company’s patent. In January, 2021, our sublicensing agreement with Anyone Picture to generate revenues was terminated. As such, there has been no revenues generated from sub-licensing the technology since the end of December, 2020. We have no sublicenses in place currently.

Table of Contents

On April 22, 2020, the Company announced the first phase development of its video streaming service. The online service will be marketed and distributed in the world under the brand name ABQQ.tv. The Company's professional team are sourcing such dramas and films to provide video streaming service on the ABQQ.tv. The video streaming website www.ABQQ.tv was officially launched on December 29, 2020. As of February 28, 2022, the Company acquired 59 movie broadcast rights. The Company will continue marketing and promoting the ABQQ.tv website through Google Ads and acquire additional broadcast rights for movies and TV series, and plan to charge subscription fees once the Company has obtained at least 200 broadcast rights of movie and TV series.

On October 21, 2021, the Company entered into a Lease Agreement (the “Lease”) with Martabano Realty Corp. (the “Landlord”), pursuant to which the Company agreed to lease approximately 8,375 square feet of in what is known as the Mt. Kisco Theatre at 144 Main Street, Mount Kisco, New York. The term of the Lease is five years plus free rent period. Commencing in month four, the Company's monthly base rent obligation will be approximately $6,979, which amount will increase in year three to $13,260, year four at$13,658 and the final year at $14,067 in accordance with the terms of the Lease. The Lease contains customary provisions for real property leases of this type, including provisions allowing the Landlord to terminate the Lease upon a default by the Company.

The space was formerly used as a theatre with a total of 5 screens and 466 sets for screening films. The former theatre opened on December 21, 1962 with Hayley Millsin “In Search of the Castaways.” It was a replacement for the town’s other movie theatre that burned down. It was later twinned and further divided into 5 screens. It was operated for years by Lesser Theaters, then bought by Clearview Cinemas. In June, 2013 it was taken over by Bow-Tie Cinemas when they took most Clearview locations. It lasted until March, 2020 when it was closed by the Covid-19 pandemic. It was announced in September 2020 that the closure would be permanent. The Company intends to continue to use the space as a theatre with a total of 5 screens and 466 sets for screening films. It’s the first theatre of ABQQ Cinemas in America as the new business line of the Company.

On April 27, 2022, the Company has entered into a Sale and Purchase Agreement of Assets with STAREASTnet as instead previously disclosed “NFT Movie and Music Market (NFT MMM) Development and Maintenance Contract. It’s more benefit for the Company, Stareastnet assures the NFT MMM reliability of platform running, such as the blockchain technical and connections of third-party service provider.

Covid-19

The full extent of the impact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict at the present time. In an effort to contain COVID-19 or slow its spread, governments around the world have enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. We anticipate that these actions and the global health crisis caused by COVID-19 will negatively impact business activity across the globe. The movie industry in general has changed dramatically as a result of the pandemic restrictions. While movie theaters struggle to stay alive, online streaming programming has increased. We have endeavored to stay with the trend for streaming services to remain competitive. We have experienced the negative impact in our results of operations and in our financial condition for the year ended August, 2020, especially with respect to the movie distribution end of our business. These impacts concern delays in delivering our movies and IP because of health restrictions imposed on certain public events that concern our business, including, among other things, theaters, indoor and outdoor performances, filming restrictions, music festivals, concerts and other such events, Some of these restrictions include pandemic government mandated shutdowns and others restrictions on capacity gathered at these events, with some jurisdictions imposing fines or revocation of business licensing, and other restrictions. As a result of these factors, our revenue was reduced from March to May of 2020. With immediate closures, the resultant industry and business specific delays have negatively affected our company.

Table of Contents

We plan to focus on the video streaming and other web-based applications and expand our business into those areas that we believe we situate the company for continued and increased revenues. As the pandemic is forecasted to worsen in the United States and other areas around the globe, we believe that the demand for our IP, online products and services offerings increases. While we cannot guarantee that the negative effects of the pandemic will not interfere with our ability to generate revenues, we intend to strengthen our position in this dynamic market and position the company to best suit its stockholders.

Specific to our company operations, during the pandemic period, we have enacted precautionary measures to protect the health and safety of our employees and partners. These measures include closing our office, having employees work from home, and eliminating all travel. While having employees work from home may have a negative impact on efficiency and may result in negligible increases in costs, it does have an impact on our ability to execute on our agreements to deliver our core products.

We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, customers, partners and stockholders. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers, partners, or vendors, or on our financial results.

Results of Operations

Revenues

Our total revenue reported for the six months ended February 28, 2022 was $1,800,000, compared with $153,600 for the six months ended February 28, 2021. The increase in revenue for the six months ended February 28, 2022 over the six months ended February 28, 2021, is mainly attributable to copyright sales of films for the current period, where in 2021, we achieved revenue of $153,600 from the patent license fees.

Total revenue for the three months ended February 28, 2022 was $1,800,000, compared with $76,800 for the three months ended February 28, 2021. The increase in revenue for the three months ended February 28, 2022 over the three months ended February 28, 2021, is mainly attributable to copyright sales of films for the current period, where in 2021, we achieved revenue of $76,800 from the patent license fees.

Our cost of revenues was $1,373,134 for the six months ended February 28, 2022, as compared with $454,927 for the six months ended February 28, 2021. Most of the increase in cost of revenues for the six months ended February 28, 2022 was the result of amortizing movie broadcast rights, not present in the same period 2021.

Our cost of revenues was $686,567 for the three months ended February 28, 2022, as compared with $298,841 for the three months ended February 28, 2021. Most of the increase in cost of revenues for the three months ended February 28, 2022 was the result of amortizing movie broadcast rights, not present in the same period 2021.

As a result, we had a gross profit of $426,866 for the six months ended February 28, 2022, as compared with a gross loss of $301,327 for the six months ended February 28, 2021. The increase in gross profit margin for the six months ended February 28, 2022 is attributable to revenue increase from copyright sales of films.

As a result, we had a gross profit of $1,113,433 for the three months ended February 28, 2022, as compared with a gross loss of $222,041 for the three months ended February 28, 2021. The increase in gross profit margin for the three months ended February 28, 2022 is attributable to revenue increase from copyright sales of films.

We hope to generate revenues for the balance of the fiscal year with start generate revenue of NFT MMM, as well as achieving enough customers to start subscriptions for ABQQ.tv. and generate revenue from the NYC cinema box office.

Operating Expenses

Operating expenses increased to $1,026,971 for the six months ended February 28, 2022 from $949,134 for the six months ended February 28, 2021. Our operating expenses for six months ended February 28, 2022 consisted of general and administrative expenses of $736,054 and related party salary and wages of $290,917. In contrast, our operating expenses for the six months ended February 28, 2021 consisted of general and administrative expenses of $764,796 and related party salary and wages of $184,337.

Table of Contents

Operating expenses decreased to $663,004 for the three months ended February 28, 2022 from $711,638 for the three months ended February 28, 2021. Our operating expenses for three months ended February 28, 2022 consisted of general and administrative expenses of $423,337 and related party salary and wages of $239,667. In contrast, our operating expenses for the three months ended February 28, 2021 consisted of general and administrative expenses of $578,651 and related party salary and wages of $132,987.

We anticipate our operating expenses will increase as we undertake our plan of operations, including increased costs associated with marketing, personnel, and other general and administrative expenses, along with increased professional fees associated with SEC and COVID compliance as our business grows more complex and more expensive to maintain. On the COVID front, we expect that restrictions will ease moving forward, but there may still be setbacks as variants to the virus emerge and governments take lockdown measures in response. These and other costs for COVID expenditures may increase our operational costs in fiscal 2022 at various levels of operation.

Other Income/Expenses

We had other income of $0 for the six months ended February 28, 2022, as compared with other expenses of $326,549 for the six months ended February 28, 2021.

We had other income of $0 for the three months ended February 28, 2022, as compared with other expenses of $117,877 for the three months ended February 28, 2021.

Net Income (Loss)

We incurred a net loss in the amount of $602,944 for the six months ended February 28, 2022, as compared with a net loss of $1,521,663 for the six months ended February 28, 2021.

We incurred a net profit in the amount of $449,101 for the three months ended February 28, 2022, as compared with a net loss of $996,209 for the three months ended February 28, 2021.

Liquidity and Capital Resources

As of February 28, 2022, we had $1,172,472 in current assets consisting of cash, prepaid expenses, subscription receivable and other receivable. Our total current liabilities as of February 28, 2022 were $1,230,655. As a result, we have a working deficit of $58,183 as of February 28, 2022 as compared with a working deficit of $228,669 as of August 31, 2021.

Operating activities used $899,705 in cash for the six months ended February 28, 2022, as compared with $3,291,897 used in cash for the same period ended February 28, 2021. Our negative operating cash flow in 2022 was mainly the result of our net loss for the six months combined with operating changes in other receivable net off amortization of intangible assets. Our negative operating cash flow in 2021 was mainly the result of our net loss for the six months combined with operating changes in accounts payable and accrued liabilities, and from related party payables.

Financing activities provided $899,106 for the six months ended February 28, 2022, as compared with $1,066,639 provided in financing activities for the six months ended February 28, 2021. Our positive financing cash flow for February 28, 2022 was the result of proceeds from sales of our common stock and preferred stock. Our positive financing cash flow for February 28, 2021 was the result of proceeds from issuance of convertible notes and convertible notes and sales of our common stock and preferred stock.

Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Going Concern

Off Balance Sheet Arrangements

As of February 28, 2022, there were no off-balance sheet arrangements.

Table of Contents

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our critical accounting policies are set forth in Note 1 to the financial statements.

Recently Issued Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of February 28, 2022. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of February 28, 2022, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of February 28, 2022, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting

Our company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending August 31, 2022: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the six months ended February 28, 2022 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Table of Contents

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A: Risk Factors

See Risk Factors contained in our Form 10-K filed with the SEC on January 12, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company has the following equity activities during the three months ended February 28, 2022:

Common shares

The Company issued 1,800,000 shares of common stock for cash at $0.01548 per share and 3,000,000 shares of common stock for cash at $0.01716 per share and 2,300,000 shares of common stock for cash at $0.01729 per share and 2,300,000 shares of common stock for cash at $0.01100 per share.

As stock-based compensation the Company issued 5,000,000 shares to the Chief Investment Offer and 10,000,000 shares to the Chief Executive Officer.

The Company issued 5,521,473 of common shares from preferred shares series D conversions

The Company issued 30,000,000 shares of stock for consulting services.

Table of Contents

Preferred shares

On December 9, 2022, the Company entered into a securities purchase agreement with an accredited investor, whereby the investor purchased from the Company 34 shares of Series D Convertible Preferred Stock of the Company for a purchase price of $34,000.

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended February 28, 2022 are not necessarily indicative of the results that can be expected for the full year.

Item 6. Exhibits
Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2022 formatted in Extensible Business Reporting Language (XBRL).

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on the dates below on its behalf by the undersigned thereunto duly authorized.

AB INTERNATIONAL GROUP CORP.

By:	/s/ Chiyuan Deng
	Chief Executive Officer, Principal Executive Officer, and Director
	June 10, 2022

By:

/s/ Vella Deng

Chief Financial Officer, Principal Financial Officer,

Principal Accounting Officer

June 10, 2022

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. freshman Avg

AB International (ABQQ) 10-Q/A2022 Q2 Quarterly report (amended)

Content analysis