UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended February ~~28, 2023~~29, 2024
☐	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~~144 Main Street, ~~Suite 1009~~, ~~New York~~Mt. Kisco, NY ~~10005~~10549
(Address of principal executive offices)
~~(212)~~(914) ~~918-4519~~202-3108
(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: ~~1,065,792,896~~2,332,226,432 common shares as of April ~~10, 2023.~~15, 2024.

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	89
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	910
Item 1A:	Risk Factors	910
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	910
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, 2023~~29, 2024 and August 31, ~~2022~~2023 (unaudited);
F-2	Consolidated Statements of Operations for the three and six months ended February 29, 2024 and February 28, 2023 ~~and 2022~~ (unaudited);
F-3	Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended February 29, 2024 and February 28, 2023 ~~and 2022~~ (unaudited);
F-4	Consolidated Statements of Cash Flows for the six months ended February 29, 2024 and February 28, 2023 ~~and 2022~~ (unaudited); and
F-5	Notes to Consolidated Financial Statements (unaudited)

Table of Contents

AB INTERNATIONAL GROUP CORP.

Consolidated Balance Sheets

(Unaudited)

	February 29,			August 31,
	2024			2023

ASSETS
Current Assets
Cash and cash equivalents	$	33,665		$	117,096
Prepaid expenses		30,000			—
Total Current Assets		63,665			117,096

Property and equipment, net		6,038			8,254
Right of use operating lease assets, net		595,619			696,380
Intangible assets, net		1,078,417			1,455,110
Purchase deposits for intangible assets, non-current		—			300,000
Security deposit		46,006			45,240
TOTAL ASSETS	$	1,789,745		$	2,622,080

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	145,973		$	156,763
Accounts payable and accrued liabilities - related party		6,388			6,388
Loan from related parties		319,551			748,285
Current portion of obligations under operating leases		244,066			211,507
Deferred revenue		82,600			—
Total Current Liabilities		798,578			1,122,943

Obligations under operating leases, non-current		485,715			608,149
Total Liabilities		1,284,293			1,731,092

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 29, 2024 and August 31, 2023, respectively		100			100
Series B preferred stock, 0 and 20,000 shares issued and outstanding, as of February 29, 2024 and August 31, 2023, respectively		—			20
Series C preferred stock, 0 and 174,421 shares issued and outstanding, as of February 29, 2024 and August 31, 2023, respectively		—			175
Series D preferred stock, 0 and 0 shares issued and outstanding, as of February 29, 2024 and August 31, 2023, respectively		—			—
Common stock, $0.001 par value, 10,000,000,000 shares authorized; 2,331,965,321 and 1,285,283,385 shares issued and outstanding, as of February 29, 2024 and August 31, 2023, respectively		2,331,965			1,285,283
Additional paid-in capital		11,012,704			11,993,408
Accumulated deficit		(12,839,317	)		(12,387,998	)
Total Stockholders’ Equity		505,452			890,988
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,789,745		$	2,622,080

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 29,			February 28,			February 29,			February 28,
	2024			2023			2024			2023

REVENUE
Copyrights and license	$	885,289		$	357,286		$	171,001		$	177,286
Theatre admissions and food and beverage sales		199,364			177,965			111,905			121,153
Consulting services		102,347			—			102,347			—
Total revenue		1,187,000			535,251			385,253			298,439

OPERATING COSTS AND EXPENSES
Amortization expenses		(1,072,483	)		(1,779,243	)		(560,674	)		(855,744	)
Theatre operating costs		(104,081	)		(78,708	)		(62,726	)		(56,304	)
General and administrative expenses		(511,616	)		(804,158	)		(249,924	)		(379,645	)
Related party salary and wages		(15,049	)		(141,000	)		—			(70,500	)
Total Operating Costs And Expenses		(1,703,229	)		(2,803,109	)		(873,324	)		(1,362,193	)

Loss From Operations		(516,229	)		(2,267,858	)		(488,071	)		(1,063,754	)

OTHER INCOME
Interest income		694			158			57			79
Interest expense – related party		(20,784	)		—			(6,905	)		—
Other income		85,000			—			—			—
Total Other Income		64,910			158			(6,848	)		79

Loss Before Income Tax Benefit		(451,319	)		(2,267,700	)		(494,919	)		(1,063,675	)

Income tax benefit		—			—			—			—
NET LOSS	$	(451,319	)	$	(2,267,700	)	$	(494,919	)	$	(1,063,675	)
Preferred shares dividend		—			(10,629	)		—			(4,864	)
Net loss available to common stockholders		(451,319	)		(2,278,329	)		(494,919	)	$	(1,068,539	)

NET LOSS PER SHARE: BASIC	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
NET LOSS PER SHARE: DILUTED	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC		2,245,380,603			604,591,133			2,502,404,882			728,656,133
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: DILUTED		2,245,380,603			604,591,133			2,502,404,882			728,656,133

~~(Unaudited)~~

February 28, August 31,
2023 2022

ASSETS
Current Assets
Cash and cash equivalents $ 165,884 $ 84,223
Prepaid expenses 9,480 13,035
Account receivable 60,000 —
Other receivable 300,000 —
Total Current Assets 535,364 97,258

Property and equipment, net 10,471 12,695
Right of use operating lease assets, net 872,345 1,004,018
Intangible assets, net 2,724,039 3,798,282
Purchase deposits for intangible assets, non-current —   881,724
Security deposit 45,240 45,240
TOTAL ASSETS $ 4,187,459 $ 5,839,217

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 131,877 $ 293,786
Related party payable —   15,127
Current portion of obligations under operating leases 237,708 229,813
Due to stockholders 908,321 377,398
Deferred revenue 40,715 38,000
Total Current Liabilities 1,318,621 954,124

Obligations under operating leases, non-current 740,744 863,145
Total Liabilities 2,059,365 1,817,269

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, 2023 and August 31, 2022, respectively 100 100
  Series B preferred stock, 20,000 and 20,000 shares issued and outstanding, as of February 28, 2023 and August 31, 2022, respectively 20 20
  Series C preferred stock, 248,975 and 335,850 shares issued and outstanding, as of February 28, 2023 and August 31, 2022, respectively 249 336
  Series D preferred stock, 0 and 0 shares issued and outstanding, as of February 28, 2023 and August 31, 2022, respectively —   —
Common stock, $0.001 par value, 10,000,000,000 shares authorized; 880,904,816 and 384,512,583 shares issued and outstanding, as of February 28, 2023 and August 31, 2022, respectively 880,905 384,512
Additional paid-in capital 12,366,636 12,636,838
Accumulated deficit (11,068,230 ) (8,789,901 )
Unearned stock compensation (51,586 ) (209,957 )
Total Stockholders’ Equity 2,128,094 4,021,948
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 4,187,459 $ 5,839,217

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

~~F-1~~F-2

Table of Contents

AB INTERNATIONAL GROUP CORP.

Consolidated Statements of ~~Operations~~Changes in Stockholders' Equity

(Unaudited)

Six Months Ended Three Months Ended
February 28 February 28,
2023 2022 2023 2022

Revenue $ 535,251 $ 1,800,000 $ 298,439 $ 1,800,000
Cost of revenue (1,857,951 ) (1,373,134 ) (912,048 ) (686,567 )
Gross Profit (Loss) (1,322,700 ) 426,866 (613,609 ) 1,113,433

OPERATING EXPENSES
General and administrative expenses (804,158 ) (736,054 ) (379,645 ) (423,337 )
Related party salary and wages (141,000 ) (290,917 ) (70,500 ) (239,667 )
Total Operating Expenses (945,158 ) (1,026,971 ) (450,145 ) (663,004 )

Income (Loss) From Operations (2,267,858 ) (600,105 ) (1,063,754 ) 450,429

OTHER INCOME (EXPENSES)
Interest income 158 —   79 —
Total Other Income (Expenses) 158 —   79 —

Loss Before Income Tax Provision (2,267,700 ) (600,105 ) (1,063,675 ) 450,429

Income tax benefit —   —   —   —
NET (LOSS) INCOME $ (2,267,700 ) $ (600,105 ) $ (1,063,675 ) $ 450,429
Preferred shares dividend (10,629 ) (2,839 ) (4,864 ) (1,328 )
Net (loss) income available to
common stockholders
$ (2,278,329 ) $ (602,944 ) $ (1,068,539 ) $ 449,101

NET (LOSS) INCOME PER SHARE: BASIC $ (0.00 ) $ (0.00 ) $ (0.00 ) $ 0.00
NET (LOSS) INCOME PER SHARE: DILUTED $ (0.00 ) $ (0.00 ) $ (0.00 ) $ 0.00
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC 604,591,133 240,076,815 728,656,133 248,359,943
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: DILUTED 604,591,133 240,076,815 728,656,133 298,337,526


	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, 2022		659,550,369		$	659,550			450,050		$	450		$	12,583,045		$	(9,999,691	)	$	(127,157	)	$	3,116,197
Preferred shares series C converted into common shares		221,354,447			221,355			(81,075	)		(81	)		(221,274	)		—			—			—
Dividend in connection with Preferred shares series C		—			—			—			—			4,865			—			—			4,865
Common shares issued to officers for services		—			—			—			—			—			—			75,571			75,571
Net loss		—			—			—			—			—			(1,068,539	)		—			(1,068,539)
Balance at February 28, 2023		880,904,816		$	880,905			368,975		$	369		$	12,366,636		$	(11,068,230	)	$	(51,586	)	$	2,128,094

Balance - August 31, 2022		384,512,583		$	384,512			455,850		$	456		$	12,636,838		$	(8,789,901	)	$	(209,957	)	$	4,021,948
Issuance of common shares		200,000,000			200,000			—			—			(53,525	)		—			—			146,475
Series C Preferred Shares issued		—			—			90,275			90			68,910			—			—			69,000
Preferred shares series C converted into common shares		296,392,233			296,393			(177,150	)		(177	)		(296,216	)		—			—			—
Dividend in connection with Preferred shares series C		—			—			—			—			10,629			—			—			10,629
Common shares issued to officers for services		—			—			—			—			—			—			158,371			158,371
Net loss		—			—			—			—			—			(2,278,329	)		—			(2,278,329)
Balance - February 28, 2023		880,904,816		$	880,905			368,975		$	369		$	12,366,636		$	(11,068,230	)	$	(51,586	)	$	2,128,094


Balance – November 30, 2023		2,566,965,321		$	2,566,965			120,000		$	120		$	10,770,780		$	(12,344,398	)	$	—		$	993,467
Preferred shares series B cancellation		—			—			(20,000	)		(20	)		20			—			—			—
Common shares cancellation		(235,000,000	)		(235,000	)		—			—			235,000			—			—			—
Imputed Interest		—			—			—			—			6,904			—			—			6,904
Net loss		—			—			—			—			—			(494,919	)		—			(494,919)
Balance – February 29, 2024		2,331,965,321		$	2,331,965			100,000		$	100		$	11,012,704		$	(12,839,317	)	$	—		$	505,452

Balance – August 31, 2023		1,285,283,385		$	1,285,283			294,421		$	295		$	11,993,408		$	(12,387,998	)	$	—		$	890,988
Issuance of restricted common shares to officer for service		225,000,000			225,000			—			—			(180,000	)		—			—			45,000
Preferred shares series C converted into common shares		1,056,681,936			1,056,682			(174,421	)		(175	)		(1,056,507	)		—			—			—
Preferred shares series B cancellation		—			—			(20,000	)		(20	)		20			—			—			—
Common shares cancellation		(235,000,000	)		(235,000	)		—			—			235,000			—			—			—
Imputed Interest		—			—			—			—			20,783			—			—			20,783
Net loss		—			—			—			—			—			(451,319	)		—			(451,319)
Balance – February 29, 2024		2,331,965,321		$	2,331,965			100,000		$	100		$	11,012,704		$	(12,839,317	)	$	—		$	505,452

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 29,			February 28,
	2024			2023

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(451,319	)	$	(2,278,329	)
Adjustments to reconcile net loss to net cash used in operating activities:
Executive salaries and consulting fees paid in stock		—			158,371
Depreciation of fixed asset		2,216			2,224
Amortization of intangible asset		1,072,482			1,779,243
Gain from sales of software in progress		(85,000	)		—
Imputed interest on officer loan		20,783			—
Non-cash dividend expense for preferred shares		—			10,629
Non-cash lease expense		10,886			17,167
Changes in operating assets and liabilities:
Accounts receivable		—			(60,000	)
Prepaid expenses		(30,000	)		3,555
Rent security & electricity deposit		(766	)		—
Other receivable		—			120,000
Purchase of movie and TV series broadcast right and copyright		(695,789	)		(243,276	)
Accounts payable and accrued liabilities		34,210			(161,909	)
Accounts payable and accrued liabilities – related party		—			(15,127	)
Deferred revenue		82,600			2,715
Net cash used in operating activities		(39,697	)		(664,737	)

CASH FLOWS FROM FINANCING ACTIVITIES
Loan proceeds from (repayment to) related parties		(43,734	)		530,923
Proceeds from common stock issuances		—			146,475
Proceeds from preferred share C issuances		—			69,000
Net cash provided by financing activities		(43,734	)		746,398

Net increase (decrease) in cash and cash equivalents		(83,431	)		81,661
Cash and cash equivalents – beginning of period		117,096			84,223
Cash and cash equivalents – end of period	$	33,665		$	165,884

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

Non-Cash Investing and Financing Activities:
Settlement of accrued CEO salaries with common stock	$	45,000		$	—
Net off purchase deposit with loan from related parties for sales of software	$	300,000
Transfer from purchase deposit to intangible assets	$	—		$	461,724
Transfer from purchase deposit to other receivable	$	—		$	420,000

The accompanying notes are an integral part of these consolidated 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,  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

Balance –November 30, 2022 659,550,369 $ 659,550 450,050 $ 450 $ 12,583,045 $ (9,999,691 ) $ (127,157 ) $ 3,116,197
Preferred shares series C converted into common shares 221,354,447 221,355 (81,075 ) (81 ) (221,274 ) —   —   —
Dividend in connection with Preferred shares series C —   —   —   —   4,865 —   —   4,865
Common shares issued to officers for services —   —   —   —   —   —   75,571 75,571
Net loss —   —   —   —   —   (1,068,539 ) —   (1,068,539)
Balance at February 28, 2023 880,904,816 $ 880,905 368,975 $ 369 $ 12,366,636 $ (11,068,230 ) $ (51,586 ) $ 2,128,094

Balance - August 31, 2022 384,512,583 $ 384,512 455,850 $ 456 $ 12,636,838 $ (8,789,901 ) $ (209,957 ) $ 4,021,948
Issuance of common shares 200,000,000 200,000 —   —   (53,525 ) —   —   146,475
Series C Preferred Shares issued —   —   90,275 90. 68,910 —   —   69,000
Preferred shares series C converted into common shares 296,392,233 296,393 (177,150 ) (177 ) (296,216 ) —   —   —
Dividend in connection with Preferred shares series C —   —   —   —   10,629 —   —   10,629
Common shares issued to officers for services —   —   —   —   —   —   158,371 158,371
Net loss —   —   —   —   —   (2,278,329 ) —   (2,278,329)
Balance - February 28, 2023 880,904,816 $ 880,905 368,975 $ 369 $ 12,366,636 $ (11,068,230 ) $ (51,586 ) $ 2,128,094

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

~~F-3~~

~~Table of Contents~~

~~AB INTERNATIONAL GROUP CORP.~~

~~Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Six Months Ended
February 28,
2023 2022

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,278,329 ) $ (602,944 )
Adjustments to reconcile net loss to net cash from operating activities:
Executive salaries and consulting fees paid in stock 158,371 227,122
Depreciation of fixed asset 2,224 26,600
Amortization of intangible asset 1,779,243 1,373,134
Non-cash dividend expense for preferred shares 10,629 2,839
Non-cash lease expense 17,167 71,430
Changes in operating assets and liabilities:
Accounts receivable (60,000 ) —
Related party receivable —   1,439
Other receivable 120,000 (346,255 )
Prepaid expenses 3,555 (10,912 )
Rent security & electricity deposit —   (28,733 )
Purchase of movie and TV series broadcast right and copyright (243,276 ) (1,604,065 )
Accounts payable and accrued liabilities (161,909 ) 29,160
Related party payable (15,127 ) (54,968 )
Deferred revenue 2,715 —
Net cash used in operating activities (664,737 ) (916,153 )

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock issuances 146,475 345,121
Proceeds from preferred share C issuances 69,000 366,985
Proceeds from preferred share D issuances —   187,000
Due to stockholders 530,923 16,448
Net cash provided by financing activities 746,398 915,554

Net increase (decrease) in cash and cash equivalents 81,661 (599 )
Cash and cash equivalents – beginning of period 84,223 132,253
Cash and cash equivalents – end of period $ 165,884 $ 131,654

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

Non-Cash Investing and Financing Activities:
Transfer from purchase deposit to intangible assets $ 461,724 $ —
Transfer from purchase deposit to other receivable $ 420,000 $ —
Additions to ROU assets $ —   $ 1,080,156

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

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – 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. 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, ~~2022~~2023 derived 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, ~~2022.~~2023.

The unaudited consolidated financial statements as of and for the three and six months ended February 29, 2024 and February 28, 2023, ~~and 2022,~~ 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 29, 2024 and February 28, 2023 ~~and 2022~~ are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The financial statements have been prepared on a consolidated basis, with the Company’s ~~fully~~wholly owned ~~subsidiaries~~subsidiary App Board Limited and AB Cinemas NY, Inc. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

~~Accounts receivable~~The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

Accounts receivable ~~are~~

Accounts receivable is presented at invoiced amount net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s payment history, its current credit-worthiness and current economic trends. Accounts are written off after efforts at collection prove unsuccessful. No allowance was recorded for the three and six months ended February 29, 2024 and February 28, ~~2023~~2023.

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currency Transactions

The financial risk arises from the fluctuations in foreign exchange rates and ~~2022~~the degrees of volatility in these rates. Currently the Company does not use derivative instruments to reduce its exposure to foreign currency risk. Gains and losses from translation of foreign currency into U.S. dollars are included in current results of operations.

.Prepayments

Prepayments primarily consist of payments made to acquire the copyrights and distribution rights of movies, TV shows and music, etc. Prepayments are classified as either current or non-current based on the nature and the terms of the respective agreements. These prepayments are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. The allowance is also based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections and utilizations. Actual amounts received or utilized may differ from management’s estimate of credit worthiness and the economic environment. Prepayments are written off against the allowances only after exhaustive collection efforts. No allowance was recorded for the three and six months ended February 29, 2024 and February 28, 2023.

Property and Equipment, net

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Leasehold improvement is related to the enhancements paid by the Company to leased offices. Leasehold improvement represents capital expenditures for direct costs of renovation or acquisition and design fees incurred. The amortization of leasehold improvements commences once the renovation is completed and ready for the Company’s intended use.

The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows:

			Estimated Useful Life
Furniture			7 years
Appliances			5 years
Leasehold improvement			Lesser of useful life and lease term

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments that substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations in other income or expenses.

Intangible Assets

Intangible assets are recorded at the lower of cost or estimated fair value and amortized as follows:

	•	Movie copyrights and broadcast rights: straight-line method over the estimated life of the asset, which has been determined by management to be 2 years
	•	NFT MMM platform: straight-line method over the estimated life of the asset, which has been determined by management to be 2 years

Amortized costs of the intangible asset are recorded as amortization expenses in the consolidated statements of operations.

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Lease property under operating lease

The Company adopted ASU No. 2016-02—Leases (Topic 842) since June 1, 2019, using a modified retrospective transition method permitted under ASU No. 2018-11. This transition approach provides a method for recording existing leases only at the date of adoption and does not require previously reported balances to be adjusted. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities on the consolidated balance sheets. The standard did not materially impact the Company’s consolidated net earnings and cash flows.

Impairment of Long-lived asset

The Company evaluates its long-lived assets or asset group, including intangible assets with indefinite and finite lives, for impairment. Intangible assets with indefinite lives that are not subject to amortization are tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the assets might be impaired in accordance with ASC 350. Such impairment test compares the fair values of assets with their carrying values with an impairment loss recognized when the carrying values exceed fair values. For long-lived assets and intangible assets with finite lives that are subject to depreciation and amortization are tested for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of an asset or a group of long-lived assets may not be recoverable. When these events occur, the Company evaluates impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the excess of the carrying amount of the asset group over its fair value. Impairment losses are included in the general and administrative expense. There was no impairment loss during the three and six months ended February 29, 2024 and February 28, 2023, ~~and 2022~~, respectively.

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~~AB INTERNATIONAL GROUP CORP.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

~~Foreign Currency Transactions~~

The financial risk arises from the fluctuations in foreign exchange rates and the degrees of volatility in these rates. Currently the Company does not use derivative instruments to reduce its exposure to foreign currency risk. Gains and losses from transactions of foreign currency into U.S. dollars are included in current results of operations.

Revenue Recognition

The Company adopted ASC Topic 606, “Revenue from Contracts with Customers”, using the modified retrospective approach. ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

The Company derives its revenues primarily from ~~three~~five sources: (1) selling copyrights of movies or TV shows; (2) licensing NFT MMM platform and providing technical service; (3) movie theater admissions and food and beverage ~~sales.~~sales; (4) embedded marketing service; (5) consulting services.

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

Revenue from selling copyrights of movies or TV shows:

The Company recognizes revenue when master copy of movie or TV show is delivered, the IP is authorized and transferred to customers. The Company’s contracts with customer are primarily on a fixed-price basis and do not contain cancelable and refund-type provisions.

Revenue from licensing NFT MMM platform and providing technical service fee:

The Company derives revenue from NFTMM platform license fees, which includes accessing the NFTMM platform and platform data on both app and website. The Company's contract has ~~one year~~a two-year term, and is non-cancelable and non-refundable. In accordance with ASC 606, a 'right to access' license is recognized over the license period. Initial technical service fee comprises of installation, implementation and necessary training required by the customer. These services fees are recognized as the services are delivered at a point in time.

Revenue from movie theater admissions and food and beverage sales:

The Company recognizes ~~admission~~admissions and food and beverage revenues based on a gross transaction ~~price. Admissions and food and beverage revenues~~price which are recorded at a point in time when a film is exhibited to a customer and when a customer takes possession of food and beverage offerings. The Company defers 100% of the revenue associated with the sales of gift cards and exchange tickets until such time as the items are redeemed or estimated income from non-redemption is recorded.

Revenue from embedded marketing service:

~~F-6~~

~~Table of Contents~~

~~AB INTERNATIONAL GROUP CORP.~~The Company derives revenue from providing the services of embedded marketing through adding advertisement into movies and TV series. The Company recognizes revenue when the advertisement is added to the movies and TV series.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~Revenue from consulting services:

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~The Company derives revenue from providing consulting services in connection with the sales of the software-in-progress and the restructuring of a Company and bring it to IPO. The consulting service fees are recognized when the services are delivered.

~~Revenue Recognition (continued)~~

Contract Assets and Liabilities

Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contact assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs.

As of February ~~28, 2023~~29, 2024 and August 31, ~~2022,~~2023, other than ~~accounts receivable and~~ deferred revenue, the Company had no material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheets.

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

Disaggregation of revenue

The Company disaggregates its revenue from contracts by revenue streams, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors.

The following table presents sales by revenue streams for the three and six months ended February 29, 2024 and February 28, 2023, respectively:


	Three months ended
	February 29, 2024		February 28, 2023
Consulting services	$	102,347	$	—
NFT licenses		171,001		177,286
Theatre admissions		77,518		79,756
Food and beverage sales		34,387		41,397
Total revenue	$	385,253	$	298,439


	Six months ended
	February 29, 2024		February 28, 2023
Copyrights sales	$	531,800	$	—
Embedded marketing service		125,489		—
Consulting services		102,347		—
NFT licenses		228,000		357,286
Theatre admissions		135,342		115,918
Food and beverage sales		64,022		62,047
Total revenue	$	1,187,000	$	535,251

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.

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments (continued)

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.

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.

No liabilities measured at fair value on a recurring basis as of February ~~28, 2023~~29, 2024 and August 31, ~~2022~~2023.

Basic and Diluted Earnings (Loss) Per Share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of February ~~28, 2023,~~29, 2024, the total number of warrants outstanding was 50,000,000 (See Note 9). No warrants were included in the diluted ~~loss~~earnings per share as they would be anti-dilutive.
No preferred stocks were included in the diluted earnings per share as they would be anti-dilutive.

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Reclassification

~~AB INTERNATIONAL GROUP CORP.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

~~Reclassification~~

Certain prior period amounts have been reclassified to conform to the current period presentation.

Warrants

Warrants are classified as equity and the proceeds from issuing warrants in conjunction with convertible notes are allocated based on the relative fair values of the base instrument of convertible notes and the warrants by following the guidance of ASC 470-20-25-2.

Proceeds from the sale of a debt instrument with stock purchase warrants (detachable call options) shall be allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portion of the proceeds so allocated to the warrants shall be accounted for as paid-in capital. The remainder of the proceeds shall be allocated to the debt instrument portion of the transaction. This usually results in a discount (or, occasionally, a reduced premium), which shall be accounted for as interest expense under Topic 835 Interest.

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes

The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Income taxes are accounted for using the asset and liability approach. Under this approach, income tax expense is recognized for the amount of taxes payable or refundable for the current year. Deferred income taxes assets and liabilities are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statement of operations in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Share-Based Compensation

The Company follows the provisions of ASC 718, “Compensation - Stock Compensation,” which establishes the accounting for employee share-based awards. For employee share-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite service period for the entire award.

Recent Accounting Pronouncements

In October 2021, the FASB issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the ~~Company~~fiscal year beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company does not expect the adoption of ASU 2021-04 to have a material effect on the consolidated financial statements.

In June 2022, the FASB issued ASU No. 2022-03, "Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions," which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. The guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. The Company does not expect the adoption to have a material impact on the consolidated financial statements.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and statements of cash flows.

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NOTE 3 – GOING CONCERN

The accompanying ~~unaudited~~ 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, 2023~~,29, 2024, the Company had an accumulated deficit of approximately $~~11.1~~12.8 million ~~million~~ and a working capital deficit of approximately~~$0.8~~ $0.7 million. For the six months ended February ~~28, 2023,~~29, 2024, the Company incurred a net loss of approximately $~~2.3~~0.5 million ~~million~~ and the net cash used in ~~operations~~operating activities was approximately $~~0.7~~40,000 ~~million. Losses have principally occurred as a result of the substantial resources required for general and administrative expenses associated with our operations.~~. The continuation of the Company as a going concern is dependent upon 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 continue as a going concern. These consolidated 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.

~~F-8~~

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~~AB INTERNATIONAL GROUP CORP.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

NOTE 4 – PROPERTY AND EQUIPMENT

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 the leased office.

The depreciation expense was ~~$2,224~~$2,216 and ~~$26,600~~$2,224 for the six months ended February 29, 2024 and February 28, 2023 ~~and 2022~~, respectively.

As of February ~~28, 2023~~29, 2024 and August 31, ~~2022~~2023, the balance of property and equipment was as follows:

	February 28, 2023			August 31, 2022			February 29, 2024			August 31, 2023
Leasehold improvement	$	146,304		$	146,304		$	146,304		$	146,304
Appliances and furniture		25,974			25,974			25,974			25,974
Total cost		172,278			172,278			172,278			172,278
Accumulated depreciation		(161,807	)		(159,583	)		(166,240	)		(164,024	)
Property and equipment, net	$	10,471		$	12,695		$	6,038		$	8,254

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – INTANGIBLE ASSETS

As of February ~~28, 2023~~29, 2024 and August 31 ~~2022~~, 2023, the balance of intangible assets was as follows:

	February 28, 2023			August 31, 2022			February 29, 2024			August 31, 2023
Movie copyrights - Love over the world	$	853,333		$	853,333		$	853,333		$	853,333
Sitcom copyrights - Chujian		640,000			640,000			640,000			640,000
Movie copyrights - A story as a picture		422,400			422,400			422,400			422,400
Movie copyrights - Our treasures		936,960			936,960			936,960			936,960
Movie broadcast right- On the way		256,000			256,000			256,000			256,000
Movie copyrights - Too simple		1,271,265			1,271,265			1,271,265			1,271,265
Movie copyrights - Confusion		1,024,000			1,024,000			1,024,000			1,024,000
Movie copyrights - Amazing Data		300,000			—			300,000			300,000
Movie copyrights - Nice to meet you		300,000			—			300,000			300,000
Movie copyrights – 6 movies								695,789			—
TV drama copyright - 20 episodes		295,000			190,000			295,000			295,000
Movie and TV series broadcast rights		2,439,840			2,439,840
Movie broadcast rights – 59 movies								2,439,840			2,439,840
NFT MMM platform		280,000			280,000			280,000			280,000
Total cost		9,018,798			8,313,798			9,714,587			9,018,798
Accumulated amortization		(6,294,759	)		(4,515,516	)		(8,636,170	)		(7,563,688	)
Intangible assets, net	$	2,724,039		$	3,798,282		$	1,078,417		$	1,455,110

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~~AB INTERNATIONAL GROUP CORP.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 5 – INTANGIBLE ASSETS (Continued)~~

The amortization expense for the six months ended February 29, 2024 and February 28, 2023 ~~and 2022~~ was ~~$1,779,243~~$1,072,482 and $1,779,243~~$1,373,134~~, respectively. Estimated future amortization expense is as follows:

Twelve months ending February 28	Amortization expense
Twelve months ending February 28,			Twelve months ending February 28,	Amortization expense
2024	$	2,191,745		$	872,272
2025		532,294			206,145
Total	$	2,724,039		$	1,078,417

In March 2022, the Company signed a purchase agreement with All In One Media Ltd to acquire the copyrights and broadcast rights for five movies at a price of $1,500,000. These copyrights and broadcast rights allow the Company to broadcast these movies outside the mainland China. On November 29, 2022, both parties entered into an amended agreement to deliver the copyrights and broadcast rights of two movies (Amazing data and Nice to meet you) to the Company on November 30, 2022 for a total price of $600,000. As of August 31, 2022, $356,724 was paid and recorded as purchase deposit for intangible asset. On November 30, 2022, the company received the copies of two movies. The purchase deposit of $356,724 was transferred to intangible assets and the unpaid balance of $243,276 was recorded as accounts payable and was paid in December 2022. Per amended agreement, the remaining three movies will be delivered upon receiving the payment of minimum $300,000 per movie from the Company before December 31, 2022. The agreement was terminated on December 31, 2022 due to the fact that the Company did not make the payments for the remaining movies.

In March 2022, the Company signed a purchase agreement with Anyone Pictures Limited to acquire the copyright for broadcasting a 25-episode TV drama series outside of mainland China, at a price of $525,000. Five standalone episodes were delivered in December 2022. On February 21, 2023, both parties entered into a supplementary agreement to determine the delivery of the remaining 20 standalone episodes. As a result, Anyone Pictures Limited agreed to refund $420,000 to the Company and the Company had received ~~$120,000~~the full amount as of ~~February 28,~~August 31, 2023.

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Table of Contents

AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – INTANGIBLE ASSETS (continued)

On August 6, 2022, the Company licensed NFT MMM platform to a third party to allow the access of ~~NFTMM~~NFT MMM platform and platform data on both app and website for one year starting from August 20, 2022 for a monthly license fee of $60,000. Subsequent to the license renewal on November 1, 2023, the Company would continue licensing the NFT MMM platform to the same third party from November 1, 2023 until October 31, 2025 for a monthly license fee of $57,000. The Company remains the ownership and copyright of the NFT MMM platform, including the APP “NFT MMM” on Google Play, and the website: starestnet.io. For the six months ended February 29, 2024 and February 28, 2023, the Company recognized license revenue of $228,000 and $357,286., respectively.

On September 10, 2023, the Company entered into an agreement with All In One Media Ltd to acquire the copyrights for 4 movies at a price of $104,714. These copyrights allow the Company to transfer these movies to other parties outside the mainland China. On November 27, 2023, the Company further acquired mainland China copyrights of these 4 movies from All In One Media Ltd. at price of $378,513.

On September 30, 2023, the Company entered into another agreement with All In One Media Ltd to acquire the copy rights and broadcast rights for 2 movies for a price of $212,562. These copyrights allow the Company to broadcast these movies globally.

In November 2023, the Company entered into an agreement with Anyone Pictures Limited to sell the Mainland China copyrights of 1 movie for a price of $180,000 and the offline broadcast rights of another movie for a price of 211,800. The granted broadcast rights are globally exclusive, with the exception of Mainland China.

On November 21, 2023, the Company entered into an agreement with Capitalive Holdings Limited to sell offline broadcast rights of 1 movie for a price of $140,000. The granted broadcast rights are globally exclusive, with the exception of Mainland China.

NOTE 6 – LEASES

~~The~~In September 2023, the Company ~~leased certain~~entered into a one month lease with a third party for an office space in Hong Kong, ~~from Zestv Studios Limited,~~incurring 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~~monthly rent of $~~66,048~~ (HKD 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~~ ~~(HKD 516,000).~~

~~The Company also leased an office space in Singapore under operating lease from April 13, 2021 to March 31, 2022 with monthly rental of~~ ~~$716~~ ~~(SGD 974), and an 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~~766. The ~~Company has renewed the~~ lease was ceased as of ~~its New York office space for one year from September 1, 2022 to August 31, 2023 with renewed annual rental of~~ ~~$22,440~~.November 30, 2023.

~~F-10~~

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~~AB INTERNATIONAL GROUP CORP.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 6 – LEASES (Continued)~~

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~~$14,366 for the first two years, and $20,648 for the third year including real estate related taxes and landlord’s insurance.

Total lease expense for the six months ended February 29, 2024 and February 28, 2023 ~~and 2022~~ was $~~142,936~~104,132 and $~~124,551~~142,936, respectively. All leases are on a fixed payment basis. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. ~~Supplemental balance sheet information related to operating leases was as follows:~~

February 28, 2023 August 31, 2022

Right-of-use assets, net $ 872,345 $ 1,004,018

Operating lease liabilities - current $ 237,708 $ 229,813
Operating lease liabilities - non-current 740,744 863,145
Total operating lease liabilities $ 978,452 $ 1,092,958

~~The weighted average remaining lease terms was~~ ~~3.68~~ ~~years as of February 28, 2023.~~

The following is a schedule of maturities of lease ~~liabilities are as follows:~~liabilities:

Twelve months ending February 28,	Twelve months ending February 28,				Twelve months ending February 28,
2024		$	244,725
2025			259,176			$	248,168
2026			252,954				252,954
2027			236,005				236,006
Total future minimum lease payments			992,860				737,128
Less: imputed interest			(14,408	)			(7,347	)
Total		$	978,452			$	729,781

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 7 – PURCHASE DEPOSITS FOR INTANGIBLE ASSETS

The balance of purchase deposits for intangible assets which relates to the acquisition of copyrights and broadcast rights for movies and TV ~~drama~~dramas and software was as follows:

February 28, 2023 August 31, 2022

Purchase deposit for 25-episode TV drama $ —   $ 525,000
Purchase deposit for movies —   356,724
Total purchase deposits for intangible assets $ —   $ 881,724

	February 29, 2024		August 31, 2023

Purchase deposit for software	$	—	$	300,000
Total purchase deposits for intangible assets	$	—	$	300,000

On June 8, 2023, the Group has entered into software development contract for the creation of the streaming software designed for use on both the website and mobile applications. Pursuant to the contract’s terms, the Developer is contractually obliged to deliver the software by September 8, 2024, which corresponds to the upcoming 15-month period. The costs of the software amounts to $1,500,000. As of August 31, 2023, the Group has remitted an initial payment of $300,000 to the Developer. On November 28, 2023, both parties entered into an amended agreement to sell the software-in-progress to the Developer for $385,000. The amount was received through Zestv Studios Limited as of November 30, 2023 and used to reduce the amount of loan from CEO (see Note 8). The Company recognized a gain on the sales of software of $85,000. From December 1, 2023 to August 31, 2024, the Group is obliged to provide consulting services to the Developer regarding the design and development of the software-in-progress. The monthly consulting fee is $25,600.

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~~AB INTERNATIONAL GROUP CORP.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

NOTE 8–8 – RELATED PARTY TRANSACTIONS

Loan from related parties

~~Due to stockholders~~

In support of the Company’s efforts and cash requirements, it may rely on advances from stockholders 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 due to stockholders 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.

On June 1, 2023, Chiyuan Deng, the Chief Executive ~~Offer, and Jianli Deng, the Chief Financial~~ Officer, as the ~~Company’s~~Company stockholders, ~~make advances periodically~~entered into a line of credit agreement with the Company. Chiyuan Deng agreed to provide a line of credit to the Company for ~~working capital purpose.~~ a total amount of no more than $1,500,000, including the previous shareholder loan balance of ~~These loans are~~$697,281. The amount under this line of credit is non-interest bearing and due on ~~demand.~~

demand starting from June 1, 2023. As of February ~~28, 2023~~ 29, 2024 and August 31, ~~2022~~2023, the Company has recognized an imputed interest at 5%, per annum of the balances. As of February 29, 2024 and August 31, 2023, the Company had ~~due to stockholders’~~loan from Chiyuan Deng balance of $~~908,321~~319,551 and $~~377,398~~748,285~~, respectively.~~.

~~Due to~~Accounts payable and accrued liabilities - related party - Youall Perform Services Ltd.

Youall Perform Services Ltd is owned by Jianli Deng, the former Chief Financial Officer. 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~~$108,800 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 two-year website maintenance contract to maintain the website ABQQ.TV which was launched on December 29, 2020. The website maintenance service began on January 1, 2021 and will end on December 31, 2022. The contract amount remains to be $128,000, out of which $108,800 was previously paid and $19,200 was scheduled to be due on the twenty first month of service term. During the ~~six months~~year ended ~~February 28,~~August 31, 2023, the Company made payment of $12,812 with the accounts payable – related party balance to Youall Perform Services Ltd of $6,388 ~~included in~~ as of August 31, 2023. As of February 29, 2024, the related part balance to Youall Perform Services Ltd was $6,388~~accounts~~.

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 8 – RELATED PARTY TRANSACTIONS (continued)

Accounts payable and accrued liabilities ~~in consolidated balance sheet~~ ~~as of~~ ~~February 28, 2023~~.

~~Due to~~– related party - Zestv Studios Limited

On December 1, 2020, the Company entered an agreement with Zestv Studios Limited, a Hong Kong entity 100% owned by ~~the~~ Chiyuan Deng, the Chief Executive Officer, to grant Zestv Studios Limited the distribution right for the movie “Love over the world” and charge Zestv Studios Limited movie royalties. The Company’s royalty 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 royalty revenue to the Company, Zestv Studios Limited failed to collect cash from Hua Xia. As of August 31, 2021, the Company had refund payable of $916,922 for the movie royalty revenue net of the movie distribution commission fee to Zestv Studios Limited.

On June 23, 2022, the Company sold the mainland China copyright and broadcast right of the movie “Too Simple” to Zestv Studios Limited for a price of $750,000. The Company remains to have all copyright of outside of mainland China. The Company used this proceed to off-set the refund payable balance to Zestv Studios Limited with additional payment of $151,795 during the year ended August 31, 2022. The Company ~~further paid~~made payments of $~~15,127~~5,127 during the ~~six~~3 months ended November 30, 2022 and $10,000 during the 3 months ended February 28, 2023.

~~F-12~~

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~~AB INTERNATIONAL GROUP CORP.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 8– RELATED PARTY TRANSACTIONS (Continued)~~

~~Due~~On November 28, 2023, the Company sold the software-in-progress to ~~related party -~~ the Developer for $385,000. Zestv Studios Limited ~~(continued)~~

Ascollected the payment on behalf of ~~February 28, 2023 and August 31, 2022,~~ the ~~Company had balance~~Company. The payment of $0385,000 ~~and~~ ~~$15,127~~ ~~payable to Zestv Studios Limited, respectively.~~reduced the loan from related parties as of November 30, 2023 (See Note 7).

The Company also rented an office space from Zestv Studios ~~Limited (See Note 6)~~Limited. The lease was early terminated on August 31, 2023. For the six months ended February 29, 2024 and February 28, 2023, ~~and 2022,~~ the Company incurred related party office rent expense of $~~33,024~~0 and $33,024, respectively.

As of February 29, 2024 and August 31, 2023, the Company had $0 payable to Zestv Studios Limited.

Executives’ salaries

On September 11, 2020 and May 24, 2022, the Company entered into two amended employment agreements with Chiyuan Deng, the Chief Executive Officer. Pursuant the amended agreements, the Company amended the compensation to Mr. Deng to include a salary of $180,000 annually, a reduction in common stock received under his initial employment agreement, a potential for a bonus in cash or shares, and the issuance of 100,000 shares of Series A Preferred Stock at par value $0.001. Mr. Deng returned 266,667 shares common stock to the Company received under his initial employment agreement.The Chief Executive Officer opted to forgo his salaries effective from October 2023.

During the six months ended February 29, 2024, the Company incurred total compensation of $15,049 for the Chief Executive Officer. During the six months ended February 28, 2023, ~~and 2022,~~ the Company incurred total compensation of $102,000 ~~and~~ ~~$290,917, respectively,~~ for Chief Executive ~~Offer~~Officer and Chief Financial Officer. The Company also incurred total compensation of $~~39,000~~0 and $~~38,999~~39,000, respectively, for Chief Investment Officer during the six months ended February 29, 2024 and February 28, 2023 ~~and 2022~~.

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9 – STOCKHOLDERS’ EQUITY

Common shares

The Company had the following activities for the six months ended February 29, 2024:

Issuance of restricted common shares

On October 5, 2023, the Board of Directors resolved to issue 225,000,000 shares of the Company’s restricted common stock, par value $0.001 per share, to Chiyuan Deng, the Chief Executive Officer, to pay off his accrued executive salaries of $45,000.

Conversion of Series C preferred shares to common shares

During the six months ended February 29, 2024, the Company issued total 1,056,681,936 common shares as the result of the conversion of total 174,421 Series C preferred shares.

Reverse Stock split

As previously disclosed in the Company’s Form 10-Q for the quarter ended May 31, 2023, on June 12, 2023, the Board of Directors approved a reverse split for the Company’s issued and outstanding common stock, at a ratio of 1 share for every 10,000 shares, contingent upon receiving a market effectiveness date from FINRA.

On September 8, 2023, however, the Board of Directors decided to cancel the company's upcoming 10,000 to 1 reverse split. The Board of Directors decided it would not be in the best interest of the stockholders or the Company to execute a reverse split at this time. The Company plans to inform FINRA that it will not be moving forward with the reverse split and will withdraw its application.

Cancellation of Common shares

On February 5, 2024, the Company’s CEO and director, Mr. Chiyuan Deng, cancelled 235,000,000 shares of common stock in the Company.

The Company had the following activities ~~during~~for the six months ended February 28, 2023:

Increasing authorized number of common shares

On October 11, 2022, the Company filed amendment to Articles of Incorporation to increase the authorized number of common shares from 1,000,000,000 shares to 10,000,000,000 shares. This increasing of authorized number of common shares has been retroactively reflected in the consolidated financial statements and notes thereto.

Conversion of Series C preferred shares to common shares

During the three months ended November 30, 2022, the Company issued total 75,037,786 common shares as the result of the conversion of total 96,075 Series C preferred shares.

During the three months ended February 28, 2023, the Company issued total 221,354,447 common shares as the result of the conversion of total 81,075 Series C preferred shares.

~~F-13~~F-17

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9 – STOCKHOLDERS’ EQUITY ~~(Continued)~~(continued)

Common shares (continued)

Subscription of Common shares

On August 2, 2022, the Company entered into a common stock purchase agreement with Alumni Capital LP, a Delaware limited partnership. Pursuant to the agreement, Alumni Capital LP shall purchase $1.0 million of common stocks as per the Company’s discretions after a Registration Statement is declared effective by the Securities and Exchange Commission. The purchase price is number of common stocks in a Purchase Notice issued by the Company multiplied by 75% of the lowest traded price of the Common Stock five Business Days prior to the Closing, which is no later than five business days after the Purchase Notice ~~Date.~~Date.

The Company plans to use the proceeds from the sale of the common stocks for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in good faith deem to be in the best interest of the Company. The registration of these securities was effective on September 13, 2022.

Pursuant to this agreement, during the six months ended February 28, 2023, Alumni Capital LP subscribed total of 200,000,000 common shares for total proceeds of $146,475. The agreement expired on December 31, 2022.

As of February ~~28, 2023~~ 29, 2024 and August 31, ~~2022,~~2023, the Company had ~~880,904,816~~2,331,965,321 and ~~384,512,583~~1,285,283,385 common shares issued and outstanding, respectively.

A summary of the status of the Company’s warrants as of February 29, 2024 and August 31, 2023 is presented below.

	Number of warrants
	Original shares issued		Anti-dilution Adjusted
Warrants as of August 31, 2022		50,000,000		—
Warrants granted during the year		—		—
Warrants as of August 31, 2023		50,000,000		—
Warrants granted during the six months		—		—
Exercisable as of February 29, 2024		50,000,000		—

Preferred shares

The Company had the following activities for the six months ended February 29, 2024:

During the six months ended February 29, 2024, the Company converted a total 174,421 Series C preferred shares into common shares.

On November 30, 2023, the Board of Directors of the Company resolved to withdraw the Amended Certificate of Designation for the Company’s Series C and Series D Preferred shares.

On December 1, 2023, the Company’s CEO and director, Mr. Chiyuan Deng, cancelled his 20,000 shares of Series B Preferred Stock.

F-18

Table of Contents

AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 9 – STOCKHOLDERS’ EQUITY (continued)

Preferred shares (continued)

On December 1, 2023, the Board of Directors of the Company resolved to withdraw the Amended Certificate of Designation for the Company’s Series B Preferred Stock.

The Company had the following activities ~~during~~for the six months ended February 28, 2023:

On September 6, 2022, the Company entered into a securities purchase agreement with an accredited investor, whereby investor purchased from the Company 90,275 shares of Series C Convertible Preferred Stock of the Company for a gross proceed of $78,500. After deduction of transaction-related expenses, net proceed to the Company was $69,000. The Company intends to use the proceeds from the Preferred Stock for general working capital purposes.

The Company recorded dividend expenses of $10,629 ~~and~~ ~~$2,839~~ on Series C and D Preferred shares for the six months ended February 28, ~~2023 and 2022, respectively.~~2023.

~~F-14~~

~~Table of Contents~~

~~AB INTERNATIONAL GROUP CORP.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

NOTE 10 – INCOME TAXES

The Company and its fully owned subsidiary, AB Cinemas NY, Inc, were incorporated in the United States and are subject to a statutory income tax rate at 21%. The Company’s fully owned subsidiary, App Board Limited, was registered in Hong Kong and is subject to a statutory income tax rate at 16.5%.

As of February ~~28, 2023~~ 29, 2024 and August 31 ~~2022,~~, 2023, the components of net deferred tax assets, including a valuation allowance, were as follows:

	February 28, 2023			August 31, 2022			February 29, 2024			August 31, 2023
Deferred tax asset attributable to:
Net operating loss carry over	$	1,804,421		$	1,328,204		$	2,171,990		$	2,077,213
Less: valuation allowance		(1,804,421	)		(1,328,204	)		(2,171,990	)		(2,077,213	)
Net deferred tax asset	$	—		$	—		$	—		$	—

The valuation allowance for deferred tax assets was $~~1,804,421~~2,171,990 and $~~$1,328,204~~2,077,213 as of February ~~28, 2023, 2022~~29, 2024 and August 31 ~~2022,~~, 2023, respectively. 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, 2023~~ 29, 2024 and August 31 ~~2022.~~, 2023.

Reconciliation between the statutory rate and the effective tax rate is as follows for the six months ended February 29, 2024 and February 28, ~~2023~~ ~~and 2022:~~2023:


	Six months ended						Six months ended
	February 28,						February 29, February 28,
	2023			2022			2024			2023
Federal statutory tax rate		21	%		21	%		21	%		21	%
Change in valuation allowance		(21	%)		(21	%)		(21	%)		(21	%)
Effective tax rate		0	%		0	%		0	%		0	%

During the six months ended February 29, 2024 and February 28, 2023,~~and 2022,~~ the Company and its subsidiaries ~~incurred~~generated net losses. As a result, the Company and its subsidiaries did not incur any income tax ~~during~~for the six months ended February 29, 2024 and February 28, 2023~~and 2022.~~.

~~F-15~~F-19

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~(Unaudited~~)(Unaudited)

NOTE 11 – CONCENTRATION RISK

Concentration

For the six months ended February 29, 2024 and February 28, 2023, ~~and 2022~~, ~~67%~~35% and ~~100%~~67% of the total revenue was generated from one customer, respectively.

~~As of~~ ~~February 28, 2023, one customer accounted for~~ ~~100%~~ ~~of the Company’s accounts receivable balance. There was~~ no ~~accounts receivable balance as of August 31, 2022.~~

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, 2023~~24, 2024 and August 31, ~~2022,~~2023, cash balance of $~~139,804~~18 and $~~70,602~~92,972, 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. As of February ~~28, 2023~~29, 2024 and August 31, ~~2022,~~2023, cash balance of $~~26,080~~33,647 and $~~13,621~~24,124, respectively, were maintained at financial institutions in the ~~US, and were subject to credit risk.~~US. While management believes that these financial institutions are of high credit quality, it also continually monitors their creditworthiness.

NOTE 12 – 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 is 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 leases

The Company has several lease agreements to rent office spaces and movie theatre with ~~its related party and~~ third-party vendors. (See Note 6)

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AB INTERNATIONAL GROUP CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 13 – SEGMENT INFORMATION

The Company reports information about operating segments in accordance with ASC 280-10, Segment Reporting, which requires financial information to be reported based on the way management organizes segments within a company for making operating decisions and evaluating performance. As the result of business strategic changes, the Company has identified two reportable segments: Copyrights and license (“IP’) segment and cinema segment.

The following table presents summary information by segment for the six months ended February 29, 2024 and February 28, 2023, ~~and 2022,~~ respectively.

~~NOTE 13 - SEGMENT INFORMATION - Schedule of Operating Activities by Segment~~.

IP Segment Cinema Segment Total
Six months ended Six months ended Six months ended
February 28 February 28 February 28
2023 2022 2023 2022 2023 2022
Revenue $ 357,286 $ 1,800,000 $ 177,965 $ — $ 535,251 $ 1,800,000
Cost of revenue 1,779,243 1,373,134 78,708   — 1,857,951 1,373,134
Gross income (loss) (1,421,957) 426,866 99,257   — (1,322,700) 426,866
Interest income 158   —   — — 158   —
Depreciation 2,224 26,600   —   — 2,224 26,600
Capital expenditure —   —   — —   —   —
Segment assets 4,161,840 7,244,749 25,619   — 4,187,459 7,244,749
Segment income (loss) $ (2,340,126) $ (602,944) $ 61,797 $ — $ (2,278,329) $ (602,944)

NOTE 14 – SEGMENT INFORMATION - Summary of Information by Segment (Details)
	IP Segment						Cinema Segment				Total
	Six months ended						Six months ended				Six months ended
	February 29,			February 28,			February 29,		February 28,		February 29,			February 28,
	2024			2023			2024		2023		2024			2023
Revenue	$	987,636		$	357,286		$	199,364	$	177,965	$	1,187,000		$	535,251
Operating costs		—			—			104,081		78,708		104,081			78,708
Depreciation and Amortization		1,074,698			1,781,467			—		—		1,074,698			1,781,467
Interest expense (income)		20,090			(158	)		—		—		20,090			(158	)
Segment assets		1,756,397			4,161,840			33,348		25,619		1,789,745			4,187,459
Segment income (loss)	$	(597,319	)	$	(2,340,126	)	$	146,000	$	61,797	$	(451,319	)	$	(2,278,329	)

The following table presents summary information by segment for the three months ended February 29, 2024 and February 28, 2023, ~~and 2022,~~ respectively.

IP Segment Cinema Segment Total
Three months ended Three months ended Three months ended
February 28 February 28 February 28
2023 2022 2023 2022 2023 2022
Revenue $ 177,286 $ 1,800,000 $ 121,153 $ — $ 298,439 $ 1,800,000
Cost of revenue 855,744 686,567 56,304   — 912,048 686,567
Gross income (loss) (678,458) 1,113,433 64,849   — (613,609) 1,113,433
Interest income 79   —   — — 79   —
Depreciation 1,108 13,300   —   — 1,108 13,300
Capital expenditure —   —   — —   —   —
Segment assets 4,161,840 7,244,749 25,619   — 4,187,459 7,244,749
Segment income (loss) $ (1,165,354) $ 449,101 $ 96,815 $ — $ (1,068,539) $ 449,101


	IP Segment						Cinema Segment				Total
	Three months ended						Three months ended				Three months ended
	February 29,			February 28,			February 29,		February 28,		February 29,			February 28,
	2024			2023			2024		2023		2024			2023
Revenue	$	273,348		$	177,286		$	111,905	$	121,153	$	385,253		$	298,439
Operating costs		—			—			62,726		56,304		62,726			56,304
Depreciation and Amortization		561,781			856,852			—		—		561,781			856,852
Interest expense (income)		6,848			(79	)		—		—		6,848			(79	)
Segment assets		1,756,397			4,161,840			33,348		25,619		1,789,745			4,187,459
Segment income (loss)	$	(581,175	)	$	(1,165,354	)	$	86,256	$	96,815	$	(494,919	)	$	(1,068,539	)

NOTE 14 – SUBSEQUENT EVENTS

In accordance with ASC 855-10, ~~the Company has~~we have analyzed ~~its operations~~events and transactions that occurred subsequent to February 29, 2024 through the date these financial statements were ~~issued.~~issued and have determined that we do not have any other material subsequent events to disclose or recognize in these financial statements.

~~Conversion of Series C preferred shares to common shares~~

~~Subsequent to the period ended February 28, 2023, the Company issued total of~~ ~~184,626,969~~ ~~common shares for the conversion of~~ ~~50,230~~ ~~Series C preferred shares.~~

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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 Act of 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 any forward-looking 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.

Unless the context provides otherwise, all references in this quarterly report to “AB International,” “we,” “us,” “our,” the “Company,” or similar terms, refer to AB International Group Corp. and its directly and indirectly owned subsidiaries on a consolidated basis.

Overview

~~We were~~The Company was incorporated under the laws of the State of Nevada on July 29, 2013. ~~Our~~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. On June 1, 2017 we have a patent license 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. Our License to the Technology generates 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 Technology of video synthesis. In January, 2021, our sublicensing agreement with Licensee to generate revenues was terminated. As such, there has been no revenues generated from sub-licensing the Technology since the end of December, 2020.

In On February 2019, we launched a business application (Ai Bian Quan Qiu) through smartphones and official social media accounts 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. As a result, we ~~decided~~decide to focus mainly the IP transactions and online video streaming.

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 ~~May 31, 2022,~~February 29, 2024, the Company acquired 5973 movie copyrights and broadcast rights and a ~~15-episode~~75-episode TV drama series. 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.

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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.

On May 5, 2022, the Company incorporated AB Cinemas NY, Inc. in New York, NY, for the purpose of operating Mt. Kisco Theatre located in Mount Kisco, NY. The theatre has started operations in October 2022. After a rough two years for movie theatres due to the pandemic, movie theaters are starting to show signs of life again. The Company is intending to shift the business strategy from online only to the combination of online and offline business. The Company expects to generate considerable revenue from its movie theater business line in the following years.

On April 27, 2022, the Company purchased a unique Non-Fungible Token (“NFT”) movie and music marketplace, named as the NFT MMM from Stareastnet Portal Limited, an unrelated party, which including an APP “NFTMMM” on Google Play, and full right to the website: stareastnet.io. NFTs are digital assets with a unique identifier that is stored on a blockchain, and NFTs are tradable rights of digital assets (pictures, music, films, and virtual creations) where ownership is recorded in blockchain smart contracts. On August 6, 2022, the Company licensed NFT MMM platform to a third party to allow the access of NFTMM platform and platform data on both app and website for one year starting from August 20, 2022 to August 19, 2023 for a monthly license fee of $60,000. Pursuant to the agreement, the Company also charged one time implementation service and consulting fee of $100,000. Subsequent to the license renewal on November 1, 2023, the Company would continue licensing the NFT MM platform to the same third party from November 1, 2023 until October 31, 2025.The Company retained the ownership and copyright of the NFT MMM platform, including the APP “NFT MMM” on Google Play, and the website: stareastnet.io.

~~COVID-19~~On May 31, 2023, the Company entered into an agreement with Capitalive Holdings Limited to sell the offline broadcast rights of total 59 movies for a price of $250,000. The granted broadcast rights are globally exclusive, with the exception of Mainland China.

~~The full extent~~On September 10, 2023, the Company entered into an agreement with All In One Media Ltd to acquire the copyrights for 4 movies at a price of $104,714. These copyrights allow the ~~impact~~Company to transfer these movies to other parties outside the mainland China. On November 27, 2023, the Company further acquired mainland China copyrights of these 4 movies from All In One Media Ltd. at a price of $378,513.

On September 30, 2023, the ~~COVID-19 pandemic on our business, operations~~Company entered into another agreement with All In One Media Ltd to acquire the copy rights and ~~financial results will depend on numerous evolving factors that we may not be able~~broadcast rights for 2 movies for a price of $212,562. These copyrights allow the Company to ~~accurately predict at~~broadcast these movies globally.

In November 2023, the ~~present time. In~~Company entered into an ~~effort~~agreement with Anyone Pictures Limited to ~~contain COVID-19 or slow its spread, governments around~~sell the ~~world have enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places~~Mainland China copyrights of ~~residence, and practice social distancing when engaging in essential activities. We anticipate that these actions~~1 movie for a price of $180,000 and the ~~global health crisis caused by COVID-19 will negatively impact business activity across the globe.~~offline broadcast rights of another movie for a price of $211,800. 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 staygranted broadcast rights are globally exclusive, with the ~~trend~~exception of Mainland China.

On November 21, 2023, the Company entered into an agreement with Capitalive Holdings Limited to sell offline broadcast rights of 1 movie for ~~streaming services to remain competitive. We have experienced~~a price of $140,000. The granted broadcast rights are globally exclusive, with the ~~negative impact in our results~~exception 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.Mainland China.

During the COVID-19 pandemic, movie theatres have been subject to various governmental orders requiring theatres to take or refrain from certain activities including, but not limited to, suspending operations, reduction in seating capacities, enforcement of social distancing, establishment of enhanced cleaning protocols, restrictions on food and beverage sales, tracking the identity of guests, employee protection protocols, and limitation on operating hours. Although the orders have been modified frequently, we believe our theatre has maintained material compliance with such orders. We currently cannot predict when or if COVID-19 related governmental orders will be fully terminated and whether similar orders will be utilized more frequently during future public health outbreaks.

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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 three and six months ended February 29, 2024 was $385,253 and $1,187,000, respectively. Our total revenue reported for the three and six months ended February 28, 2023 was $298,439 and $535,251, respectively. ~~Our total revenue reported for the three and six months ended February 28, 2022 was $1,800,000.~~

The revenue for the three and six months ended February ~~28, 2023,~~29, 2024, was mainly attributable to the license fee received in connection with the licensing of our NFT MMM platform, movie copyrights sales to two third parties, fees charged for embedded marketing service, consulting service fees in connection with the sales of the software-in-progress and restructuring of a ~~third party,~~company as well as the revenue generated from movie tickets and food and beverage sales from our newly operated movie theatre. On the other hand, ~~the revenue~~ for the three and six months ended February 28, ~~2022,~~2023, the Company had the same sources of revenue as the current period, except the movie copyrights sales, the fees charged for embedded marketing service and consulting services fees in connection with the sales of the software-in-progress and restructuring of a company . The increase in revenue was ~~attributable~~mainly due to the ~~sale~~increase in sales of ~~mainland China~~ copyrights and broadcast rights ~~for~~during the ~~movies “Love over~~three and six months ended February 29, 2024 as compared to the ~~world,” “Our treasures,”~~three and ~~“Confusion.”"~~

~~Our cost of revenues for the~~ six months ended February 28, 2023, was $1,857,951, compared to $1,373,134 for the same period in 2022. The increase in cost of revenues was mainly due to the amortization of copyrights and broadcast rights and MFT MMM platform, as well as film rental and food costs related to our cinema segment.

Similarly, our cost of revenues for the three months ended February 28, 2023, was $912,048, compared to $686,567 for the same period in 2022. The increase in cost of revenues was also primarily attributable to the amortization of copyrights and broadcast rights and MFT MMM platform, as well as film rental and food costs related to our cinema segment.2023.

We have started the operation of our movie theatre since October 2022. We expect to have continued growth in our cinema segment with the recovery of movie industry from the impact of the pandemic. For the six months ended February 29, 2024, we generated total revenue of $199,364, including $135,342 from ticket sales, and $64,022 from food and beverage sales. For the six months ended February 28, 2023, we generated total revenue of $177,965, including $115,918 from ticket sales, and $62,047 from food and beverage sales. Total cost for our cinema segment was $78,708, which resulted in gross profit margin of 56%. We expect to have continued growth in our cinema segment with the recovery of movie industry from the impact of the pandemic.

Consequently, we incurred a gross loss of $1,322,700 for the six months ended February 28, 2023, compared to a gross profit of $426,866 for the six months ended February 28, 2022. Similarly, for the three months ended February 28, 2023, we recorded a gross loss of $613,609, compared to a gross profit of $1,113,433 for the same period in 2022. The decrease in gross profit for both the three and six months ended February 28, 2023, as compared to the same period last year, was primarily due to the absence of sales of copyrights and broadcast rights during the current period, as well as higher costs associated with amortizing movie broadcast rights and MFT MMM platform.

We ~~expect to generate increased~~anticipate an increase in revenue in the future by selling movie and TV drama copyrights and broadcast rights, achieving enough customers to start subscriptions for ABQQ.tv and generating movie tickets and related revenues from our Mt. Kisco movie theatre in New York. We also hope to generate more license revenue from our NFT MMM platform.

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Operating Costs and Expenses

Operating costs and expenses ~~decreased~~were $1,703,229 for the six months ended February 29, 2024, as compared to ~~$945,158~~$2,803,109 for the six months ended February 28, 2023. Our operating costs and expenses for the six months ended February 29, 2024 consisted of theatre operating costs of $104,081, amortization expenses of $1,072,483, general and administrative expenses of $511,616 and related party salary and wages of $15,049. In contrast, our operating costs and expenses for the six months ended February 28, 2023 ~~from $1,026,971 for the six months ended February 28, 2022. Our~~consisted of theatre operating costs of $78,708, amortization expenses ~~for six months ended February 28, 2023 consisted~~ of $1,779,243, general and administrative expenses of $804,158 and related party salary and wages of $141,000.

Operating expenses decreased to $873,324 for the three months ended February 29, 2024 from $1,362,193 for the three months ended February 28, 2023. Our operating expenses for three months ended February 29, 2024 consisted of theatre operating costs of $62,726, amortization expenses of $560,674 and general and administrative expenses of $249,924. In contrast, our operating expenses ~~for the six months ended February 28, 2022 consisted of general and administrative expenses of $736,054 and related party salary and wages of $290,917.~~

~~Operating expenses decreased to $450,145~~ for the three months ended February 28, 2023 ~~from $663,004 for the three months ended February 28, 2022. Our~~consisted of theatre operating costs of $56,304, amortization expenses ~~for three months ended February 28, 2023 consisted~~ of $855,744, general and administrative expenses of $379,645 and related party salary and wages of $70,500. ~~In contrast, our~~

We experienced an increase in theatre operating ~~expenses~~costs for the ~~three~~six months ended February 29, 2024 as compared to the six months ended February 28, ~~2022 consisted~~2023, mainly due to the commencement of our move theatre operation since October 2022. The theatre operating costs for the six months ended February 29, 2024 encompass an additional month of operating costs in contrast to the corresponding period in 2023.

We experienced a decrease in amortization expenses for the six months ended February 29, 2024 as compared to the corresponding period in 2023, mainly due to more fully amortized intangible assets for the six months ended February 29, 2024.

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We experienced a decrease in general and administrative expenses for the six months ended February 29, 2024 as compared to the corresponding period in 2023, mainly as a result of ~~$423,337~~decreased non-related party salaries and contractors, stock-based compensations, professional fees, office expenses and repair and maintenance expenses for the six months ended February 29, 2024 in contrast to the corresponding period in 2023.

We experienced a decrease in related party salary and wages for the six months ended February 29, 2024 as compared to corresponding period in 2023, mainly due to the resignation of ~~$239,667.~~the Chief Financial Officer and Chief Investment Officer as well as the opt out of salary by the Chief Executive Officer effective since October 2023. During the six months ended February 29, 2024, the Company incurred total compensation of $15,049 for the Chief Executive Officer. During the six months ended February 28, 2023, the Company incurred total compensation of $102,000 for Chief Executive Officer and Chief Financial Officer. The Company also incurred total compensation of $nil and $39,000, respectively, for Chief Investment Officer during the six months ended February 29, 2024 and February 28, 2023.

We anticipate our operating expenses will increase as we undertake our plan of operations, including ~~increased~~the streamline of 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.SEC. These ~~and other~~ costs ~~for COVID expenditures~~ may increase our operational costs in fiscal ~~2023~~2024 at various levels of operation.

Other Income

We had other income of $64,910 for the six months ended February 29, 2024, as compared with other income of $158 for the corresponding period in 2023. Our other income for the six months ended February 29, 2024 was the net amount of the other income generated from the sales of software in progress, bank interest income, and the interest expense – related party. Our other expenses for the corresponding period in 2023 was the bank interest income.

Net Loss

We incurred a net loss in the amount of ~~$2,278,329~~$451,319 for the six months ended February ~~28, 2023,~~29, 2024, as compared with a net loss of ~~$602,944~~$2,267,700 for ~~the six months ended February 28, 2022.~~ corresponding period in 2023.

~~We incurred a net loss in the amount of $1,068,539 for the three months ended February 28, 2023, as compared with a net profit of $449,101 for the three months ended February 28, 2022.~~

Liquidity and Capital Resources

As of February ~~28, 2023,~~29, 2024, we had ~~$535,364~~$63,665 in current assets consisting of cash and prepaid ~~expenses, accounts receivable and other receivables.~~expenses. Our total current liabilities as of February ~~28, 2023~~29, 2024 were ~~$1,318,621.~~$798,578. As a result, we have a working capital deficit of ~~$783,257~~$734,913 as of February ~~28, 2023~~29, 2024 as compared with ~~$856,866~~$1,005,847 as of August 31, ~~2022.~~2023.

Operating activities used $39,697 in cash for the six months ended February 29, 2024, as compared with $664,737 used in cash for the six months ended February 28, ~~2023, as compared with $916,153 used in cash for the same period last year.~~2023.

Our negative operating cash flow for the six months ended February 29, 2024 was mainly the result of net loss combined with cash used in the purchase of movie and TV series broadcast right and copyright, offset by the amortization of intangible assets, and the increase in deferred revenue and accounts payable and accrued liabilities.

Our negative operating cashflow for the six months ended February 28, 2023 was mainly the result of our net loss combined with operating changes in accounts receivable, purchase of movie and TV series broadcast right and copyright and accounts payable and accrued liabilities, offset by the amortization of intangible assets and consulting fees paid in stock. Our negative operating cash flow for six months ended February 28, 2022 was mainly the result of our net loss combined with operating changes in other receivable and purchase of movie and TV series broadcast rights and copyrights, offset by amortization of intangible assets and executive salaries and consulting fees paid in stock.

~~We had no investing~~Investing activities ~~for six months ended February 28, 2023 and 2022.~~

~~Financing activities provided $746,398~~was $Nil for the six months ended February 29, 2024 and February 28, ~~2023,~~2023.

Financing activities used $43,734 for the six months ended February 29, 2024, as compared with ~~$915,554~~$746,398 provided inby financing activities for the six months ended February 28, ~~2022.~~2023. Our negative financing cash flow for the six months ended February 29, 2024 was due to the settlement of loans due to related party. Our positive financing cash flow for the six months ended February 28, 2023 ~~and 2022~~ was mainly the result of proceeds from issuance of our common shares, preferred shares, and the ~~increase in due to stockholders.~~loans from related parties.

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Going Concern

Our ~~unaudited~~ 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, 2023~~29, 2024, the Company had an accumulated deficit of approximately ~~$11.1~~$12.8 million and a working capital deficit of approximately ~~$0.8~~$0.7 million. For the six months ended February ~~28, 2023,~~29, 2024, the Company incurred a net loss of approximately ~~$2.3~~$0.5 million and the net cash used in ~~operations~~operating activities was approximately ~~$0.7 million. Losses have principally occurred as a result of the substantial resources required for general and administrative expenses associated with our operations.~~$40,000.

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 continue to provide the additional cash to meet the Company’s obligations as they become due. The Company also intends to fund operations through cash flow generated from the operations, including the expected ticket sales from Mt. Kisco movie theatre, equity financing, debt borrowings, and additional equity financing from outside investors, to ensure sufficient working capital. However, no assurance can be given that additional financing, if required, would be available on favorable terms or at all. If we are not able to secure additional funding, the implementation of our business plan will be impaired.

These factors, among others, raise the substantial doubt regarding the Company’s ability to continue 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.

Off Balance Sheet Arrangements

As of February ~~28, 2023,~~29, 2024, there were no off-balance sheet arrangements.

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 2 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.

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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, 2023.~~29, 2024. 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, 2023,~~29, 2024, 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, 2023,~~29, 2024, 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, ~~2023:~~2024: (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 three months ended February ~~28, 2023~~29, 2024, 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.

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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 ~~December 8, 2022.~~November 29, 2023.

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

~~The Company had~~On October 5, 2023, the ~~following equity activities during~~Board of Directors resolved to issue 225,000,000 shares of the ~~three~~Company’s restricted common stock, par value $0.001 per share, to Chiyuan Deng, the Chief Executive Officer, to pay off his accrued executive salaries of $45,000.

During the six months ended February ~~28, 2023:~~

~~Conversion of Series C preferred shares to common shares~~

~~During the three months ended February 28, 2023,~~29, 2024, the Company issued total ~~221,354,447~~1,056,681,936 common shares as the result of the conversion of total ~~81,075~~174,421 Series C preferred shares.

On February 5, 2024, the Company’s Chief Executive Officer cancelled 235,000,000 shares of common stock in the Company.

These securities were issued pursuant to Section 3(a)(9), 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

None

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, 2023~~29, 2024 formatted in Extensible Business Reporting Language (XBRL).

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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~~
	~~April 14, 2023~~

~~By:~~

~~/s/ Jianli Deng~~

Chief Financial Officer, Principal Executive Officer, Principal Financial Officer,

Principal Accounting Officer and Director

April ~~14, 2023~~15, 2024


	Six Months Ended						Three Months Ended
	February 28						February 28,
	2023			2022			2023			2022

Revenue	$	535,251		$	1,800,000		$	298,439		$	1,800,000
Cost of revenue		(1,857,951	)		(1,373,134	)		(912,048	)		(686,567	)
Gross Profit (Loss)		(1,322,700	)		426,866			(613,609	)		1,113,433

OPERATING EXPENSES
General and administrative expenses		(804,158	)		(736,054	)		(379,645	)		(423,337	)
Related party salary and wages		(141,000	)		(290,917	)		(70,500	)		(239,667	)
Total Operating Expenses		(945,158	)		(1,026,971	)		(450,145	)		(663,004	)

Income (Loss) From Operations		(2,267,858	)		(600,105	)		(1,063,754	)		450,429

OTHER INCOME (EXPENSES)
Interest income		158			—			79			—
Total Other Income (Expenses)		158			—			79			—

Loss Before Income Tax Provision		(2,267,700	)		(600,105	)		(1,063,675	)		450,429

Income tax benefit		—			—			—			—
NET (LOSS) INCOME	$	(2,267,700	)	$	(600,105	)	$	(1,063,675	)	$	450,429
Preferred shares dividend		(10,629	)		(2,839	)		(4,864	)		(1,328	)
Net (loss) income available to common stockholders	$	(2,278,329	)	$	(602,944	)	$	(1,068,539	)	$	449,101

NET (LOSS) INCOME PER SHARE: BASIC	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	0.00
NET (LOSS) INCOME PER SHARE: DILUTED	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	0.00
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC		604,591,133			240,076,815			728,656,133			248,359,943
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: DILUTED		604,591,133			240,076,815			728,656,133			298,337,526

	February 28, 2023		August 31, 2022

Right-of-use assets, net	$	872,345	$	1,004,018

Operating lease liabilities - current	$	237,708	$	229,813
Operating lease liabilities - non-current		740,744		863,145
Total operating lease liabilities	$	978,452	$	1,092,958

	February 28, 2023		August 31, 2022

Purchase deposit for 25-episode TV drama	$	—	$	525,000
Purchase deposit for movies		—		356,724
Total purchase deposits for intangible assets	$	—	$	881,724


	IP Segment				Cinema Segment				Total
	Six months ended				Six months ended				Six months ended
	February 28				February 28				February 28
	2023		2022		2023		2022		2023		2022
Revenue	$	357,286	$	1,800,000	$	177,965	$	—	$	535,251	$	1,800,000
Cost of revenue		1,779,243		1,373,134		78,708		—		1,857,951		1,373,134
Gross income (loss)		(1,421,957)		426,866		99,257		—		(1,322,700)		426,866
Interest income		158		—		—		—		158		—
Depreciation		2,224		26,600		—		—		2,224		26,600
Capital expenditure		—		—		—		—		—		—
Segment assets		4,161,840		7,244,749		25,619		—		4,187,459		7,244,749
Segment income (loss)	$	(2,340,126)	$	(602,944)	$	61,797	$	—	$	(2,278,329)	$	(602,944)