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AB INTERNATIONAL GROUP CORP.

Date Filed : Aug 04, 2022

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UNITED STATES

SECURITIES AND EXCHANGECOMMISSION

Washington, D.C.20549

 

FORM S-1

 

REGISTRATION STATEMENTUNDER THE SECURITIES ACT OF 1933

 

ABINTERNATIONAL GROUP CORP.

(Exact name of registrantas specified in its charter)

 

NV     37-1740351
(State of Incorporation)    

(IRS Employer

Identification Number)

 

48Wall Street, Suite1009,

NewYork, NY10005

(212)918-4519

(Address, includingzip code, and telephone number, including area code,

of registrant’sprincipal executive offices)

 

Copies of all correspondenceto: 

The Doney Law Firm

4955 S. Durango Rd.Ste. 165

Las Vegas, NV 89113
Tel. No.: (702) 982-5686
(Address, including zip code, and telephone, including area code)

 

Approximate dateof commencement of proposed sale of the securities to the public:
From time to time after the effective date of this registration statement.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933, check the following box. 

 

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check thefollowing box and list the Securities Act registration statement number of the earlier effective registration statement for the sameoffering. 

 

Ifthis Form is a post-effective amendment filed pursuant to rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. 

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. 

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smallerreporting 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

  

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. 

 

CALCULATION OF REGISTRATIONFEE

 

Title of Each Class of securities to be registered  

Number of shares of

common stock to be registered (1)

   

Proposed

Maximum

Offering

Price Per

Share

(2)

   

Proposed

Maximum

Aggregate

Offering

Price

   

Amount of

Registration

Fee

 
                         
Common Stock     200,000,000     $ .0054     $ 1,080,000     $ 100.12  
Common Stock Underlying Warrants     50,000,000       .0054       270,000       25.03  
Total     250,000,000               1,350,000       125.15  

 

 

(1) Alumni Capital LP (the selling stockholder identified in this prospectus) may offer up to 250,000,000 shares of common stock to be used for drawdowns and warrant exercises in connection with an August 2, 2022 Common Stock Purchase Agreement (the “Purchase Agreement”) and Common Stock Purchase Warrant we entered into with Alumni Capital LP. The shares being registered hereunder include such indeterminate number of shares of our Common Stock as may be issuable with respect to the shares being registered hereunder to prevent dilution by reason of any stock dividend, stock split, recapitalization or other similar transaction.
   
(2) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) and (g) under the Securities Act, based on the average of the high and low prices reported for the shares of Common Stock as reported on the OTCPink on July 29, 2022.

 

 

The Registrant herebyamends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall filea further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) ofthe Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission,acting pursuant to said Section 8(a), may determine.

 

  

 

The information in this prospectusis not complete and may be changed. The Selling Stockholders may not sell these securities until the registration statement filed withthe Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not solicitingan offer to buy these securities in any state where the offer, solicitation or sale is not permitted.

 

PRELIMINARYPROSPECTUS, SUBJECT TO COMPLETION, DATED AUGUST 3, 2022

 

AB INTERNATIONALGROUP CORP.

 

Up to 250,000,000Shares of Common Stock

 

Pursuant to this prospectus,Alumni Capital LP, a Delaware Limited Partnership (referred to herein as “Alumni Capital”), is offering on a resale basisfrom time to time an aggregate of up to 250,000,000 shares of common stock, par value $0.001 per share (the “Common Stock), ofAB International Group Corp. (“AB International,” “we,” “us”, “our” or the “Company”),a Nevada corporation. Shares amounting to 200,000,000 shares of Common Stock are purchasable by Alumni Capital pursuant to the termsand conditions of the Purchase Agreement that we entered into with Alumni Capital on August 2, 2022 (the “Purchase Agreement”).Pursuant to the Purchase Agreement, we have the right to “put”,” or sell, at our discretion, up to $1,000,000 worthof shares of Common Stock to Alumni Capital. This arrangement is also sometimes referred to herein as the “Equity Line.”Shares amounting to 50,000,000 are purchasable upon exercise at $0.02 per share by Alumni Capital pursuant to the terms and conditionsof a Common Stock Purchase Warrant.

 

We are not selling anyshares of Common Stock under this prospectus and will not receive any of the proceeds from the sale of the Common Stock by Alumni Capital(referred to herein as the “Selling Stockholder”). However, we may receive up to an aggregate of $1 million in proceeds fromthe sale of our Common Stock to Alumni Capital pursuant to the Equity Line and up to $1 million in proceeds if Alumni Capital exercisesthe Common Stock Purchase Warrant.

 

The Selling Stockholdermay sell all or a portion of the shares being offered pursuant to this Prospectus at fixed prices, at prevailing market prices at thetime of sale, at varying prices or at negotiated prices. For additional information regarding the methods of sale you should refer tothe section entitled “Plan of Distribution” in this Prospectus.

 

The Selling Stockholderis considered an underwriter within the meaning of the Securities Act of 1933, and any broker-dealers or agents that are involved inselling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection withsuch sales. In such event, any commissions received by such broker-dealers or agents, and any profit on the resale of the shares purchasedby them, may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. 

 

The Common Stock isquoted on the OTCPink, under the symbol “ABQQ.” On July 29, 2022, the last reported sale price of the Common Stock on theOTCPink was $0.0054 per share.

 

Investing in ourcommon stock involves a high degree of risk. Before deciding whether to invest in our securities, you should consider carefully the risksthat we have described on page 5 of this prospectus under the caption “Risk Factors” and in the documents incorporated byreference into this prospectus.

 

Neither the Securitiesand Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectusis truthful or complete. Any representation to the contrary is a criminal offense.

 

The date of this prospectusis August 3, 2022.

 

 2 

 

TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS 1
PROSPECTUS SUMMARY 2
RISK FACTORS 5
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 11
USE OF PROCEEDS 12
DILUTION 12
SELLING STOCKHOLDERS 12
PLAN OF DISTRIBUTION 13
DESCRIPTION OF CAPITAL STOCK 14
DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS, AND CONTROL PERSONS 17
EXECUTIVE COMPENSATION 21
BUSINESS 22
MARKET PRICE OF THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS 24
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 26
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS 32
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT 33
LEGAL MATTERS 33
EXPERTS 33
WHERE YOU CAN FIND MORE INFORMATION 34
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS  35

 

We have not, and theSelling Stockholders have not, authorized anyone to provide you with information other than that contained or incorporated by referencein this prospectus and any applicable prospectus supplement or amendment. We have not, and the Selling Stockholders have not, authorizedany person to provide you with different information. This prospectus is not an offer to sell, nor is it an offer to buy, these securitiesin any jurisdiction where the offer is not permitted. The information contained or incorporated by reference in this prospectus and anyapplicable prospectus supplement or amendment is accurate only as of its date. Our business, financial condition, results of operations,and prospects may have changed since that date.

 

 3 

 

ABOUTTHIS PROSPECTUS

 

This prospectus is partof a registration statement that we have filed with the Securities and Exchange Commission (the “SEC”) pursuant to whichthe Selling Stockholder named herein may, from time to time, offer and sell or otherwise dispose of the securities covered by this prospectus.You should not assume that the information contained in this prospectus is accurate on any date subsequent to the date set forth on thefront cover of this prospectus or that any information we have incorporated by reference is correct on any date subsequent to the dateof the document incorporated by reference, even though this prospectus is delivered or securities are sold or otherwise disposed of ona later date. It is important for you to read and consider all information contained in this prospectus, including the Information Incorporatedby Reference herein, in making your investment decision. You should also read and consider the information in the documents to whichwe have referred you under the captions “Where You Can Find More Information” and “Incorporation of Information byReference” in this prospectus.

 

Neither we nor the SellingStockholder have authorized any dealer, salesman or other person to give any information or to make any representation other than thosecontained or incorporated by reference in this prospectus. You must not rely upon any information or representation not contained orincorporated by reference in this prospectus. This prospectus does not constitute an offer to sell or the solicitation of an offer tobuy any of our securities other than the securities covered hereby, nor does this prospectus constitute an offer to sell or the solicitationof an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in suchjurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselvesabout, and to observe, any restrictions as to the offering and the distribution of this prospectus applicable to those jurisdictions.

 

We further note thatthe representations, warranties and covenants made in any agreement that is filed as an exhibit to any document that is incorporatedby reference in the accompanying prospectus were made solely for the benefit of the parties to such agreement, including, in some cases,for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty orcovenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, suchrepresentations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.

 1 

PROSPECTUS SUMMARY

 

The following isa summary of what we believe to be the most important aspects of our business and the offering of our securities under this prospectus.We urge you to read this entire prospectus, including the more detailed financial statements, notes to the financial statements and otherinformation incorporated by reference from our other filings with the SEC. Each of the risk factors could adversely affect our business,operating results and financial condition, as well as adversely affect the value of an investment in our securities.

 

Overview

 

The Company was incorporatedunder the laws of the State of Nevada on July 29, 2013. The Company's fiscal year end is August 31.

 

We are an intellectualproperty (IP) and movie investment and licensing firm, focused on acquisitions and development of various intellectual property, includingthe acquisition and distribution of movies. In February 2019, we launched a business application (Ai Bian Quan Qiu) through smartphonesand 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 advertisingevents have been suspended for 7 months. The Company decided to suspend the Ai Bian Quan Qiu platform, which, at the time, created anadverse impact on the business and financial condition and hampered its ability to generate revenue and access sources of liquidity onreasonable terms. As a result, we decide to focus mainly the IP transactions and online video streaming. Our management and operationsare from the New York City, the international media center.

 

On April 22, 2020, theCompany announced the first phase development of its video streaming service. The online service will be marketed and distributed inthe world under the brand name ABQQ.tv. The Company's professional team are sourcing such dramas and films to provide video streamingservice on the ABQQ.tv. The video streaming website www.ABQQ.tv was officially launched on December 29, 2020. As of May 31, 2022, theCompany acquired 59 movie broadcast rights and a 15-episode TV drama series. The Company will continue marketing and promoting the ABQQ.tvwebsite through Google Ads and acquire additional broadcast rights for movies and TV series, and plan to charge subscription fees oncethe Company has obtained at least 200 broadcast rights of movie and TV series.

 

On October 21, 2021,the Company entered into a Lease Agreement (the “Lease”) with Martabano Realty Corp. (the “Landlord”), pursuantto 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 baserent obligation will be approximately $6,979, which amount will increase in year three to $13,260, year four at $13,658 and the finalyear 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 formerlyused as a theatre with a total of 5 screens and 466 sets for screening films. The former theatre opened on December 21, 1962 with HayleyMillsin “In Search of the Castaways.” It was a replacement for the town’s other movie theatre that burned down. Itwas 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 closedby the Covid-19 pandemic. It was announced in September 2020 that the closure would be permanent. The Company intends to continue touse the space as a theatre with a total of 5 screens and 466 sets for screening films. It’s the first theatre of ABQQ Cinemas inAmerica as the new business line of the Company.

 

On April 27, 2022, wepurchased a unique Non-Fungible Token (“NFT”) movie and music marketplace, named as the NFT MMM, from Stareastnet PortalLimited, which including an APP “NFT MMM” on Google Play, and full right to the website: starestnet.io. NFTs are digitalassets 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. As the expert of IP transactions specialized in themedia industry, we believe that NFTs provide great potential in the intellectual property protection domain. It can promote transparencyand liquidity and open the market to innovators who aim to commercialize their IP efficiently. We are actively launching movie and TVdrama copyrights NFTs to buyers on the NFT MMM, and expect to generate revenues from the transactions incurred on the platform.

 

Subsequent to quarterend, on June 22, 2022, we entered an agreement with Zestv Studios Limited, a Hong Kong entity 100% owned by our Chief Executive OfficerChiyuan Deng, to transfer the mainland China copyright and broadcast right for the movie “Too Simple” to Zestv Studios Limited.The total transfer price was $750,000.

 

 2 

 

Covid-19

 

The full extent of theimpact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that we maynot be able to accurately predict at the present time. In an effort to contain COVID-19 or slow its spread, governments around the worldhave enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to theirhomes or places of residence, and practice social distancing when engaging in essential activities. We anticipate that these actionsand the global health crisis caused by COVID-19 will negatively impact business activity across the globe. The movie industry in generalhas changed dramatically as a result of the pandemic restrictions. While movie theaters struggle to stay alive, online streaming programminghas increased. We have endeavored to stay with the trend for streaming services to remain competitive. We have experienced the negativeimpact in our results of operations and in our financial condition for the year ended August, 2020, especially with respect to the moviedistribution end of our business. These impacts concern delays in delivering our movies and IP because of health restrictions imposedon certain public events that concern our business, including, among other things, theaters, indoor and outdoor performances, filmingrestrictions, music festivals, concerts and other such events, Some of these restrictions include pandemic government mandated shutdownsand 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, theresultant industry and business specific delays have negatively affected our company.

 

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

 

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

 

We will continue toactively 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 ourcustomers, partners, or vendors, or on our financial results.

 

Description of the Purchase Agreementand the Common Stock Purchase Warrant

 

OnAugust 2, 2022, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Alumni Capital LP, a Delawarelimited partnership. Pursuant to the Purchase Agreement, the Company has the right, but not the obligation to cause Alumni Capital topurchase up to $1 million of our common stock at the Investment Amount (defined below) during the period beginning on the execution dateof the Purchase Agreement and ending on the earlier of (i) the date on which the Alumni Capital has purchased $1 million of our commonstock shares pursuant to the Purchase Agreement or (ii) December 31, 2022.

 

Pursuantto the Purchase Agreement, the “Investment Amount” means seventy five percent (75%) of the lowest traded price of the CommonStock five Business Days prior to the Closing of a Purchase Notice. No Purchase Notice will be made without an effective registrationstatement and no Purchase Notice will be in an amount less than twenty-five thousand dollars ($25,000) or greater than five hundred thousanddollars ($500,000).

 

ThePurchase Agreement provides that the number of our common stock shares to be sold to Alumni Capital will not exceed the number of sharesthat, when aggregated together with all other shares of our common stock which the investor is deemed to beneficially own, would resultin the investor owning more than 9.99% of our outstanding common stock.

 

Inconsideration for Alumni Capital’s execution and performance under the Purchase Agreement, the Company issued to Alumni Capitala Common Stock Purchase Warrant dated August 2, 2022 to purchase 50,000,000 shares of Common Stock at an exercise price of $0.02 pershare.

 

ThePurchase Agreement contains certain representations, warranties, covenants and events of default. The Closing occurred following thesatisfaction of customary closing conditions. 

 

 3 

 

THE OFFERING

 

Common stock to be offered by the Selling Stockholder   Up to 250,000,000 Shares
     
Shares of Common Stock outstanding before this offering   376,758,463 shares, as of August 1, 2022
     
Shares of Common Stock outstanding after this offering   626,758,463 shares.  This assumes that the Company has fully committed on the Equity Line up to the maximum of shares allowable under this Prospectus and has exercised the Common Stock Purchase Warrant.
     
Use of Proceeds   We will not receive any proceeds from the sale of Common Stock by the Selling Stockholder. We may receive up to an aggregate of $1 million in proceeds from the sale of our Common Stock to Alumni Capital pursuant to the Equity Line and up to $1 million in proceeds from the exercise of the Common Stock Purchase Warrant.
     
Plan of Distribution   The Selling Stockholder may, from time to time, sell any or all of their shares of our Common Stock on the stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be fixed or negotiated prices. For further information, see “Plan of Distribution” beginning on page 5.
     
Risk Factors   This investment involves a high degree of risk. See “Risk Factors” for a discussion of factors you should consider carefully before making an investment decision.
     
OTCPink symbol   “ABQQ.”

  

 4 

RISK FACTORS

 

This investment hasa high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other informationin this prospectus. If any of the following risks actually occur, our business, operating results and financial condition could be harmedand the value of our stock could go down. This means you could lose all or a part of your investment.

 

Risk Related to Covid 19

 

Our business andfuture operations may be adversely affected by epidemics and pandemics, such as the recent COVID-19 outbreak.

 

We may face risks relatedto health epidemics and pandemics or other outbreaks of communicable diseases, which could result in a widespread health crisis thatcould adversely affect general commercial activity and the economies and financial markets of the country as a whole. For example, therecent outbreak of COVID-19, which began in China, has been declared by the World Health Organization to be a “pandemic,”has spread across the globe, including the United States of America.

 

A health epidemic orpandemic or other outbreak of communicable diseases, such as the current COVID-19 pandemic, poses the risk that we, or potential businesspartners may be disrupted or prevented from conducting business activities for certain periods of time, the durations of which are uncertain,and may otherwise experience significant impairments of business activities, including due to, among other things, operational shutdownsor suspensions that may be requested or mandated by national or local governmental authorities or self-imposed by us, our customers orother business partners. While it is not possible at this time to estimate the impact that COVID-19 could have on our business, potentialcustomers, potential suppliers or other current or potential business partners, the continued spread of COVID-19, the measures takenby the local and federal government, actions taken to protect employees, and the impact of the pandemic on various business activitiescould adversely affect our results of operations and financial condition.

 

The COVID-19 pandemichas required our management to focus their attention primarily on responding to the challenges presented by the pandemic, including ensuringcontinuous operations, and adjusting our operations to address changes in the virtual payments industry. Due to measures imposed by thelocal governments in areas affected by COVID-19, businesses have been suspended due to quarantine intended to contain this outbreak andmany people have been forced to work from home in those areas. As a result, advertiser merchants orders for event has been suspended,which has had an adverse impact on our business and financial condition and has hampered our ability to generate revenue and access usualsources of liquidity on reasonable terms.

 

Risks Related to Our Financial Condition

 

Because we havea limited operating history, you may not be able to accurately evaluate our operations.

 

We have had limitedoperations to date and have generated limited revenues. Therefore, we have a limited operating history upon which to evaluate the meritsof investing in our company. Potential investors should be aware of the difficulties normally encountered by new companies and the highrate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complicationsand delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limitedto, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business, and additional costs andexpenses that may exceed current estimates. We expect to incur significant losses into the foreseeable future. We recognize that if theeffectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history uponwhich to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will continue to generateoperating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likelyfail.

 

 5 

 

Weare dependent on outside financing for continuation of our operations.

 

Becausewe have generated limited revenues and currently operate at a loss, we are completely dependent on the continued availability of financingin order to continue our business. There can be no assurance that financing sufficient to enable us to continue our operations will beavailable to us in the future.

 

Wehave sold several convertible promissory notes with discount to market conversions that have the effect of driving down our stock price,from which we may never recover.

 

In2020 and 2021, we have issued several convertible promissory notes to accredited investors. These notes contain terms that allow fordiscounted conversions from the company’s stock price, with most at a 40% discount. These notes also contain strict terms for complianceand penalty provisions that could cost us more than the principal and accrued interest. They also have most favored nation clauses thatforce us to offer more favorable terms in subsequent offerings. If we are unable to secure a better form of financing, or pay off thenotes before they convert, we could experience a significant drop in our stock price and face other negative consequences. Because weare penny stock, and there is a limited market for our shares, investor may not be able to recoup their investment and noteholders maynot be able to sell their converted shares into the market. We may be forced to pay off the convertible debt, with existing or raisedfunds, which might not be available. We could be at risk of default with the noteholders. If that happens, we may be forced to defendthe lawsuits, liquidate assets, etc., which would be costly and turn management’s attention away from the business. We could goout of business and you could lose your entire investment.

 

RisksRelated to Legal Uncertainty

 

Compliancewith changing regulation of corporate governance and public disclosure may result in additional expenses.

 

Changinglaws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 andnew SEC regulations, are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subjectto varying interpretations in many cases due to their lack of specificity, and as a result, their application in practice may evolveover time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliancematters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining highstandards of corporate governance and public disclosure. As a result, we intend to invest resources to comply with evolving laws, regulationsand standards, and this investment may result in increased general and administrative expenses and a diversion of management time andattention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulationsand standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, our reputationmay be harmed.

 

Ifwe fail to comply with the new rules under the Sarbanes-Oxley Act related to accounting controls and procedures, or if material weaknessesor other deficiencies are discovered in our internal accounting procedures, our stock price could decline significantly.

 

Weare exposed to potential risks from legislation requiring companies to evaluate internal controls under Section 404(a) of the Sarbanes-OxleyAct of 2002. As a smaller reporting company we will be exempt from auditor attestation requirements concerning any suchreport so long as we are a smaller reporting company. We have not yet evaluated whether our internal control procedures are effectiveand therefore there is a greater likelihood of material weaknesses in our internal controls, which could lead to misstatements or omissionsin our reported financial statements as compared to issuers that have conducted such evaluations.

 

Ifmaterial weaknesses and deficiencies are detected, it could cause investors to lose confidence in our company and result in a declinein our stock price and consequently affect our financial condition. In addition, if we fail to achieve and maintain the adequacy of ourinternal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls overfinancial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly thoserelated to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financialfraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investorscould lose confidence in our reported financial information, and the trading price of our common stock could drop significantly. In addition,we cannot be certain that additional material weaknesses or significant deficiencies in our internal controls will not be discoveredin the future.

 

 6 

 

Risks Associated with Management andControl Persons

 

Ifwe fail to attract and retain qualified senior executive and key technical personnel, our business will not be able to expand.

 

Weare dependent on the continued availability of Chiyuan Deng, and the availability of new employees to implement our business plans. Themarket for skilled employees is highly competitive, especially for employees in the service industry. Although we expect that our compensationprograms will be intended to attract and retain the employees required for us to be successful, there can be no assurance that we willbe able to retain the services of all our key employees or a sufficient number to execute our plans, nor can there be any assurance wewill be able to continue to attract new employees as required.

 

Ourpersonnel may voluntarily terminate their relationship with us at any time, and competition for qualified personnel is intense. The processof locating additional personnel with the combination of skills and attributes required to carry out our strategy could be lengthy, costlyand disruptive.

 

Ifwe lose the services of key personnel, or fail to replace the services of key personnel who depart, we could experience a severe negativeeffect on our financial results and stock price. In addition, there is intense competition for highly qualified bilingual and “peoplefriendly” personnel in the locations where we principally operate. The loss of the services of any key personnel, marketing orother personnel or our failure to attract, integrate, motivate and retain additional key employees could have a material adverse effecton our business, operating and financial results and stock price.

 

Mr.Deng owns a significant percentage of the voting power of our stock and will be able to exercise significant influence over the compositionof our Board of Directors, matters subject to stockholder approval and our operations.

 

Asof the date of this filing, Chiyuan Deng owns 100,000 shares of our Series A Preferred Stock, which has the voting power of 51% of thetotal vote of shareholders. As a result of his equity ownership interest, voting power and the contractual rights described above, Mr.Deng currently is in a position to influence, subject to our organizational documents and Nevada law, the composition of our Board ofDirectors and the outcome of corporate actions requiring stockholder approval, such as mergers, business combinations and dispositionsof assets, among other corporate transactions. In addition, this concentration of voting power could discourage others from initiatinga potential merger, takeover or other change of control transaction that may otherwise be beneficial to us, which could adversely affectthe market price of our securities.

 

Risks Related to Our Securities and theOver the Counter Market

 

If a market forour common stock does not develop, shareholders may be unable to sell their shares.

 

Our common stock isquoted under the symbol “ABQQ” on the OTCPink operated by OTC Markets Group, Inc, an electronic inter-dealer quotation mediumfor equity securities. We do not currently have an active trading market. There can be no assurance that an active and liquid tradingmarket will develop or, if developed, that it will be sustained.

 

Our securities are verythinly traded. Accordingly, it may be difficult to sell shares of our common stock without significantly depressing the value of thestock. Unless we are successful in developing continued investor interest in our stock, sales of our stock could continue to result inmajor fluctuations in the price of the stock.

 

Our common stock pricemay be volatile and could fluctuate widely in price, which could result in substantial losses for investors.

 

 7 

  

The market price ofour common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which arebeyond our control, including:

 

  § technological innovations or new products and services by us or our competitors;

 

  § government regulation of our products and services;

 

  § the establishment of partnerships with other technology companies;

 

  § intellectual property disputes;

 

  § additions or departures of key personnel;

 

  § sales of our common stock

 

  § our ability to integrate operations, technology, products and services;

 

  § our ability to execute our business plan;

 

  § operating results below expectations;

 

  § loss of any strategic relationship;

 

  § industry developments;

 

  § economic and other external factors; and

 

  § period to period fluctuations in our financial results.

 

Because we have nominalrevenues to date, you should consider any one of these factors to be material. Our stock price may fluctuate widely as a result of anyof the above.

 

In addition, the securitiesmarkets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performanceof particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

 

As a new investor,you will experience substantial dilution as a result of future equity issuances.

 

In the event we arerequired to raise additional capital we may do so by selling additional shares of common stock thereby diluting the shares and ownershipinterests of existing shareholders.

 

 8 

 

Our stock is apenny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and FINRA’s sales practice requirements,which may limit a stockholder’s ability to buy and sell our stock.

   

Our stock is a pennystock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equitysecurity that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject tocertain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealerswho sell to persons other than established customers and “accredited investors”. The term “accredited investor”refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annualincome exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transactionin a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SECwhich provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also mustprovide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salespersonin the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account.The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally orin writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealermust make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’swritten agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity inthe secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the abilityof broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketabilityof, our common stock.

 

In addition to the “pennystock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority has adopted rulesthat require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investmentis suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealersmust make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives andother information. Under interpretations of these rules, the Financial Industry Regulatory Authority believes that there is a high probabilitythat speculative low-priced securities will not be suitable for at least some customers. The Financial Industry Regulatory Authority’requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your abilityto buy and sell our stock.

 

Rule 144 salesin the future may have a depressive effect on our stock price as an increase in supply of shares for sale, with no corresponding increasein demand will cause prices to fall.

 

All of the outstandingshares of common stock held by the present officers, directors, and affiliate stockholders are “restricted securities” withinthe meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted shares, these shares may be resold only pursuantto an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under theAct and as required under applicable state securities laws. Rule 144 provides in essence that a person who is an affiliate or officeror director who has held restricted securities for six months may, under certain conditions, sell every three months, in brokerage transactions,a number of shares that does not exceed the greater of 1.0% of a company’s outstanding common stock. There is no limit on the amountof restricted securities that may be sold by a non-affiliate after the owner has held the restricted securities for a period of six monthsif the company is a current reporting company under the 1934 Act. A sale under Rule 144 or under any other exemption from the Act, ifavailable, or pursuant to subsequent registration of shares of common stock of present stockholders, may have a depressive effect uponthe price of the common stock in any market that may develop.

 

 9 

 

FINRA sales practicerequirements may also limit a stockholder’s ability to buy and sell our stock.

 

In addition to the “pennystock” rules described above, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommendingan investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable effortsto obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretationsof these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at leastsome customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock,which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

 

We do not intendto pay dividends.

 

We do not anticipatepaying cash dividends on our common stock in the foreseeable future. We may not have sufficient funds to legally pay dividends. Evenif funds are legally available to pay dividends, we may nevertheless decide in our sole discretion not to pay dividends. The declaration,payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among otherthings, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors ourboard of directors may consider relevant. There is no assurance that we will pay any dividends in the future, and, if dividends are rapid,there is no assurance with respect to the amount of any such dividend.

 

We have the rightto issue additional common stock and preferred stock without consent of shareholders. This would have the effect of diluting investors’ownership and could decrease the value of their investment.

 

We are authorized to issue up to 1,000,000,000 sharesof common stock, of which there were 376,758,463 shares issued and outstanding as of August 2, 2022. In addition, our articles of incorporationauthorizes the issuance of up to 10,000,000 shares of preferred stock, the rights, preferences, designations and limitations of whichmay be set by the Board of Directors. We have designated and authorized, one 100,000 share of Series A Preferred Stock, 20,000 sharesof Series B Convertible Preferred Stock, 1,000,000 shares of Series C Preferred Stock, and 5,075 shares of Series D Preferred Stock. Asof August 2, 2022, there were issued and outstanding (i) 100,000 shares of our Series A Preferred Stock, (ii) 20,000 shares of our SeriesB Preferred Stock, (iii) 365,349 shares of our Series C Preferred Stock, and (iv) 0 shares of our Series D Convertible Preferred Stock.

 

The shares of authorizedbut undesignated preferred stock may be issued upon filing of an amended certificate of incorporation and the payment of required fees;no further shareholder action is required. If issued, the rights, preferences, designations and limitations of such preferred stock wouldbe set by our Board and could operate to the disadvantage of the outstanding common stock. Such terms could include, among others, preferencesas to dividends and distributions on liquidation. We have designated four series of preferred stock, four of which have shares issuedand outstanding. A description of the terms, rights and preferences of these series of preferred stock are described under “Descriptionof Securities” beginning on page 3.

 

Risks Related to the Offering

 

Ourexisting stockholders may experience significant dilution from the sale of our common stock pursuant to the Alumni Capital Purchase Agreement.

 

Thesale of our common stock to Alumni Capital in accordance with the Purchase Agreement may have a dilutive impact on our shareholders.As a result, the market price of our common stock could decline. In addition, the lower our stock price is at the time we exercise ourput options, the more shares of our common stock we will have to issue to Alumni Capital in order to exercise a put under the PurchaseAgreement. If our stock price decreases, then our existing shareholders would experience greater dilution for any given dollar amountraised through the offering.

 

Theperceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common stock.Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors to engage inshort sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling could furthercontribute to progressive price declines in our common stock.

 

 10 

 

Theissuance of shares pursuant to the Alumni Capital Purchase Agreement may have significant dilutive effect.

 

Dependingon the number of shares we issue pursuant to the Alumni Capital Purchase Agreement, it could have a significant dilutive effect uponour existing shareholders. Although the number of shares that we may issue pursuant to the Purchase Agreement will vary based on ourstock price (the higher our stock price, the less shares we have to issue), there may be a potential dilutive effect to our shareholders,based on different potential future stock prices, if the full amount of the

  

PurchaseAgreement is realized. Dilution is based upon common stock put to Alumni Capital and the stock price discounted to seventy five percent(75%) of the lowest traded price of the Common Stock five Business Days prior to the Closing of a Purchase Notice during which the PurchasePrice of the Common Stock is valued.

 

AlumniCapital will pay less than the then-prevailing market price of our common stock which could cause the price of our common stock to decline.

 

Ourcommon stock to be issued under the Alumni Capital Purchase Agreement will be purchased at 75% of the lowest traded price of the CommonStock five Business Days prior to the Closing of a Purchase Notice.

 

AlumniCapital has a financial incentive to sell our shares immediately upon receiving them to realize the profit between the discounted priceand the market price. If Alumni Capital sells our shares, the price of our common stock may decrease. If our stock price decreases, AlumniCapital may have further incentive to sell such shares. Accordingly, the discounted sales price in the Purchase Agreement may cause theprice of our common stock to decline.

 

Wemay not have access to the full amount under the Purchase Agreement.

 

The lowest traded price of the Company’s commonstock during the five (5) consecutive trading day period immediately preceding the filing of this Registration Statement was approximately$0.0046. At that price we would be able to sell shares to Alumni Capital under the Purchase Agreement at the discounted price of $0.00345.At that discounted price, the 200,000,000 shares of Common Stock to be issued in connection with the Purchase Agreement would only representapproximately $690,000, which is far below $1,000,000 (the full amount of the Purchase Agreement).

 

CAUTIONARY NOTE REGARDINGFORWARD-LOOKING STATEMENTS

 

All statements otherthan statements of historical facts contained in or incorporated by reference into this prospectus, including statements regarding ourfuture results of operations and financial position, business strategy, prospective products, product approvals, research and developmentcosts, commercialization plans and timing, other plans and objectives of management for future operations, and future results of currentand anticipated products are forward-looking statements. These statements involve known and unknown risks, uncertainties and other importantfactors that may cause our actual results, performance or achievements to be materially different from any future results, performanceor achievements expressed or implied by the forward-looking statements.

 

In some cases, you canidentify forward-looking statements by terms such as “may,” “will,” “should,” “expect,”“plan,” “aim,” “anticipate,” “could,” “intend,” “target,” “project,”“contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue”or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions.We have based these forward-looking statements largely on our current expectations and projections about future events and financialtrends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speakonly as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions including those listed inthe ‘‘Risk Factors’’ incorporated by reference into this prospectus from our Annual Report on Form 10-K,as updated by subsequent reports. Forward-looking statements are subject to inherent risks and uncertainties, some of which cannot bepredicted or quantified and some of which are beyond our control. The events and circumstances reflected in our forward-looking statementsmay not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover,we operate in a dynamic industry and economy. New risk factors and uncertainties may emerge from time to time, and it is not possiblefor management to predict all risk factors and uncertainties that we may face. Except as required by applicable law, we do not plan topublicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events,changed circumstances or otherwise.

 

 11 

 

USE OF PROCEEDS

 

We will not receiveany of the proceeds from the sale of shares of our Common Stock in this offering. The Selling Stockholder will receive all of the proceedsfrom this offering. However, we may receive up to an aggregate of $1 million in proceeds from the sale of our Common Stock to AlumniCapital pursuant to the Equity Line and up to $1 million in proceeds from the exercise of the Common Stock Purchase Warrant.

 

The Selling Stockholderswill pay any underwriting discounts and commissions and expenses incurred by the Selling Stockholders for brokerage, accounting, taxor legal services or any other expenses incurred by the Selling Stockholders in disposing of the shares. We will bear all other costs,fees and expenses incurred in effecting the registration of the shares covered by this prospectus, including, without limitation, allregistration and filing fees, fees and expenses of our counsel, certain expenses of counsel to the Selling Stockholder and our independentregistered public accountants.

  

DILUTION

 

The sale of our commonstock to Alumni Capital in accordance with the Purchase Agreement and Common Stock Warrant will have a dilutive impact on our stockholders.As a result, our net loss per share could increase in future periods and the market price of our common stock could decline. In addition,the lower our stock price is at the time we exercise our Purchase Notice, the more shares of our common stock we will have to issue toAlumni Capital in order to drawdown pursuant to the Purchase Agreement. If our stock price decreases during the pricing period, thenour existing stockholders would experience greater dilution.

 

SELLING STOCKHOLDER

 

We are registeringshares of Common Stock in order to permit the Selling Stockholder to offer the shares for resale from time to time.

 

The following tablesets forth:

 

·                 the Selling Stockholder and other information regarding the beneficial ownership of the shares of Common Stock by the Selling Stockholder;

 

·                 the number of shares of Common Stock beneficially owned by the Selling Stockholder, based on its ownership of the shares of Common Stock,as of August 2, 2022, without regard to any limitations on exercises prior to the sale of the shares covered by this prospectus;

 

·                 the number of shares that may be offered by the Selling Stockholder pursuant to this prospectus;

 

·                 the number of shares to be beneficially owned by the Selling Stockholder and their affiliates following the sale of any shares coveredby this prospectus; and

 

·                 the percentage of our issued and outstanding Common Stock to be beneficially owned by the Selling Stockholder and their affiliates followingthe sale of all shares covered by this prospectus, based on the Selling Stockholder’s ownership of Common Stock as of August 2,2022.

 

This prospectus generallycovers the (i) resale of all shares received by the Selling Stockholder in connection with the transactions contemplated by the PurchaseAgreement and (ii) resale of all shares of Common Stock that are issuable upon exercise by the Selling Stockholder of the Common StockPurchase Warrant.

  

 12 

 

The Selling Stockholdermay sell all, some or none of its shares in this offering. See “Plan of Distribution.”

 

    Number of
shares of
Beneficially
Owned Prior to
  Maximum
Number
of shares of
Common Stock
to be Sold
Pursuant to this
  Number of shares
of Common Stock
Beneficially Owned After
Offering(1)(2)
Name of Selling Stockholder   Offering(1)   Prospectus   Number   Percent
Alumni Capital LP (3)   50,000,000(4)   250,000,000(5)   0   0%

  

(1)             Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect toshares of Common Stock. Shares of Common Stock subject to derivative securities exercisable, or exercisable within 60 days, are countedas outstanding for computing the percentage of the person holding such options or warrants but are not counted as outstanding for computingthe percentage of any person.

 

(2)             Assumes that the Selling Stockholder sells all shares of Common Stock registered under this prospectus held by such Selling Stockholder.

 

  (3) Ashkan Mapar, Manager of Alumni Capital, exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Alumni Capital.

 

(4)             Represents the amount of Warrant Shares under the Common Stock Purchase Warrant (without consideration of the 4.99% ownership limitationimposed by the Warrant).

 

(5)             Represents the amount of Common Stock issuable pursuant to the Purchase Agreement and Common Stock Purchase Warrant.

 

PLAN OF DISTRIBUTION

 

The SellingStockholder may, from time to time, sell any or all of shares of our Common Stock covered hereby on the OTCPink or any other stock exchange,market or trading facility on which the shares are traded or in private transactions. The Selling Stockholder may sell  all or aportion of the shares being offered pursuant to this prospectus at fixed prices, at prevailing market prices at the time of sale, atvarying prices or at negotiated prices. The Selling Stockholder may use any one or more of the following methods when selling shares:

 

·           on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

·           in the over-the-counter market;

·           in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

·           ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

·           block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block asprincipal to facilitate the transaction;

·           purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

·           an exchange distribution in accordance with the rules of the applicable exchange;

·           privately negotiated transactions;

 ·           in transactions through broker-dealers that agree with the selling stockholder to sell a specified number of such shares at a stipulatedprice per share;

·           through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

·           a combination of any such methods of sale; or

·           any other method permitted pursuant to applicable law.

 

The SellingStockholder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Broker-dealersengaged by the Selling Stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissionsor discounts from the Selling Stockholder (or, if any broker- dealer acts as agent for the purchaser of securities, from the purchaser)in amounts to be negotiated, provided such amounts are in compliance with FINRA Rule 2121. Discounts, concessions, commissions andsimilar selling expenses, if any, that can be attributed to the sale of Common Stock will be paid by the selling stockholder and/or thepurchasers.

 

The SellingStockholder and any broker-dealers or agents that are involved in selling the shares are deemed to be “underwriters” withinthe meaning of the Securities Act in connection with such sales. With respect to any shares of Common Stock issued pursuant to the EquityLine are resold hereunder, the Selling Stockholder is deemed as an underwriter and any broker-dealers that are involved in selling suchshares is deemed as an underwriter. In such event, any commissions received by such broker-dealers or agents and any profit on the resaleof the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act, and such broker-dealersor agents will be subject to the prospectus delivery requirements of the Securities Act.

 

 13 

 

We arerequired to pay certain fees and expenses incurred by us incident to the registration of the shares covered by this prospectus. We haveagreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under theSecurities Act of 1933. We will not receive any proceeds from the resale of any of the shares of our common stock by the Selling Stockholder.We may, however, receive proceeds from the sale of our common stock under the Purchase Agreement with Alumni Capital and cash exercisesof the Common stock Purchase Warrant. Neither the Purchase Agreement with Alumni Capital nor any rights of the parties under the PurchaseAgreement with Alumni Capital may be assigned or delegated to any other person.

 

We haveentered into an agreement with Alumni Capital to keep this prospectus effective until Alumni Capital has sold all of the common sharespurchased by it under the Purchase Agreement and has no right to acquire any additional shares of common stock under the Purchase Agreement.

 

Under applicablerules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale shares may notsimultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined inRegulation M, prior to the commencement of the distribution. In addition, the selling stockholder will be subject to applicable provisionsof the Securities Exchange Act of 1934 and the rules and regulations thereunder, including Regulation M, which may limit the timing ofpurchases and sales of shares of the common stock by the Selling Stockholder or any other person. We will make copies of this prospectusavailable to the Selling Stockholder.

  

DESCRIPTION OF CAPITALSTOCK

 

General

 

We are authorized to issue an aggregate of 1,000,000,000shares of common stock, $0.001 par value per share and 10,000,000 shares of preferred stock in one or more series and to fix the votingpowers, preferences and other rights and limitations of the preferred stock. As of August 1, 2022, there were issued and outstanding(i) 376,758,463 shares of common stock, (ii) 100,000 shares of our Series A Preferred Stock, (iii) 20,000 shares of our Series B PreferredStock, (iv) 365,349 shares of our Series C Preferred Stock, and (v) 0 shares of our Series D Convertible Preferred Stock.

 

Each share of commonstock shall have one (1) vote per share. Our common stock does not provide a preemptive, subscription or conversion rights and thereare no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election ofBoard of Directors.

 

Dividends

 

We have not paid anydividends on our common stock since our inception and do not intend to pay any dividends in the foreseeable future.

 

The declaration of anyfuture cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirementsand financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cashdividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

 

Warrants

 

In consideration forAlumni Capital’s execution and performance under the Purchase Agreement, the Company issued to Alumni Capital a Common Stock PurchaseWarrant dated August 2, 2022 to purchase 50,000,000 shares of Common Stock at an exercise price of $0.02 per share.

 

Options

 

Currently, we have nooptions outstanding to purchase our common stock.

 

Securities Authorized for Issuance UnderEquity Compensation Plans

 

We have no equity compensationplans.

 

 14 

 

Preferred Stock

 

The Company has authorized10,000,000 shares of preferred stock. The board of directors has the authority to issue these shares and to set dividends, voting andconversion rights, redemption provisions, liquidation preferences, and other rights and restrictions.

 

Series A Preferred Stock

 

On September 4, 2020,we filed a certificate of designation for 100,000 shares of Series A Preferred Stock. The Series A Preferred Stock has the right to vote51% of the total vote of shareholders and concerts to common stock on a one for one conversion. Our Chief Executive Officer, ChiyuanDeng, owns all 100,000 shares.

 

Series B Preferred Stock

 

On January 8, 2021,we filed a certificate of destination for 20,000 shares of Series B Preferred Stock. The Series B Preferred Stock is entitled to a liquidationpreference of $16 per share, the stated value of the Series B Preferred Stock, over our common stock and Series A Preferred Stock inthe event of a dissolution, liquidation or winding up of the company. The Series B Preferred Stock does not have voting rights, but after36 months the holders may convert each share of their preferred stock into 1,000 shares of common stock. The holders of shares of SeriesB Preferred Stock have no dividend rights except as may be declared by the Board in its sole and absolute discretion, out of funds legallyavailable for that purpose. Our Chief Executive Officer, Chiyuan Deng, owns all 20,000 shares.

 

Series C Preferred Stock

 

On January 28, 2021,we filed a certificate of designation for 1,000,000 shares of the Series C Preferred Stock. The shares of Series C Preferred Stock havea stated value of $1.00 per share, are convertible into Common Stock after one hundred and eighty (180) days at a price per share equalto 75% of the average of the lowest three (3) VWAPs for the Common Stock during the ten (10) Trading Day (as defined in the Certificateof Designation) period ending on the last complete Trading Day prior to the Conversion Date (as defined in the Certificate of Designation)(the “Conversion Price”), and earn dividends at the rate of twelve percent (12%) per annum. Upon an Event of Default (asdefined in the Certificate of Designation), the Series C Preferred Stock earn dividends at the rate of twenty two percent (22%) per annum.The shares of Series C Preferred Stock do not have voting rights, and rank: (a) senior with respect to dividend rights and rights ofliquidation with the Common Stock and Series A Preferred Stock; (b) junior with respect to dividends and right of liquidation with respectto our Series B Preferred Stock; and (c) junior with respect to dividends and right of liquidation to all existing indebtedness of theCompany. We may redeem the Series C Preferred Stock in accordance with the terms of the Certificate of Designation prior to the one hundredeightieth (180th) day following the date of issuance of the Series C Preferred Stock. We currently have 365,349 shares of Series C PreferredStock outstanding.

 

Series D Preferred Stock

 

On April 12, 2021, wefiled a certificate of designation for 5,075 shares of the Company’s Series D Preferred Stock. .

 

Below is a summary descriptionof the material rights, designations and preferences of the Series D Preferred Stock (all capitalized terms not otherwise defined hereinshall have that definition assigned to it as per the Certificate of Designation).

 

The Company has theright to redeem the Series D Preferred Stock, in accordance with the following schedule:

 

  § If all of the Series D Preferred Stock are redeemed within ninety (90) calendar days from the issuance date thereof, the Company shall have the right to redeem the Series D Preferred Stock upon three (3) business days’ of written notice at a price equal to one hundred and fifteen percent (115%) of the Stated Value together with any accrued but unpaid dividends.

 

  § If all of the Series D Preferred Stock are redeemed after ninety (90) calendar days and within one hundred twenty (120) calendar days from the issuance date thereof, the Company shall have the right to redeem the Series D Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty percent (120%) of the Stated Value together with any accrued but unpaid dividends; and

 

  § If all of the Series D Preferred Stock are redeemed after one hundred and twenty (120) calendar days and within one hundred eighty (180) calendar days from the issuance date thereof, the Company shall have the right to redeem the Series D Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty five percent (125%) of the Stated Value together with any accrued but unpaid dividends.

 

 15 

 

The Company shall paya dividend of three percent (8%) per annum on the Series D Preferred Stock. Dividends shall be paid quarterly, and at the Company’sdiscretion, in cash or Series D Preferred Stock calculated at the purchase price. The Stated Value of the Series D Preferred Stock is$1,200 per share.

 

The Series D PreferredStock will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations (as set forthin the Certificate of Designation).

 

Each share of the SeriesD Preferred Stock is convertible, at any time and from time to time from and after the issuance at the option of the Holder thereof,into that number of shares of Common Stock (subject to Beneficial Ownership Limitations) determined by dividing the Stated Value of suchshare by $0.149.

 

There are also PurchaseRights and Most Favored Nation Provisions. We currently have 0 shares of Series D Preferred Stock outstanding.

  

Anti-Takeover Effects of Various Provisionsof Nevada Law

 

Provisions of the NevadaRevised Statutes, our articles of incorporation, as amended, and bylaws could make it more difficult to acquire us by means of a tenderoffer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below, would be expectedto discourage certain types of takeover practices and takeover bids our Board may consider inadequate and to encourage persons seekingto acquire control of us to first negotiate with us. We believe that the benefits of increased protection of our ability to negotiatewith the proponent of an unfriendly or unsolicited proposal to acquire or restructure us will outweigh the disadvantages of discouragingtakeover or acquisition proposals because, among other things, negotiation of these proposals could result in an improvement of theirterms.

 

Blank Check Preferred

 

Our articles of incorporationpermit our Board to issue preferred stock with voting, conversion and exchange rights that could negatively affect the voting power orother rights of our Common Stockholders. The issuance of our preferred stock could delay or prevent a change of control of our Company.

 

Amendments to our Articles of Incorporationand Bylaws

 

Under the Nevada RevisedStatutes, our articles of incorporation may not be amended by stockholder action alone.

 

Nevada Anti-Takeover Statute

 

We may be subjectto Nevada’s Combination with Interested Stockholders Statute (Nevada Corporation Law Sections 78.411-78.444) which prohibits an“interested stockholder” from entering into a “combination” with the corporation, unless certain conditions aremet. An “interested stockholder” is a person who, together with affiliates and associates, beneficially owns (or within theprior two years, did beneficially own) 10% or more of the corporation’s capital stock entitled to vote. 

Limitations on Liability and Indemnificationof Officers and Directors

 

The Nevada Revised Statuteslimits or eliminates the personal liability of directors to corporations and their stockholders for monetary damages for breaches ofdirectors’ fiduciary duties as directors.

 

The limitation of liabilityand indemnification provisions under the Nevada Revised Statutes and in our articles of incorporation and bylaws may discourage stockholdersfrom bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of reducingthe likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefitus and our stockholders. However, these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non-monetaryrelief such as injunction or rescission in the event of a breach of a director’s fiduciary duties. Moreover, the provisions donot alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to theextent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuantto these indemnification provisions.

 

 16 

  

Authorized but Unissued Shares

 

Our authorized but unissuedshares of Common Stock and preferred stock will be available for future issuance without stockholder approval, except as may be requiredunder the listing rules of any stock exchange on which our Common Stock is then listed. We may use additional shares for a variety ofcorporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans.The existence of authorized but unissued shares of Common Stock and preferred stock could render more difficult or discourage an attemptto obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

 

Penny Stock Considerations

 

Our shares will be “pennystocks” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of lessthan $5.00 per share. Thus, our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealerswho engage in certain transactions involving a penny stock. Under the penny stock regulations, a broker-dealer selling a penny stockto anyone other than an established customer must make a special suitability determination regarding the purchaser and must receive thepurchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.

 

In addition, under the penny stock regulations,the broker-dealer is required to:

 

  Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;

 

  Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;

 

  Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value, and information regarding the limited market in penny stocks; and

 

  Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.

 

Because of these regulations,broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of sellingshareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activityin the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if oursecurities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in theprice of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood,find it difficult to sell their securities.

 

DIRECTORS, EXECUTIVEOFFICERS, PROMOTERS, AND CONTROL PERSONS

 

Our current executive officer and directoris as follows:

 

Name  Age  Position
Chiyuan Deng   58   Chief Executive Officer, Principal Executive Officer
Jianli Deng   28   Chief Financial Officer and Director, Appointed on June 24, 2022
Jimmy Chue   65   Chief Investment Officer
Ho Fai Lam   65   Director

 

 17 

 

Chiyuan Deng

 

Mr. Deng is an investor,producer, and director of Chinese films. He has worked as Vice Chairman of the Guangdong Province Film and TV Production Industry Associationand Vice Secretary General of the China City Image Project Advancement Committee. He has extensive investment and management experiencein China, including in the areas of corporate development and business investment activities. Mr. Deng graduated from Guangzhou BroadcastTV University in 1987. Mr. Deng is Jianli Deng’s father.

 

Mr. Deng does not holdand has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investmentcompany under the Investment Company Act of 1940.

  

Jianli Deng

 

Mr.Deng is a producer of numerous international film and music productions involving mixed media. He is the creator of a mobile phone applicationwhich brings video merging functions containing sophisticated video editing technology normally utilized by computers to the smart phone.Mr. Deng attended Hong Kong Open University where he studied music marketing and management. Mr. Deng is the company’s CEO anddirector of the board period January 2016 to August 2017. Period August 2018 to August 2020, he is the company’s secretary andtreasurer. Mr. Deng is the managing director of a private company Zestv Studios Limited since September 2020 to present.

 

Mr.Deng does not hold and has not held over the past five years any other directorships in any company with a class of securities registeredpursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registeredas an investment company under the Investment Company Act of 1940.

 

Wehave chosen Mr. Deng as our director because of his experience in the movie production business.

 

Ho Fai Lam

 

From Jan 2014 to present,Mr. Lam is a director of Gay Giano Company Limited, a company holding patent and trademarks in the fashion industry.

 

Mr. Lam has over 20years’ experience in treasury management in the banking industry and 10 years of corporate finance experience.

 

Mr. Lam does not holdand has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investmentcompany under the Investment Company Act of 1940.

 

 18 

 

Jimmy Chue

 

Wall Street career spansfor more than three decades. Working with prestiges firms such as Merrill Lynch and Prudential Securities as a senior analysis of operations.Founding Member and CIO of Healthier2gether, Senior Partner at Silver Bear Capital, and Cofounder of a new entity in formation namedWorld Global Partners Inc.

 

Mr. Chue does not holdand has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investmentcompany under the Investment Company Act of 1940.

 

Other Significant Employees

 

Other than our executiveofficer, we do not currently have any significant employees.

 

Term of Office

 

Our directors are appointedfor a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordancewith our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board, subject to their respectiveemployment agreements.

 

Family Relationships

 

There are no familyrelationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executiveofficers, aside from Chiyuan and Jianli Deng, who are father and son.

 

Involvement in Certain Legal Proceedings

 

During the past 10 years,none of our current executive officers, nominees for directors, or current directors have been involved in any legal proceeding identifiedin Item 401(f) of Regulation S-K, including:

 

  1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;

  

  2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

  3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:

 

  i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;  

 

ii.       Engagingin any type of business practice; or

 

  iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

 

  4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity;

 

  5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

 

 19 

 

  6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

 

  7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

 

i.       AnyFederal or State securities or commodities law or regulation; or

 

  ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

 

  iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

  8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Audit Committee

 

TheBoard of Directors has an audit committee to assist the Board of Directors in the execution of its responsibilities. Our audit committeeis comprised solely of non-employee, independent directors as defined by NYSE American market listing standards.

 

TheAudit Committee was established in October of 2019 and was comprised of Directors Ruiyu Guan and Ho Fai Lam, and is chaired by DirectorLam. It is now comprised of Jianli Deng and Ho Fai Lam, with Lam as the chair.

TheAudit Committee approves the selection of our independent accountants and meets and interacts with the independent accountants to discussissues related to financial reporting. In addition, the Audit Committee reviews the scope and results of the audit with the independentaccountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internalaccounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and theperformance of the independent auditor.

 

Forthe fiscal year ending August 31, 2021, the Audit Committee:

 

1. Reviewed anddiscussed the audited financial statements with management, and

2. Reviewed anddiscussed the written disclosures and the letter from our independent auditors on the matters relating to the auditor's independence.

 

Basedupon the Audit Committee’s review and discussion of the matters above, the board of directors authorized inclusion of the auditedfinancial statements for the years ended August 31, 2021 and 2020 to be included in this Prospectus.

 

TheBoard has determined that Mr. Lam of the Audit Committee qualifies as an audit committee financial expert as defined under applicableSEC rules and also meets the additional criteria for independence of audit committee members set forth in Rule 10A-3(b)(1) under theSecurities Exchange Act of 1934, as amended.

 

Compliance with Section 16(a) Of theExchange Act

 

Section16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registeredclass of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownershipof common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial shareholdersare required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solelyon a review of Forms 3, 4, and 5 (and any amendments thereof) received by us during or with respect to the year ended August 31, 2021,there have been no late reports, failures to file or transactions not timely reported, aside from one transaction not timely reportedfor Mr. Chiyuan Deng.

 

Code of Ethics

 

We have adopted a CorporateCode of Business Conduct and Ethics and Financial Code of Ethics. These are attached as exhibits to our Annual Report for the year endedAugust 31, 2019.

 

 20 

 

EXECUTIVE COMPENSATION

 

Thetable below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal yearsended August 31, 2021 and 2020.

 

  SUMMARY COMPENSATION TABLE 

Name

and

principal

position

Year Salary($)

Bonus

($)

 

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($)

Nonqualified

Deferred

Compensation

Earnings ($)

All Other

Compensation

($)

Total

($)

Chiyuan Deng
President,

CEO, and Director

2021

2020

 

180,000

0

50,000

 

30,100

100,000

0

0

0

0

0

0

9,000

9,000

269,100

109,000

Brandy Gao

CFO, resigned in December 2021

2021

2020

25,000

15,000

0

0

0

145

0

0

0

0

0

0

0

0

25,000

15,145 

Jimmy Chue

Chief Investment Officer

2021

 

 

55,685 0 7,527 0 0 0 0 63,212

Linqing Ye

Former COO

2021

2020

 

 0 

0

0

0

0

9,667

0

0

0

0

0

0

0

120,000

0

129,667

Jianli Deng

Former Secretary, Treasurer and Director

2021

2020

0

0

 

0

0

0

50,000

 

 

0

0

0

0

0

0

0

119,000

0

169,000

Lijun Yu

Former Chief Marketing Officer

2021

2020

0

0

0

0

0

9,667

0

0

0

0

0

0

0

110,000

0

119,667

 

 

OnJuly 30, 2018, we entered into an employment agreement with Chiyuan Deng to serve as our President. The agreement is for six years andwe issued Mr. Deng 400,000 shares for his services. Under the agreement, Mr. Deng is eligible for a bonus if provided by the board, vacation,medical, insurance and other benefits.

 

OnSeptember 11, 2020, we entered into an amended employment agreement with Chiyuan Deng, our Chief Executive Officer. Pursuant the amendedagreement, we amended the compensation to Mr. Deng to include a salary of $180,000 annually, a reduction in common stock received underhis initial employment agreement, a potential for a bonus in cash or shares, and the issuance of 100,000 shares of our newly createdSeries A Preferred Stock. Effective May 24, 2022, we amended the employment agreement for Mr. Chiyuan Deng, our Chief Executive Officer.The amended employment agreement allows us to pay Mr. Deng in shares of common stock at the market rate in lieu of cash payments on hissalary. No other changes were made to the employment agreement.

 

On February 22, 2021,we entered into an employment agreement with Jimmy Chue to serve as Chief Investment Officer (CIO). The CIO will be compensated withan annual base salary of $78,000, and eligible for a bonus of at least 50% of the annual salary payable in a lump sum at such time asmay be determined by the Board of Directors. The Company also issued 500,000 restricted shares of the Company’s common stock, parvalue $0.001 per share, to the CIO as Restricted Stock Award.

 

OnAugust 29, 2020, we entered into a Separation Agreement and Release with each of Jianli Deng, Lijun Yu and Linqing Ye. Pursuant to theagreements, Mr. Deng resigned as Secretary and Treasurer, Mr. Yu resigned as Chief Marketing Officer and Mr. Ye resigned as Chief OperatingOfficer. Mr. Deng will remain on as a member of our board of directors. The Separation and Release Agreement cancelled the employmentagreements for each of Messrs. Deng, Yu and Ye, and provided them each an indebtedness payment within five (5) business days of the agreements.Mr. Deng will receive $110,000 USD, Miss Yu will receive $110,000 USD and Mr. Ye will receive $120,000 USD. We received a release ofall claims from these prior officers.

 

 21 

 

OnDecember 31, 2021, Brandy Gao resigned as Chief Financial Officer of the Company. The term of her contract with the Company ended onthe last day of 2021.

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
 
OPTION AWARDS    STOCK AWARDS 
Name   Number of Securities Underlying Unexercised Options (#) Exercisable    Number of Securities Underlying Unexercised Options (#) Unexercisable    Equity Incentive  Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)    Option Exercise Price  ($)    Option Expiration Date    Number of Shares or Units of Stock That Have Not Vested (#)    

Market Value of Shares or Units

of Stock That Have Not Vested ($)

    

Equity Incentive  Plan Awards:  Number of Unearned  Shares, Units or Other Rights That Have

 Not Vested (#)

    Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not  Vested (#) 
Chiyuan Deng   —      —      —      —      —      —      —      —      —   
Linqing Ye   —      —      —      —      —      —      —      —      —   
Jianli Deng   —      —      —      —      —      —      —      —      —   
Lijun Yu   —      —      —      —      —      —      —      —      —   
Brandy Gao   —      —      —      —      —      —      —      —      —   
Jimmy
Chue
   —      —      —      —      —      —      —      —      —   

 

Director Compensation

 

OnSeptember 29, 2020, our board of directors approved a change in director compensation from shares to cash compensation.

 

Forthe year 2019-2020, the Board of Directors hereby approves of the payment of US$9,000 as the fee for each Director.

Forthe year 2020-2021, the Board of Directors hereby approves of the payment of US$9,000 as the fee for each Director.

 

BUSINESS

 

Company Overview 

 

We are an intellectualproperty (IP) and movie investment and licensing firm, focused on acquisitions and development of various intellectual property, includingthe acquisition and distribution of movies. In February 2019, we launched a business application (Ai Bian Quan Qiu) through smartphonesand 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 advertisingevents have been suspended for 7 months. The Company decided to suspend the Ai Bian Quan Qiu platform, which, at the time, created anadverse impact on the business and financial condition and hampered its ability to generate revenue and access sources of liquidity onreasonable terms. As a result, we decide to focus mainly the IP transactions and online video streaming. Our management and operationsare from the New York City, the international media center.

 

 22 

 

On April 22, 2020, theCompany announced the first phase development of its video streaming service. The online service will be marketed and distributed inthe world under the brand name ABQQ.tv. The Company's professional team are sourcing such dramas and films to provide video streamingservice on the ABQQ.tv. The video streaming website www.ABQQ.tv was officially launched on December 29, 2020. As of May 31, 2022, theCompany acquired 59 movie broadcast rights and a 15-episode TV drama series. The Company will continue marketing and promoting the ABQQ.tvwebsite through Google Ads and acquire additional broadcast rights for movies and TV series, and plan to charge subscription fees oncethe Company has obtained at least 200 broadcast rights of movie and TV series.

 

On October 21, 2021,the Company entered into a Lease Agreement (the “Lease”) with Martabano Realty Corp. (the “Landlord”), pursuantto 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 baserent obligation will be approximately $6,979, which amount will increase in year three to $13,260, year four at $13,658 and the finalyear 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 formerlyused as a theatre with a total of 5 screens and 466 sets for screening films. The former theatre opened on December 21, 1962 with HayleyMillsin “In Search of the Castaways.” It was a replacement for the town’s other movie theatre that burned down. Itwas 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 closedby the Covid-19 pandemic. It was announced in September 2020 that the closure would be permanent. The Company intends to continue touse the space as a theatre with a total of 5 screens and 466 sets for screening films. It’s the first theatre of ABQQ Cinemas inAmerica as the new business line of the Company.

 

On April 27, 2022, wepurchased a unique Non-Fungible Token (“NFT”) movie and music marketplace, named as the NFT MMM, from Stareastnet PortalLimited, which including an APP “NFT MMM” on Google Play, and full right to the website: stareastnet.io. NFTs are digitalassets 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. As the expert of IP transactions specialized in themedia industry, we believe that NFTs provide great potential in the intellectual property protection domain. It can promote transparencyand liquidity and open the market to innovators who aim to commercialize their IP efficiently. We are actively launching movie and TVdrama copyrights NFTs to buyers on the NFT MMM, and expect to generate revenues from the transactions incurred on the platform.

 

Subsequent to quarterend, on June 22, 2022, we entered an agreement with Zestv Studios Limited, a Hong Kong entity 100% owned by our Chief Executive OfficerChiyuan Deng, to transfer the mainland China copyright and broadcast right for the movie “Too Simple” to Zestv Studios Limited.The total transfer price was $750,000.

 

 Competition

 

Ourmain business is sub-license a patent of video synthesis and release system for mobile communications equipment to smartphone apps andsmartphone makers. We are in the process of using the underlying technology to create a smartphone video mix app as well as the socialvideo sharing platform. The main competitors are short video apps, we are going to discuss becoming a cooperation partner of them whichgenerated sub-license patent of video synthesis and release system monthly fee from them.

 

Employees 

 

Wecurrently have 4 employees.  

 

 23 

 

MARKET PRICE OF THEREGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

 

MarketInformation

 

Ourcommon stock is quoted under the symbol “ABQQ” on the OTCPink operated by OTC Markets Group, Inc. 

 

Thereis currently no active trading market for our securities. There is no assurance that a regular trading market will develop, or if developed,that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

 

Penny Stock

 

TheSecurities Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securitiesexchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securitiesis provided by the exchange or system.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock,to deliver a standardized risk disclosure document prepared by the Commission, that: (a) contains a description of the nature and levelof risk in the market for penny stocks in both public offerings and secondary trading;(b) contains a description of the broker's or dealer'sduties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirementsof Securities' laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocksand the significance of the spread between the bid and ask  price;(d) contains a toll-free telephone number for inquiries ondisciplinary actions;(e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and;(f) containssuch other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.

 

Thebroker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with; (a) bid and offer quotationsfor the penny stock;(b) the compensation of the broker-dealer and its salesperson in the transaction;(c) the number of shares to whichsuch bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and(d) a monthly account statements showing the market value of each penny stock held in the customer's account.

 

Inaddition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealermust make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser'swritten acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, anda signed and dated copy of a written suitability statement.

 

Thesedisclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subjectto these penny stock rules. Therefore, because our common stock is subject to the penny stock rules, stockholders may have difficultyselling those securities.

 

Holdersof Our Common Stock 

 

As ofAugust 2, 2022, we had 376,758,463 shares of our common stock issued and outstanding, held by approximately 559 shareholders of record,with others holding shares in street name.

 

Dividends

 

Wehave never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The paymentof cash dividends on our common stock will depend on earnings, financial condition and other business and economic factors at such timeas the board of directors may consider relevant. If we do not pay cash dividends, our common stock may be less valuable because a returnon your investment will only occur if its stock price appreciates.

 

 24 

 

SecuritiesAuthorized for Issuance under Equity Compensation Plans

 

Wehave no equity compensation plans.

 

UnregisteredSales of Equity Securities

 

Commonshares

 

  The Company issued 19,000,000 shares of common stock for cash at $0.0140 per share and 4,000,000 shares of common stock for cash at $0.0715 per share.

  The Company issued 25,406,238 shares of common stock from note conversion. Refer to Note 9 of the consolidated financial statements for the year ended August 31, 2021 for further details.

  The Company issued 56,407,922 shares of common stock from warrant exercises. Refer to Note 10 of the consolidated financial statements for the year ended August 31, 2021 for further details.

  261,111 shares of common stock returned to the Company due to officer resignations.

 

 

The Company issued 31,646,633 shares of put shares for cash at $0.015312, $0.014256, $ 0.01452, $0.077528, $0.09856, $0.11, $0.0715, $0.0563, $0.0528, $0.04875, $0.05764, and $0.0344 per share. 

     
  As stock-based compensation the Company issued 500,000 shares to the Chief Investment Offer and 1,000,000 shares to the Chief Executive Officer.
     
  The Company issued 24,528,637 of common shares from preferred shares series C & D conversion.
     
  The Company issued 17,700,000 shares of stock for consulting services.
     
  The Company issued 5,500,000 shares of put shares for cash at $0.02288 and $0.02719 per share
     
  The Company issued 3,146,854 of common shares from preferred shares series D conversions
     
  •  The Company issued 1,800,000 shares of common stock for cash at $0.01548 per share and 3,000,000 shares of common stock for cash at $0.01716 per share and 2,300,000 shares of common stock for cash at $0.01729 per share and 2,300,000 shares of common stock for cash at $0.01100 per share.
     
  •  As stock-based compensation the Company issued 5,000,000 shares to the Chief Investment Offer and 10,000,000 shares to the Chief Executive Officer.
     
  The Company issued 5,521,473 of common shares from preferred shares series D conversions
     
  The Company issued 30,000,000 shares of stock for consulting services.
     
  On April 7, 2022, the Company issued 2,841,389 shares of common stock for the conversion of Series C preferred stock.
     
  From June 13, 2022 to July 7, 2022, the Company issued 33,986,292 common shares for the conversion of Series C preferred stock.

 

 25 

 

Preferredshares

TheCompany authorized 10,000,000 shares of preferred shares with a par value $0.001. During the year ended August 31, 2021, the Companyissued 100,000 shares of Series A Preferred shares at par value $0.001, and 20,000 shares of Series B Preferred shares at $16 per share,280,025 shares of Series C Preferred shares and its dividend shares were converted to 7,140,360 common shares in August, 2021, and 798shares of Series D Preferred shares were converted to 17,388,277 common shares in August, 2021.

 

Basedupon the Series C Preferred Share purchase agreement, each share of Series C Preferred Stock carries an annual dividend in the amountof 12.0% of the Stated Value (the “Dividend Rate”). Which shall be cumulative, payable solely upon redemption, liquidationor conversion. Upon the occurrence of an Event of Default, the Dividend Rate shall automatically increase to 22.0%. As of August 31,2021, the Company has dividend expense of $16,801 and dividend payable of $0 on Series C Preferred Shares.

 

Basedupon the Series D Preferred Share purchase agreement, each share of Series D Preferred Stock shall be entitled to receive, and the Corporationshall pay, cumulative dividends of 8.0% per annum, payable quarterly, beginning on the Original Issuance Date and ending on the datethat such share of Preferred Share has been converted or redeemed (the “Dividend End Date”). As of August 31, 2021, the Companyhas dividend expense of $9,034 and dividend payable of $1,834 on Series D Preferred Shares and included in the accrued liabilities inthe balance sheet.

 

OnSeptember 3, 2021, the Company entered into a securities purchase agreement with an accredited investor, whereby the investor purchasedfrom the Company 234,300 shares of Series C Convertible Preferred Stock of the Company for a purchase price of $203,500.

OnNovember 2, 2021, the Company entered into a securities purchase agreement with an accredited investor, whereby investor purchased fromthe Company 98,325 shares of Series C Convertible Preferred Stock of the Company for a purchase price of $85,450. 

 

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

 

OnDecember 20, 2021, the Company entered into a securities purchase agreement with an accredited investor, whereby the investor purchasedfrom the Company 34 shares of Series D Convertible Preferred Stock of the Company for a purchase price of $34,000.

OnJanuary 21, 2022, the Company entered into a securities purchase agreement with an accredited investor, whereby investor purchased fromthe Company 89,490 shares of Series C Convertible Preferred Stock of the Company for a purchase price of $78,050.

 

OnJune 1, 2022, the Company entered into a securities purchase agreement with an accredited investor, whereby investor purchased from theCompany 147,775 shares of Series C Convertible Preferred Stock of the Company for a purchase price of $128,500. The closing occurredon June 16, 2022.

 

OnJuly 30, 2022, the Company entered into a securities purchase agreement with an accredited investor, whereby investor purchased fromthe Company 92,000 shares of Series C Convertible Preferred Stock of the Company for a purchase price of $80,000. The closing occurredon July 30, 2022.

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Youshould read the following discussion of our financial condition and results of operations in conjunction with financial statements andnotes thereto included elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect our plans,estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors thatcould cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in the sectionlabeled “Risk Factors.”

 

Thissection of the prospectus includes a number of forward-looking statements that reflect our current views with respect to future eventsand financial performance. Forward-looking statements are often identified by words like “believe,” “expect,”“estimate,” “anticipate,” “intend,” “project,” and similar expressions, or words that,by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only asof the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actualresults to differ materially from historical results or our predictions.

 

 26 

 

COVID-19

 

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

 

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

 

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

 

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

 

Results of Operationsfor the Three and Nine Months Ended May 31, 2022 and 2021

 

Revenues 

 

Ourtotal revenue reported for the nine months ended May 31, 2022 was $2,056,000, compared with $102,400 for the nine months ended May 31,2021. The increase in revenue for the nine months ended May 31, 2022 over the same period last year was mainly attributable to the Companysold the mainland China copyright and broadcast right of the movie “Love over the world”, “Our treasures” and“QiQingKuaiChe” for $1,800,000, and sold the mainland China copyrights and broadcast rights of the movie “LuShang”and “Huafeng” for total $256,000. For the same period last year, we had to shutdown of the performance matching platform(Ai Bian Quan Qiu). Since no large social gathering is allowed as a result of COVID-19, there has been no revenue generated from theperformance matching platform (Ai Bian Quan Qiu) since the end of January, 2020.

 

Totalrevenue for the three months ended May 31, 2022 was $256,000, compared with negative revenue of $51,200 for the three months ended May31, 2021. The increase was mainly due to we sold the mainland China copyrights and broadcast rights of the movie “LuShang”and “Huafeng” for total $256,000.

 

Ourcost of revenues was $2,235,534 for the nine months ended May 31, 2022, as compared with $878,601 for the nine months ended May 31, 2021.Most of the increase in cost of revenues for the nine months ended May 31, 2022 was the result of amortizing movie copyrights and broadcastrights due to the Company obtained more movie copyrights and broadcast rights.

 

 27 

 

Ourcost of revenues was $862,400 for the three months ended May 31, 2022, as compared with $423,674 for thethree months ended May 31, 2021. Most of the increase in cost of revenues for the three months ended May 31, 2022 was the result of amortizingmovie copyrights and broadcast rights due to the Company obtained more movie copyrights and broadcast rights.

 

Asa result, we had a gross loss of $179,534 for the nine months ended May 31, 2022, as compared with a gross loss of $776,201 for the ninemonths ended May 31, 2021. The negative gross profit for the nine months ended May 31, 2022 was attributable to the amortization of moviebroadcast rights exceeded the revenue from the copyright sales of films.

 

Asa result, we had a gross loss of $606,400 for the three months ended May 31, 2022, as compared with a gross loss of $474,874 for thethree months ended May 31, 2021. The increase in gross loss for the three months ended May 31, 2022 was attributable to the amortizationof movie broadcast rights exceeded the revenue from the copyright sales of films.

 

OnApril 27, 2022, we purchased a unique Non-Fungible Token movie and music marketplace, named as the NFT MMM, from Stareastnet Portal Limited,which including an APP “NFT MMM” on Google Play, and full right to the website: starestnet.io. We are actively launchingmovie NFT to buyers on the NFT MMM, and expect to generate transaction revenues from the platform.

 

Inaddition, we are increasing the marketing activities to achieve enough customers to start subscriptions for ABQQ.tv. and as well as generatingrevenue from the NYC cinema box office sales.

 

Operating Expenses 

 

Operatingexpenses decreased to $1,448,288 for the nine months ended May 31, 2022 from $1,466,979 for the nine months ended May 31, 2021. Our operatingexpenses for nine months ended May 31, 2022 consisted of general and administrative expenses of $1,106,121 and related party salary andwages of $342,167. In contrast, our operating expenses for the nine months ended May 31, 2021 consisted of general and administrativeexpenses of $1,208,142 and related party salary and wages of $258,837.

  

Operatingexpenses decreased to $421,317 for the three months ended May 31, 2022 from $517,845 for the three months ended May 31, 2021. Our operatingexpenses for three months ended May 31, 2022 consisted of general and administrative expenses of $370,067 and related party salary andwages of $51,250. In contrast, our operating expenses for the three months ended May 31, 2021 consisted of general and administrativeexpenses of $443,345 and related party salary and wages of $74,500.

 

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

 

Other Income/Expenses

 

Wehad other expense of $141,945 for the nine months ended May 31, 2022, as compared with other expenses of $413,702 for the nine monthsended May 31, 2021.

 

Wehad other expense of $141,945 for the three months ended May 31, 2022, as compared with other expenses of $87,153 for the three monthsended May 31, 2021.

 

Ourother expenses for the nine and three months ended May 31, 2022 were the penalty expense recorded in connection with the conversion ofits Series C preferred stocks due to the fact that the Company was late filing the Form 10-Q for the period ended February 28, 2022.

 

Ourother expenses for the nine and three months ended May 31, 2021 were mainly the result of interest expense and the loss from prepaidconvertible notes and warrant exercises. 

 

 28 

 

Net Loss

 

Weincurred a net loss in the amount of $1,769,767 for the nine months ended May 31, 2022, as compared with a net loss of $2,601,535 forthe nine months ended May 31, 2021. 

 

Weincurred a net loss in the amount of $1,169,662 for the three months ended May 31, 2022, as compared with a net loss of $1,079,872 forthe three months ended May 31, 2021.

 

Liquidity and CapitalResources

 

Asof May 31, 2022, we had $382,215 in current assets consisting of cash, accounts receivable and prepaid expenses. Our total current liabilitiesas of May 31, 2022 were $1,646,294. As a result, we have a working deficit of $1,264,079 as of May 31, 2022 as compared with a workingdeficit of $228,669 as of August 31, 2021.

  

Operatingactivities used $478,498 in cash for the nine months ended May 31, 2022, as compared with $4,043,032 used in cash for the same periodended May 31, 2021. Our negative operating cash flow in nine months ended May 31, 2022 was mainly the result of our net loss for thenine months combined with operating changes in purchase of copyrights and broadcast rights and changes in the long-term prepayments,offset by the amortization of intangible assets and increased account payable and accrued liabilities. Our negative operating cash flowin the same period in 2021 was mainly the result of our net loss for the nine months combined with operating changes in purchase of copyrightsand broadcast rights, offset by the amortization of intangible assets.

 

Investingactivities used $280,000 for the nine months ended May 31, 2022, as compared with $5,000 used for the nine months ended May 31, 2021.Our negative investing cash flow for May 31, 2022 was mainly the result of the purchase of NFT MMM, a unique Non-Fungible Token movieand music marketplace.

 

Financingactivities provided $998,007 for the nine months ended May 31, 2022, as compared with $1,660,166 provided in financing activities forthe nine months ended May 31, 2021. Our positive financing cash flow for the period ended May 31, 2022 was the result of proceeds fromissuance of our common stock and preferred stock. Our positive financing cash flow for the period ended May 31, 2021 was the result ofproceeds from issuance of convertible notes and convertible notes and sales of our common stock and preferred stock.

 

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

 

Going Concern

 

Theaccompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplatesthe realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As of May 31,2022, the Company had an accumulated deficit of approximately $8.37 million and a negative working capital of $1.26 million. For thenine months ended May 31, 2022, the Company incurred a net loss of approximately $1.77 million and had negative cash flows of approximately$0.48 million from its operations. Although, the Company generated revenue of approximately $2.06 million as the result of selling themainland China copyrights and broadcast rights for five movies (“Love over the world”, “Our treasures”, “Confusion”,“Huafeng” and “Lushang”) for the nine months ended May 31, 2022, the future operations of the Company dependon its ability to realize forecasted revenues, achieve profitable operations, and depend on whether or not the Company could obtain thecontinued financial support from its stockholders or external financing. Management believes the existing stockholders will provide theadditional cash to meet the Company’s obligations as they become due. However, there is no assurance that the Company will be successfulin securing sufficient funds to sustain the operations.

 

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

 

 29 

 

Off Balance Sheet Arrangements

 

Asof May 31, 2022, there were no off-balance sheet arrangements.

 

Results of operationsfor the years ended August 31, 2021 and 2020

 

Revenues 

 

Ourtotal revenue reported for the year ended August 31, 2021 was $115,091, compared with $448,343 for the year ended August 31, 2020.

 

Thedecrease in revenue for the years ended August 31, 2021 over the years ended August 31, 2020 is mainly attributable to the terminationof the sublicensing agreement with Anyone Picture in January, 2021. As such, there has been no revenues generated from sub-licensingthe patent since the end of December, 2020.

        

89%and 69% of revenue was generated from one customer during the years ended August 31, 2021 and August 31, 2020, respectively.

 

Ourcost of revenues was $1,494,328 for the years ended August 31, 2021, as compared with $177,577 for the years ended August 31, 2020. Mostof the increase in cost of revenues for the years ended August 31, 2021 was the result of amortizing movie broadcast rights, not presentin the same period 2020.

 

Asa result, we had gross loss of $1,379,237 for the years ended August 31, 2021, as compared with gross profit of $270,766 for the yearsended August 31, 2020. The decrease in gross profit margin for the years ended August 31, 2021 is largely to the high cost of amortizingmovie broadcast rights.

 

Wehope to generate increased revenue in the future by achieving enough customers to start subscriptions for ABQQ.tv and generating moviebox office revenue from our new movie theatre in New York.

 

OperatingExpenses 

 

Operatingexpenses increased to $1,844,670 for the years ended August 31, 2021 from $1,640,093 for the years ended August 31, 2020.

 

Ouroperating expenses for year ended August 31, 2021 consisted of general and administrative expenses of $1,511,333 and related party salaryand wages of $333,337. In contrast, our operating expenses for the years ended August 31, 2020 consisted of general and administrativeexpenses of $1,346,525, research and development expenses of $108,800 and related party salary and wages of $184,768.

 

Weexperienced an increase in general and administrative expenses in 2021 over 2020, mainly as a result of increased consulting fees, transactioncosts for issuing preferred shares, rent, salaries, valuation fees, travel and entertainment, and depreciation expense, etc.

 

Weexperienced an increase in related party salary and wages as the Chief Executive Officer started receiving cash salary in the fiscalyear of 2021 and received both cash bonus and stock-based compensation in February, 2021. During the years ended August 31, 2021, theCompany paid the Chief Executive Officer $180,000 salary, $50,000 bonus in cash, and $30,100 stock-based compensation. $25,000 salarywas paid in cash to Chief Financial Officer. In addition, the Company hired Chief Investment Officer on February 22, 2021 and $55,685cash salary and $7,527 stock-based compensation were paid to Chief Investment Officer for the years ended August 31, 2021. During theyears ended August 31, 2020, $169,768 was paid to five executives in the form of stock-based compensation and $15,000 cash salary waspaid to the Chief Financial Officer. 

 

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

 

 30 

 

OtherExpenses

 

Wehad other expenses of $439,537 for the years ended August 31, 2021, as compared with other expenses of $153,744 for the year ended August31, 2020. Our other expenses in 2021 were mainly the result of interest expense and the loss from prepaid convertible notes and warrantexercises. Our other expenses for 2020 was the result of interest expenses and a loss from a change in fair value.

 

NetLoss

 

Weincurred a net loss in the amount of $3,608,097 for the years ended August 31, 2021, as compared with a net loss of $1,523,071 for theyears ended August 31, 2020. 

 

Liquidityand Capital Resources

 

Asof August 31, 2021, we had $879,282 in current assets consisting of cash, prepaid expenses, related party receivables, subscription receivable,and other receivable. Our total current liabilities as of August 31, 2021 were $1,107,951. As a result, we have a negative working capitalof $228,669 as of August 31, 2021 as compared with a positive working capital of $1,840,732 as of August 31, 2020.

 

Operatingactivities used $5,141,166 in cash for the years ended August 31, 2021, as compared with $1,263,370 used in cash for the same periodended August 31, 2020. Our negative operating cash flow in 2021 was mainly the result of our net loss for the year combined with changesin other receivable, accounts payable and accrued liabilities, prepayment and costs for acquiring movie and TV series broadcast rightand copyright, and offset by related party payable. Our negative operating cash flow in 2020 was mainly the result of our net loss forthe year combined with changes in account receivable, other payable, prepayment for acquiring movie and TV series broadcast right andcopyright, and offset by a receivable on disposed assets.

 

Investingactivities used $5,000 in cash for the years ended August 31, 2021, as compared with $1,047,040 provided for the years ended August 31,2020.

 

Financingactivities provided $2,823,359 for the years ended August 31, 2021, as compared with $1,106,641 provided in financing activities forthe years ended August 31, 2020. Our positive financing cash flow for August 31, 2021 was the result of proceeds from convertible notesand sales of our common stock and preferred stock, offset by payments for warrant termination and prepayments for convertible notes.Our positive financing cash flow for August 31, 2020 was the result of proceeds from convertible notes and sales of our common stock.

 

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

 

Off BalanceSheet Arrangements

 

Asof August 31, 2021, there were no off-balance sheet arrangements.

 

CriticalAccounting Policies

 

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

 

Ourcritical accounting policies are set forth in Note 2 to the financial statements.

 

 31 

 

CertainRelationships and Related Person Transactions

 

Exceptas provided in “Description of Business” and “Executive Compensation” set forth above, for the past two fiscalyears there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were orwill be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of ourtotal assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or moreof any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct orindirect material interest.

 

YouallPerform Services Ltd, owned by the son of the Company’s Chief Executive Offer and the Company’s former Secretary and TreasurerJianli Deng, collects revenue from the performance matching platform “Ai Bian Quan Qiu” via a Wechat official account onbehalf of the Company. Due to the COVID-19 impact, the Company ceased operation of the “Ai Bian Quan Qiu” platform in January,2020. For the years ended August 31, 2021 and 2020, the Company recognized revenue of $0 and $141,143 from this performance matchingplatform, respectively. The balance of related party receivable from Youall Perform Services Ltd was $1,439 and $87,581 as of August31, 2021 and 2020, respectively.

 

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

 

TheCompany has entered into a patent license agreement with a related party Guangzhou Shengshituhua Film and Television Company Limited(“Licensor”) 100% owned by the Chief Executive Officer Chiyuan Deng. The agreement is for a term of 5 years commencing onthe effective date on June 1, 2017. The Company has already paid the licensor a non-refundable, up-from payment of $500,000 and shallpay a royalty of 20% of the gross revenue realized from the sale of licensed products and sub-licensing of this patent every year. Theroyalty expenses during the years ended August 31, 2021 and August 31, 2020 are $25,600 and $61,440, respectively. In January, 2021,the Company’s sublicensing agreement to generate royalty revenues was terminated with Anyone Picture. As such, there has been noroyalty expenses since the end of December, 2020 given there has been no sublicensing royalty revenue generated from the patent. Oncethe Company finds another company to sublicense the patent, it will generate royalty revenue and pay royalty expense again.

  

TheCompany rented an office from ZESTV STUDIOS LIMITED, a Hong Kong entity 100% owned by the Chief Executive Officer Chiyuan Deng. On December1, 2020, the Company entered an agreement with ZESTV STUDIOS LIMITED to grant ZESTV STUIDIOS LIMITED the distribution right for the movie“Love over the world” and charge ZESTV STUIDIOS LIMITED movie royalties. The Company’s royalties revenue is stipulatedto equal 43% of the after-tax movie box office revenue deducting movie issuance costs. The movie box office revenue is tracked by a moviedistributor Huaxia Film Distribution Co. Ltd (hereafter “Hua Xia”) in China as it connects with all movie theaters in Chinaand can track the total movie box office revenue online in real time. Although ZESTV STUDIOS LIMITED has paid royalties revenue to theCompany, ZESTV STUDIOS LIMITED failed to collect cash from Hua Xia. The Company will refund ZESTV STUDIOS LIMITED the movie royalties.As of August 31, 2021, the Company incurred related party payable of $16,512 for the office rent and $916,922 of refund for the movieroyalites revenue net of the movie distribution commission fee.   

  

OnAugust 29, 2020, the Company entered into a Separation Agreement and Release with each of Jianli Deng, Lijun Yu and Linqing Ye. Pursuantto the agreements, Mr. Deng resigned as Secretary and Treasurer, Ms. Yu resigned as Chief Marketing Officer and Mr. Ye resigned as ChiefOperating Officer. Mr. Deng will remain on as a member of our board of directors. The Separation and Release Agreement cancelled theemployment agreements for each of Messrs. Deng, Yu and Ye, and provided them each an indebtedness payment within five (5) business daysof the agreements. Mr. Deng will receive $110,000, Ms. Yu will receive $110,000 and Mr. Ye will receive $120,000. We received a releaseof all claims from these prior officers. In addition, Mr. Deng, Ms. Yu, and Mr. Ye agreed to return to the Company their unvested restrictedshares of 130,556, 147,222, and 147,222, respectively.

 

OnJune 22, 2022, we entered an agreement with Zestv Studios Limited, a Hong Kong entity 100% owned by our Chief Executive Officer ChiyuanDeng, to transfer the mainland China copyright and broadcast right for the movie “Too Simple” to Zestv Studios Limited. Thetotal transfer price was $750,000.

 

 32 

 

SECURITY OWNERSHIPOF BENEFICIAL OWNERS AND MANAGEMENT

 

The following tablesets forth, as of August 2, 2022 information as to shares of our common stock owned by (i) each person known by us to beneficially ownmore than 5% of our outstanding common stock, (ii) each of our directors, and (iii) all of our executive officers and directors as agroup:

 

Name and Address of
Beneficial Owner
  Common Stock     Series A
Preferred Stock
Series B
Preferred Stock
    Number of Shares Owned     Percent of  Class(1)(2)     Number of Shares Owned     Percent of  Class(1)(2) Number of Shares Owned Percent of  Class(1)(2)
Chiyuan Deng(3)     36,312,733       9.1%       100,000       100% 20,000 100%
Jianli Deng     269,444       *       —            —
Jimmy Chue     5,500,000       1.5%       —       
Ho Fai Lam     —        —        —       
Ruiyu Guan     —        —        —       
All Directors and Executive Officers as a Group (5 persons)     42,082,177       10.6%       100,000       100%

 

 

 

20,000

 

 

 

100%

5% Holders                                  
                      —       

 

* Less than 1%

  

  (1) Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of voting stock listed as owned by that person or entity.

 

  (2) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 376,758,463 shares of common issued and outstanding, 100,000 shares of Series A Preferred Stock, and 20,000 shares of Series B Preferred Stock as of August 2, 2022.

 

  (3) Includes 100,000 shares that may be converted of the 100,000 shares of Series A Preferred Stock and 20,000,000 shares that may be converted of the 20,000 shares of Series B Preferred Stock.

  

LEGAL MATTERS

 

Thevalidity of the shares of Common Stock offered by this prospectus will be passed upon for us by The Doney Law Firm, Las Vegas, Nevada.

 

EXPERTS

 

Theconsolidated financial statements for the Company as of August 31, 2020 and for the year then ended included in this prospectus havebeen audited by Yu Certified Public Accountant PC. The consolidated financial statements for the Company as of August 31, 2021 and forthe year then ended included in this prospectus have been audited by RotenbergMeril. Both are independent registered public accountingfirms, to the extent and for the periods set forth in our report and are incorporated herein in reliance upon such report given uponthe authority of said firm as experts in auditing and accounting. 

 

 33 

  

WHERE YOU CAN FINDMORE INFORMATION

 

Weare subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and file annual, quarterly and currentreports, proxy statements and other information with the SEC. You may read and copy these reports, proxy statements and other informationat the SEC’s public reference facilities at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of thesedocuments by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more informatsion aboutthe operation of the public reference facilities. SEC filings are also available at the SEC’s web site at http://www.sec.gov.

 

Thisprospectus is only part of a registration statement on Form S-1 that we have filed with the SEC under the Securities Act and thereforeomits certain information contained in the registration statement. We have also filed exhibits and schedules with the registration statementthat are excluded from this prospectus, and you should refer to the applicable exhibit or schedule for a complete description of anystatement referring to any contract or other document. You may inspect a copy of the registration statement, including the exhibits andschedules, without charge, at the public reference room or obtain a copy from the SEC upon payment of the fees prescribed by the SEC.

 

 34 

 

INDEX TO CONSOLIDATEDFINANCIAL STATEMENTS

  

  Page
   
Consolidated Financial Statements of AB International Group Corp. and Subsidiaries  
   
Consolidated Balance Sheets as of May 31, 2022 (Unaudited) and August 31, 2021 F-1
Consolidated Statements of Operations for the Three and Nine Months Ended May 31, 2022 and 2021 (Unaudited) F-2
Consolidated Statements of Stockholders’ Equity for Nine Months Ended May 31, 2022 and 2021 (Unaudited) F-3
Consolidated Statements of Cash Flows  for the Nine Months Ended May 31, 2022 and 2021 (Unaudited) F-4
Notes to Consolidated Financial Statements F-5

 

  Page
   
Consolidated Financial Statements of AB International Group Corp. and Subsidiaries  
   
Reports of Independent Registered Public Accounting Firms F-15
Consolidated Balance Sheets as of August 31, 2021 and 2020 F-19
Consolidated Statements of Operations for the Years Ended August 31, 2021 and 2020 F-20
Consolidated Statements of Stockholders’ Equity for the Years Ended August 31, 2021 and 2020 F-21
Consolidated Statements of Cash Flows for the Years Ended August 31, 2021 and 2020 F-22
Notes to Consolidated Financial Statements F-23

 

 35 

 

  

ABINTERNATIONAL GROUP

ConsolidatedBalance Sheets

(Unaudited) 

   May 31,  August 31,
   2022  2021
       
 ASSETS          
 Current Assets          
Cash and cash equivalents  $371,762   $132,253 
Accounts receivable   8,120       
Prepaid expenses   2,333    13,566 
Related party receivable         1,439 
Subscription receivable         87,239 
Other receivable         644,785 
 Total Current Assets   382,215    879,282 
           
 Fixed assets and leasehold improvement, net   13,803    53,705 
 Right of use operating lease assets, net   1,069,557    47,827 
 Intangible assets, net   3,513,272    3,998,805 
 Long-term prepayment   1,796,265    761,600 
 Other assets   45,241    16,508 
 TOTAL ASSETS  $6,820,353   $5,757,727 
           
 LIABILITIES AND STOCKHOLDERS’ EQUITY          
 Current Liabilities          
Accounts payable and accrued liabilities  $333,905   $118,283 
Related party payable   1,049,341    933,434 
Current portion of obligations under operating leases   229,014    48,226 
Due to stockholders   25,088    2,347 
Other payable   3,827    3,827 
Dividend payable   5,119    1,834 
 Total Current Liabilities   1,646,294    1,107,951 
           
 Obligations under operating leases, non-current   920,900       
 Total Liabilities   2,567,194    1,107,951 
           
 Stockholders’ Equity          
 Preferred stock, $0.001 par value, 10,000,000 preferred shares authorized;          
 Series A preferred stock, 100,000 and 100,000 shares issued and outstanding, as of May 31, 2022 and August 31, 2021, respectively   100    100 
 Series B preferred stock, 20,000 and 20,000 shares issued and outstanding, as of May 31, 2022 and August 31, 2021, respectively   20    20 
 Series C preferred stock, 283,890 and 0 shares issued and outstanding, as of May 31, 2022 and August 31, 2021, respectively   284       
 Series D preferred stock, 0 and 0 shares issued and outstanding, as of May 31, 2022 and August 31, 2021, respectively            
 Common stock, $0.001 par value, 1,000,000,000 shares authorized; 327,841,919 and 226,589,735 shares issued and outstanding, as of May 31, 2022 and August 31, 2021, respectively   327,842    226,590 
 Additional paid-in capital   12,595,751    11,009,517 
 Accumulated deficit   (8,366,088)   (6,578,978)
 Unearned compensation   (304,750)   (7,473)
 Total Stockholders’ Equity   4,253,159    4,649,776 
 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $6,820,353   $5,757,727 

 

Theaccompanying notes are an integral part of these financial statements. 

 F-1 

   

ABINTERNATIONAL GROUP CORP.

ConsolidatedStatements of Operations

(Unaudited)   

                                 
   Nine Months Ended  Three Months Ended
   May 31,  May 31,
   2022  2021  2022  2021
             
Revenue  $2,056,000   $102,400   $256,000   $(51,200)
Cost of revenue   (2,235,534)   (878,601)   (862,400)   (423,674)
Gross Profit (Loss)   (179,534)   (776,201)   (606,400)   (474,874)
                     
OPERATING EXPENSES                    
General and administrative expenses   (1,106,121)   (1,208,142)   (370,067)   (443,345)
Related party salary and wages   (342,167)   (258,837)   (51,250)   (74,500)
 Total Operating Expenses   (1,448,288)   (1,466,979)   (421,317)   (517,845)
                     
Loss From Operations   (1,627,822)   (2,243,180)   (1,027,717)   (992,719)
                     
OTHER INCOME (EXPENSES)                    
Rent income         1,920             
Interest expense, net         (156,815)         (28,161)
Penalty expenses   (141,945)        (141,945)     
Gain /(Loss) from change in fair value         64,584          45,490 
Gain/(Loss) from lease termination         (3,251)            
Gain/(Loss) from prepaid convertible note         (232,797)         (104,482)
Gain/(Loss) from warrant termination         (12,343)            
Gain/(Loss) from warrant exercise         (75,000)            
 Total Other Expenses   (141,945)   (413,702)   (141,945)   (87,153)
                     
Loss Before Income Tax Provision   (1,769,767)   (2,656,882)   (1,169,662)   (1,079,872)
Income tax provision         55,347             
NET LOSS  (1,769,767)  (2,601,535)   (1,169,662)  (1,079,872)
Preferred shares dividend expense   (17,343)   (7,009)   (14,504)   (7,009)
                     
Net loss available to common stock holders  $(1,787,110)  $(2,608,544)  $(1,184,166)  $(1,086,881)
                     
                     
NET LOSS PER SHARE: BASIC  $(0.01)  $(0.01)  $(0.00)  $(0.01)
NET LOSS PER SHARE: DILUTED  $(0.01)  $(0.01)  $(0.00)  $(0.01)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC   267,359,634    174,927,364    321,035,615    174,927,364 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: DILUTED   267,359,634    174,927,364    321,035,615    174,927,364 

  

The accompanyingnotes are an integral part of these financial statements.

    

 F-2 

 

AB INTERNATIONALGROUP CORP.

Consolidated Statementsof 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 – February 28, 2021  173,434,466   $173,434   400,025   $400   $8,825,968   $(4,492,544)  $(14,973)  $4,492,286 
Common shares issued for cash   4,000,000    4,000                282,000                286,000 
Put Shares issued for cash   5,056,633    5,057                493,954                499,011 
Common shares issued to officers for services                                       3,750    3,750 
Common shares issued for consulting services   8,200,000    8,200                237,800                246,000 
Preferred shares converted into common shares   3,880,152    3,880                173,043                176,923 
Preferred shares series D issuance               95          73,077                73,077 
Warrants termination and exercised