Forward-Looking Statements
Certain statements, other than purely historical information, including
estimates, projections, statements relating to our business plans, objectives,
and expected operating results, and the assumptions upon which those statements
are based, are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements generally are identified by the words "believes,"
"project," "expects," "anticipates," "estimates," "intends," "strategy," "plan,"
"may," "will," "would," "will be," "will continue," "will likely result," and
similar expressions. We intend such forward-looking statements to be covered by
the safe-harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and are including this
statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. Our ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse effect on our operations
and future prospects on a consolidated basis include, but are not limited to:
changes in economic conditions, legislative/regulatory changes, availability of
capital, interest rates, competition, and generally accepted accounting
principles. These risks and uncertainties should also be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise. Further information concerning our business, including
additional factors that could materially affect our financial results, is
included herein and in our other filings with the SEC.
Overview
AB International Group Corp. (the "Company", "we" or "us") was incorporated
under the laws of the State of Nevada on July 29, 2013 and originally intended
to purchase used cars in the United States and sell them in Krygyzstan. The
Company's fiscal year end is August 31.
We are an intellectual property (IP) and movie investment and licensing firm,
focused on acquisitions and development of various intellectual property,
including the acquisition and distribution of movies. We have a Patent License
to a video synthesis and release system for mobile communications equipment, in
which the technology is the subject of a utility model patent in the People's
Republic of China. We had launched a business application (Ai Bian Quan Qiu)
through smartphones and official social media accounts based on WeChat platform
in February 2019, utilizing Artificial Intelligence, it is a matching platform
for performers, advertiser merchants, and owners for more efficient services. We
generate revenues through an agency service fee from each matched performance.
Due to the quarantine and continuous control imposed by the state and local
governments in areas affected by COVID-19, merchant advertising events have been
suspended for 7 months. The Company decided to suspend the Ai Bian Quan Qiu
platform, which, at the time, created an adverse impact on the business and
financial condition and hampered its ability to generate revenue and access
sources of liquidity on reasonable terms. Starting in January 2021, however, the
Company started generating movie box-office revenue from the movie "Ai Bian Quan
Qiu" as a result in the easing of COVID-19 restrictions.
On April 22, 2020, the Company announced the first phase development of its
video streaming service. The online service will be marketed and distributed in
the world under the brand name ABQQ.tv. The Company's professional team are
sourcing such dramas and films to provide video streaming service on the
ABQQ.tv. The video streaming website www.ABQQ.tv was officially launched on
December 29, 2020. As of November 30, 2021, the Company acquired 59 movie
broadcast rights. The Company will continue marketing and promoting the ABQQ.tv
website through GoogleAds and acquire additional broadcast rights for movies and
TV series, and plan to charge subscription fees once the Company has obtained at
least 200 broadcast rights of movie and TV series.
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On October 21, 2021, the Company entered into a Lease Agreement (the "Lease")
with Martabano Realty Corp. (the "Landlord"), pursuant to which the Company
agreed to lease approximately 8,375 square feet of in what is known as the Mt.
Kisco Theatre at 144 Main Street, Mount Kisco, New York. The term of the Lease
is five years. Commencing in month four, the Company's monthly base rent
obligation will be approximately $6,979, which amount will increase in year
three to $13,260, year four at $13,658 and the final year at $14,067 in
accordance with the terms of the Lease. The Lease contains customary provisions
for real property leases of this type, including provisions allowing the
Landlord to terminate the Lease upon a default by the Company.
The space was formerly used as a theatre with a total of 5 screens and 466 sets
for screening films. The former theatre opened on December 21, 1962 with Hayley
Mills in "In Search of the Castaways." It was a replacement for the town's other
movie theatre that burned down. It was later twinned and further divided into 5
screens. It was operated for years by Lesser Theaters, then bought by Clearview
Cinemas. In June, 2013 it was taken over by Bow-Tie Cinemas when they took most
Clearview locations. It lasted until March, 2020 when it was closed by the
Covid-19 pandemic. It was announced in September 2020 that the closure would be
permanent. The Company intends to continue to use the space as a theatre with a
total of 5 screens and 466 sets for screening films. It's the first theatre of
ABQQ Cinemas in America as the new business line of the Company.
Covid-19
The full extent of the impact of the COVID-19 pandemic on our business,
operations and financial results will depend on numerous evolving factors that
we may not be able to accurately predict at the present time. In an effort to
contain COVID-19 or slow its spread, governments around the world have enacted
various measures, including orders to close all businesses not deemed
"essential," isolate residents to their homes or places of residence, and
practice social distancing when engaging in essential activities. We anticipate
that these actions and the global health crisis caused by COVID-19 will
negatively impact business activity across the globe. The movie industry in
general has changed dramatically as a result of the pandemic restrictions. While
movie theaters struggle to stay alive, online streaming programming has
increased. We have endeavored to stay with the trend for streaming services to
remain competitive. We have experienced the negative impact in our results of
operations and in our financial condition for the year ended August, 2020,
especially with respect to the movie distribution end of our business. These
impacts concern delays in delivering our movies and IP because of health
restrictions imposed on certain public events that concern our business,
including, among other things, theaters, indoor and outdoor performances,
filming restrictions, music festivals, concerts and other such events, Some of
these restrictions include pandemic government mandated shutdowns and others
restrictions on capacity gathered at these events, with some jurisdictions
imposing fines or revocation of business licensing, and other restrictions. As a
result of these factors, our revenue was reduced from March to May of 2020. With
immediate closures, the resultant industry and business specific delays have
negatively affected our company.
We plan to focus on the video streaming and other web based applications and
expand our business into those areas that we believe we situate the company for
continued and increased revenues. As the pandemic is forecasted to worsen in the
United States and other areas around the globe, we believe that the demand for
our IP, online products and services offerings increases. While we cannot
guarantee that the negative effects of the pandemic will not interfere with our
ability to generate revenues, we intend to strengthen our position in this
dynamic market and position the company to best suit its shareholders.
Specific to our company operations, during the pandemic period, we have enacted
precautionary measures to protect the health and safety of our employees and
partners. These measures include closing our office, having employees work from
home, and eliminating all travel. While having employees work from home may have
a negative impact on efficiency and may result in negligible increases in costs,
it does have an impact on our ability to execute on our agreements to deliver
our core products.
We will continue to actively monitor the situation and may take further actions
that alter our business operations as may be required by federal, state, local
or foreign authorities, or that we determine are in the best interests of our
employees, customers, partners and stockholders. It is not clear what the
potential effects any such alterations or modifications may have on our
business, including the effects on our customers, partners, or vendors, or on
our financial results.
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Results of Operations
Revenues
Our total revenue reported for the three months ended November 30, 2021 was $0,
compared with $76,800 for the three months ended November 30, 2020.
The decrease in revenue for the three months ended November 30, 2021 over the
three months ended November 30, 2020 is mainly attributable to lack of any movie
box-office revenue for the current period, where in 2020, we achieved revenue of
$76,800 from the movie "Ai Bian Quan Qiu."
100% of revenue was generated from one customer during the three months ended
November 30, 2020.
Our cost of revenues was $686,567 for the three months ended November 30, 2021,
as compared with $156,086 for the three months ended November 30, 2020. Most of
the increase in cost of revenues for the three months ended November 30, 2021
was the result of amortizing movie broadcast rights, not present in the same
period 2020.
As a result, we had a gross loss of $686,567 for the three months ended November
30, 2021, as compared with a gross loss of $79,286 for the three months ended
November 30, 2020. The decrease in gross profit margin for the three months
ended November 30, 2021 is largely to the high cost of amortizing movie
broadcast rights combined with a lack of revenue.
We hope to generate increased revenues for the balance of the fiscal year with
continued box office revenue of Our Treasures, as well as achieving enough
customers to start subscriptions for ABQQ.tv
Operating Expenses
Operating expenses increased to $363,967 for the three months ended November 30,
2021 from $237,496 for the three months ended November 30, 2020.
Our operating expenses for three months ended November 30, 2021 consisted of
general and administrative expenses of $308,966 and related party salary and
wages of $55,000. In contrast, our operating expenses for the three months ended
November 30, 2020 consisted of general and administrative expenses of $231,146
and related party salary and wages of $6,350.
We experienced an increase in general and administrative expenses in 2021 over
2020, mainly as a result of increased rent, salaries, valuation fees, consulting
fees, transaction costs for issuing preferred shares, travel and entertainment,
and depreciation expense, etc.
We anticipate our operating expenses will increase as we undertake our plan of
operations, including increased costs associated with marketing, personnel, and
other general and administrative expenses, along with increased professional
fees associated with SEC and COVID compliance as our business grows more complex
and more expensive to maintain. On the COVID front, we expect that restrictions
will ease moving forward, but there may still be setbacks as variants to the
virus emerge and governments take lockdown measures in response. These and other
costs for COVID expenditures may increase our operational costs in fiscal 2022
at various levels of operation.
Other Expenses
We had other expenses of $1,511 for the three months ended November 30, 2021, as
compared with other expenses of $208,672 for the three months ended November 30,
2020. Our other expenses in 2021 were mainly the result of preferred share
dividend expense. Our other expenses in 2020 were mainly the result of interest
expense and loss from the change in fair value.
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Net Loss
We incurred a net loss in the amount of $1,052,045 for the three months ended
November 30, 2021, as compared with a net loss of $525,453 for the three months
ended November 30, 2020.
Liquidity and Capital Resources
As of November 30, 2021, we had $1,380,971 in current assets consisting of cash,
prepaid expenses, related party receivables and amounts due from shareholders.
Our total current liabilities as of November 30, 2021 were $1,611,998. As a
result, we have a working capital deficit of $231,027 as of November 30, 2021 as
compared with $228,669 as of August 31, 2021.
Operating activities used $629,550 in cash for the three months ended November
30, 2021, as compared with $1,744,973 used in cash for the same period ended
November 30, 2020. Our negative operating cash flow in 2021 was mainly the
result of our net loss for the quarter combined with operating changes in
receivables. Our negative operating cash flow in 2020 was mainly the result of
our net loss for the quarter combined with operating changes in accounts payable
and accrued liabilities, and from related party payables.
Investing activities used $0 in cash for the three months ended November 30,
2021, as compared with $5,000 used for the three months ended November 30, 2020.
We have zero investing cash flow for November 30, 2021. Our negative investing
cash flow for November 30, 2020 was mainly the result of the purchase of movie
and TV series rights.
Financing activities provided $667,965 for the three months ended November 30,
2021, as compared with $313,885 provided in financing activities for the three
months ended November 30, 2020. Our positive financing cash flow for November
30, 2021 was the result of proceeds from sales of our common stock and preferred
stock. Our positive financing cash flow for November 30, 2020 was the result of
proceeds from convertible notes and sales of our common stock.
The company has discussed selling the mainland China broadcast right of 3 movies
("Love over the world", "Our treasures", "Confusion") (the Company is
anticipating to sign a contract by the end of February 2022). The Company is
also contemplating selling all other mainland China broadcast rights of all
films owned by the Company due to restrictions on the Company in accessing the
royalties earned on mainland China. The company plans to continue to own all
other copyrights & broadcast rights.
Based upon our current financial condition, we do not have sufficient cash to
operate our business at the current level for the next twelve months. We intend
to fund operations through increased sales and debt and/or equity financing
arrangements, which may be insufficient to fund expenditures or other cash
requirements. We plan to seek additional financing in a private equity offering
to secure funding for operations. There can be no assurance that we will be
successful in raising additional funding. If we are not able to secure
additional funding, the implementation of our business plan will be impaired.
There can be no assurance that such additional financing will be available to us
on acceptable terms or at all.
Off Balance Sheet Arrangements
As of November 30, 2021, there were no off-balance sheet arrangements.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most
"critical accounting polices" in the Management Discussion and Analysis. The SEC
indicated that a "critical accounting policy" is one which is both important to
the portrayal of a company's financial condition and results, and requires
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain.
Our critical accounting policies are set forth in Note 2 to the financial
statements.
Recently Issued Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to
have a significant impact on our results of operations, financial position or
cash flow.
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