Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On January 6, 2022, the board of directors of AB International Group Corp. (the
"Company") determined, upon the recommendation of the Company's management, and
in consultation with the Company's independent registered public accounting
firm, that the Company should restate its previously issued financial statements
for quarters ended February 28, 2021 and May 31, 2021 to correct the accounting
for certain transactions contained therein, as discussed below.
The restatement relates to the following:
The Company has previously entered into 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 Companys
royalties revenue is stipulated to equal 43% of the after-tax movie box office
revenue deducting movie issuance costs. The movie box office revenue is tracked
by a movie distributor Huaxia Film Distribution Co. Ltd (hereafter "Hua Xia") in
China as it connects with all movie theaters in China and can track the total
movie box office revenue online in real time. Although ZESTV STUDIOS LIMITED has
paid royalties revenue to the Company, ZESTV STUDIOS LIMITED failed to collect
cash from Hua Xia and Company management determined that it was an error to
record royalty revenue under this customer contract as management determined the
contract did not meet the required criteria to record revenue under FASB ASC 606
- Revenue from contracts with customers. The Company had previously recorded
royalty revenue of $697,709 for the second quarter ended February 28, 2021 and
$941,417 for the third quarter ended May 31, 2021.
Restated financial statements for the quarters ended February 28, 2021 and May
31, 2021 will be disclosed in amendments to the corresponding quarterly reports
as soon as is practicable.
Accordingly, the financial statements contained in the Company's Form 10-Q
reports for the quarters during those fiscal periods, filed with the Securities
and Exchange Commission should no longer be relied upon in their present format
until such time as the restated financial statements are filed.
The Company's management discussed the matters disclosed in this Item 4.02 with
the Company's independent registered public accounting firm, RotenbergMeril and
with its previous auditor, Yu Certified Public Accountant PC.
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