NOTE 9 – CONVERTIBLE NOTES | NOTE 9 – CONVERTIBLE NOTES On November 18, 2019, the Company closed a private financing with EMA Financial, LLC (“EMA Financial” or the “Holder”) by issuing a convertible note (the “Note”). In connection with the issuance of the Note, the Company granted EMA Financial a five year 30,000 $12.5 100% 45,851,221 On December 13, 2019, the Company entered into a Securities Purchase Agreement with Peak One Opportunity Fund, L.P., a Delaware limited partnership (“Peak One” or the “Holder”), pursuant to which we issued and sold to the Peak One a convertible promissory note. The Note has an original principal amount of $235,000 $211,500 $23,500 $23,500 1,096,846 five year 10,000 $10 100% 3,720,326 On January 8, 2020, the Company entered into a Securities Purchase Agreement with Crown Bridge Partners, LLC, a New York limited company (“Crown Bridge”), pursuant to which the Company issued and sold to Crown a convertible promissory note, dated January 8, 2020, in the principal amount of $121,500 $109,500 $12,000 $12,000 five year 4,680 $12.5 On December 31, 2019, the Company closed a private financing with Auctus Capital Partners, LLC, (“Auctus” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $75,000 with no original discount upon issuance. As part of initial closing the outstanding principal amount shall be $75,000 and the Holder shall pay $75,000 of the consideration (the “First Tranche”). Out of $75,000 consideration, the Company has received $59,342 cash from Auctus with the remaining $15,658 spent as legal expense for note issuance and due diligence fees. The term of this convertible note is 9 months with the maturity date on September 30, 2020 . On February 13, 2020, the Company closed a private financing with East Capital Investment Corporation (“East Capital” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $50,000 $50,000 $50,000 $50,000 $43,492 $6,508 1 year February 13, 2021 On February 19, 2020, the Company closed a private financing with Fidelis Capital, LLC, (“Fidelis” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $50,000 $50,000 $50,000 $50,000 $43,487 $6,513 1 year February 19, 2021 AB INTERNATIONAL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – CONVERTIBLE NOTES (Continued) On March 12, 2020, the Company closed a private financing with Armada Capital Partners, LLC, (“Armada” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $38,500 $3,500 $38,500 $35,000 $35,000 $32,992 $2,008 one year March 12, 2021 five year 4,200 $12.50 On July 17, 2020, the Company closed a private financing with EMA Financial, LLC (“EMA Financial” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $50,000 $2,500 $50,000 $47,500 $47,500 $42,987 $4,513 one year July 17, 2021 On July 24, 2020, the Company closed a private financing with Power Up Lending Group Ltd., (“Power up” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $130,000 $130,000 $130,000 $130,000 $116,079 $13,921 one year July 24, 2021 On August 18, 2020, the Company closed another private financing with Power Up Lending Group Ltd., (“Power up” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $63,000 $63,000 $63,000 $63,000 $54,939 $8,061 one year August 18, 2021 On September 1, 2020, the Company closed another private financing with Jefferson Street Capital LLC, (“Jefferson Street Capital” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $82,500 $7,500 AB INTERNATIONAL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – CONVERTIBLE NOTES (Continued) As part of closing the outstanding principal amount shall be $82,500 $75,000 $75,000 $68,949 $6,051 The term of this convertible note is 1 year September 1, 2021 10.0% Upon an event of default, the interest rate will be equal to the 22.0% per annum from the due date thereof until the same is paid The conversion price shall equal the lower of: (i) the lowest closing price during the preceding 20 trading day period ending on the latest complete trading day prior to the Issue Date of this Note (the “Closing Price”) or (ii) 60.0% of the lowest traded price for the common stock on the principal market during the 20 consecutive trading immediately preceding the Conversion Date On September 1, 2020, the Company closed another private financing with FirstFire Global Opportunities Fund, LLC, (“FirstFire Global” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $75,000 $3,750 As part of closing the outstanding principal amount shall be $75,000 $71,250 $71,250 $61,498 $9,752 The term of this convertible note is 9 months June 1, 2021 10.0% Upon an event of default, the interest rate will be equal to the 24.0% per annum from the due date thereof until the same is paid The conversion price shall equal the lower of: (i) the lowest closing price during the preceding 20 trading day period ending on the latest complete trading day prior to the Issue Date of this Note (the “Closing Price”) or (ii) 60.0% of the lowest traded price for the common stock on the principal market during the 20 consecutive trading immediately preceding the Conversion Date On October 8, 2020, the Company closed another private financing with Power Up Lending Group Ltd., (“Power up” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $55,000 As part of closing the outstanding principal amount shall be $55,000 $55,000 $55,000 $47,579 $7,421 The term of this convertible note is 1 year October 8, 2021 10.0% Upon an event of default, the interest rate will be equal to the 22.0% per annum from the due date thereof until the same is paid The conversion price shall equal the lower of: (i) the lowest closing price during the preceding 20 trading day period ending on the latest complete trading day prior to the Issue Date of this Note (the “Closing Price”) or (ii) 60.0% of the lowest traded price for the common stock on the principal market during the 20 consecutive trading immediately preceding the Conversion Date On October 9, 2020, the Company closed another private financing with East Capital Investment Corp., (“East Capital” or the “Holder”) by issuing a convertible note (the “Note”). The Note has an original principal amount of $62,700 As part of closing the outstanding principal amount shall be $62,700 $62,700 $62,700 $54,992 $7,708 AB INTERNATIONAL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – CONVERTIBLE NOTES (Continued) The term of this convertible note is 1 year October 9, 2021 10.0% The conversion price shall equal the lower of: (i) the lowest closing price during the preceding 20 trading day period ending on the latest complete trading day prior to the Issue Date of this Note (the “Closing Price”) or (ii) 60.0% of the lowest traded price for the common stock on the principal market during the 20 consecutive trading immediately preceding the Conversion Date The below table summarizes all the convertible notes issued during the year ended August 31, 2021. Counterparties Issuance date Maturity Date Principal Amount Purchase Price Discount on Note issuance Note issuance costs Proceeds Received (USD) Jefferson Street Capital September 1,2020 September 1, 2021 82,500 75,000 7,500 6,051 68,949 FirstFire Global September 1,2020 June 1, 2021 75,000 71,250 3,750 9,752 61,498 Power Up Lending October 8, 2020 October 8, 2021 55,000 55,000 - 7,421 47,579 East Capital October 9, 2020 October 9, 2021 62,700 62,700 - 7,708 54,992 $ 275,200 $ 263,950 $ 11,250 $ 30,932 $ 233,018 The following table summarizes the convertible note and derivative liability in the balance sheet at August 31, 2021: Balance, August 31, 2020 $ 438,921 Issuance of Convertible Note Principal $ 275,200 Issuance of MFN Principal $ 15,000 Discount on Note issuance, net of amortization $ 75,075 Accrued interest expense $ 24,562 Converted Note Principal $ ( 166,464 ) Converted accrued and unpaid interest $ ( 8,538 ) Prepayment of Note Principal $ ( 559,782 ) Paid interest expense $ ( 29,390 ) Change in fair value of Derivative liability $ ( 64,584 ) Balance, August 31, 2021 $ — The Company valued its derivatives liability using Monte Carlo simulation. Assumptions used as of August 31, 2021 include (1) risk-free interest rates of 0.06% 66.25% 66.3% 30% The Company recognizes gain due to convertible feature of $64,584 AB INTERNATIONAL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – CONVERTIBLE NOTES (Continued) The Company prepaid nine convertible notes during the year ended August 31, 2021 as below: Convertible Notes Beginning Principal after Note Conversion Total Interest Accrued Paid Date Paid Principal Paid Interest Principal balance Outstanding Payment amount Loss from prepaid convertible note Crown Bridge (Tranche I) 1,082 2,641 12/9/20 ( 1,082 ) ( 2,641 ) - - - Crown Bridge (Tranche II) 40,500 1,545 12/9/20 ( 40,500 ) ( 1,545 ) - 72,500 1 ( 26,732 ) 1 EMA Financial 50,000 1,990 12/9/20 ( 50,000 ) ( 1,990 ) - 72,800 ( 20,810 ) Power Up Lending 130,000 6,491 1/22/21 ( 130,000 ) ( 6,491 ) - 190,925 ( 54,434 ) Power Up Lending 63,000 3,042 2/10/21 ( 63,000 ) ( 3,042 ) - 92,380 ( 26,338 ) East Capital 62,700 3,114 4/7/21 ( 62,700 ) ( 3,114 ) - 87,467 ( 21,652 ) Power Up Lending 55,000 2,746 4/7/21 ( 55,000 ) ( 2,746 ) - 80,797 ( 23,051 ) Jefferson Street 82,500 4,097 3/1/21 ( 82,500 ) ( 4,097 ) - 116,975 ( 30,378 ) FirstFire Global 75,000 3,724 3/1/21 ( 75,000 ) ( 3,724 ) - 108,125 ( 29,401 ) Total 559,782 29,390 - ( 559,782 ) ( 29,390 ) - 821,969 ( 232,796 ) 1. The Holders converted convertible notes to common shares during the year ended August 31, 2021 as below: EMA Financial: Conversion date Beginning principal balance Principal Amount Converted Interest Amount Converted MFN Principal Total converted principals and unpaid interest Closing Ending principal balance Conversion Price Converted September 1, 2020 5,285 5,285 5,154 — 10,439 1,000 — $ 0.00812 1,408,800 Total 5,285 5,154 — 10,439 1,000 1,408,800 Auctus Capital Partners: Conversion date Beginning principal balance Principal Amount Converted Interest Amount Converted MFN Principal Total converted principals and unpaid interest Closing Ending principal balance Conversion Price Converted September 8, 2020 33,295 12,055 73 — 12,128 750 21,240 $ 0.00510 2,525,000 September 18, 2020 21,240 15,233 58 — 15,291 750 6,007 $ 0.00510 3,145,300 September 29, 2020 6,007 6,007 18 11,082 17,107 750 — $ 0.00480 3,720,200 October 22, 2020 — — — 3,918 3,918 750 — $ 0.00216 2,161,240 Total 33,295 149 15,000 48,444 3,000 11,551,740 *On September 29, 2020, $6,007 17,107 $0.0048 60% $15,000 $0.1 $0 $15,000 AB INTERNATIONAL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – CONVERTIBLE NOTES (Continued) East Capital: Conversion date Beginning principal balance Principal Amount Converted Interest Amount Converted MFN Principal Total converted principals and unpaid interest Closing Ending principal balance Conversion Price Converted September 8, 2020 26,600 13,300 250 — 13,550 — 13,300 $ 0.01020 1,328,431 September 25, 2020 13,300 13,300 129 — 13,429 — — $ 0.00960 1,398,854 Total 26,600 379 — 26,979 — 2,727,285 Fidelis Capital: Conversion date Beginning principal balance Principal Amount Converted Interest Amount Converted MFN Principal Total converted principals and unpaid interest Closing Ending principal balance Conversion Price Converted September 1, 2020 41,000 25,671 — — 25,671 — 15,329 $ 0.01218 2,107,648 September 9, 2020 15,329 15,329 2,605 — 17,934 — — $ 0.01020 1,758,257 Total 41,000 2,605 — 43,605 — 3,865,905 Armada Partners: Conversion date Beginning principal balance Principal Amount Converted Interest Amount Converted MFN Principal Total converted principals and unpaid interest Closing Ending principal balance Conversion Price Converted September 25, 2020 25,500 13,000 213 — 13,213 500 12,500 $ 0.01020 1,344,363 October 6, 2020 12,500 12,500 38 — 12,538 500 — $ 0.00960 1,358,145 Total 25,500 251 — 25,751 1,000 2,702,508 Crown Bridge (Tranche I): Conversion date Beginning principal balance Principal Amount Converted Interest Amount Converted MFN Principal Total converted principals and unpaid interest Closing Ending principal balance Conversion Price Converted September 8, 2020 20,867 6,400 — — 6,400 1,250 14,467 $ 0.00765 1,000,000 September 22, 2020 14,467 5,635 — — 5,635 1,250 8,832 $ 0.00765 900,000 October 1, 2020 8,832 7,750 — — 7,750 1,250 1,082 $ 0.00720 1,250,000 Total 19,785 — 19,785 3,750 3,150,000 AB INTERNATIONAL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – CONVERTIBLE NOTES (Continued) In summary, the Company has either converted or prepaid all the outstanding convertible notes as of August 31, 2021. The below table lists conversions and prepayments during each quarter in fiscal 2021. Sr. No. Note Total convertible note issued Total principal converted as of 08/31/2020 Total principal converted as of 11/30/2020 Total principal paid off as of 2/28/2021 Total principal paid off as of 8/31/2021 Principal balance Outstanding as of 8/31/2021 1 EMA Financial 90,000 ( 84,716 ) ( 5,285 ) - - - 2 Peak One Opportunity 85,000 ( 85,000 ) - - - - 3 Auctus Fund Note 90,000 ( 41,705 ) ( 48,295 ) - - - 4 Crown Bridge (Tranche I) 40,500 ( 19,633 ) ( 19,785 ) ( 1,082 ) - - 5 East Capital 50,000 ( 23,400 ) ( 26,600 ) - - - 6 Fidelis Capital 50,000 ( 9,000 ) ( 41,000 ) - - - 7 Armada Partners 38,500 ( 13,000 ) ( 25,500 ) - - - 8 Crown Bridge (Tranche II) 40,500 - - ( 40,500 ) - - 9 EMA Financial (Issue Date: 7.17.2020) 50,000 - - ( 50,000 ) - - 10 Power Up Lending (Issue Date: 07.24.2020) 130,000 - - ( 130,000 ) - - 11 Power Up Lending (Issue Date: 08.18.2020) 63,000 - - ( 63,000 ) - - 12 East Capital (Issue Date: 10.09.2020) 62,700 - - - ( 62,700 ) - 13 Power Up Lending (Issue Date: 10.08.2020) 55,000 - - - ( 55,000 ) - 14 Jefferson Street (Issue Date: 09.01.2020) 82,500 - - - ( 82,500 ) - 15 FirstFire Global (Issue Date: 09.01.2020) 75,000 - - - ( 75,000 ) - Total 1,002,700 ( 276,454 ) ( 166,464 ) ( 284,582 ) ( 275,200 ) - As of August 31, 2021, all convertible notes were either converted or paid. No AB INTERNATIONAL GROUP CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |