RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

9 Months Ended

May 31, 2021

Accounting Changes and Error Corrections [Abstract]

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

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 Company’s 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. Therefore, the Company determined that it was an error to record royalty revenue for this customer contract as the management determined the contract did not meet the required criteria to recognize revenue under FASB ASC 606 – Revenue from contracts with customers.

The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated balance sheet as of May 31, 2021: 

	For the period ended May 31, 2021
	As previously filed			Restatement Adjustments			As Restated			Restatement References
ASSETS
Current Assets
Cash and cash equivalents		67,195			—			67,195
Prepaid expenses		2,000			—			2,000
Account receivable		—			—			—
Related party receivable		658,961			(657,522	)		1,439		a
Subscription receivable		319,020			—			319,020		b
Interest receivable		—			—			—
Other receivable		—			—			—
Total Current Assets		1,047,176			(657,522	)		389,654
Fixed assets, net		18,236			—			18,236
Leasehold improvement, net		48,769			—			48,769
Right of use operating lease assets, net		70,792			—			70,792
Intangible assets, net		3,374,648			—			3,374,648
Long-term prepayment		1,228,800			—			1,228,800
Other assets		16,440			—			16,440
TOTAL ASSETS		5,804,861			(657,522	)		5,147,339
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities		97,830			(5,504	)		92,326		c
Related party payable		—			289,400			289,400		c
Current portion of obligations under operating leases		71,362			—			71,362
Convertible note and derivative liability		—			—			—
Due to shareholder		258			—			258
Tax payable		—			—			—
Other payable		3,827			—			3,827
Dividend payable		—			—			—
Total Current Liabilities		173,277			283,896			457,173
Obligations under operating leases, non-current		—			—			—
Total Liabilities		173,277			283,896			457,173
Stockholders’ Equity
Preferred stock, $0.001 par value, 10,000,000 preferred shares authorized;
Series A preferred stock, 100,000 and 0 shares issued and outstanding, as of May 31, 2021 and August 31, 2020, respectively		100			—			100
Series B preferred stock, 20,000 and 0 shares issued and outstanding, as of May 31, 2021 and August 31, 2020, respectively		20			—			20
Series C preferred stock, 280,025 and 0 shares issued and outstanding, as of May 31, 2021 and August 31, 2020, respectively		280			—			280
Series D preferred stock, 95 and 0 shares issued and outstanding, as of May 31, 2021 and August 31, 2020, respectively		—			—			—
Common stock, $0.001 par value, 1,000,000,000 shares authorized;
194,571,251 and 46,661,417 shares issued and outstanding, as of   May 31, 2021 and August 31, 2020, respectively		194,571			—			194,571
Additional paid-in capital		10,085,842			—			10,085,842
Accumulated deficit		(4,638,008	)		(941,417	)		(5,579,425	)	a
Unearned shareholders' compensation		(11,223	)		—			(11,223	)
Total Stockholders’ Equity		5,631,583			(941,417	)		4,690,166
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		5,804,860			(657,522	)		5,147,339

a)	To reverse the revenue recognized from the movie box office revenue in China for the movie “Love over the World” (Chinese name “Ai Bian Quan Qiu”)
b)	The balance sheet account "Due from shareholders" is renamed as "Subscription receivable"
c)	To bifurcate related party payable from account payable and accrued liabilities
d)	To recognize retained earning adjustment in the current year income statement as the balance is immaterial. As the Company applied the calendar year to its tax return and the calendar year 2017 had a net loss, $55,347 income tax expense booked in 2017 was reversed.
e)	To relcass the cash used to purchase movie and TV series broadcast rights and copyrights from the investing cash flow to the operating cash flow and combine the changes in long-term prepayment and intangible assets into one line of "Purchase of movie and TV series broadcast right and copyright" under the operating cash flow
f)	To corrrect the value of preferred shares converted into common shares

The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of operations for the nine months ended May 31, 2021:

	For the nine months ended May 31, 2021
	As previously filed			Restatement Adjustments			As Restated			Restatement References
Revenue		1,043,817			(941,417	)		102,400		a
Cost of revenue		(878,601	)		—			(878,601	)
Gross Profit (Loss)		165,216			(941,417	)		(776,201	)
OPERATING EXPENSES
General and administrative expenses		(1,208,142	)		—			(1,208,142	)
Related party salary and wages		(258,837	)		—			(258,837	)
Total Operating Expenses		(1,466,979	)		—			(1,466,979	)
Loss From Operations		(1,301,763	)		(941,417	)		(2,243,180	)
OTHER INCOME (EXPENSES)
Rent income		1,920			—			1,920
Interest expense		(156,822	)		—			(156,822	)
Interest income		8			—			8
Preferred shares dividend expense		(7,009	)		—			(7,009	)
Gain /(Loss) from change in fair value		64,584			—			64,584
Loss from lease termination		(3,251	)		—			(3,251	)
Loss from prepaid convertible note		(232,797	)		—			(232,797	)
Loss from warrant termination		(12,343	)		—			(12,343	)
Loss from warrant exercise		(75,000	)		—			(75,000	)
Total other income (expenses)		(420,711	)		—			(420,711	)
Loss Before Income Tax Provision		(1,722,474	)		(941,417	)		(2,663,891	)
Income tax benefit		—			55,347			55,347		d
NET LOSS		(1,722,474	)		(886,070	)		(2,608,544	)
NET LOSS PER SHARE: BASIC		(0.01	)					(0.01	)
NET LOSS PER SHARE: DILUTED		(0.01	)					(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC		174,927,364						174,927,364
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: DILUTED		174,927,364						174,927,364

a)	To reverse the revenue recognized from the movie box office revenue in China for the movie “Love over the World” (Chinese name “Ai Bian Quan Qiu”)
b)	The balance sheet account "Due from shareholders" is renamed as "Subscription receivable"
c)	To bifurcate related party payable from account payable and accrued liabilities
d)	To recognize retained earning adjustment in the current year income statement as the balance is immaterial. As the Company applied the calendar year to its tax return and the calendar year 2017 had a net loss, $55,347 income tax expense booked in 2017 was reversed.
e)	To relcass the cash used to purchase movie and TV series broadcast rights and copyrights from the investing cash flow to the operating cash flow and combine the changes in long-term prepayment and intangible assets into one line of "Purchase of movie and TV series broadcast right and copyright" under the operating cash flow
f)	To corrrect the value of preferred shares converted into common shares

The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of operations for the three months ended May 31, 2021:

	For the three months ended May 31, 2021
	As previously filed			Restatement Adjustments			As Restated			Restatement References
Revenue		192,508			(243,708	)		(51,200	)	a
Cost of revenue		(423,674	)		—			(423,674	)
Gross Profit (Loss)		(231,166	)		(243,708	)		(474,874	)
OPERATING EXPENSES
General and administrative expenses		(443,345	)		—			(443,345	)
Related party salary and wages		(74,500	)		—			(74,500	)
Total Operating Expenses		(517,845	)		—			(517,845	)
Loss From Operations		(749,011	)		(243,708	)		(992,719	)
OTHER INCOME (EXPENSES)
Rent income		—			—			—
Interest expense		(28,161	)		—			(28,161	)
Interest income		0			—			0
Preferred shares dividend expense		(7,009	)		—			(7,009	)
Gain /(Loss) from change in fair value		45,490			—			45,490
Loss from lease termination		—			—			—
Loss from prepaid convertible note		(104,482	)		—			(104,482	)
Loss from warrant termination		—			—			—
Loss from warrant exercise		—			—			—
Total other income (expenses)		(94,162	)		—			(94,162	)
Loss Before Income Tax Provision		(843,173	)		(243,708	)		(1,086,881	)
Income tax benefit		—			—			—
NET LOSS		(843,173	)		(243,708	)		(1,086,881	)
NET LOSS PER SHARE: BASIC		(0.00	)		(0.00	)		(0.01	)
NET LOSS PER SHARE: DILUTED		(0.00	)		(0.00	)		(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC		174,927,364			—			174,927,364
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: DILUTED		174,927,364			—			174,927,364

a)	To reverse the revenue recognized from the movie box office revenue in China for the movie “Love over the World” (Chinese name “Ai Bian Quan Qiu”)
b)	The balance sheet account "Due from shareholders" is renamed as "Subscription receivable"
c)	To bifurcate related party payable from account payable and accrued liabilities
d)	To recognize retained earning adjustment in the current year income statement as the balance is immaterial. As the Company applied the calendar year to its tax return and the calendar year 2017 had a net loss, $55,347 income tax expense booked in 2017 was reversed.
e)	To relcass the cash used to purchase movie and TV series broadcast rights and copyrights from the investing cash flow to the operating cash flow and combine the changes in long-term prepayment and intangible assets into one line of "Purchase of movie and TV series broadcast right and copyright" under the operating cash flow
f)	To corrrect the value of preferred shares converted into common shares

The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of cash flows for the nine months ended May 31, 2021:

	For the nine months ended May 31, 2021
	As previously filed			Restatement Adjustments			As Restated			Restatement References
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(1,722,474	)		(886,070	)		(2,608,544	)	a, d
Adjustments to reconcile net income (loss) to net cash from operating activities:
Executive salaries and consulting fees paid in stock		564,877			—			564,877
Depreciation of fixed asset		39,748			—			39,748
Amortization of intangible asset		853,001			—			853,001
Impairment of intangible asset		—			—			—
Loss/(gain) from change in fair value of derivatives		(64,584	)		—			(64,584	)
Loss/(gain) from lease termination		3,251			—			3,251
Loss/(gain) from warrant termination		12,343			—			12,343
Loss/(gain) from warrant exercise		75,000			—			75,000
Loss/(gain) prepaid convertible notes		232,797			—			232,797
Non-cash interest for convertible notes		156,822			—			156,822
Non-cash note conversion fees		8,750			—			8,750
Non-cash lease expense		1,761			—			1,761
Changes in operating assets and liabilities:								—
Accounts receivable		137,700			—			137,700
Receivable on asset disposal		—			—			—
Interest receivable		26,240			—			26,240
Related party receivable		(571,380	)		657,522			86,142		a
Prepaid expenses		9,024			—			9,024
Rent security & electricity deposit		1,987			—			1,987
Long-term prepayment		513,280			(513,280	)		—		e
Purchase of movie and TV series broadcast right and copyright		0			(3,539,369	)		(3,539,369	)	e
Accounts payable and accrued liabilities		(267,149	)		—			(267,149	)	c
Related party payable		—			283,896			283,896		a, c
Due to / from shareholders		(218	)		—			(218	)
Tax payable		(1,403	)		(55,347	)		(56,750	)	d
Other payable		243			—			243
Net cash provided by / (used in) operating activities		9,616			(4,052,649	)		(4,043,032	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds collected from note receivable		—
Purchase of movie and TV series broadcast right and copyright		(4,052,649	)		4,052,649			—		e
Purchase of furniture and equipment		(5,000	)		—			(5,000	)
Net cash used in investing activities		(4,057,649	)		4,052,649			(5,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of convertible notes		233,017			—			233,017
Proceeds from common stock issuances		1,530,619			—			1,530,619
Proceeds from preferred share B issuances		320,000			—			320,000
Proceeds from preferred share C issuances		243,500			—			243,500
Proceeds from preferred share D issuances		250,000			0			250,000
Payments for warrant termination		(95,000	)		—			(95,000	)
Prepayments of convertible notes		(821,970	)		—			(821,970	)
Net cash provided by financing activities		1,660,166			0			1,660,166
Net increase (decrease) in cash and cash equivalents		(2,387,867	)		0			(2,387,866	)
Cash and cash equivalents - beginning of the quarter		2,455,061			—			2,455,061
Cash and cash equivalents - end of the quarter		67,195			0			67,195
Supplemental Cash Flow Disclosures
Cash paid for interest		—			—			—
Cash paid for income taxes		—			—			—
Non-Cash Investing and Financing Activities:
Cashless warrant exercises		137,766			—			137,766
Convertible notes converted to common shares		(183,752	)		—			(183,752	)
Additions to ROU assets from operating lease liabilities		27,421			—			27,421
Common shares returned due to officer resignations		(391,667	)		—			(391,667	)
Preferred shares converted into common shares		3,880			173,043			176,923		f

a)	To reverse the revenue recognized from the movie box office revenue in China for the movie “Love over the World” (Chinese name “Ai Bian Quan Qiu”)
b)	The balance sheet account "Due from shareholders" is renamed as "Subscription receivable"
c)	To bifurcate related party payable from account payable and accrued liabilities
d)	To recognize retained earning adjustment in the current year income statement as the balance is immaterial. As the Company applied the calendar year to its tax return and the calendar year 2017 had a net loss, $55,347 income tax expense booked in 2017 was reversed.
e)	To relcass the cash used to purchase movie and TV series broadcast rights and copyrights from the investing cash flow to the operating cash flow and combine the changes in long-term prepayment and intangible assets into one line of "Purchase of movie and TV series broadcast right and copyright" under the operating cash flow
f)	To corrrect the value of preferred shares converted into common shares