Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND ORGANIZATION
Basis of Presentation
The accompanying unaudited
financial statements are presented in accordance with generally accepted accounting principles for interim financial information
and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management,
all adjustments (consisting only of normal recurring accruals) considered necessary in order to make the financial statements not
misleading, have been included. Operating results for the nine months ended February 28, 2019 are not necessarily indicative of
results that may be expected for the year ending May 31, 2019.
Organization
Music of Your Life, Inc. (hereafter,
“we”, “our”, “us”, “MYL”, or the “Company”) was incorporated on January
30, 2008, in the State of Florida, as ZhongSen International Tea Company, with the principal business objective of providing sales
and marketing consulting services to small to medium sized Chinese tea producing companies who wish to export and distribute high
quality Chinese tea products worldwide. The Company commenced business activities in August, 2008, when it entered into a related
party Sales and Marketing Agreement with Yunnan Zhongsen Group, Ltd. However, due to lack of capital, the Company was unable to
implement its business plan fully. On May 31, 2013, the Company entered into a merger agreement (the “Merger”) with
Music of Your Life, Inc., a Nevada corporation (“MYL Nevada”). As a result of the Merger, MYL Nevada is a wholly-owned
subsidiary of the Company, and the Company is now operating a multi-media entertainment company, producing television shows and
radio programming. The Company changed its name to Music of Your Life, Inc. effective July 26, 2013.
Reverse Stock
Split
Effective June 20, 2018,
the Company effectuated a 1 share for 4,000 shares reverse stock split which reduced the issued and outstanding shares of common
stock from 3,642,441,577 shares to 912,863 shares. The accompanying financial statements have been retroactively adjusted to reflect
this reverse stock split.
Acquisition of The Marquie
Group, Inc.
On August 16, 2018 (see
Note 7), the Company merged with The Marquie Group, Inc. (“TMG”) in exchange for the issuance of a total of 40,000,002
shares of our common stock to TMG’s stockholders. Following the merger, the Company had 40,912,865 shares of common stock
issued and outstanding. On December 5, 2018, the Company amended and restated its Articles of Incorporation providing for a change
in the Company’s name from “Music of Your Life, Inc.” to “The Marquie Group, Inc.”
NOTE 2 - LOANS RECEIVABLE – RELATED
PARTY
During the year ended May
31, 2013, the Company loaned $174,950 to the Company’s current chief executive in anticipation of the merger agreement described
in Note 1. The loans are non-interest bearing and due on demand. Effective May 31, 2015, the Company agreed to waive collection
of $100,000 of the remaining $115,950 loans receivable balance in exchange for the chief executive officer’s agreement to
waive payment of the $100,000 accrued consulting fees balance due him at May 31, 2015 (see Note 8). As of February 28, 2019, the
balance due on this loan was $15,950.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
NOTE 3 - MUSIC INVENTORY
Music inventory consisted
of the following:
|
|
February 28, 2019
|
|
May 31, 2018
|
Digital music acquired for use in operations – at cost
|
|
$
|
19,330
|
|
|
$
|
17,055
|
|
Accumulated depreciation
|
|
|
(9,864
|
)
|
|
|
(7,374
|
)
|
Music inventory – net
|
|
$
|
9,466
|
|
|
$
|
9,681
|
|
The Company purchases digital
music to broadcast over the radio and internet. During the nine months ended February 28, 2019, the Company purchased $2,275 worth
of music inventory. For the nine months ended February 28, 2019 and 2018, depreciation of music inventory was $1,638 and $-0-,
respectively.
NOTE 4 - NOTES PAYABLE
Notes payable consisted of
the following:
|
|
February 28,
2019
|
|
May 31,
2018
|
Notes payable to an entity, non-interest bearing, due on demand, unsecured
|
|
$
|
45,500
|
|
|
$
|
—
|
|
Note payable to an individual, due on May 22, 2015, in default (B)
|
|
|
25,000
|
|
|
|
25,000
|
|
Note payable to an entity, non interest bearing, due on February 1, 2016, in default (D)
|
|
|
50,000
|
|
|
|
50,000
|
|
Note payable to a family trust, stated interest of $2,500, due on October 31, 2015, in default (E)
|
|
|
7,000
|
|
|
|
7,000
|
|
Note payable to a corporation, stated interest of $5,000, due on October 21, 2015, in default (G)
|
|
|
50,000
|
|
|
|
50,000
|
|
Note payable to a corporation, stated interest of $5,000, due on November 6, 2015, in default (H)
|
|
|
50,000
|
|
|
|
50,000
|
|
Note payable to an individual, stated interest of $2,500, due on December 20, 2015, in default (I)
|
|
|
25,000
|
|
|
|
25,000
|
|
Convertible note payable to an entity, interest at 12%, due on December 29, 2016, in default (M)
|
|
|
40,000
|
|
|
|
40,000
|
|
Note payable to a family trust, interest at 10%, due on November 30, 2016, in default (P)
|
|
|
25,000
|
|
|
|
25,000
|
|
Convertible note payable to an entity, interest at 10%, due on March 17, 2017, in default (Q)
|
|
|
19,586
|
|
|
|
33,686
|
|
Convertible note payable to an entity, interest at 10%, due on April 1, 2017, in default (R)
|
|
|
21,250
|
|
|
|
46,250
|
|
Convertible note payable to an entity, interest at 10%, due on June 13, 2017, in default (S)
|
|
|
40,750
|
|
|
|
40,750
|
|
Convertible note payable to an entity, interest at 12%, due on August 16, 2017, in default (T)
|
|
|
5,890
|
|
|
|
36,900
|
|
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
Convertible note payable to an entity, interest at 12%, due on October 31, 2017, in default (U)
|
|
|
44,331
|
|
|
|
46,750
|
|
Convertible note payable to an individual, interest at 10%, due on demand (V)
|
|
|
46,890
|
|
|
|
46,890
|
|
Convertible note payable to an individual, interest at 8%, due on demand (W)
|
|
|
29,000
|
|
|
|
29,000
|
|
Convertible note payable to an individual, interest at 8%, due on demand (X)
|
|
|
21,500
|
|
|
|
21,500
|
|
Convertible note payable to an entity, interest at 10%, due on demand (Y)
|
|
|
8,600
|
|
|
|
8,600
|
|
Convertible note payable to an entity, interest at 12%, due on March 16, 2018, in default (Z)
|
|
|
37,000
|
|
|
|
37,000
|
|
Convertible note payable to an entity, interest at 10%, due on January 11, 2019, in default – net of discount of $-0- and $54,247, respectively (AA)
|
|
|
88,000
|
|
|
|
33,753
|
|
Convertible note payable to an entity, interest at 10%, due on demand (CC)
|
|
|
50,000
|
|
|
|
50,000
|
|
Convertible note payable to an entity, interest at 10%, due on March 5, 2019 – net of discount of $479 and $26,658, respectively (DD)
|
|
|
34,521
|
|
|
|
8,342
|
|
Convertible note payable to an entity, interest at 10%, due on April 4, 2019 – net of discount of $3.596 and $31,644, respectively (EE)
|
|
|
33,903
|
|
|
|
5,856
|
|
Convertible note payable to an entity, interest at 10%, due on September 18, 2019 – net of discount of $12,452 and $-0-, respectively (FF)
|
|
|
10,048
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on September 18, 2019 – net of discount of $9,962 and $-0-, respectively (GG)
|
|
|
8,037
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on September 19, 2019 – net of discount of $148,175 and $-0-, respectively (HH)
|
|
|
51,825
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on August 4, 2019 – net of discount of $147,459 and $-0-, respectively (II)
|
|
|
22,541
|
|
|
|
—
|
|
Notes payable to individuals, non-interest bearing, due on demand
|
|
|
103,475
|
|
|
|
103,476
|
|
Total Notes Payable
|
|
|
994,650
|
|
|
|
820,753
|
|
Less: Current Portion
|
|
|
(994,650
|
)
|
|
|
(820,753
|
)
|
Long-Term Notes Payable
|
|
$
|
—
|
|
|
$
|
—
|
|
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
(B) On April 22, 2015, the
Company issued a $25,000 Promissory Note, non-interest bearing (interest at 24% per annum after May 22, 2015), due at maturity
on May 22, 2015. The Company also agreed to issue 500,000 shares of common stock, valued at $50,000 on April 22, 2015, as part
of the note agreement. The proceeds of the note were allocated between the principal and the market value of the stock resulting
in the Company recording a discount on the debt of $16,667. This amount was amortized over the 30 days life of the promissory
note.
(D) On July 24, 2015, the
Company issued a $50,000 Promissory Note to Kodiak Capital Group, LLC (“Kodiak”) for services rendered in association
with the Equity Purchase Agreement (See Note 8). As amended and restated January 4, 2016, the note is non-interest bearing and
was due on February 1, 2016.
(E) On July 31, 2015, the
Company issued a $25,000 Promissory Note with a stated interest amount of $2,500 due at maturity on October 31, 2015. The Company
also issued 1,000,000 shares of common stock, valued at $38,000, as part of the note agreement. The proceeds of the note were allocated
between the principal and the market value of the stock resulting in the Company recording a discount on the debt of $15,079. This
amount was amortized over the 90 days life of the promissory note.
(G) On August 6, 2015, the
Company issued a $50,000 Promissory Note with a stated interest amount of $5,000 due at maturity on October 21, 2015. The Company
also agreed to issue 2,000,000 shares of common stock, valued at $76,000, as part of the note agreement. The proceeds of the note
were allocated between the principal and the market value of the stock resulting in the Company recording a discount on the debt
of $30,159. This amount was amortized over the 75 days life of the promissory note.
(H) On August 21, 2015, the
Company issued a $50,000 Promissory Note with a stated interest amount of $5,000 due at maturity on November 6, 2015. The Company
also agreed to issue 2,000,000 shares of common stock, valued at $60,000, as part of the note agreement. The proceeds of the note
were allocated between the principal and the market value of the stock resulting in the Company recording a discount on the debt
of $27,273. This amount was amortized over the 75 days life of the promissory note.
(I) On September 21, 2015,
the Company issued a $25,000 Promissory Note with a stated interest amount of $2,500 due at maturity on December 20, 2015. The
Company also agreed to issue 1,000,000 shares of common stock, valued at $30,000, as part of the note agreement. The proceeds of
the note were allocated between the principal and the market value of the stock resulting in the Company recording a discount on
the debt of $13,636. This amount was amortized over the 90 days life of the promissory note. In the event that all principal and
interest are not paid to the lender by January 20, 2016, the Company is obligated to issue another 1,000,000 shares of common stock
to the lender and for interest to accrue at a rate of 24% per annum commencing on January 21, 2016.
(M) On December 29, 2015,
the Company issued a $20,000 Convertible Promissory Note to a lender for net loan proceeds of $15,000. The note bears interest
at a rate of 12% per annum, is due on December 29, 2016, and is convertible at the option of the lender into shares of the Company
common stock at a Conversion Price equal to 50% of the lowest closing bid price during the 30 Trading Day period prior to the Conversion
Date. See Note 6 (Derivative Liability).
(P) On June 3, 2016, the Company
issued a $25,000 Promissory Note. The note bears interest at a rate of 10% per annum and was due on November 30, 2016.
(Q) On June 17, 2016, the
Company issued a $50,750 Convertible Promissory Note to a lender for net loan proceeds of $44,000. The note bears interest at a
rate of 10% per annum (24% per annum default rate), was due on March 17, 2017, and is convertible at the option of the lender into
shares of the Company common stock at a Conversion Price equal to 55% of the lowest Trading Price during the 25 Trading Day period
prior to the Conversion Date. See Note 6 (Derivative Liability).
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
(R) On July 21, 2016, the
Company issued a $56,250 Convertible Promissory Note to a lender for net loan proceeds of $50,000. The note bears interest at a
rate of 10% per annum (24% per annum default rate), was due on April 21, 2017, and is convertible at the option of the lender into
shares of the Company common stock at a Conversion Price equal to $2.00 per share.
(S) On September 13, 2016,
the Company issued a $40,750 Convertible Promissory Note to a lender for net loan proceeds of $35,000. The note bears interest
at a rate of 10% per annum (24% per annum default rate), was due on June 13, 2017, and is convertible at the option of the lender
into shares of the Company common stock at a Conversion Price equal to $2.00 per share.
(T) On November 16, 2016,
the Company issued a $47,000 Convertible Promissory Note to a lender for net loan proceeds of $40,000. The note bears interest
at a rate of 12% per annum (24% per annum default rate), was due on August 16, 2017, and is convertible at the option of the lender
into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 25 Trading Day
period prior to the Conversion Date. See Note 6 (Derivative Liability).
(U) On January 31, 2017, the
Company issued a $46,750 Convertible Promissory Note to a lender for net loan proceeds of $40,000. The note bears interest at a
rate of 12% per annum (24% per annum default rate), was due on October 31, 2017, and is convertible at the option of the lender
into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 25 Trading Day
period prior to the Conversion Date. See Note 6 (Derivative Liability).
(V) On May 3, 2017, the Company
issued a $72,750 Convertible Promissory Note to a lender as a replacement for the principal and interest due on an earlier promissory
note. The note bears interest at a rate of 10% per annum, is due on demand, and is convertible at the option of the lender into
shares of the Company common stock at a Conversion Price equal to $0.5172 per share.
(W) On April 5, 2017, the
Company issued a $35,000 Convertible Promissory Note to a lender as a replacement for the principal and interest due on an earlier
promissory note. The note bears interest at a rate of 8% per annum, is due on demand, and is convertible at the option of the lender
into shares of the Company common stock at a Conversion Price equal to 40% of the lowest Trading Price during the 5 Trading Day
period prior to the Conversion Date. See Note 6 (Derivative Liability).
(X) On April 5, 2017, the
Company issued a $27,500 Convertible Promissory Note to a lender as a replacement for the principal and interest due on an earlier
promissory note. The note bears interest at a rate of 8% per annum, is due on demand, and is convertible at the option of the lender
into shares of the Company common stock at a Conversion Price equal to 40% of the lowest Trading Price during the 5 Trading Day
period prior to the Conversion Date. See Note 6 (Derivative Liability).
(Y) On March 1, 2017, the
Company issued a $8,600 Convertible Promissory Note to a vendor of the Company to convert certain accounts payable due to the vendor.
The note bears interest at a rate of 10% per annum, is due on demand, and is convertible at the option of the lender into shares
of the Company common stock at a Conversion Price equal to the higher of $0.16 per share or 60% of the lowest Trading Price during
the 5 Trading Day period prior to the Conversion Date.
(Z) On June 16, 2017, the
Company issued a $37,000 Convertible Promissory Note to a lender for net loan proceeds of $31,000. The note bears interest at a
rate of 12% per annum (24% per annum default rate), was due on March 16, 2018, and is convertible at the option of the lender into
shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 25 Trading Day period
prior to the Conversion Date. See Note 6 (Derivative Liability).
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
(AA) On January 11, 2018,
the Company issued a $500,000 Convertible Promissory Note to a lender. During the quarter ended February 28, 2018, the Company
borrowed $88,000 (of the $500,000), and received net loan proceeds of $75,000. The note bears interest at a rate of 10% per annum
and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the
lowest Trading Price during the 15 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability). The maturity
date for each tranche funded is twelve months from the effective date of each payment.
(CC) On December 1, 2017,
the Company issued a $50,000 Convertible Promissory Note to a vendor in settlement of certain accrued consulting fees of $50,000.
The note bears interest at a rate of 10% per annum, is due on demand, and is convertible at the option of the lender into shares
of the Company common stock at a Conversion Price equal to 60% of the lowest Trading Price during the 20 Trading Day period prior
to the Conversion Date. See Note 6 (Derivative Liability).
(DD) On March 5, 2018,
the Company issued a $35,000 Convertible Promissory Note to a lender for net loan proceeds of $33,000. The note bears interest
at a rate of 10% per annum, is due on March 5, 2019, and is convertible at the option of the lender into shares of the Company
common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion
Date. See Note 6 (Derivative Liability).
(EE) On April 4, 2018, the
Company issued a $37,500 Convertible Promissory Note to a lender for net loan proceeds of $35,500. The note bears interest at a
rate of 10% per annum, is due on April 4, 2019, and is convertible at the option of the lender into shares of the Company common
stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date.
See Note 6 (Derivative Liability).
(FF) On September 18, 2018,
the Company issued a $22,500 Convertible Promissory Note to a lender for net loan proceeds of $17,500. The note bears interest
at a rate of 10% per annum, is due on September 18, 2019, and is convertible at the option of the lender into shares of the Company
common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion
Date. See Note 6 (Derivative Liability).
(GG) On September 18, 2018,
the Company issued a $18,000 Convertible Promissory Note to a lender for net loan proceeds of $14,000. The note bears interest
at a rate of 10% per annum, is due on September 18, 2019, and is convertible at the option of the lender into shares of the Company
common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion
Date. See Note 6 (Derivative Liability).
(HH) On December 19, 2018,
the Company issued a $200,000 Convertible Promissory Note to a lender for net loan proceeds of $169,000. The note bears interest
at a rate of 10% per annum, is due on September 19, 2019, and is convertible at the option of the lender into shares of the Company
common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 25 Trading Day period prior to the Conversion
Date. See Note 6 (Derivative Liability).
(II) On February 4, 2019,
the Company issued a $170,000 Convertible Promissory Note to a lender for net loan proceeds of $149,955. The note bears interest
at a rate of 10% per annum, is due on August 4, 2019, and is convertible at the option of the lender into shares of the Company
common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 25 Trading Day period prior to the Conversion
Date. See Note 6 (Derivative Liability).
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
NOTE 5 - NOTES PAYABLE – RELATED PARTIES
Notes payable – related
parties consisted of the following:
|
|
February 28,
2019
|
|
May 31,
2018
|
Note payable to wife of Company’s chief executive officer, non-interest bearing, due on demand, unsecured
|
|
$
|
—
|
|
|
$
|
23,088
|
|
Note payable to Company law firm (and owner of 10,000,000 shares of common stock since August 16, 2018), non-interest bearing, due on demand, unsecured
|
|
|
2,073
|
|
|
|
2,073
|
|
Notes payable to The OZ Corporation (owner of 10,000,000 shares of common stock since August 16, 2018), non-interest bearing, due on demand, unsecured
|
|
|
103,250
|
|
|
|
103,250
|
|
Convertible note payable to John D. Thomas P.C. (Company law firm and owner of 10,000,000 shares of common stock since August 16, 2018), interest at 10%, due on demand, convertible at the option of the lender into shares of Company common stock equal to 60% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability)
|
|
|
50,000
|
|
|
|
50,000
|
|
Total Notes Payable
|
|
|
155,323
|
|
|
|
178,411
|
|
Less: Current Portion
|
|
|
(155,323
|
)
|
|
|
(178,411
|
)
|
Long-Term Notes Payable
|
|
$
|
—
|
|
|
$
|
—
|
|
In the three months ended
February 28, 2019, the Company paid the wife of the Company’s Chief Executive Officer a total of $50,000 for repayment of
the note payable due her ($24,593) and agreed interest expense ($25,407).
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
NOTE 6 - DERIVATIVE LIABILITY
The derivative liability at
February 28, 2019 and May 31, 2018 consisted of:
|
|
February 28, 2019
|
|
May 31, 2018
|
|
|
Face Value
|
|
Derivative Liability
|
|
Face Value
|
|
Derivative Liability
|
Convertible note payable issued December 29, 2015, due December 29, 2016 (M)
|
|
$
|
40,000
|
|
|
$
|
105,455
|
|
|
$
|
40,000
|
|
|
$
|
40,000
|
|
Convertible note payable issued June 17, 2016, due March 17, 2017 (Q)
|
|
|
19,586
|
|
|
|
44,999
|
|
|
|
33,686
|
|
|
|
27,561
|
|
Convertible note payable issued November 16, 2016, due August 16, 2017 (T)
|
|
|
5,890
|
|
|
|
15,529
|
|
|
|
36,900
|
|
|
|
47,000
|
|
Convertible note payable issued January 31, 2017, due October 31, 2017 (U)
|
|
|
44,331
|
|
|
|
116,874
|
|
|
|
46,750
|
|
|
|
46,750
|
|
Convertible note payable issued April 5, 2017, due on demand (W)
|
|
|
29,000
|
|
|
|
102,818
|
|
|
|
29,000
|
|
|
|
43,500
|
|
Convertible note payable issued April 5, 2017, due on demand (X)
|
|
|
21,500
|
|
|
|
76,227
|
|
|
|
21,500
|
|
|
|
32,250
|
|
Convertible note payable issued June 16, 2017, due on March 16, 2018 (Z)
|
|
|
37,000
|
|
|
|
97,545
|
|
|
|
37,000
|
|
|
|
37,000
|
|
Convertible note payable issued January 11, 2018, due on January 11, 2019 (AA)
|
|
|
88,000
|
|
|
|
232,000
|
|
|
|
88,000
|
|
|
|
171,204
|
|
Convertible note payable issued December 1, 2017, due on demand (BB)
|
|
|
50,000
|
|
|
|
101,515
|
|
|
|
50,000
|
|
|
|
33,333
|
|
Convertible note payable issued December 1, 2017, due on demand (CC)
|
|
|
50,000
|
|
|
|
101,515
|
|
|
|
50,000
|
|
|
|
33,333
|
|
Convertible note payable issued March 5, 2018, due on March 5, 2019 (DD)
|
|
|
35,000
|
|
|
|
94,182
|
|
|
|
35,000
|
|
|
|
68,915
|
|
Convertible note payable issued April 4, 2018, due on April 4, 2019 (EE)
|
|
|
37,500
|
|
|
|
121,364
|
|
|
|
37,500
|
|
|
|
72,957
|
|
Convertible note payable issued September 18, 2018, due on September 18, 2019 (FF)
|
|
|
22,500
|
|
|
|
81,818
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued September 18, 2018, due on September 18, 2019 (GG)
|
|
|
18,000
|
|
|
|
65,455
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued December 19, 2018, due on September 19, 2019 (HH)
|
|
|
200,000
|
|
|
|
727,273
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued February 4, 2019, due on August 4, 2019 (II)
|
|
|
170,000
|
|
|
|
615,090
|
|
|
|
—
|
|
|
|
—
|
|
Totals
|
|
$
|
860,807
|
|
|
$
|
2,699,659
|
|
|
$
|
505,336
|
|
|
$
|
653,803
|
|
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
The above convertible notes
contain a variable conversion feature based on the future trading price of the Company common stock. Therefore, the number of shares
of common stock issuable upon conversion of the notes is indeterminate. Accordingly, we have recorded the fair value of the embedded
conversion features as a derivative liability at the respective issuance dates of the notes and charged the applicable amounts
to debt discounts and the remainder to other expense. The increase (decrease) in the fair value of the derivative liability from
the respective issuance dates of the notes to the measurement dates is charged (credited) to other expense (income). The fair value
of the derivative liability of the notes is measured at the respective issuance dates and quarterly thereafter using the Black
Scholes option pricing model.
Assumptions used for the calculations
of the derivative liability of the notes at February 28, 2019 include (1) stock price of $0.02 per share, (2) exercise prices ranging
from $0.0044 to $0.0066 per share, (3) terms ranging from -0- days to 203 days, (4) expected volatility of 777.61 and (5) risk
free interest rates ranging from 2.44% to 2.50%.
Assumptions used for the calculations
of the derivative liability of the notes at May 31, 2018 include (1) stock price of $0.0001 per share ($0.40 per share adjusted
for the June 20, 2018 1 share for 4,000 shares reverse stock split, (2) exercise prices ranging from $0.00004 to $0.00006 per share
($0.16 to $0.24 per share adjusted for the June 20, 2018 1 share for 4,000 shares reverse stock split, (3) terms ranging from 0
days to 278 days, (4) expected volatility of 527% and (5) risk free interest rates ranging from 1.76% to 2.23%.
NOTE 7 - EQUITY TRANSACTIONS
On October 3, 2016, the Company
amended its Articles of Incorporation to increase the number of authorized shares of common stock from 500,000,000 to 2,000,000,000
shares and to change the par value of both the common stock and preferred stock from $0.001 per share to $0.0001 per share.
On November 9, 2016, the Company
amended its Articles of Incorporation to increase the number of authorized shares of common stock from 2,000,000,000 to 10,000,000,000
shares and to amend the voting rights for the Series A Preferred Stock. As amended, each share of Series A Preferred Stock shall
have voting rights equal to four times the sum of (a) all shares of Common Stock issued and outstanding at the time of voting;
plus (b) the total number of votes of all other classes of preferred stock which are issued and outstanding at the time of voting;
divided by (c) the number of shares of Series A Preferred Stock issued and outstanding at the time of voting. The Series A Preferred
Stock has no conversion, liquidation, or dividend rights.
During the year ended May 31, 2018,
the Company issued an aggregate of 278,818 shares (as adjusted for the June 20, 2018 reverse stock split) of common stock for the
conversion of notes payable and interest in the aggregate amount of $54,653.
During the year ended May 31, 2018,
the Company issued 29,500 shares (as adjusted for the June 20, 2018 reverse stock split) of common stock for cash in the amount
of $500.
On August 16, 2018, the Company
entered into a Merger Agreement by and among the Company, and The Marquie Group, Inc., a Utah Corporation (“TMG”),
pursuant to with the Company merged with TMG. The Company is the surviving corporation. Each shareholder of TMG received one (1)
share of common stock of the Company for every one (1) share of TMG common stock held as of August 16, 2018. In accordance with
the terms of the merger agreement, all of the shares of TMG held by TMG shareholders were cancelled, and 40,000,002 shares of common
stock of the Company were issued to the TMG shareholders.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
TMG was incorporated on August
3, 2018. The merger provides the Company with certain registered trademarks and intellectual property of TMG with respect to health,
beauty, and social networking products. The three stockholders of TMG prior to the merger who received the 40,000,002 shares are
(1) Marc Angell (CEO of the Company) and Jacquie Angell (20,000,002 shares), (2) The OZ Corporation (holder of $103,250 of Company
notes payable at May 31, 2018 and February 28, 2019) (10,000,000 shares), and (3) John Thomas P.C. (Company law firm and holder
of $52,073 of Company notes payable at May 31, 2018 and February 28, 2019) (10,000,000 shares). Pursuant to ASC 805-50-30-5 relating
to transactions between entities under common control, the intellectual property of TMG (and the issuance of the 40,000,002 shares
of common stock) was recorded at $-0-, the historical cost of the property to TMG.
During the nine months ended February
28, 2019, the Company issued an aggregate of 16,787,266 shares of common stock for the conversion of notes payable and accrued
interest in the aggregate amount of $145,480. We incurred a loss on the conversion of notes payable and accrued interest of $1,354,627,
which represents the excess of the $1,500,106 fair value of the 16,787,266 shares at the dates of conversion over the $145,479
amount of debt satisfied.
On October 16, 2018, the Company
issued 2,000,000 shares of its common stock to the consulting firm entity discussed in Note 8. The $41,000 estimated fair value
of the 2,000,000 shares (based on the
$0.0205 closing price of our common stock on October 16, 2018) has been expensed and included in “Salaries and Consulting
Fees” in the nine months ended February 28, 2019.
At February 28, 2019, there
are no stock options or warrants outstanding.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Service Agreements
On November 5, 2012, the Company
executed a General Services Agreement with the Company’s chief executive officer. The agreement provided for monthly compensation
of $10,000 and was to remain in full force and effect until either party provided 30 days notice of termination to the other party.
Effective May 31, 2015, the chief executive officer agreed to waive payment of the $100,000 accrued consulting fees balance due
him at May 31, 2015 in exchange for the Company’s agreement to waive collection of $100,000 of the remaining $115,950 loans
receivable balance due from the chief executive officer at May 31, 2015 before this transaction (see Note 2). On May 31, 2015,
this agreement was terminated.
On March 1, 2017, the Company
executed a Consulting Agreement with the Company’s chief executive officer. The agreement provides for monthly compensation
of $10,000 through December 31, 2020. The Company may terminate the agreement at any time without cause. For the nine months ended
February 28, 2019 and 2018, consulting fees expensed under this Consulting Agreement were $90,000 and $90,000, respectively. At
February 28, 2019 and May 31, 2018, accrued consulting fees under this Consulting Agreement were $104,800 and $71,800, respectively.
On November 15, 2012 and June
3, 2013, the Company executed General Services Agreements with two other service providers. The agreements provided for monthly
compensation of $1,000 and $500, respectively, and were to remain in full force and effect until either party provided 90 days
and 30 days, respectively, notice of termination to the other party. Effective September 1, 2015, these two agreements were replaced
by Consulting Agreements to provide for monthly compensation of $5,000 to each of the two service providers. The term of the agreements
is from September 1, 2015 to December 31, 2016 and thereafter on a month-to-month basis. The Company may terminate both of these
Consulting Agreements at any time without cause. For the nine months ended February 28, 2019 and 2017, consulting fees expensed
under these 2 Consulting Agreements totaled $90,000 and $90,000, respectively. At February 28, 2019 and May 31, 2018, accrued consulting
fees under these 2 Consulting Agreements were $266,050 and $181,850, respectively.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
Effective September 1,
2015, the Company entered into a Consulting Agreement with another service provider. The agreement provides for monthly compensation
of $1,000 for a term from September 1, 2015 to December 31, 2016 and thereafter on a month-to-month basis. The Company may terminate
this Consulting Agreement at any time without cause. For the nine months ended February 28, 2019 and 2017, consulting fees expensed
under this Consulting Agreement totaled $9,000 and $9,000, respectively. At February 28, 2019 and May 31, 2018, accrued consulting
fees under this Consulting Agreement was $42,000 and $33,000, respectively.
Effective January 1, 2019,
the Company entered into Consulting Agreements with two other service providers. The agreements provide for monthly compensation
of $1,000 and $500, respectively, on a month-to-month basis. The Company may terminate both of these Consulting Agreements at any
time without cause. For the nine months ended February 28, 2019 and 2017, consulting fees expensed under these Consulting Agreements
totaled $3,000 and $-0-, respectively. At February 28, 2019 and May 31, 2018, accrued consulting fees under these Consulting Agreements
was $3,000 and $-0-, respectively.
Corporate Consulting Agreement
On March 14, 2018, the Company
executed a Corporate Consulting Agreement (the “Agreement”) with a consulting firm entity (the “Consultant”).
The Agreement provided for the Consultant to perform certain investor relations and other services for the Company. The term of
the Agreement was 4 months but the Agreement provided that the Company could terminate the Agreement for any reason at any time
upon 5 days written prior notice. The Agreement provided for 8 payments of cash fees totaling $240,000 to be paid to the Consultant
over 4 months.
On April 1, 2018, the Company
notified the Consultant that the Agreement was terminated. A total of $25,000 was paid to the Consultant in March 2018 which was
expensed and included in “Salaries and Consulting Fees” in the Consolidated Statement of Operations for the year ended
May 31, 2018. No other amounts were accrued at May 31, 2018.
On October 16, 2018 (see Note
7), the Company issued 2,000,000 shares of its common stock to the Consultant. On October 26, 2018, the Consultant advised the
Company that it had not been notified that the Agreement was terminated on April 1, 2018 and that the Company is in default of
the Agreement.
NOTE 9 - GOING CONCERN
The accompanying financial
statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. At February 28, 2019, the Company had negative working
capital of $2,497,534 and an accumulated deficit of $5,088,599. These factors raise substantial doubt regarding the Company’s
ability to continue as a going concern.
To date the Company has funded
its operations through a combination of loans and sales of common stock. The Company anticipates another net loss for the fiscal
year ended May 31, 2019 and with the expected cash requirements for the coming year, there is substantial doubt as to the Company’s
ability to continue operations.
The Company is attempting
to improve these conditions by way of financial assistance through issuances of notes payable and additional equity and by generating
revenues through sales of products and services.
The financial statements do
not include any adjustments that might result from the outcome of this uncertainty.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial
Statements
February 28, 2019
(Unaudited)
NOTE 10 - SUBSEQUENT EVENTS
From March 1, 2019 to April
4, 2019, the Company issued a total of 19,787,804 shares of its common stock for the conversion of notes payable and accrued interest
in the aggregate amount of $66,277. The $197,619 excess of the $265,997 fair value of the 19,787,804 shares at the dates of conversion
over the $68,378 of debt satisfied will be charged to “Loss on conversion of notes payable and accrued interest” in
the three months ended May 31, 2019.
On March 4, 2019, the Company
received $67,500 from EMA Financial, LLC as net loan proceeds of a $75,000 10% convertible note due November 13, 2019. The default
interest rate on the note is 24%. The note is convertible at the option of the lender into shares of the Company common stock at
a conversion price equal to the lower of (i) the closing sale price on the trading day immediately preceding the issue date and
(ii) 50% of either the lowest sale price during the 20 trading days including and immediately preceding the conversion date, or
the closing bid price, whichever is lower.