Note: The above statement reflects retroactively the 1 share for 4,000 shares
reverse split effective June 20, 2018 and 1 share
Notes to the Consolidated Financial Statements
May 31, 2019
NOTE 1 -ORGANIZATION
Music of Your Life, Inc. (the “Company”)
was incorporated under the laws of the State of Florida on January 30, 2008 under the name of “Zhong Sen International Tea
Company”. From January 2008 to May 2013, the Company operated with the principal business objective of providing sales and
marketing consulting services to small to medium sized Chinese tea producing companies who wished to export and distribute high
quality Chinese tea products worldwide. On May 31, 2013 (the “Closing Date”), the Company entered into a Merger Agreement
(the “Merger Agreement”) by and among the Company, Music of Your Life, Inc., a Nevada corporation (“MYL Nevada”)
incorporated October 10, 2012, and Music of Your Life Merger Sub, Inc., a Utah corporation ("Merger Sub"), pursuant to
which MYL Nevada merged with Merger Sub. As a result of the merger, MYL Nevada became a wholly-owned subsidiary of the Company,
and on July 26, 2013, the Company changed its name to Music of Your Life, Inc., and is now operating a multi-media entertainment
company, producing live concerts, television shows and radio programming. On May 20, 2014 the Company acquired 100% of the outstanding
stock of iRadio, Inc., a Utah corporation. The Company was the surviving corporation. iRadio was an entity related to the Company
by common ownership.
Reverse Stock Splits
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 910,610 shares. Effective September 4, 2019, the Company effectuated a 1 share for 400 shares reverse stock
split which reduced the issued and outstanding shares of common stock from 430,589,412 shares to 1,061,356 shares. The accompanying
financial statements have been retroactively adjusted to reflect these reverse stock splits.
Acquisition of The Marquie Group,
Inc.
On August 16, 2018 (see Note 9),
the Company merged with The Marquie Group, Inc. (“TMG”) in exchange for the issuance of a total of 100,000 shares of
our common stock to TMG’s stockholders. Following the merger, the Company had 102,277 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.” The TMG business plan is to launch a
direct-to-consumer, health and beauty product line called “Whim” that use innovative formulations of plant-based, amino-acids
and other natural alternatives to chemical ingredients, with and without non-THC CBD oil.
NOTE 2 -SIGNIFICANT
ACCOUNTING POLICIES
This summary of significant accounting
policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements
and notes are representations of the Company’s management who are responsible for their integrity and objectivity. These
accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently
applied in the preparation of the financial statements. The following policies are considered to be significant:
a. Principles
of Consolidation
The consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States and include the Company and
its wholly-owned subsidiary. All inter-company accounts and transactions have been eliminated.
b. Accounting
Method
The Company recognizes income and
expenses based on the accrual method of accounting. The Company has elected a May 31 year-end.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
c. Use
of Estimates in the Preparation of Financial Statements
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
d. Cash
and Cash Equivalents
Cash equivalents are generally comprised
of certain highly liquid investments with original maturities of less than three months.
e. Basic
and Fully Diluted Net Loss per Share of Common Stock
In accordance with Financial Accounting
Standards No. ASC 260, “Earnings per Share,” basic net loss per common share is based on the weighted average number
of shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of
common shares plus dilutive common share equivalents outstanding during the period. Dilutive instruments (such as convertible notes
payable) have not been included in the diluted earnings per share computations as their effect were antidilutive for the periods
presented.
f. Revenue
Recognition
Revenue is recognized upon completion
of services or delivery of goods where the sales price is fixed or determinable and collectability is reasonably assured. Advance
customer payments are recorded as deferred revenue until such time as they are recognized. The Company does not offer any cash
rebates. Returns or discounts, if any, are netted against gross revenues.
g. Advertising
Advertising costs, which are expensed
as incurred, were $438 and $4,301 for the years ended May 31, 2019 and 2018, respectively.
h. Income
Taxes
Deferred income taxes are provided
on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
At May 31, 2019, the Company had
net operating loss carryforwards of approximately $3,889,862, of which $3,035,346 expires in varying amounts through 2038 and $854,516
does not expire. No tax benefit has been reported in the financial statements because the potential tax benefits of the net operating
loss carryforwards are offset by a valuation allowance of the same amount.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
Due to the change in ownership provisions
of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual
limitations. Should a substantial change in ownership occur, net operating loss carryforwards may be limited as to future use.
Net deferred tax
assets consist of the following components as of May 31, 2019 and 2018:
|
|
May 31, 2019
|
|
May 31, 2018
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
NOL Carryover
|
|
$
|
816,871
|
|
|
$
|
637,423
|
|
Valuation allowance
|
|
|
(816,871
|
)
|
|
|
(637,423
|
)
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
The income tax provision differs
from the amount of income tax determined by applying the U.S. federal income tax rate of 21% and 34%, respectively, to pretax income
(loss) for the years ended May 31, 2019 and 2018 due to the following:
|
|
May 31, 2019
|
|
May 31, 2018
|
Expected tax (benefit) at 21% and 34%, respectively
|
|
$
|
(766,594
|
)
|
|
$
|
(212,726
|
)
|
Non-deductible stock-based expenses
|
|
|
8,610
|
|
|
|
—
|
|
Non-deductible expense (non-taxable income) from derivative liability
|
|
|
131,905
|
|
|
|
(92,634
|
)
|
Non-deductible amortization of debt discounts
|
|
|
87,693
|
|
|
|
63,615
|
|
Non-deductible loss on conversions of notes payable and accrued interest
|
|
|
358,938
|
|
|
|
—
|
|
Remeasurement of deferred income tax from 34% to 21% (a)
|
|
|
—
|
|
|
|
394,595
|
|
Change in valuation allowance
|
|
|
179,448
|
|
|
|
(152,850
|
)
|
Provision for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(a)
|
As a result of the Tax Cuts and Jobs Act enacted on December 22, 2017, the United States corporate
income tax rate became 21% effective January 1, 2018. Accordingly, we reduced our deferred income tax asset relating to our net
operating loss carryforward (and the valuation allowance thereon) by $394,595 from $1,032,018 to $637,423 as of May 31, 2018.
|
For the periods presented, the Company had no tax
positions or unrecognized tax benefits.
The Company includes interest
and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income
taxes. For the periods presented, the Company had no such interest or penalties.
|
i.
|
Concentrations of Credit Risk
|
Financial instruments that potentially
subject the Company to concentrations of credit risks consist of cash and cash equivalents. The Company places cash and cash equivalents
at well-known quality financial institutions. Cash and cash equivalents at banks are insured by the Federal Deposit Insurance Corporation
for up to $250,000. The Company did not have any cash or cash equivalents in excess of this amount at May 31, 2019.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
j. Recent
Accounting Pronouncements
We have reviewed accounting pronouncements
issued and have adopted any that are applicable to the Company. We have determined that none had a material impact on our financial
position, results of operations, or cash flows for the years ended May 31, 2019 and 2018.
Certain other accounting pronouncements
have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been
adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards
is not expected to be material.
NOTE 3 - FINANCIAL INSTRUMENTS
The Company has adopted FASB ASC
820-10-50, “Fair Value Measurements.” This guidance defines fair value, establishes a three-level valuation
hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three
levels are defined as follows:
Level 1 inputs
to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs
to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs
to valuation methodology are unobservable and significant to the fair measurement.
The carrying amounts reported in
the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments
and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and
their expected realization and their current market rate of interest.
NOTE 4 - 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 were 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 10). As of May 31, 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
May 31, 2019
NOTE 5 - MUSIC INVENTORY
Music inventory consisted of the
following:
|
|
May 31, 2019
|
|
May 31, 2018
|
Digital music acquired for use in operations – at cost
|
|
$
|
20,076
|
|
|
$
|
17,055
|
|
Accumulated depreciation
|
|
|
(10,679
|
)
|
|
|
(7,374
|
)
|
Music inventory – net
|
|
$
|
9,397
|
|
|
$
|
9,681
|
|
The Company purchases digital music
to broadcast over the radio and internet. During the year ended May 31, 2019, the Company purchased $3,021 worth of music inventory.
For the years ended May 31, 2019 and 2018, depreciation on music inventory was $3,305 and $7,374, respectively.
NOTE 6 – ACCRUED CONSULTING FEES
Accrued consulting fees consisted
of the following:
|
|
May 31,
2019
|
|
May 31,
2018
|
Due to Company Chief Executive Officer pursuant to Consulting Agreement dated March 1, 2017 – monthly compensation of $10,000
|
|
$
|
74,300
|
|
|
$
|
71,800
|
|
Due to wife of Company Chief Executive Officer pursuant to consulting agreement effective August 16, 2018 – monthly compensation of $15,000
|
|
|
90,500
|
|
|
|
—
|
|
Due to mother of Company Chief Executive Officer pursuant to Consulting Agreement dated September 1, 2015 – monthly compensation of $5,000
|
|
|
101,350
|
|
|
|
76,350
|
|
Due to service provider pursuant to Consulting Agreement dated September 1, 2015 (which was terminated February 28, 2019) – monthly compensation of $5,000
|
|
|
144,700
|
|
|
|
105,500
|
|
Due to service provider pursuant to Consulting Agreement dated September 1, 2015 – monthly compensation of $1,000
|
|
|
45,000
|
|
|
|
33,000
|
|
Due to two other service providers
|
|
|
19,500
|
|
|
|
—
|
|
Total
|
|
$
|
475,350
|
|
|
$
|
286,650
|
|
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
The accrued consulting fees balance
changed as follows:
|
|
Year Ended
|
|
|
May 31,
2019
|
|
May 31,
2018
|
Balance, beginning of period
|
|
$
|
286,650
|
|
|
$
|
171,550
|
|
Compensation expense accrued pursuant to consulting agreements
|
|
|
399,000
|
|
|
|
252,000
|
|
Payments to consultants
|
|
|
(210,300
|
)
|
|
|
(136,900
|
)
|
Balance, end of period
|
|
$
|
475,350
|
|
|
$
|
286,650
|
|
See Note 11 (Commitments and Contingencies)
NOTE 7 - NOTES PAYABLE
Notes payable consisted of the following:
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
|
|
May 31,
2019
|
|
May 31,
2018
|
Notes payable to an entity, non-interest bearing, due on demand, unsecured
|
|
$
|
7,500
|
|
|
$
|
—
|
|
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, 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)
|
|
|
—
|
|
|
|
33,686
|
|
Convertible note payable to an entity, interest at 10%, due on April 21, 2017, in default (R)
|
|
|
35,496
|
|
|
|
46,250
|
|
Convertible note payable to an entity, interest at 10%, due on June 13, 2017, in default (S)
|
|
|
64,233
|
|
|
|
40,750
|
|
Convertible note payable to an entity, interest at 12%, due on August 16, 2017, in default (T)
|
|
|
—
|
|
|
|
36,900
|
|
Convertible note payable to an entity, interest at 12%, due on October 31, 2017, in default (U)
|
|
|
8,313
|
|
|
|
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)
|
|
|
54,992
|
|
|
|
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)
|
|
|
35,381
|
|
|
|
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, in default – net of discount of $-0- and $26,658, respectively (DD)
|
|
|
35,000
|
|
|
|
8,342
|
|
Convertible note payable to an entity, interest at 10%, due on April 4, 2019, in default – net of discount of $-0- and $31,644, respectively (EE)
|
|
|
37,500
|
|
|
|
5,856
|
|
|
Convertible note payable to an entity, interest at 10%, due on September 18, 2019 – net of discount of $6,781 and $-0-, respectively (FF)
|
|
|
15,719
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on September 18, 2019 – net of discount of $5,425 and $-0-, respectively (GG)
|
|
|
12,575
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on September 19, 2019 – net of discount of $81,022 and $-0-, respectively (HH)
|
|
|
118,978
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on August 4, 2019 – net of discount of $61,050 and $-0-, respectively (II)
|
|
|
108,950
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on November 13, 2019 – net of discount of $45,604 and $-0-, respectively (JJ)
|
|
|
29,396
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on November 15, 2019 – net of discount of $9,205 and $-0-, respectively (KK)
|
|
|
10,795
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on November 30, 2019 – net of discount of $2,507 and $-0-, respectively (LL)
|
|
|
2,493
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on December 6, 2019 – net of discount of $1,553 and $-0-, respectively (MM)
|
|
|
1,447
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on December 11, 2019 – net of discount of $5,315 and $-0-, respectively (NN)
|
|
|
4,685
|
|
|
|
—
|
|
Notes payable to individuals, non-interest bearing, due on demand
|
|
|
103,476
|
|
|
|
103,476
|
|
Total Notes Payable
|
|
|
1,114,919
|
|
|
|
820,753
|
|
Less: Current Portion
|
|
|
(1,114,919
|
)
|
|
|
(820,753
|
)
|
Long-Term Notes Payable
|
|
$
|
—
|
|
|
$
|
—
|
|
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
(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.
(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
an Equity Purchase Agreement. 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.
(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.
(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.
(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. In the event that
all principal and interest are not paid to the lender by January 20, 2016, interest is 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, was 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 9 (Derivative Liability).
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
(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 bore interest at a rate of
10% per annum (24% per annum default rate), was due on March 17, 2017, and was convertible at the option of the lender into shares
of the Company common stock at a Conversion Price equal to the lesser of 55% of the lowest Trading Price during the 25 Trading
Day period (a) prior to June 17, 2016 or (b) prior to the Conversion Date. See Note 9 (Derivative Liability).
(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 $0.0005 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 $0.0005 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 bore interest at a rate of
12% per annum (24% per annum default rate), was due on August 16, 2017, and was 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 9 (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 9 (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 a promissory note due
on October 14, 2014. 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 $0.0001293 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 a promissory note
due on August 23, 2015. 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 9 (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 a promissory note
due on October 31, 2015. 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 9 (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%
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
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 $0.00004 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 9 (Derivative Liability).
(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 9 (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 9 (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, was 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 9 (Derivative Liability).
(EE) On April 4, 2018, the Company
issued a $37,500 Convertible Promissory Note (Tranche 2 of (AA) above) to a lender for net loan proceeds of $35,500. The note bears
interest at a rate of 10% per annum, was 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 9 (Derivative Liability).
(FF) On September 18, 2018, the Company
issued a $22,500 Convertible Promissory Note (Tranche 3 of (AA) above) 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 9 (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 9 (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
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
Conversion Price equal to the lesser of (i) the lowest Trading Price during the 25 Trading Day period prior to December
19, 2018 or (ii) 50% of the lowest Trading Price during the 25 Trading Day period prior to the Conversion Date. See Note 9 (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, was 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 9 (Derivative Liability).
(JJ) On February 13, 2019, the Company
issued a $75,000 Convertible Promissory Note to a lender for net loan proceeds of $67,500. The note bears interest at a rate of
10% per annum, is due on November 13, 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 9 (Derivative Liability).
(KK) On November 15, 2018, the
Company issued a $20,000 Convertible Promissory Note (Tranche 4 of (AA) above) to a lender for net loan proceeds of $20,000.
The note bears interest at a rate of 10% per annum, is due on November 15, 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 9 (Derivative Liability).
(LL) On November 30, 2018, the
Company issued a $5,000 Convertible Promissory Note (Tranche 5 of (AA) above) to a lender for net loan proceeds of $5,000.
The note bears interest at a rate of 10% per annum, is due on November 30, 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 9 (Derivative Liability).
(MM) On December 6, 2018, the
Company issued a $3,000 Convertible Promissory Note (Tranche 6 of (AA) above) to a lender for net loan proceeds of $3,000.
The note bears interest at a rate of 10% per annum, is due on December 6, 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 9 (Derivative Liability).
(NN) On December 11, 2018, the
Company issued a $10,000 Convertible Promissory Note (Tranche 7 of (AA) above) to a lender for net loan proceeds of $10,000.
The note bears interest at a rate of 10% per annum, is due on December 11, 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 9 (Derivative Liability).
Concentration of Notes Payable:
The principal balance of the notes payable at
May 31, 2019 was due to:
Lender A
|
|
$
|
333,033
|
|
Lender B
|
|
|
200,000
|
|
Lender C
|
|
|
133,381
|
|
15 other lenders
|
|
|
666,967
|
|
|
|
|
|
|
Total
|
|
|
1,333,381
|
|
|
|
|
|
|
Less debt discounts
|
|
|
(218,462
|
)
|
|
|
|
|
|
Net
|
|
$
|
1,114,919
|
|
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
NOTE 8 - NOTES PAYABLE – RELATED PARTIES
Notes payable – related parties
consisted of the following:
|
|
May 31,
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, non-interest bearing, due on demand, unsecured
|
|
|
2,073
|
|
|
|
2,073
|
|
Notes payable to The OZ Corporation (owner of 25,000 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 25,000 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 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)
|
|
|
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 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
May 31, 2019
NOTE 9 - DERIVATIVE LIABILITY
The derivative liability at May 31,
2019 and 2018 consisted of:
|
|
May 31, 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
|
|
|
$
|
60,000
|
|
|
$
|
40,000
|
|
|
$
|
40,000
|
|
Convertible note payable issued June 17, 2016, due March 17, 2017 (Q)
|
|
|
—
|
|
|
|
—
|
|
|
|
33,686
|
|
|
|
27,561
|
|
Convertible note payable issued November 16, 2016, due August 16, 2017 (T)
|
|
|
—
|
|
|
|
—
|
|
|
|
36,900
|
|
|
|
47,000
|
|
Convertible note payable issued January 31, 2017, due August 31, 2017 (U)
|
|
|
8,313
|
|
|
|
12,470
|
|
|
|
46,750
|
|
|
|
46,750
|
|
Convertible note payable issued April 5, 2017, due on demand (W)
|
|
|
29,000
|
|
|
|
55,769
|
|
|
|
29,000
|
|
|
|
43,500
|
|
Convertible note payable issued April 5, 2017, due on demand (X)
|
|
|
21,500
|
|
|
|
41,346
|
|
|
|
21,500
|
|
|
|
32,250
|
|
Convertible note payable issued June 16, 2017, due on March 16, 2018 (Z)
|
|
|
54,992
|
|
|
|
82,488
|
|
|
|
37,000
|
|
|
|
37,000
|
|
Convertible note payable issued January 11, 2018 (AA)
|
|
|
35,381
|
|
|
|
53,072
|
|
|
|
88,000
|
|
|
|
171,204
|
|
Convertible note payable issued December 1, 2017, due on demand (BB)
|
|
|
50,000
|
|
|
|
55,555
|
|
|
|
50,000
|
|
|
|
33,333
|
|
Convertible note payable issued December 1, 2017, due on demand (CC)
|
|
|
50,000
|
|
|
|
55,555
|
|
|
|
50,000
|
|
|
|
33,333
|
|
Convertible note payable issued March 5, 2018, due on March 5, 2019 (DD)
|
|
|
35,000
|
|
|
|
52,500
|
|
|
|
35,000
|
|
|
|
68,915
|
|
Convertible note payable issued April 4, 2018, due on April 4, 2019 (EE)
|
|
|
37,500
|
|
|
|
56,250
|
|
|
|
37,500
|
|
|
|
72,957
|
|
Convertible note payable issued September 18, 2018, due on September 18, 2019 (FF)
|
|
|
22,500
|
|
|
|
56,250
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued September 18, 2018, due on September 18, 2019 (GG)
|
|
|
18,000
|
|
|
|
45,000
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued December 19, 2018, due on September 19, 2019 (HH)
|
|
|
200,000
|
|
|
|
500,000
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued February 4, 2019, due on August 4, 2019 (II)
|
|
|
170,000
|
|
|
|
396,667
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued February 13, 2019, due on November 13, 2019 (JJ)
|
|
|
75,000
|
|
|
|
187,500
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued November 15, 2018, due on November 15, 2019 (KK)
|
|
|
20,000
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued November 30, 2018, due on November 30, 2019 (LL)
|
|
|
5,000
|
|
|
|
12,500
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued December 6, 2018, due on December 6, 2019 (MM)
|
|
|
3,000
|
|
|
|
7,500
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued December 11, 2018, due on December 11, 2019 (NN)
|
|
|
10,000
|
|
|
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
Totals
|
|
$
|
885,186
|
|
|
$
|
1,805,422
|
|
|
$
|
505,336
|
|
|
$
|
653,803
|
|
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
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 May 31, 2019 include (1) stock price of $0.60 per share, (2) exercise prices ranging
from $0.15 to $0.20 per share, (3) terms ranging from 0 days to 166 days, (4) expected volatility of 490% and (5) risk free interest
rates ranging from 0.86% to 2.35%.
Assumptions used for the calculations
of the derivative liability of the notes at May 31, 2018 include (1) stock price of $160.00 per share, (2) exercise prices ranging
from $64.00 to $96.00 per share, (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%.
Concentration of Derivative Liability:
The derivative liability at May 31, 2019 relates
to convertible notes payable due to:
Lender A
|
|
$
|
479,155
|
|
Lender B
|
|
|
512,469
|
|
Lender C
|
|
|
260,572
|
|
Lender D
|
|
|
187,500
|
|
6 other lenders
|
|
|
365.726
|
|
|
|
|
|
|
Total
|
|
$
|
1,805,422
|
|
NOTE 10 - 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.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
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 continues to have no conversion, liquidation, or dividend rights.
During the year ended May 31, 2018,
the Company issued an aggregate of 697.05 shares 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 7.375 shares 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 .0025 shares 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 100,000 shares of common stock of
the Company were issued to the TMG shareholders.
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 100,000 shares are (1)
Marc Angell (CEO of the Company) and Jacquie Angell (50,000 shares), (2) The OZ Corporation (holder of $103,250 of Company notes
payable at May 31, 2019 and 2018 (25,000 shares), and (3) John Thomas P.C. (Company law firm and holder of $52,073 of Company notes
payable at May 31, 2019 and 2018 (25,000 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 100,000 shares of common stock) was recorded at $-0-, the historical
cost of the property to TMG.
During the year ended May 31, 2019,
the Company issued an aggregate of 275,435 shares of common stock for the conversion of notes payable and accrued interest in the
aggregate amount of $283,977. We incurred a loss on the conversion of notes payable and accrued interest of $1,709,230, which represents
the excess of the $1,993,207 fair value of the 275,435 shares at the dates of conversion over the $283,977 amount of debt satisfied.
On October 16, 2018, the Company
issued 5,000 shares of its common stock to the consulting firm entity discussed in Note 10. The $41,000 estimated fair value of
the 5,000 shares (based on the
$8.20 closing price of our common stock on October 16, 2018) has been expensed and included in “Salaries and Consulting Fees”
in the year ended May 31, 2019.
At May 31, 2019 and 2018, there are
no stock options or warrants outstanding.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
Consulting Agreements with Individuals
The Company has entered into Consulting
Agreements with the Company’s Chief Executive Officer, the wife of the Company’s Chief Executive Officer, the mother
of the Company’s Chief Executive Officer, and
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
other service providers (see Note 6 – Accrued Consulting Fees). The Consulting
Agreement with the Company’s Chief Executive Officer provides for monthly compensation of $10,000 and has a term expiring
December 31, 2020. The Consulting Agreement with the wife of the Company’s Chief Executive Officer provides for monthly compensation
of $15,000 and has a term expiring July 31, 2021. The Consulting Agreement with the mother of the Company’s Chief Executive
Officer provides for monthly compensation of $5,000 and is month-to-month. The other 3 consulting agreements in effect at May 31,
2019 provide for monthly compensation totaling $3,000.
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 has been expensed
and included in “Salaries and Consulting Fees” in the accompanying Consolidated Statement of Operations for the year
ended May 31, 2018. No other amounts have been accrued at May 31, 2018 and 2019.
On October 16, 2018 (see Note 10),
the Company issued 5,000 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 12 - 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 May 31, 2019, the Company had negative working capital of $3,810,142
and an accumulated deficit of $7,948,240. 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, 2020 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 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.
NOTE 13 – SUBSEQUENT EVENTS
On August 28, 2019, the Securities
and Exchange Commission (the “SEC”) issued a Notice of Qualification regarding a Form 1-A filed by the Company in connection
with the Company’s offering of up to 1,333,333,333 shares of common stock at a price of $0.0075 per share or a total offering
of $10,000,000. The end date of the offering is August 28, 2020.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
May 31, 2019
From June 1, 2019 to August 31, 2019,
the Company issued a total of 676,382 shares of its common stock for the conversion of notes payable and accrued interest in the
aggregate amount of $65,820. The $86,699 excess of the $152,519 fair value of the 676,382 shares at the dates of conversion over
the $65,820 of debt satisfied will be charged to “Loss on conversion of notes payable and accrued interest” in the
three months ended August 31, 2019.