OFFERING CIRCULAR NO. 4 DATED FEBRUARY 25, 2020
(to the offering circular dated August
29, 2019)
Filed Pursuant to Rule 253(g)(2)
The Marquie Group, Inc.
(f/k/a Music of Your Life, Inc.)
(Exact name of issuer as specified in its
charter)
Florida
(State or other jurisdiction of incorporation
or organization)
https://www.themarquiegroup.com/
3225 McLeod Drive, Suite 100,
Las Vegas, Nevada
800-351-3021
(Address, including zip code, and telephone
number, including area code of issuer’s principal executive office)
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4461 Health and Personal Care
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26-2091212
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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EXPLANATORY
NOTE
This
document (the “Supplement”) supplements the amended offering circular of The Marquie Group, Inc. (the “Company,”
“we,” “us,” or “our”) dated August 16, 2019 and originally qualified August 29, 2019 (“Offering
Circular”). Unless otherwise defined in this Supplement, capitalized terms used herein shall have the same meanings as set
forth in the Offering Circular, including the disclosures incorporated by reference therein.
The
purpose of this Supplement is to reduce the total offering amount and to reduce the offering price.
Maximum offering up to 1,334,285,714
shares
This is a public offering of shares of
common stock of The Marquie Group, Inc.
The total offering shall be for $934,000
with an offering price of $0.0007 per share, equaling maximum of 1,334,285,714 total shares. The end date of the offering will
be August 28, 2020. Investors may subscribe to the offering immediately, however, shares will not be delivered to a subscriber
until the reverse stock split has been deemed effective by FINRA.
Our common stock currently trades on the
OTC Pink market under the symbol “TMGI” and the closing price of our common stock on February 21 2020 was $0.0018.
Our common stock currently trades on a sporadic and limited basis.
We are offering our shares without the
use of an exclusive placement agent. However, the Company reserves the right to retain one. upon the approval of any subscription
to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose
of the proceeds in accordance with the Use of Proceeds.
We expect to commence the sale of the shares
as of the date on which the Offering Statement of which this Offering Circular is qualified by the Commission.
See “Risk Factors” to read
about factors you should consider before buying shares of common stock.
Generally, no sale may be made to you
in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different
rules apply to accredited investors and non-natural persons. Before making any representation that your investment does
not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information
on investing, we encourage you to refer to www.investor.gov.
The United States Securities and Exchange
Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does
it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered
pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination
that the securities offered are exempt from registration.
This Offering Circular is following the
offering circular format described in Part II (a)(1)(ii) of Form 1-A.
Offering Circular Dated February 25,
2020
TABLE OF CONTENTS
No dealer, salesperson or other person
is authorized to give any information or to represent anything not contained in this Offering Circular. You must not rely on any
unauthorized information or representations. This Offering Circular is an offer to sell only the shares offered hereby, but only
under circumstances and in jurisdictions where it is lawful to do so. The information contained in this Offering Circular is current
only as of its date.
SUMMARY
This summary highlights information
contained elsewhere in this Offering Circular. This summary does not contain all of the information that you should consider before
deciding to invest in our common stock. You should read this entire Offering Circular carefully, including the “Risk Factors”
section, our historical consolidated financial statements and the notes thereto, and unaudited pro forma financial information,
each included elsewhere in this Offering Circular. Unless the context requires otherwise, references in this Offering
Circular to “the Company,” “we,” “us” and “our” refer to The Marquie Group, Inc.
OUR COMPANY
The Marquie Group, Inc. (“TMGI”
or “The Company”) (TMGI: OTC) was incorporated on January 30, 2008, in the State of Florida, as Maximum Consulting,
Inc., changing its name to ZhongSen International Tea Company in April 2008, 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 an acquisition agreement (the “Acquisition”)
of Music of Your Life, Inc., a Nevada corporation (“MYL Nevada”). As a result of the Acquisition, 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.
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.” On February 22, 2018 our FINRA symbol
changed from “MYLI” to “TMGI.”
On July 21, 2019, the Board of Directors
recommended to the shareholders of the Company a reverse stock split at a ratio of 400:1, which was approved by the shareholders
on the same date. The Company expects the Split to be deemed effective by FINRA on or around August 21, 2019.
OVERVIEW
The Company is currently operating two
businesses; a nationally syndicated radio network called “Music of Your Life”, broadcasting on AM, FM, and HD terrestrial
radio stations across the United Sates, and heard around the world over the Internet; and 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. The Company plans to market the new Whim products on the Music of Your
Life network upon launch.
OUR STRATEGY
Our branded, solution-driven slate of multiple
SKU’s includes facial masks, facial serums, eye serums, CBD tinctures, and beauty drinks, each with unique, skin and complexion
enhancing properties. Marketing plan includes a multi-channel, national sales program developed by the Company’s team of
health and beauty product marketing specialists that will target consumers through proven and tested inspirational branding and
sensorial experience. The new Whim™ products will be introduced initially on the Company’s nationally syndicated radio
network, Music of Your Life, the Company’s streaming video channels, and Jacquie Carter’s social media reach which
covers more than 90-countries, on the Company recently released website, www.simplywhim.com.
THE OFFERING
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Common Stock we are offering
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Up to 1,334,285,714 shares of Common Stock at a price of $0.0007 per share.
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Common Stock outstanding before this Offering
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253,563,095 Common Stock, par value $0.001
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Use of proceeds
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The funds raised per this offering will be utilized in administrative and legal fees, product inventory, marketing, and staffing in the United States. See “Use of Proceeds” for more details.
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Risk Factors
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See “Risk Factors” and other information appearing elsewhere in this Offering Circular for a discussion of factors you should carefully consider before deciding whether to invest in our common stock.
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This offering is being made on a self-underwritten
basis without the use of an exclusive placement agent, although the Company may choose to engage a placement agent at its sole
discretion. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall
immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use
of Proceeds.
Management will make its best effort to
fill the subscription. In the event that the Offering Circular is fully subscribed, any additional subscriptions shall be rejected
and returned to the subscribing party along with any funds received.
In order to subscribe to purchase the shares,
a prospective investor must complete a subscription agreement and send payment by check, wire transfer or ACH. Investors
must answer certain questions to determine compliance with the investment limitation set forth in Regulation A Rule 251(d)(2)(i)(C)
under the Securities Act of 1933, which states that in offerings such as this one, where the securities will not be listed on a
registered national securities exchange upon qualification, the aggregate purchase price to be paid by the investor for the securities
cannot exceed 10% of the greater of the investor’s annual income or net worth. In the case of an investor who
is not a natural person, revenues or net assets for the investors’ most recently completed fiscal year are used instead.
The Company has not currently engaged any
party for the public relations or promotion of this offering.
As of the date of this filing, there are
no additional offers for shares, nor any options, warrants, or other rights for the issuance of additional shares except those
described herein.
RISK FACTORS
Investing in our common stock involves
a high degree of risk. You should carefully consider each of the following risks, together with all other information set
forth in this Offering Circular, including the consolidated financial statements and the related notes, before making a decision
to buy our common stock. If any of the following risks actually occurs, our business could be harmed. In that case, the trading
price of our common stock could decline, and you may lose all or part of your investment.
This offering contains forward-looking
statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking
statements by terminology such as “may,” “will,” “should,” “expects,” “plans,”
“anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,”
“believes,” “estimates,” “predicts,” “potential” or “continue” or the
negative of these terms or other similar words. These statements are only predictions. The outcome of the events described in these
forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our customers’
or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking
statements, to differ. “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and “Business,” as well as other sections in this prospectus, discuss the important factors
that could contribute to these differences.
The forward-looking statements made in
this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence
of unanticipated events.
This prospectus also contains market data
related to our business and industry. This market data includes projections that are based on a number of assumptions. If these
assumptions turn out to be incorrect, actual results may differ from the projections based on these assumptions. As a result, our
markets may not grow at the rates projected by these data, or at all. The failure of these markets to grow at these projected rates
may have a material adverse effect on our business, results of operations, financial condition and the market price of our common
stock.
Risk Related to our Company and our Business
We may require additional funds in
the future to achieve our current business strategy and our inability to obtain funding may cause our business plan to fail.
We may need to raise additional funds through
public or private debt or equity sales in order to fund our future operations and fulfill contractual obligations in the future.
These financings may not be available when needed. Even if these financings are available, it may be on terms that we deem unacceptable
or are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences,
or other terms. Our inability to obtain financing would have an adverse effect on our ability to implement our current business
plan and develop our products, and as a result, could require us to diminish or suspend our operations and possibly cease our existence.
Even if we are successful in raising capital
in the future, we will likely need to raise additional capital to continue and/or expand our operations. If we do not raise the
additional capital, the value of any investment in our Company may become worthless. In the event we do not raise additional capital
from conventional sources, it is likely that we may need to scale back or curtail implementing our business plan.
Our management has a limited experience
operating a public company in the CBD and healthy lifestyle industry and is subject to the risks commonly encountered by early-stage
companies.
Although the management of The Marquie
Group, Inc. has experience in operating public companies, current management has not had to manage expansion while being a public
company in in the beauty products and healthy lifestyle industry. Because we have a limited operating history for our current business
model, our operating prospects should be considered in light of the risks and uncertainties frequently encountered by early-stage
companies in rapidly evolving markets. These risks include:
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risks
that we may not have sufficient capital to achieve our growth strategy;
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risks
that we may not develop our product and service offerings in a manner that enables us to be profitable and meet our customers’
requirements;
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risks
that our growth strategy may not be successful; and
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risks
that fluctuations in our operating results will be significant relative to our revenues.
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These risks are described in more detail
below. Our future growth will depend substantially on our ability to address these and the other risks described in this section.
If we do not successfully address these risks, our business would be significantly harmed.
We may not be successful in the implementation
of our business strategy or our business strategy may not be successful, either of which will impede our development and growth
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Our business consists of a direct-to-consumer
platform for health and beauty products containing plant-based ingredients, amino-acids, and other natural ingredients, with and
without non-THC CBD oil. Our ability to implement this business strategy is dependent on our ability to:
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Distinguish
ourselves in a very competitive market;
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Establish
brand recognition and customer loyalty; and
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Manage
growth in administrative overhead costs during the initiation of our business efforts.
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We do not know whether we will be able
to continue successfully implementing our business strategy or whether our business strategy will ultimately be successful. In
assessing our ability to meet these challenges, a potential investor should take into account our need for significant amounts
of capital to fund marketing and product development within our subsidiaries and brand recognition, our management’s relative
inexperience, the competitive conditions existing in our industry and general economic conditions. Our growth is largely dependent
on our ability to successfully implement our business strategy. Our revenues may be adversely affected if we fail to implement
our business strategy or if we divert resources to a business that ultimately proves unsuccessful.
We must effectively manage the growth
of our operations, or our company will suffer .
Our business consists of a direct-to-consumer
platform for health and beauty products containing plant-based ingredients, amino-acids, and other natural ingredients, with and
without non-THC CBD oil. Expansion of our operations, to include the development of all our portfolio, may also cause a significant
demand on our management, finances and other resources. Our ability to manage the anticipated future growth, should it occur, will
depend upon a significant expansion of our accounting and other internal management systems and the implementation and subsequent
improvement of a variety of systems, procedures and controls. There can be no assurance that significant problems in these areas
will not occur. Any failure to expand these areas and implement and improve, procedures and controls in an efficient manner at
a pace consistent with our business could have a material adverse effect on our business, financial condition and results of operations.
There can be no assurance that our attempts to expand our marketing, sales, manufacturing and customer support efforts will be
successful or will result in additional sales or profitability in any future period.
We have limited existing brand identity
and customer loyalty; if we fail to market our brand to promote our service offerings, our business could suffer.
Because of our limited commercialization
of our subsidiary products, we currently do not have strong brand identity or brand loyalty. We believe that establishing and maintaining
brand identity and brand loyalty is critical to attracting customers once we have a commercially viable product offered by our
subsidiaries. In order to attract customers to our subsidiary products, we may be forced to spend substantial funds to create and
maintain brand recognition among consumers. We believe that the cost of our sales campaigns could increase substantially in the
future. If our branding efforts are not successful, our ability to earn revenues and sustain our operations will be harmed.
Promotion and enhancement of our products
and services will depend on our success in consistently providing high-quality products and services to our customers.
The Angell Family Trust, beneficially
owns approximately or has the right to vote on 0.02% of our outstanding Common Stock and 100% of our Series A Preferred Stock,
which counts for 80.00% of the total voting rights of the Common Stock before the offering and would retain 80.00% of the total
rights of following the sale of the maximum offering of 1,334,285,714 Common shares. As a result, it has and may retain a substantial
voting power in all matters submitted to our stockholders for approval including:
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Election
of our board of directors;
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Removal
of any of our directors;
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Amendment
of our Certificate of Incorporation or bylaws;
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Adoption
of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving
us.
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As a result of its ownership and position,
the Angell Family Trust is able to substantially influence all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts
of shares held by it could affect the market price of our common stock if the marketplace does not orderly adjust to the increase
in shares in the market and the value of your investment in our company may decrease. The Angell Family Trust’s stock ownership
may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could
reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
We have a history of operating losses
and we will need additional financing to meet our future long-term capital requirements.
We have a history of losses and may continue
to incur operating and net losses for the foreseeable future. As of February 28, 2019, we had negative working capital of $2,497,534
and an accumulated deficit of $5,088,599. We generated a net loss for the nine months ended February 28, 2019 of $3,734,415. We
have not achieved sustainable profitability on an annual basis. We may not be able to reach a level of revenue to achieve profitability.
If our revenues grow slower than anticipated, or if operating expenses exceed expectations, then we may not be able to achieve
profitability in the near future or at all, which may depress our stock price.
We may need significant additional
capital, which we may be unable to obtain .
We may need to obtain additional financing
over time to fund operations. Our management cannot predict the extent to which we will require additional financing and can provide
no assurance that additional financing will be available on favorable terms or at all. The rights of the holders of any debt or
equity that may be issued in the future could be senior to the rights of common shareholders, and any future issuance of equity
could result in the dilution of our common shareholders’ proportionate equity interests in our company. Failure to obtain
financing or an inability to obtain financing on unattractive terms could have a material adverse effect on our business, prospects,
results of operation and financial condition.
Our resources may not be sufficient
to manage our potential growth; failure to properly manage our potential growth would be detrimental to our business.
We may fail to adequately manage our potential
future growth. Any growth in our operations will place a significant strain on our administrative, financial and operational resources,
and increase demands on our management and on our operational and administrative systems, controls and other resources. We cannot
assure you that our existing personnel, systems, procedures or controls will be adequate to support our operations in the future
or that we will be able to successfully implement appropriate measures consistent with our growth strategy. As part of this growth,
we may have to implement new operational and financial systems, procedures and controls to expand, train and manage our employee
base, and maintain close coordination among our technical, accounting, finance, marketing and sales staff. We cannot guarantee
that we will be able to do so, or that if we are able to do so, we will be able to effectively integrate them into our existing
staff and systems. To the extent we acquire businesses, we will also need to integrate and assimilate new operations, technologies
and personnel. If we are unable to manage growth effectively, such as if our sales and marketing efforts exceed our capacity to
install, maintain and service our products or if new employees are unable to achieve performance levels, our business, operating
results and financial condition could be materially and adversely affected.
Our financial situation creates doubt
whether we will continue as a going concern .
Since inception, the Company has generated
minimal revenues and has incurred losses and reported losses for the period from inception through March 31, 2019. Further, we
expect to incur a net loss for the fiscal year ending May 31, 2019, primarily as a result of increased operating expenses. There
can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations
or obtain additional financing through private placements, public offerings and/or bank financing necessary to support our working
capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are
insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available,
or if available, will be on acceptable terms. These conditions raise substantial doubt about our ability to continue as a going
concern. If adequate working capital is not available, we may be forced to discontinue operations, which would cause investors
to lose their entire investment. Our auditors have indicated that these conditions raise substantial doubt about the Company’s
ability to continue as a going concern
We will need to increase the size
of our organization, and we may be unable to manage rapid growth effectively.
Our failure to manage growth effectively
could have a material and adverse effect on our business, results of operations and financial condition. We anticipate that a period
of significant expansion will be required to address possible acquisitions of business, products, or rights, and potential internal
growth to handle licensing and research activities. This expansion will place a significant strain on management, operational and
financial resources. To manage the expected growth of our operations and personnel, we must both improve our existing operational
and financial systems, procedures and controls and implement new systems, procedures and controls. We must also expand our finance,
administrative, and operations staff. Our current personnel, systems, procedures and controls may not adequately support future
operations. Management may be unable to hire, train, retain, motivate and manage necessary personnel or to identify, manage and
exploit existing and potential strategic relationships and market opportunities.
We are dependent on the continued
services and performance of our senior management, the loss of any of whom could adversely affect our business, operating results
and financial condition.
Our future performance depends on the continued
services and continuing contributions of our senior management to execute our business plan, and to identify and pursue new opportunities
and product innovations. The loss of services of senior management, could significantly delay or prevent the achievement of our
strategic objectives. The loss of the services of senior management for any reason could adversely affect our business, prospects,
financial condition and results of operations.
We may become subject to claims of
infringement or misappropriation of the intellectual property rights of others, which could prohibit us from developing our products,
require us to obtain licenses from third parties or to develop non-infringing alternatives and subject us to substantial monetary
damages.
Third parties could, in the future, assert
infringement or misappropriation claims against us with respect to products we develop. Whether a product infringes a patent or
misappropriates other intellectual property involves complex legal and factual issues, the determination of which is often uncertain.
Therefore, we cannot be certain that we have not infringed the intellectual property rights of others. Our potential competitors
may assert that some aspect of our product infringes their patents. Because patent applications may take years to issue, there
also may be applications now pending of which we are unaware that may later result in issued patents upon which our products could
infringe. There also may be existing patents or pending patent applications of which we are unaware upon which our products may
inadvertently infringe.
Any infringement or misappropriation claim
could cause us to incur significant costs, place significant strain on our financial resources, divert management’s attention
from our business and harm our reputation. If the relevant patents in such claim were upheld as valid and enforceable and we were
found to infringe them, we could be prohibited from selling any product that is found to infringe unless we could obtain licenses
to use the technology covered by the patent or are able to design around the patent. We may be unable to obtain such a license
on terms acceptable to us, if at all, and we may not be able to redesign our products to avoid infringement. A court could also
order us to pay compensatory damages for such infringement, plus prejudgment interest and could, in addition, treble the compensatory
damages and award attorney fees. These damages could be substantial and could harm our reputation, business, financial condition
and operating results. A court also could enter orders that temporarily, preliminarily or permanently enjoin us and our customers
from making, using, or selling products, and could enter an order mandating that we undertake certain remedial activities. Depending
on the nature of the relief ordered by the court, we could become liable for additional damages to third parties.
A competitor with a stronger or more
suitable financial position may enter our marketplace .
The success of our business primarily depends
on the success our products and their market performance, compared to rival technologies offered by a competitor. If a direct competitor
arrives in our market, achieving market acceptance for our services may require additional marketing efforts and the expenditure
of significant funds, the availability of which we cannot be assured, to create awareness and demand among customers. We have limited
financial, personnel and other resources to undertake additional marketing activities. Accordingly, no assurance can be given that
we will be able to win business from a stronger competitor.
Litigation may harm our business.
Substantial, complex or extended litigation
could cause us to incur significant costs and distract our management. For example, lawsuits by employees, stockholders, collaborators,
distributors, customers, competitors or others could be very costly and substantially disrupt our business. Disputes from time
to time with such companies, organizations or individuals are not uncommon, and we cannot assure you that we will always be able
to resolve such disputes or on terms favorable to us. Unexpected results could cause us to have financial exposure in these matters
in excess of recorded reserves and insurance coverage, requiring us to provide additional reserves to address these liabilities,
therefore impacting profits.
Risks Related to Our Business and
Industry
U.S. Federal and foreign regulation
and enforcement may adversely impact the CBD supply chain which may negatively impact our revenues, or we may be found to be violating
the Controlled Substances Act or other U.S. federal, state, or foreign laws, which could substantially impact our ability to access
financial and banking services.
The Company will utilize only non-THC derived
cannabidiol (CBD) ingredients in its internal, and topical formulas. CBD can be extracted from THC containing and non-THC containing
strains of Cannabis. While our intention is to only procure CBD from reputable, non-cannabis-based sources, this is an emerging
industry and regulation and enforcement actions are ongoing. If we are found to be sourcing our CBD from THC-based sources or vendors,
it may substantially impact our standing under the law, which could in turn lead to an inability to access to retain financial
and/or banking services.
In December 2018, the Farm Bill was signed
into law. Under section 10113 of the Farm Bill, state departments of agriculture must consult with the state’s governor and
chief law enforcement officer to devise a plan that must be submitted to the Secretary of USDA. A state’s plan to license
and regulate hemp can only commence once the Secretary of USDA approves that state’s plan. In states opting not to devise
a hemp regulatory program, USDA will construct a regulatory program under which hemp cultivators in those states must apply for
licenses and comply with a federally run program. This system of shared regulatory programming is similar to options states had
in other policy areas such as health insurance marketplaces under ACA, or workplace safety plans under OSHA—both of which
had federally-run systems for states opting not to set up their own systems. Non-cannabis hemp be a highly regulated crop in the
United States for both personal and industrial production.
The law outlines actions that are considered
violations of federal hemp law (including such activities as cultivating without a license or producing cannabis with more than
0.3 percent THC). The law details possible punishments for such violations, pathways for violators to become compliant, and even
which activities qualify as felonies under the law, such as repeated offenses.
The Marquie Group will utilize only non-THC
ingredients in those formulas which contain CBD.
Section 12619 of the Farm Bill removes
hemp-derived products from its Schedule I status under the Controlled Substances Act, but the legislation does not legalize CBD
generally. CBD, with some minor exceptions, remains a Schedule I substance under federal law. The Farm Bill ensures that any cannabinoid—a
set of chemical compounds found in the cannabis plant—that is derived from hemp will be legal, if and only if that hemp is
produced in a manner consistent with the Farm Bill, associated federal regulations, association state regulations, and by a licensed
grower. Though many states have adopted their own policies legalizing the sale and manufacture of products containing CBD oil,
all other cannabinoids, produced in any other setting, remain a Schedule I substance under federal law and are thus illegal.
In October 2018, the United States Drug
Enforcement Agency (“DEA”) rescheduled drugs approved by the United States Food and Drug Administration (“FDA”)
which contain CBD derived from cannabis and no more than 0.1 percent tetrahydrocannabinols from Schedule I, the highest level of
restriction with a high potential for abuse, to Schedule V, the lowest restriction with the lowest potential for abuse under the
Controlled Substances Act (“CSA”). This ruling does not apply to Cannabidiol (“CBD”) products such as oils,
tinctures, extracts, and other foods because they are not FDA approved.
In October 2018, the FDA was advised by
the DEA that removing CBD from the CSA would violate international drug treaties to which the United States is a signatory. Specifically,
the DEA explained that the United States would “not be able to keep obligations under the 1961 Single Convention on Narcotic
Drugs if CBD were decontrolled under the CSA”.
Consequently, the FDA revised its recommendation
and advised the DEA to place CBD in Schedule V—which applies to drugs with demonstrated medical value and deemed unlikely
to cause harm, abuse, or addiction—instead. Nonetheless, the FDA declared that “[i]f treaty obligations do not require
control of CBD, or the international controls on CBD…are removed at some future time, the above recommendation for Schedule
V under the CSA would need to be revisited promptly.”
On May 22, 2018, the DEA released the Internal
Directive Regarding the Presence of Cannabinoids in Products and Materials Made from the Cannabis Plant , which states “The
mere presence of cannabinoids is not itself dispositive as to whether a substance is within the scope of the CSA; the dispositive
question is whether the substance falls within the CSA definition of marijuana.”
Most CBD products are derived from Cannabis
sativa or Cannabis Indica plants. Cannabis sativa is primarily used to produce hemp. Hemp contains little or no THC. Cannabis Indica
is primarily used to produce Marijuana (“Marijuana-CBD”). Marijuana-CBD remains a Schedule I substance. Marijuana-CBD
products may be legal under state law in states like Washington, Oregon, and California but their sale is only permitted through
a state-regulated marijuana market in the respective state of legal cultivation. Marijuana-CBD products are only legal in states
where they were cultivated and these products are heavily regulated at all stages of production, from seed-to-sale. These products
come from licensed producers, are developed by licensed processors or manufacturers, and are sold to the public through licensed
retailers or dispensaries. Marijuana-CBD products may also contain significant levels of THC.
On the other hand, CBD derived from Cannabis
sativa, which produces industrial hemp (“Hemp-CBD”) can be argued as falling completely outside the CSA because the
cultivation of industrial hemp was legalized by Section 7606 of the Agricultural Act of 2014 (the “2014 Farm Bill”).
Industrial hemp is defined as the cannabis plant with less than 3% THC. The 2014 Farm Bill also requires that industrial hemp to
be cultivated under a state agricultural pilot program. Some states also require a license to cultivate or process industrial hemp
into other products like Hemp-CBD.
The distribution of Hemp-CBD products is
arguably legal under federal law because the 2014 Farm Bill does not explicitly limit distribution. In oral arguments during HIA
v. DEA, the DEA admitted that the 2018 Farm Bill preempted the CSA with regards to industrial hemp. The DEA has rarely taken any
enforcement action against distributors of Hemp-CBD, in part because Congress has limited the DEA’s ability to use federal
funds to do so and because the DEA would have to legally establish that the CSA does in fact cover Hemp-CBD. However, the
DEA, FDA, and other federal agencies issued guidance in 2016 stating that the 2014 Farm Bill did not permit the interstate
transfer or commercial sale of industrial hemp. Several states like Idaho prohibit the distribution of Hemp-CBD. Other states like
Ohio, Michigan, and California significantly restrict the distribution of Hemp-CBD.
Even though Hemp-CBD does not fall within
the CSA, Hemp-CBD products have not been approved by the FDA. This is also true of Marijuana-CBD. This means that even cannabis
derived Marijuana-CBD and Hemp-CBD products containing less than 1% THC are not approved CBD drugs for lack of FDA approval.
There is always some risk of enforcement
action against Hemp-CBD distributors, as the budgetary restriction that prevented the DEA from using funds to prosecute industrial
hemp distributors expired on September 30, 2018. It is also possible that the FDA could take a more aggressive approach to limit
the distribution of CBD products.
We may be subject to compliance actions
by the Food and Drug Administration (FDA) for making unsubstantiated claims as to our products efficacy or intended use.
Though we strive to comply with all state
and federal regulations, in the process of promoting and discussing the potential benefits of our health and beauty products, particularly
those who list CBD as an active ingredient, we may inadvertently make statements which are deemed to be unsubstantiated claims
by the FDA as to the efficacy or intended use of our products.
On April 2, 2019, outgoing FDA Commissioner
Scott Gotlieb issued a statement on the agency’s website, www.fda.gov, pledging the agency will continue to use its authority
to take action against companies and product developers which make unproven claims to treat serious or life-threatening diseases,
and “where patients may be misled to forgo otherwise effective, available therapy and opt instead for a product that has
no proven value or may cause them serious harm.”
The FDA has issued warning letters, in
collaboration with the Federal Trade Commission, to three companies – Advanced Spine and Pain LLC (d/b/a Relievus), Nutra
Pure LLC and PotNetwork Holdings Inc. – in response to their making unsubstantiated claims related to more than a dozen different
products and spanning multiple product webpages, online stores and social media websites. The FDA deemed that companies “used
these online platforms to make unfounded, egregious claims about their products’ ability to limit, treat or cure cancer,
neurodegenerative conditions, autoimmune diseases, opioid use disorder, and other serious diseases, without sufficient evidence
and the legally required FDA approval.”
Examples of claims made by the companies
which have been deemed deceptive marketing by the FDA include CBD’s ability to
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Effectively
treat substance use disorders
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Reduce
the rewarding effects of morphine
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Reduce
drug-seeking for heroin
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Avoid
or Reduce opiate withdrawal symptoms
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Stop
cancer cells in several cervical cancer varieties
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Degrease
human glioma cell growth and invasion
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Slow
the progression of Alzheimer’s
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Block
spinal, peripheral and gastrointestinal mechanisms responsible for pain associated with migraines, fibromyalgia, and Irritable
Bowel Syndrome
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The agency has said it may pursue a company
making medical claims about products asserting to contain CBD that haven’t been approved by the FDA. The FDA has stated that
selling unapproved products with unsubstantiated therapeutic claims can put patients and consumers at risk. The FDA does not believe
these products have not been shown to be safe or effective, and deceptive marketing of unproven treatments may keep some patients
from accessing appropriate, recognized therapies to treat serious and even fatal diseases. Additionally, because they are not evaluated
by the FDA, there may be other ingredients that are not disclosed, which may be harmful.
The FDA has pledged to continue to monitor
the marketplace and take enforcement action as needed to protect the public health against companies illegally selling CBD products
that claim to prevent, diagnose, treat, or cure serious diseases, such as cancer, Alzheimer’s disease, psychiatric disorders
and diabetes; illegally selling cannabis and cannabis-derived products that can put consumers at risk; and marketing and distributing
such products in violation of the FDA’s authorities.
Though we have no intention to make any
of the claims stated above, whether through advertising, sales, or promotional materials, there may be additional claims made in
the future about the efficacy or intended use of our health and beauty products, including those which may list CBD as an active
ingredient, which may be deemed to be unsubstantiated claims by the FDA.
Different state and federal government
agencies, as well as different advertising networks, may have their own regulations and restrictions regarding advertising CBD
products which could make effective advertising difficult.
Though only a portion of our product line
in development may contain CBD, marketing or selling those products would make us subject to the rules of various state and federal
agencies, as well as advertising networks, regarding the promotion of our products.
Relevant state and local laws may make
it difficult to advertise CBD in various markets. The two largest ad buying platforms -- Facebook and Google -- still do not allow
CBD advertising (it is designated as a “dangerous product”) on their platforms, which limits the digital marketing
efforts of CBD companies to organic marketing. For new businesses, the inability to promote their brand without paid social and
search ads makes it extremely challenging to get the qualified traffic needed to grow their online retail business. If we are found
by these platforms to be advertising CBD, it could significantly impede our ability to market our products online.
Additional regulatory considerations that
must be taken into account include the Federal Trade Commission’s regulation of unfair and deceptive product labeling and
marketing, as well as state law regulation of food safety. States have the authority to regulate matters related to the health
and safety of its own citizens, such that the 2018 Farm Bill and regulation by the USDA will not necessarily preempt state or local
laws regulating the manufacture and distribution of cannabis-related products that are not directly in conflict with federal law.
States may still choose to enact their own laws that can promote or restrict the sale of cannabis-based products. States such as
Indiana and Alabama do not permit the sale of CBD oil on a personal level without a prescription. Failure to successfully navigate
this shifting and varied legal environment could prohibit our ability to effectively market in certain states.
Any and all claims of medicinal value must
be substantiated with reputable scientific support and may be subject to evaluation by the FDA. If we are unable to scientifically
validate many of the popular claims being made regarding the efficacy of CBD, we will not be able to share those claims and could
be less competitive than competitors who are less compliant.
Failure to remain in compliance could result
in enforcement actions from the FTC, FDA, and other federal and state agencies.
There are limitations to how CBD
may be marketed and what potential benefits may be advertised which may restrict the scope of our marketing efforts.
Any and all claims of medicinal value must
be substantiated with reputable scientific support and may be subject to evaluation by the FDA and we may be unable to effectively
market our products without proper scientific documentation. If we cannot produce the requisite documentation, we may be unable
to effectively market any products which contain CBD as an active ingredient.
In April 2019, outgoing FDA Commissioner
Scott Gottlieb acknowledged that the FDA is considering whether to use its authority to issue regulations that would permit the
marketing of CBD in foods or as dietary supplements. However, until the law changes, it is the FDA’s position that selling
unapproved products with unsubstantiated therapeutic claims both violates the law and potentially puts patients at risk. Commissioner
Gottlieb also asserted that it continues to be unlawful to market foods containing added CBD or THC or dietary supplements containing
CBD or THC, regardless of whether the substances are hemp-derived and regardless of the claims being made. FDA takes this position
based on the operation of statutory “exclusionary clauses” in the Food, Drug and Cosmetic Act related to food additives
and dietary supplements. Specifically, FDA has determined that both CBD and THC, which are now active ingredients in FDA-approved
drugs, were the subject of substantial clinical investigations before they were marketed as foods or dietary supplements, and due
to the operation of the exclusionary clauses, FDA concludes that it is currently illegal to introduce CBD or THC into the food
supply or to market these ingredients as dietary supplements.
Additional regulatory considerations that
must be taken into account include the Federal Trade Commission’s regulation of unfair and deceptive product labeling and
marketing, as well as state law regulation of food safety.
We are subject to risks relating
to legal proceedings.
We are subject to various claims and legal
actions arising in the ordinary course of its business. Any such litigation could be very costly and could distract our management
from focusing on operating our business. The existence of any such litigation could harm our business, results of operations and
financial condition. Results of actual and potential litigation are inherently uncertain. An unfavorable result in a legal proceeding
could adversely affect our reputation, financial condition and operating results.
We will be subject to the U.S. Foreign
Corrupt Practices Act and other anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws
governing our anticipated operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties,
other remedial measures, and legal expenses, which could adversely affect our business, results of operations and financial condition.
Our operations, if initiated, will be subject
to certain anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”), and other anti-corruption
laws that apply in countries where we do business. The FCPA and other anti-corruption laws generally prohibit us and our employees
and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain
or retain business or gain some other business advantage. We and our commercial partners operate in a number of jurisdictions that
pose a high risk of potential FCPA violations and we participate in collaborations and relationships with third parties whose actions
could potentially subject us to liability under the FCPA or local anti-corruption laws. In addition, we cannot predict the nature,
scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which
existing laws might be administered or interpreted.
We also anticipate becoming subject to
other laws and regulations governing our international operations, including regulations administered in the U.S. and in the EU,
including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency
exchange regulations (collectively, “Trade Control Laws”).
There can be no assurance that we will
be completely effective in ensuring our compliance with all applicable anticorruption laws, including the FCPA or other legal requirements,
such as Trade Control Laws. Any investigation of potential violations of the FCPA, other anti-corruption laws or Trade Control
Laws by U.S., EU or other authorities could have an adverse impact on our reputation, our business, results of operations and financial
condition. Furthermore, should we be found not to be in compliance with the FCPA, other anti-corruption laws or Trade Control Laws,
we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, as well as the accompanying
legal expenses, any of which could have a material adverse effect on our reputation and liquidity, as well as on our business,
results of operations and financial condition.
The U.S. laws pertaining to the importation
and exportation of hemp-based products may adversely affect our ability to fully implement our business plan.
In the United States today the U.S. Customs
Service has a “zero tolerance standard” for the importation of industrial hemp. What this means is that a product cannot
have any potentially dangerous substances contained in it or it will be considered adulterated and unfit for human consumption,
and thus illegal to possess or use per U.S. Federal Law. In 2001 the DEA elaborated on this and clarified that any product with
any quantity of THC in it at all cannot be imported into the United States. Since no hemp-based products containing THC are legally
permitted in the United States such products with THC are not allowed to be exported out of the United States either. Because of
the strict laws that exist with the U.S. importation and exportation of industrial hemp products our business could be adversely
affected. Should our supply chain be accidentally contaminated by THC, we have no system in place for evaluating THC levels in
our products prior to delivery.
We operate in a highly competitive
environment, and if we are unable to compete with our competitors, our business, financial condition, results of operations, cash
flows and prospects could be materially adversely affected.
We operate in a highly competitive environment.
Our competition includes all other companies that are in the business of distributing or reselling hemp-based products for personal
use or consumption. A highly competitive environment could materially adversely affect our business, financial condition, results
of operations, cash flows and prospects.
We and our customers may have difficulty
accessing the service of banks, which may make it difficult to sell our products and services.
Since the use of cannabis is illegal under
federal law, federally chartered banks will not accept for deposit funds from businesses involved with cannabis, even if the end
product is non-psychoactive CBD. Consequently, businesses involved in the cannabis industry often have trouble finding a bank willing
to accept their business. The inability to open bank accounts may make it difficult for our customers to operate. There does appears
to be recent movement to allow state-chartered banks and credit unions to provide banking to the industry, but as of the date of
this report there are only nominal entities that have been formed that offer these services. Further, in a February 6, 2018, Forbes
article, United States Secretary of the Treasury, Steven Mnuchin, is reported to have testified that his department is “reviewing
the existing guidance.” But he clarified that he doesn’t want to rescind it without having an alternate policy in place
to address public safety concerns.
Financial transactions involving proceeds
generated by cannabis-related conduct can form the basis for prosecution under the federal money laundering statutes, unlicensed
money transmitter statute and the U.S. Bank Secrecy Act. Despite guidance from the U.S. Department of the Treasury suggesting it
may be possible for financial institutions to provide services to cannabis-related businesses consistent with their obligations
under the Bank Secrecy Act, banks remain hesitant to offer banking services to cannabis-related businesses. Consequently, those
businesses involved in the cannabis industry continue to encounter difficulty establishing banking relationships. Our inability
to maintain our current bank accounts would make it difficult for us to operate our business, increase our operating costs, and
pose additional operational, logistical and security challenges and could result in our inability to implement our business plan.
Similarly, many of our customers are directly involved in cannabis sales and further restriction to their ability to access banking
services may make it difficult for them to purchase our products, which could have a material adverse effect on our business, financial
condition and results of operations.
We are subject to certain federal
regulations relating to cash reporting.
The Bank Secrecy Act, enforced by FinCEN,
requires us to report currency transactions in excess of $10,000, including identification of the customer by name and social security
number, to the IRS. This regulation also requires us to report certain suspicious activity, including any transaction that exceeds
$5,000 that we know, suspect or have reason to believe involves funds from illegal activity or is designed to evade federal regulations
or reporting requirements and to verify sources of funds. Substantial penalties can be imposed against us if we fail to comply
with this regulation. If we fail to comply with these laws and regulations, the imposition of a substantial penalty could have
a material adverse effect on our business, financial condition and results of operations.
We may be subject to certain tax
risks and treatments that could negatively impact our results of operations.
Section 280E of the Internal Revenue Code,
as amended, prohibits businesses from deducting certain expenses associated with trafficking controlled substances (within the
meaning of Schedule I and II of the Controlled Substances Act). The IRS has invoked Section 280E in tax audits against various
cannabis businesses in the U.S. that are permitted under applicable state laws. Although the IRS issued a clarification allowing
the deduction of certain expenses, the scope of such items is interpreted very narrowly and the bulk of operating costs and general
administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative
and federal courts challenging these restrictions, there is no guarantee that these courts will issue an interpretation of Section
280E favorable to cannabis businesses.
Risks Related to the Securities Markets
and Ownership of our Equity Securities
The Common Stock is thinly traded,
so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire
to liquidate your shares.
The Common Stock has historically been
sporadically traded on the OTC Pink Sheets, meaning that the number of persons interested in purchasing our shares at or near ask
prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including
the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and
others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons,
they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase
of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or
more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady
volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give
you any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that
current trading levels will be sustained.
The market price for the common stock
is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited
operating history and lack of revenue, which could lead to wide fluctuations in our share price. The price at which you purchase
our shares may not be indicative of the price that will prevail in the trading market. You may be unable to sell your common shares
at or above your purchase price, which may result in substantial losses to you.
The market for our shares of common stock
is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue
to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number
of factors. First, as noted above, our shares are sporadically traded. Because of this lack of liquidity, the trading of relatively
small quantities of shares may disproportionately influence the price of those shares in either direction. The price for our shares
could, for example, decline precipitously in the event that a large number of our shares is sold on the market without commensurate
demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly,
we are a speculative investment due to, among other matters, our limited operating history and lack of revenue or profit to date,
and the uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-averse
investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more
inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the securities of
a seasoned issuer. The following factors may add to the volatility in the price of our shares: actual or anticipated variations
in our quarterly or annual operating results; acceptance of our inventory of games; government regulations, announcements of significant
acquisitions, strategic partnerships or joint ventures; our capital commitments and additions or departures of our key personnel.
Many of these factors are beyond our control and may decrease the market price of our shares regardless of our operating performance.
We cannot make any predictions or projections as to what the prevailing market price for our shares will be at any time, including
as to whether our shares will sustain their current market prices, or as to what effect the sale of shares or the availability
of shares for sale at any time will have on the prevailing market price.
Shareholders should be aware that, according
to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns
include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
(2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler
room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive
and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse
of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the
penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of practical limitations to prevent the described patterns
from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility
of our share price.
The market price of our common stock
may be volatile and adversely affected by several factors.
The market price of our common stock could
fluctuate significantly in response to various factors and events, including, but not limited to:
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our
ability to integrate operations, technology, products and services;
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our
ability to execute our business plan;
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operating
results below expectations;
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our
issuance of additional securities, including debt or equity or a combination thereof;
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announcements
of technological innovations or new products by us or our competitors
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loss
of any strategic relationship;
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industry
developments, including, without limitation, changes in healthcare policies or practices;
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economic
and other external factors;
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period-to-period
fluctuations in our financial results; and
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whether
an active trading market in our common stock develops and is maintained.
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In addition, the securities markets have
from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular
companies. These market fluctuations may also materially and adversely affect the market price of our common stock. Issuers using
the Alternative Reporting standard for filing financial reports with OTC Markets are often subject to large volatility unrelated
to the fundamentals of the company.
Our issuance of additional shares
of Common Stock, or options or warrants to purchase those shares, would dilute your proportionate ownership and voting rights.
We are entitled under our articles of incorporation
to issue up to 10,000,000,000 shares of common stock. We have issued and outstanding, as of the date of this prospectus, 161,061,018
shares of common stock. Our board may generally issue shares of common stock, preferred stock or options or warrants to purchase
those shares, without further approval by our shareholders based upon such factors as our board of directors may deem relevant
at that time. It is likely that we will be required to issue a large amount of additional securities to raise capital to further
our development. It is also likely that we will issue a large amount of additional securities to directors, officers, employees
and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock
plans. We cannot give you any assurance that we will not issue additional shares of common stock, or options or warrants to purchase
those shares, under circumstances we may deem appropriate at the time.
The elimination of monetary liability
against our directors, officers and employees under our Articles of Incorporation and the existence of indemnification rights to
our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against
our directors, officers and employees.
Our Articles of Incorporation contains
provisions that eliminate the liability of our directors for monetary damages to our company and shareholders. Our bylaws also
require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements
with our directors, officers and employees. The foregoing indemnification obligations could result in our company incurring substantial
expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to
recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors, officers
and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders
against our directors, officers and employees even though such actions, if successful, might otherwise benefit our company and
shareholders.
Anti-takeover provisions may impede
the acquisition of our company.
Certain provisions of the Florida Law have
anti-takeover effects and may inhibit a non-negotiated merger or other business combination. These provisions are intended to encourage
any person interested in acquiring us to negotiate with, and to obtain the approval of, our board of directors in connection with
such a transaction. However, certain of these provisions may discourage a future acquisition of us, including an acquisition in
which the shareholders might otherwise receive a premium for their shares. As a result, shareholders who might desire to participate
in such a transaction may not have the opportunity to do so.
Our past filings may be deemed insufficient.
Form 8-K shall be used for current reports
under Section 13or 15(d) of the Securities Exchange Act of 1934, filed pursuant to Rule 13a-11 or Rule 15d-11 and for reports of
nonpublic information required to be disclosed by Regulation FD (17 CFR 243.100 and 243.101). Form 8-K is required to be filed
no less than four business days from the date of the reported event. On September 6, 2018, we disclosed the reverse merger with
The Marquie Group, Inc. which was reported on Form 8-K filed with the Commission. The reverse merger occurred on August
16, 2018. As a result, we were not in compliance with the requirements of Form 8-K. Although a failure to file a timely Form 8-K
shall not be deemed a violation of Section 10 of the Securities Exchange Act of 1934 or Rules 10b-5: 1.01, 1.02, 2.03-2.06, 4.02(a),
(5.02(e), or 6.03 of the Securities Exchange Act of 1934, the Commissions guidance suggests that failure to properly file a Form
8-K may be considered prima facie evidence of a lack of sufficient disclosure controls under the Sarbanes-Oxley Act of 2002.
In addition, the Commission may deem that the Company has lost the ability to file a registration statement on Form S-3. Although
such an offering is not currently anticipated, the loss of our ability to utilized Form S-3 may affect our ability to grow in the
future.
We may become involved in securities
class action litigation that could divert management’s attention and harm our business.
The stock market in general, and the shares
of early stage companies in particular, have experienced extreme price and volume fluctuations. These fluctuations have often been
unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future,
the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility
in the market price of a particular company’s securities, securities class action litigation has often been brought against
that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become involved in this type
of litigation, which would be expensive and divert management’s attention and resources from managing our business.
As a public company, we may also from time
to time make forward-looking statements about future operating results and provide some financial guidance to the public markets.
Our management has limited experience as a management team in a public company and as a result, projections may not be made timely
or set at expected performance levels and could materially affect the price of our shares. Any failure to meet published forward-looking
statements that adversely affect the stock price could result in losses to investors, stockholder lawsuits or other litigation,
sanctions or restrictions issued by the SEC.
The subscription agreement for the
purchase of common stock from the Company contains an exclusive forum provision, which will limit investors ability to litigate
any issue that arises in connection with the offering anywhere other than the state and Federal courts in Nevada.
The subscription agreement states that
it shall be governed by the local law of the State of Nevada and the United States, and the parties consent to the exclusive jurisdiction
of the state and Federal courts in Nevada. They will not have the benefit of bringing a lawsuit in a more favorable jurisdiction
or under more favorable law than the local law of the State of Nevada. Insomuch claims are brought under the Securities Act of
1933, our provision requires that a claim be brought in federal court. We also believe this provision would require an action brought
under the Securities Exchange Act of 1934 also be brought in federal court, as Section 27 of the Securities Exchange Act of 1934
provides exclusive jurisdiction to the federal courts for claims brought pursuant to the Securities Exchange Act of 1934. However,
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce
any duty or liability created by the Securities Act or the rules and regulations thereunder. As noted above, our subscription agreement
will provide that the courts of Nevada and the federal district court for the District of Nevada shall have concurrent jurisdiction
over any action arising under the Securities Act. Accordingly, there is uncertainty as to whether a court would enforce such provision,
and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations
thereunder. Additionally, as contract law is generally based in state law, a claim may be bought under state law. The inconsistencies
of venue and applicably law could make any action brought by an investor extremely difficult. Moreover, we cannot provide any certainty
as to whether a court would enforce our forum and choice of law provisions. The combination of both potentially unfavorable forum
and the lack of certainty regarding enforceability poses a risk regarding litigation related to the subscription to this Offering
and should be considered by each investor before signing the subscription agreement.
Our common stock is currently deemed
a “penny stock,” which makes it more difficult for our investors to sell their shares.
The SEC has adopted Rule 15g-9 which establishes
the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price
of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules
require that a broker or dealer approve a person’s account for transactions in penny stocks, and the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account
for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of
the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person
has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver,
prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which,
in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or
dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing
to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors
to dispose of our common stock if and when such shares are eligible for sale and may cause a decline in the market value of its
stock.
Disclosure also has to be made about the
risks of investing in penny stocks in both public offerings and in secondary trading and about the commission payable to both the
broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price
information for the penny stock held in the account and information on the limited market in penny stock.
As an issuer of “penny stock,”
the protection provided by the federal securities laws relating to forward-looking statements does not apply to us.
Although federal securities laws provide
a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this
safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection
in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact
or was misleading in any material respect because of our failure to include any statements necessary to make the statements not
misleading. Such an action could hurt our financial condition.
Securities analysts may elect not
to report on our common stock or may issue negative reports that adversely affect the stock price.
At this time, no securities analysts provide
research coverage of our common stock, and securities analysts may not elect to provide such coverage in the future. It may remain
difficult for our company, with its small market capitalization, to attract independent financial analysts that will cover our
common stock. If securities analysts do not cover our common stock, the lack of research coverage may adversely affect the stock’s
actual and potential market price. The trading market for our common stock may be affected in part by the research and reports
that industry or financial analysts publish about our business. If one or more analysts elect to cover our company and then downgrade
the stock, the stock price would likely decline rapidly. If one or more of these analysts cease coverage of our company, we could
lose visibility in the market, which, in turn, could cause our stock price to decline. This could have a negative effect on the
market price of our common stock.
We have not paid cash dividends in
the past and do not expect to pay cash dividends in the foreseeable future. Any return on investment may be limited to the value
of our common stock.
We have never paid cash dividends on our
capital stock and do not anticipate paying cash dividends on our capital stock in the foreseeable future. The payment of dividends
on our capital stock will depend on our earnings, financial condition and other business and economic factors affecting us at
such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because
a return on your investment will only occur if the common stock price appreciates.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
We make forward-looking statements under
the “Summary,” “Risk Factors,” “Business,” “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and in other sections of this Offering Circular. In some cases,
you can identify these statements by forward-looking words such as “may,” “might,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking
statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our
future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions
based on our current expectations and projections about future events. There are important factors that could cause our actual
results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or
achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and
uncertainties described under “Risk Factors.”
While we believe we have identified material
risks, these risks and uncertainties are not exhaustive. Other sections of this Offering Circular describe additional factors that
could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing
environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties,
nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking statements.
Although we believe the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements.
Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking
statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update
any of these forward-looking statements after the date of this Offering Circular to conform our prior statements to actual results
or revised expectations, and we do not intend to do so.
Forward-looking statements include, but
are not limited to, statements about:
|
|
●
|
our
business’ strategies and investment policies;
|
|
|
●
|
our
business’ financing plans and the availability of capital;
|
|
|
●
|
potential
growth opportunities available to our business;
|
|
|
●
|
the
risks associated with potential acquisitions by us;
|
|
|
●
|
the
recruitment and retention of our officers and employees;
|
|
|
●
|
our
expected levels of compensation;
|
|
|
●
|
the
effects of competition on our business; and
|
|
|
●
|
the
impact of future legislation and regulatory changes on our business.
|
We caution you not to place undue reliance
on the forward-looking statements, which speak only as of the date of this Offering Circular.
DILUTION
Purchasers of our common stock in this
Offering will experience an immediate dilution of net tangible book value per share from the public offering price. Dilution
in net tangible book value per share represents the difference between the amount per share paid by the purchasers of shares of
common stock and the net tangible book value per share immediately after this Offering. As of November 31, 2019, we had a tangible
book deficit of $7,880.897 or $(0.0036) per share of issued and outstanding common stock at January 20, 2020. After giving effect
to the sale of the shares proposed to be offered in this Offering, the dilution to the purchaser of the common stock in this offering
is as follows:
|
Percentage of Offering Sold
|
|
|
100.00%
|
|
|
|
75.00%
|
|
|
|
50.00%
|
|
|
|
25.00%
|
|
|
Net Book Value
|
|
|
(7,880,897
|
)
|
|
|
(7,880,897
|
)
|
|
|
(7,880,897
|
|
|
|
(7,880,897
|
)
|
|
New Total Shares Outstanding
|
|
|
1550515810
|
|
|
|
1216944386
|
|
|
|
882372957
|
|
|
|
529809529
|
|
|
New Book Value Per Share
|
|
$
|
-.0045
|
|
|
$
|
-.0059
|
|
|
$
|
-0.0004
|
|
|
$
|
-.0140
|
|
|
Increase in NBV/Share
|
|
$
|
.0320
|
|
|
$
|
.0305
|
|
|
$
|
.0280
|
|
|
$
|
.0225
|
|
|
Dilution to new shareholders
|
|
$
|
0.01
|
|
|
$
|
.0066
|
|
|
$
|
.0091
|
|
|
$
|
.0147
|
|
PLAN OF DISTRIBUTION
The Offering will be sold by our officers
and directors.
This is a self-underwritten offering. This
Offering Circular is part of an exemption under Regulation A that permits our officers and directors to sell the Shares directly
to the public in those jurisdictions where the Offering Circular is approved, with no commission or other remuneration payable
for any Shares sold. There are no plans or arrangements to enter into any contracts or agreements to sell the Shares with a broker
or dealer. After the qualification by the Commission and acceptance by those states where the offering will occur, the Officer
and Directors intends to advertise through personal contacts, telephone, and hold investment meetings in those approved jurisdictions
only. We do not intend to use any mass-advertising methods such as the Internet or print media. Officers and Directors will also
distribute the prospectus to potential investors at meetings, to their business associates and to his friends and relatives who
are interested the Company as a possible investment, so long as the Company has provided notice filing in the jurisdiction where
such communications have taken place. In offering the securities on our behalf, the Officers and Directors will rely on the safe
harbor from broker dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934.
Terms of the Offering
The Company is offering on a best-efforts,
self-underwritten basis a maximum of 1,334,285,714 shares of its common stock at an offering price of $0.0007 per share.
The Company is offering, on a best-efforts,
self-underwritten basis, a maximum of 1,334,285,714 shares at a price of $0.0007 There is no minimum investment required from
any individual investor. The shares are intended to be sold directly through the efforts of our officers and directors. The shares
are being offered for a period not to exceed 360 days. The offering will terminate on the earlier of: (i) the date when the sale
of all shares is completed, or (ii) 360 days from the effective date of this document (unless extended by the Board of Directors
for an additional 90 days). For more information, see the section titled “Use of Proceeds” herein.
USE OF PROCEEDS
The Company plans to use the proceeds from
this offering to grow its business. The company intends to use the proceeds for research and development, the purchase of inventory,
website development, marketing, operating capital, hiring staff and offering expenses. The more we are able to raise, the more
we will be able to invest in these opportunities. Since this offering is on a best efforts basis, the amount of securities we sell
is uncertain, therefore our use of proceeds will depend on how much we are able to raise under this offering. We intend to use
the proceeds generally so as to provide the most value to our investors by growing sales of our existing products and entering
markets with new products we are able to successfully develop.
The following Use of Proceeds is based
on estimates made by management. The Company planned the Use of Proceeds after deducting estimated offering expenses estimated
to be $25,000. Management prepared the milestones based on three levels of offering raise success: 25% of the Maximum Offering
proceeds raised ($1,186,250), 50% of the Maximum Offering proceeds raised ($2,347,500), 75% of the Maximum Offering proceeds raised
($3,508,750) and the Maximum Offering proceeds raised of $4,670,000 through the offering. The costs associated with operating as
a public company are included in all our budgeted scenarios and management is responsible for the preparation of the required documents
to keep the costs to a minimum.
Although we have no minimum offering, we
have calculated used of proceeds such that if we raise 25% of the offering is budgeted to sustain operations for a twelve-month
period. 25% of the Maximum Offering is sufficient to keep the Company current with its public listing status costs with prudently
budgeted funds remaining which will be sufficient to complete the development of our marketing package. If the Company were to
raise 50% of the Maximum Offering, then we would be able to expand our marketing outside the US. Raising the Maximum Offering will
enable the Company to implement our full business. If we begin to generate profits, we plan to increase our marketing and sales
activity accordingly.
The Company intends to use the proceeds
from this offering as follows:
|
|
|
If 25%
of the
Offering
is Raised
($)
|
|
|
If 50%
of the
Offering
is Raised
($)
|
|
|
If 75%
of the
Offering
is Raised
($)
|
|
|
If 100%
of the
Offering
is Raised
($)
|
|
|
Cost of the Offering
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Net Proceeds
|
|
|
233,500
|
|
|
|
467,000
|
|
|
|
700,500
|
|
|
|
934,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal (Q’s and K’s)
|
|
|
2,500
|
|
|
|
5,000
|
|
|
|
7,500
|
|
|
|
10,000
|
|
|
Accounting (Q’s and K’s)
|
|
|
12,500
|
|
|
|
25,000
|
|
|
|
37,500
|
|
|
|
50,000
|
|
|
Travel
|
|
|
750
|
|
|
|
1,500
|
|
|
|
2,250
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Websites
|
|
|
1,000
|
|
|
|
2,000
|
|
|
|
3,000
|
|
|
|
4,000
|
|
|
Office 12-Months
|
|
|
1,500
|
|
|
|
3,000
|
|
|
|
4,500
|
|
|
|
6,000
|
|
|
Furniture & Equipment
|
|
|
625
|
|
|
|
1,250
|
|
|
|
1,875
|
|
|
|
2,500
|
|
|
Working Capital
|
|
|
1,250
|
|
|
|
2,500
|
|
|
|
3,750
|
|
|
|
5,000
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Retire Debt
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
150,000
|
|
|
|
200,000
|
|
|
Product Development
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
75,000
|
|
|
|
100,000
|
|
|
TMGI Accrued Corporate Salaries
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
75,000
|
|
|
|
100,000
|
|
|
Health & Beauty COGS
|
|
|
75,000
|
|
|
|
150,000
|
|
|
|
225,000
|
|
|
|
300,000
|
|
|
Sales & Marketing
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
75,000
|
|
|
|
100,000
|
|
|
Operating budget for MOYL Corporate
|
|
|
4,500
|
|
|
|
9,000
|
|
|
|
13,500
|
|
|
|
18,000
|
|
|
Company-Wide Expenses
|
|
|
4,375
|
|
|
|
8,750
|
|
|
|
13,125
|
|
|
|
17,500
|
|
|
MYLI Radio Network
|
|
|
2,000
|
|
|
|
4,000
|
|
|
|
6,000
|
|
|
|
8,000
|
|
|
Miscellaneous & Contingency
|
|
|
2,500
|
|
|
|
5,000
|
|
|
|
7,500
|
|
|
|
10,000
|
|
|
TOTAL
|
|
|
233,500
|
|
|
|
467,000
|
|
|
|
700,500
|
|
|
|
934,000
|
|
DIVIDEND POLICY
We have not declared or paid any dividends
on our common stock. We intend to retain earnings for use in our operations and to finance our business. Any change in our dividend
policy is within the discretion of our board of directors and will depend, among other things, on our earnings, debt service and
capital requirements, restrictions in financing agreements, if any, business conditions, legal restrictions and other factors that
our board of directors deems relevant.
BUSINESS
This Prospectus includes market and industry
data that we have developed from publicly available information; various industry publications and other published industry sources
and our internal data and estimates. Although we believe the publications and reports are reliable, we have not independently verified
the data. Our internal data, estimates and forecasts are based upon information obtained from trade and business organizations
and other contacts in the market in which we operate and our management’s understanding of industry conditions.
As of the date of the preparation of this
Prospectus, these and other independent government and trade publications cited herein are publicly available on the Internet without
charge. Upon request, the Company will also provide copies of such sources cited herein.
Company Overview
The Marquie Group, Inc. (“TMGI”
or “The Company”) (TMGI: OTC), formerly known as The Music of Your Life, is a multi-media entertainment company
that produces live radio programming 24 hours a day, syndicated to AM, FM and HD terrestrial radio stations around the country.
The network is streamed over the Internet. Music of Your Life® has been on the air since 1978, making it the longest running
syndicated music radio network in the world. The Company is currently developing a direct-to-consumer, health and beauty products
platform that use innovative formulations of plant-based, amino-acids and other natural alternatives to chemical ingredients, with
and without non-THC CBD oil, with the objective of initially launching them over the Music of Your Life radio network using its
three nationwide advertising minutes per hour in order maximize net market returns from the products.
Company History
The Company was incorporated on January
30, 2008, in the State of Florida, as Maximum Consulting, Inc. and shortly thereafter changed its name to 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 an acquisition agreement (the “Acquisition”) with Music of Your Life, Inc., a Nevada corporation (“MYL
Nevada”). As a result of the Acquisition, 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.
The Company merged into The Marquie Group,
Inc. on August 16, 2018, which was founded by Jacquie Carter prior to its merger with the Company . Jacquie Carter is a
former Executive Director of Worldwide Training and Education at Herbalife Nutrition. During her 18 years with Herbalife, Jacquie
created and launched over 60 products worldwide, which have accumulated more than $1-billion in sales.
Internet Licensing has transformed the
advertising landscape in a way that is detrimental to advertising sales for terrestrial radio. In response to this, Music of Your
Life and the Company began to explore developing a product line to be marketed through radio spots on the Company’s syndicated
radio network. At the same time the Company was in an exploratory phase of developing amino-acid-based health and beauty care products.
The Music of Your Life merged into the Company though Share Exchange Agreement in August 2018.
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.” On February 22, 2018 our FINRA symbol
changed from “MYLI” to “TMGI.”
Our Strategy
The Company is currently developing a direct-to-consumer,
health and beauty products platform that use innovative formulations of plant-based, amino-acids, and other natural alternatives
to chemical ingredients, with and without non-THC CBD oil. Our branded, solution-driven slate of multiple SKU’s includes
facial masks, facial serums, eye serums, CBD tinctures, and beauty drinks, each with unique, skin and complexion enhancing properties.
Marketing plan includes a multi-channel, national sales program developed by the Company’s team of health and beauty product
marketing specialists that will target consumers through proven and tested inspirational branding and sensorial experience. The
products will be introduced initially on the Company’s nationally syndicated radio network, Music of Your Life, the Company’s
vast social media connections, as well as Jacquie Carter’s social media reach which covers more than 90-countries. The Company
launched a new product-centric website at www.simplywhim.com for people to sign-up and receive discounts upon product launch. Please
review our Risk Factors for limitations on advertising CBD products.
|
|
●
|
Direct-to-consumer,
health and beauty products platform that use innovative formulations of plant-based, amino-acids, with and without non-THC CBD
alternatives to chemical ingredients.
|
|
|
●
|
Branded,
solution-driven slate of multiple SKU’s planned for a 2019 launch - a facial mask, a facial serum, a beauty drink, and CBD
oil tinctures, each with unique, skin and complexion enhancing properties.
|
|
|
●
|
Marketing
plan includes a multi-channel, national sales program developed by the Company’s team of health and beauty product marketing
specialists that will target consumers through proven and tested inspirational branding and sensorial experience.
|
Our skin care formulations will be made
without Sulfates SLS and SLES, parabens, formaldehydes, formaldehyde-releasing agents, phthalates, mineral oil, retinyl palmitate,
oxybenzone, coal tar, hydroquinone, triclosan, triclocarban. Only formulas which have less than one percent of synthetic fragrances
will be sent to market.
According to the Physician’s
Desk Reference approximately 10-20% of vitamins and minerals taken in supplement form are actually absorbed by the body. Because
of this low rate of absorption typical multi-vitamins are not enough for us to obtain the vital nutrients our bodies need.
And especially not the skin. Our ultimate goal is to be able supply both topical, nutrient driven products as well as accompanying
beauty drinks. This will allow for a wonderful synergy inside and out and will assure us that we are taking the necessary steps
to protect our bodies and look good and feel good while doing it.
The products will be introduced on the
Company’s Nationwide Syndicated Radio Network, Music of Your Life, which is also simulcast to a worldwide audience over the
Internet. Product videos and Blog Posts will be featured at www.simplywhim.com, www.whimandadare.com, www.whimbeauty.com, and www.musicofyourlife.com
Principal Products and Services
Our product lines will be marketed as custom
blended and derived from nature, nutrition, and science to help combat the effects of aging, stress, and all that comes with our
busy, hectic lifestyles: “All while Nourishing the Body, Mind and Soul from the Inside Out & the Outside In.”
Initial Product Lineup
|
|
1.
|
Whim™
- Beauty Drink. A fortified Beauty Drink powder, sold in portable on-the-go sachets, that easily dissolves in water for nutrition
on-the-go. Beverage powder formulas under development will contain a targeted blend of ingredients that includes Amino Acids,
Antioxidant Vitamins, “Super Food” (Acai, Moringa, Blueberry, etc.) Puree Blends, Hydrolyzed Collagen, and, in certain
instances, non-THC, water-soluble CBD. These products will be sweetened with natural ingredients without the use of sugar.
|
|
|
2.
|
Whim™
- Face Serum. An AM/PM youth enhancing facial serum infused non-THC, water-soluble CBD oil and a proprietary blend of amino acids
and other natural ingredients that help to address skin aging through additional plant-based technologies.
|
|
|
3.
|
Whim™
- Beauty Scrub/Mask. A treatment facial mask that delivers anti-aging ingredients to the skin to leave it looking and feeling
more youthful.
|
These products are to be produced without
sulfates SLS and SLES, parabens, formaldehydes, formaldehyde-releasing agents, phthalates, mineral oil, retinyl palmitate, coal
tar, hydroquinone, triclosan, or triclocarban.
Associated Intellectual Property
Trademarks Under License Owned by Jacquie
Carter
|
|
●
|
CBD
Nutrition by Jacquie
|
|
|
●
|
CBD
Skincare by Jacquie
|
Nutritive Benefits of CBD
Cannabidiol (CBD) is a non-intoxicating
cannabinoid found in the Cannabis plant. After tetrahydrocannabinol (THC), CBD is the second-most abundant cannabinoid
in the cannabis plant. Parallel to the growth of the legal cannabis industry there is a rapidly emerging market for CBD due to
its both its potential and its purported therapeutic benefits, including anti-inflammatory, analgesic, anti-anxiety and seizure-suppressant
properties. CBD can be sourced the Cannabis sativa and Cannabis indica plants. Cannabis sativa is primarily used
to produce hemp. Hemp contains little or no THC, therefore, hemp-derived CBD is used for safe and regulated production. While
CBD is gaining public attention for potential medicinal applications (is the active ingredient in Epidolex, which was recently
approved by the FDA for the treatment of severe forms of epilepsy), our products are not intended to treat or cure any disease.
We intend to utilize the nutritive aspects of CBD in our formulas to provide a more effective product. Please see our Risk Factors
for a discussion of limits placed on claims made by businesses regarding the efficacy of CBD.
Defaults Upon Senior Securities
The Company has not paid the principal
and interest due on 14 notes payable aggregating $503,807 at February 28, 2019. See Note 4 to the Consolidated Financial Statements.
Derivative Liabilities
The Company follows the provisions of FASB
ASC Topic No. 815-40, “Derivatives and Hedging - Contracts in an Entity’s Own Stock”, for the embedded conversion
options that were accounted for as derivative liabilities at the date of issuance and adjusted to fair value through earnings at
each reporting date. In accordance with ASC 815, the Company has bifurcated the conversion feature of the convertible Debentures,
along with any free-standing derivative instruments and recorded derivative liabilities on their issuance date. The Company uses
the Black-Scholes model to value the derivative liabilities.
Regulation
Our business relies heavily on interpreting
and complying with Federal Communication Commission rules and regulations as well as rules and regulations pertaining to direct-to-consumer
sales, including but not limited to the processing and distribution of hemp-derived health and beauty products. Any changes to
the laws, licensing schemes or the enforcement of the same could be detrimental to our business.
Employees
Our current staff is as follows:
Marc Angell – CEO
Jacquie Carter – President
Peter Marshall – On-Air
Personality
Steve March-Torme – On-Air
Personality
Les Brown, Jr. – On-Air
Personality
Al Hardee – On-Air Personality
Legal Matters
As of April 1st, 2019, all legal matters
were resolved or inexistent.
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial
condition and results of operations should be read in conjunction with the unaudited financial statements and the notes thereto
of the Company included in this Offering Circular. The following discussion contains forward-looking statements. Actual results
could differ materially from the results discussed in the forward-looking statements. See “Risk Factors” and “Cautionary
Note Regarding Forward-Looking Statements” above.
Overview
The Marquie Group, Inc. (“TMGI”
or “The Company”) (TMGI: OTC) was, prior to August 2018, The Music of Your Life, a multi-media entertainment
company that produced live radio programming 24 hours a day, syndicated to AM, FM and HD terrestrial radio stations around the
country. The network is also heard in more than 50 countries streaming over the Internet. Music of Your Life® has been on the
air since 1978, making it the longest running syndicated music radio network in the world.
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.” On February 22, 2018 our FINRA symbol
changed from “MYLI” to “TMGI.”
The Company is currently developing a direct-to-consumer,
health and beauty products platform that use innovative formulations of plant-based, amino-acid and CBD alternatives to chemical
ingredients with the objective of launching them over the Music of Your Life radio network using its three network advertising
minutes per hour in order maximize net market return from the products.
We currently have enough cash on hand to
sustain the costs of this offering and to continue with our existing business plan. We are dependent on capital raised through
this offering to implement the business plan for our health and beauty products.
Results of Operations
The following is management’s discussion
of the relevant items affecting results of operations for the years ended May 31, 2019 and 2018.
Revenues
The Company generated net revenues of $5,269
during the year ended May 31, 2019 as compared to $5,745 for the year ended May 31, 2018. Revenues were generated from spot sales,
digital sales and subscription-based sales from the live radio programming through radio stations around the country. Following
the successful qualification of our offering, we will initiate the production, promotion, distribution, and sale of health and
beauty products and our revenues will change as we move forward with our business plan
Cost of Sales
Our cost of sales was $-0- for both years
ended May 31, 2019 and 2018. Historically, our costs of sales have consisted principally of licensing costs and royalties associated
with our syndicated radio network, other related services provided directly or outsourced through our affiliates, as well as operational
and staffing costs with respect thereto. Following the successful qualification of our offering, our business model will shift
to incorporate our line of health and beauty products and our costs of sales will increase dramatically. Please refer to our Use
of Proceeds for additional discussion of expenses associated with costs of sales.
Salaries and Consulting Fees
Accrued salaries and consulting expenses
for the year ended May 31, 2019 were $451,000 as compared to $318,196 for the year ended May 31, 2018. We expect that salaries
and consulting expenses that are cash instead of share-based, will increase as we add personnel to build our multi-media entertainment
business and, following the successful qualification of our offering, salaries and consulting fees will increase dramatically as
we expand our business and seek brand and technical consultants to help develop and market our health and beauty products.
Professional Fees
Professional fees for the year ended May
31, 2019 were $88,169 as compared to $71,772 for the year ended May 31, 2018. We anticipate that professional fees will increase
in future periods as we scale up our operations.
Other Selling, General and Administrative
Expenses
Other selling, general and administrative
expenses were $130,909 for the year ended May 31, 2019 as compared to $97,048 for the year ended May 31, 2018. We anticipate that
SG&A expenses will increase commensurate with an increase in our operations.
Expenses which comprise the costs of goods
sold will include licensing agreements and royalties, as well as operational and staffing costs related to the management of the
Company’s syndicated network. General and administrative expenses are comprised of administrative wages and benefits; occupancy
and office expenses; outside legal, accounting and other professional fees; travel and other miscellaneous office and administrative
expenses. Selling and marketing expenses include selling/marketing wages and benefits, advertising and promotional expenses, as
well as travel and other miscellaneous related expenses.
Other Income (Expenses)
The Company had net other expense of $2,985,637
for the year ended May 31, 2019 as compared to $144,393 for the year ended May 31, 2018. Other expenses were comprised mainly of
interest expenses related to notes payable. For the year ended May 31, 2019 the company incurred $648,288 in interest expense which
included the amortization of debt discounts in the amount of $417,587 and a loss on conversion of notes payable and accrued interest
of $1,709,230. The Company also recorded income from derivative liability of $(628,119). For the year ended May 31, 2018, the Company
incurred interest expense of $416,847 and income from derivative liability of $272,454.
Because we have incurred losses, income
tax expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards, given our uncertainty of
being able to utilize such loss carryforwards in future years. We anticipate incurring additional losses during the coming year.
Operating Activities
For the year ended May 31, 2019, we used
we used $495,732 of cash in operating activities, compared to $263,482 for the period ended May 31, 2018. Non-cash adjustments
included $41,000 from stock-based compensation, $3,305 from depreciation of music inventory, expense of $628,119 from derivative
liability, amortization of debt discounts of $417,587, and a loss on conversion notes payable and accrued interest. Changes in
operating assets and liability amounted to $5,478 for accounts payable, $161,295 for accrued interest payable on notes payable,
and $188,700 in accrued consulting fees.
For the year ended May 31, 2018, non-cash
adjustments included $50,000 in promissory note issued for services, $7,373 from depreciation of music inventory, income of $272,454
from derivative liability, amortization of debt discounts of $187,103, and a loss on conversion notes payable and accrued interest.
Changes in operating assets and liability amounted to $3,315 for accounts payable, $201,744 for accrued interest payable on notes
payable, and $165,100 in accrued consulting fees.
Investing Activities
For the year ended May 31, 2019, we used
$(5,371) in investment activities, compared to $(3,518) for the year ended May 31, 2017. These were directly related to trademark
costs and music inventory.
Financing Activities
For the year ended May 31, 2019, we received
$507,395 from financing activities, consisting of $531,00 in proceeds from notes payable, $1,505 net proceeds from notes payable
to a related party, and $(24,593) form payments on notes payable to related parties. This was offset by a bank charge of $517.
For the year ended May 31, 2018, we received $256,892 from financing activities, consisting of $242,975 in proceeds from notes
payable, $517 in bank overdraft, $500 from proceeds of sale of common stock, and $12,900 net proceeds from notes payable to a related
party.
Unregistered Sales of Equity Securities
and Use of Proceeds
For the nine months ended February 28,
2019 the Company issued an aggregate of 40,000,002 shares of common stock for the merger of The Marquie Group, Inc. See Note 7
in the notes to the financial statements.
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
On October 16, 2018, the Company issued
2,000,000 shares of its common stock to the consulting firm entity discussed in Note 8 for services.
At February 28, 2019, there are no stock
options or warrants outstanding.
With respect to the transactions noted
above, each of the recipients of securities of the Company was an accredited investor, or is considered by the Company to be a
“sophisticated person”, inasmuch as each of them has such knowledge and experience in financial and business matters
that they are capable of evaluating the merits and risks of receiving securities of the Company. No solicitation was made, and
no underwriting discounts were given or paid in connection with these transactions. The Company believes that the issuance of its
securities as described above was exempt from registration with the Securities and Exchange Commission pursuant to Section 4(2)
of the Securities Act of 1933.
Liquidity and Capital Resources
As of May 31, 2019, our primary source
of liquidity consisted of $22,247 in cash and cash equivalents. We hold our cash reserves in a major United States bank. Since
inception, we have financed our operations through a combination of short and long-term loans, and through the private placement
of our common stock.
We have sustained significant net losses
which have resulted in negative working capital and an accumulated deficit at May 31, 2019 and May 31, 2018 of $7,948,240 and $4,297,794,
respectively, which raises doubt about our ability to continue as a going concern. We generated a net loss for the year ended May
31, 2019 of $3,650,446. Without additional revenues, working capital loans, or equity investment, there is substantial doubt as
to our ability to continue operations.
We believe these conditions have resulted
from the inherent risks associated with small public companies. Such risks include, but are not limited to, the ability to (i)
generate revenues and sales of our products and services at levels sufficient to cover our costs and provide a return for investors,
(ii) attract additional capital in order to finance growth, and (iii) successfully compete with other comparable companies having
financial, production and marketing resources significantly greater than those of the Company.
We believe that our capital resources are
insufficient for ongoing operations, with minimal current cash reserves, particularly given the resources necessary to expand our
multi-media entertainment business. We will likely require considerable amounts of financing to make any significant advancement
in our business strategy. There is presently no agreement in place that will guarantee financing for our Company, and we cannot
assure you that we will be able to raise any additional funds, or that such funds will be available on acceptable terms. Funds
raised through future equity financing will likely be substantially dilutive to current shareholders. Lack of additional funds
will materially affect our Company and our business and may cause us to substantially curtail or even cease operations. Consequently,
you could incur a loss of your entire investment in the Company.
12-Month Plan of Operation
The company’s 12-month plan is to
move from research and development to sales. The company plans to become profitable within the first 12-months of product launch
using a combination of direct to consumer sales on the company’s Music of Your Life nationwide radio network, by way of an
established and extensive social media network, as well as using established celebrity influencer campaigns. The company is developing
an affiliate referral program which would give 15% commission to select, non-salaried product users who promote our products and
our brand lifestyle over social media.
Some of the Company’s 12-month benchmarks
are as follows:
|
|
●
|
The
company is negotiating a development agreement LaCore Nutraceuticals of Dallas, TX to manufacture tinctures and beauty drinks,
which will include a pick-pack-and ship program.
|
|
|
●
|
The
company will be utilizing the LaCore Payment Systems gateway for all CBD product payments. LaCore has been approved by various
banks at the Federal level for payment processing. Please see our Risk Factors for payment processing issues facing businesses
in the CBD space.
|
|
|
●
|
The
company will be moving from a sample agreement to a manufacturing agreement with Cosmetic Developments Systems, Inc. of Newbury
Park, CA
|
|
|
●
|
The
company has finalized, and with be purchasing all packaging from The Packaging Company, of Long Beach, CA for delivery to both
manufacturing facilities.
|
|
|
●
|
The
company has finalized its logo and graphics and will be sourcing the cardboard packing manufacturer for delivery to the manufacturing
facilities.
|
|
|
●
|
The
company will continue to promote its “Ask Jacquie” campaign on the Music of Your Life radio network.
|
|
|
●
|
The
company is currently producing a series of 60-second radio commercials to promote the new product line on the Music of Your Life
network. The spots will begin airing in June 2019.
|
|
|
●
|
The
company is currently interviewing various social media influencers for inclusion in a media push to coincide with the new product
launch.
|
|
|
●
|
The
company is currently interviewing various brand ambassadors to coincide with the product launch
|
|
|
●
|
The
company is currently interviewing various persons to fill 2 sales positions.
|
|
|
●
|
The
company is currently reviewing office space for its new corporate location.
|
Industry Overview
Fortified beauty drinks are a new concept,
among a growing trend for ‘nutri-cosmetics’ – foods, drinks and supplements that provide beauty benefits from
within. These benefits go above and beyond those you would obtain from just eating normal foods. Because many ingredients found
in health and beauty products, from herbal supplements to amino acids, can be taken internally, we believe that fortified beverages
are a unique and marketable way of developing our brand through a scalable product line that is accessible to consumers. We have
compiled statistics from Global Data’s December 2016 TrendSights Analysis: Wellbeing which connect the ever-expanding market
for well-being products with what they call the “functional food and beverage market,” which includes nutri-cosmetics.
(Source: Global Data. TrendSights Analysis: Wellbeing. https://www.globaldata.com/store/report/cs0020ts--trendsights-analysis-wellbeing/
)
Fortified beverages are a way for us to
bring our products out of the health and beauty aisle, creating greater consumer awareness towards our brand while also introducing
customers to the health and wellness formulas which would be found across our product line.
(Source: Global Data. TrendSights Analysis: Wellbeing. https://www.globaldata.com/store/report/cs0020ts--trendsights-analysis-wellbeing/
)
Because of the variety of options facing
manufacturers and distributors in the beverage industry, we believe that this approach will give us broader opportunities to work
towards developing economies of scale in our product lines.
Critical Accounting Policies and Estimates
Our financial statements and related public
financial information are based on the application of generally accepted accounting principles in the United States (“GAAP”).
GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an
impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information
contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our
use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We
base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor
significant estimates made during the preparation of our financial statements.
Our significant accounting policies are
summarized in Note 2 of our financial statements included in our May 31, 2018 Form 10-K. While all of these significant accounting
policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined
to be critical are those policies that have the most significant impact on our financial statements and require management to use
a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given
current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause
a material effect on our results of operations, financial position or liquidity for the periods presented in this report.
We recognize revenue on arrangements in
accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the
price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability of
the resulting receivable is reasonably assured.
Use of estimates
The preparation of the unaudited financial
statements in conformity with generally accepted accounting principles in the United States of America 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 these estimates. Significant estimates during the fiscal quarter ending November 30, 2018 and the year ended
May 31, 2019 include the useful lives of website development cost, beneficial conversion of convertible notes payable, the valuation
of derivative liabilities and the valuation of stock-based compensation.
Revenue recognition
The Company follows ASC 605-10 “Revenue
Recognition” and recognizes revenue when all the conditions for revenue recognition are met: (i) persuasive evidence
of an arrangement exists, (ii) collection of the fee is probable, (iii) the sales price is fixed and determinable and
(iv) services have been rendered.
The Company reports its revenue at gross
amounts in accordance with ASC 605-45 “Principal Agent Considerations” because it is responsible for fulfillment of
the service, has substantial latitude in setting price, assumes the credit risk and it is responsible for the payment of all obligations
incurred for legal and debt collection fees. The Company bears the credit risks if it does not collect the settlement fees and
will be responsible to pay for fees including, but not limited to, court filing fees, collection fees, travel costs, deposition
reporter, video, and transcript fees, expert fees and expenses, investigation costs, messenger and process service fees, computer-assisted
legal research fees, document duplication and/or imaging expenses, electronic-data vendor fees, and any fees or costs that a court
may order to pay to a party or third party.
General
The Company is currently headquartered
in Las Vegas, Nevada.
MANAGEMENT
Directors of the corporation are elected
by the stockholders to a term of one year and serve until a successor is elected and qualified. Officers of the corporation are
appointed by the Board of Directors to a term of one year and serves until a successor is duly appointed and qualified, or until
he or he is removed from office. The Board of Directors has no nominating, auditing or compensation committees. The Board of Directors
also appointed our officers in accordance with the Bylaws of the Company, and per employment agreements negotiated between the
Board of Directors and the respective officer. Currently, there are no such employment agreements. Officers listed herein are employed
at the whim of the Directors and state employment law, where applicable.
The name, age, and position of our officer
and director is set forth below:
|
Name
|
|
Age
|
|
First Year as a
Director or officer
|
|
Office(s) held
|
|
Marc Angell
|
|
61
|
|
2012
|
|
Chief Executive Officer
|
|
Jacquie Carter
|
|
52
|
|
2016
|
|
President
|
The term of office of each director of
the Company ends at the next annual meeting of the Company’s stockholders or when such director’s successor is elected
and qualifies. No date for the next annual meeting of stockholders is specified in the Company’s bylaws or has been fixed
by the Board of Directors. The term of office of each officer of the Company ends at the next annual meeting of the Company’s
Board of Directors, expected to take place immediately after the next annual meeting of stockholders, or when such officer’s
successor is elected and qualifies.
Directors are entitled to reimbursement
for expenses in attending meetings but receive no other compensation for services as directors. Directors who are employees may
receive compensation for services other than as director. No compensation has been paid to directors for services.
Jacquie Carter and Marc Angell are a married
couple.
Biographical Information
Marc Angell, our Chief Executive
Officer, has been CEO of the Company since November 2012. Mr. Angell acquired the well-known Music of Your Life trademark in 2008,
and in November 2012, Angell formed Music of Your Life, Inc. as an entertainment company to capitalize on the growth and development
of the Music of Your Life trademark and branding, including radio, TV, live concerts, and merchandising. Angell has entered into
deals with Time-Life for music catalogs. Mr. Angell was a director of Wireless Village, Inc., a telecommunications solution provider,
and Concierge Technologies, Inc. from June 2004 to January 2008. In 2000, Mr. Angell became the founder and President of Planet
Halo, a wireless telecommunications company, until he sold it in May 2004 to the public company Concierge Technologies, Inc. (OTC:BB
CNCG). In January 1990 Mr. Angell founded Angellcom, a supplier and distributor of one-way paging devices in the U.S. He remained
its CEO until 1999. Mr. Angell conceptualized, designed and marketed both the one-way pagers for Angellcom and the Halo device
for Planet Halo. During the 1990s, Mr. Angell was also involved in the land mobile radio business as a license holder and manager
of 220MHz radio systems throughout the United States and Mexico. Mr. Angell was the first US citizen to be granted a wireless telecom
license in Mexico. Mr. Angell decided in 2014 to take Music of Your Life, Inc. public in an effort to raise capital and merge his
efforts with the emerging streaming radio opportunities. As Internet licensing fees grew, and the landscape of radio advertising
changed rapidly, a decision was made to either partner, merge, or acquire a business that was in the health and beauty space, and
perfect fit for the demographics of the Music of Your Life radio network market listener. In September 2018, Mr. Angell decided
to do a reverse merger with The Marquie Group and raised the necessary capital to develop the beauty products for the company.
Jacquie Carter, our President and
Founder, has been President of the Company since September 2018. She is the former Director of Worldwide Training & Education
at Herbalife International, Inc., a role she has held since 2012. Prior to that she was a Director of Global Product Marketing.
In her nearly 20 years of worldwide experience in the health and beauty industry at Herbalife International, she Launched over
60 new products and trained over one million representatives at regional events throughout 90 countries, traveling more than 3-million
miles in her effort. She created a worldwide “Train the Trainers” program with ongoing educational opportunities for
the global sales force and customers. This program utilized various communication channels including the company’s first
live webinar trainings, on-line e-learning courses, and social media platforms. Before joining Herbalife in 1999, she was a Global
Brand Manager for NAKI Electronics from 1996-1998. Mr. Carter holds a Bachelor of Arts from SUNY Oneonta and is a Certified Beauty
Therapist from Stonebridge Academy, United Kingdom. Ms. Carter created the Marquie Group to raise capital and further develop a
line of skin care products and beauty drinks.
Executive Compensation
As of the date of this Offering Circular,
no executive compensation has been issued for all services rendered in all capacities to us for the period for the past 2 years.
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.
As of date no other bonus/stock/awards/options
or other compensations have been issued.
Employees and Employment Agreements
Marc Angell (Director and Chief Executive
Officer) and Jacquie Carter (President) are non-employee officers and/or directors of the Company, and none of them has an employment
agreement with the Company.
The Company has no official employees. We
currently have 4 on-air talent paid as part-time contractors, 1 part-time production person, an outside accountant, and an outside
lawyer.
Facilities
We currently do not own any real property
or offices. Our Company rents approximately 500 square feet of office space at 3225 McLeod Drive, Suite 100, Las Vegas, NV 89121,
with a monthly lease of $1,500, and a recording studio with a monthly lease of $500.
General
The Company is currently headquartered
in 3225 McLeod Drive, Suite 100, Las Vegas, NV 89121. The Company’s shares of Common Stock are publicly traded on the OTC
Pinksheets under the symbol “TMGI”. The Company is fully reporting.
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company merged with The Marquie Group,
Inc. in 2018 in a reverse merger in August 2018. The Marquie Group, Inc., founded by Jacquie Carter, was founded in anticipation
of the merger with the Company. Consideration of 40,000,002 shares of common stock was issued to the Company’s stockholders,
includes Mr. Angell, our CEO, and Jacquie Carter, our President. 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. OTC Markets listed the price of the stock at $0.032 on August 16, 2018. However,
there was no significant volume in our common stock at the time of the merger.
There are no other related party transactions.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial
ownership of each of our directors and executive officers, and each person known to us to beneficially own 5% or more of the outstanding
shares of our common stock, and our executive officers and directors as a group, as of September 10, 2019. Beneficial ownership
is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Unless
otherwise indicated, we believe that each beneficial owner set forth in the table has sole voting and investment power and has
the same address as us. Our address is 3225 McLeod Drive, Suite 100, Las Vegas, NV 89103. As of September 10, 2019, we had 1,061,356
shares of common stock issued and outstanding and 200 shares of preferred stock outstanding. While each of our shares of common
stock holds one vote, each share of our Series A Preferred Stock has 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 following table describes the ownership of our voting securities (i) by each of our
officers and directors, (ii) all of our officers and directors as a group, and (iii) each person known to us to own beneficially
more than 5% of our common stock or any shares of our preferred stock.
|
Name
|
|
Shares of
Stock
Beneficially
Owned
|
|
|
Percent
of Class
|
|
|
Voting Rights
|
|
|
Total
Voting %
|
|
|
% Voting
Rights After
Offering
(Low Range)(1)
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacquie Angell
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Marc Angell
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Angell Family Trust(2)
|
|
|
50,018
|
|
|
|
4.71
|
%
|
|
|
50,018
|
|
|
|
0.94
|
%
|
|
|
—
|
|
|
All directors and executive officers as a group (1 person)
|
|
|
50,018
|
|
|
|
4.71
|
%
|
|
|
50,018
|
|
|
|
0.94
|
%
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacquie Angell
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Marc Angell
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Angell Family Trust(2)
|
|
|
200
|
|
|
|
100
|
%
|
|
|
4,245,424
|
|
|
|
80.00
|
%
|
|
|
80.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (1 person)
|
|
|
200
|
|
|
|
100
|
%
|
|
|
4,245,424
|
|
|
|
80.00
|
%
|
|
|
80.00
|
|
|
Total Voting Rights of Beneficial Owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80.94
|
%
|
|
|
80.00
|
|
|
|
(1)
|
Based
upon the sale of 1,334,285,714 shares of our Common Stock, or 100% of the Maximum Offering at our lower end of our price per share
range ($0.0075) post reverse stock split.
|
|
|
(2)
|
The
Trustee of the Angell Family Trust is Alexandria Angell of Thousand Oaks, CA.
|
DESCRIPTION OF CAPITAL
The following summary is a description
of the material terms of our capital stock and is not complete. You should also refer to our articles of incorporation, as amended
and our bylaws, as amended, which are included as exhibits to the registration statement of which this Offering Circular forms
a part.
We are authorized to issue up to 10,000,000,000
shares of our Common Stock and 2,000,000 shares Preferred Stock, 200 of which are designated Series A Preferred, each at a par
value of $0.0001 per share, respectively.
Common Stock
Voting
Each holder of our common stock is entitled
to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Any action at a meeting at
which a quorum is present will be decided by a majority of the votes cast. Cumulative voting for the election of directors
is not permitted.
Dividends
Holders of our common stock are entitled
to receive dividends when, as and if declared by our Board of Directors out of funds legally available for payment, subject to
the rights of holders, if any, of our preferred stock. Any decision to pay dividends on our common stock will be at
the discretion of our Board of Directors. Our Board of Directors may or may not determine to declare dividends in the future. See
“Dividend Policy.” The Board’s determination to issue dividends will depend upon our profitability
and financial condition, and other factors that our Board of Directors deems relevant.
Liquidation Rights
In the event of a voluntary or involuntary
liquidation, dissolution or winding up of our company, the holders of our common stock will be entitled to share ratably on the
basis of the number of shares held in any of the assets available for distribution after we have paid in full all of our debts
and after the holders of all outstanding preferred stock, if any, have received their liquidation preferences in full.
Series A Preferred
Voting
Each holder of our Series A Preferred is
entitled to voting rights equal to four times the sum of (a) all shares of Common Stock issued and outstanding at 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
Dividends
None.
Liquidation Rights
None.
Conversion Rights
None.
Limitations on Liability and Indemnification
of Officers and Directors
Florida law authorizes corporations to
limit or eliminate (with a few exceptions) the personal liability of directors to corporations and their stockholders for monetary
damages for breaches of directors’ fiduciary duties as directors. Our articles of incorporation and bylaws include
provisions that eliminate, to the extent allowable under Florida law, the personal liability of directors or officers for monetary
damages for actions taken as a director or officer, as the case may be. Our articles of incorporation and bylaws also
provide that we must indemnify and advance reasonable expenses to our directors and officers to the fullest extent permitted by
Florida law. We are also expressly authorized to carry directors’ and officers’ insurance for our directors,
officers, employees and agents for some liabilities. We currently maintain directors’ and officers’ insurance
covering certain liabilities that may be incurred by directors and officers in the performance of their duties.
The limitation of liability and indemnification
provisions in our articles of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for
breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation
against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In
addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement
and damage awards against directors and officers pursuant to the indemnification provisions in our articles of incorporation and
bylaws.
There is currently no pending litigation
or proceeding involving any of directors, officers or employees for which indemnification is sought.
Transfer Agent
The transfer agent for our common stock
is Pacific Stock Transfer Company, 6725 Via Austi Pkwy #300, Las Vegas, NV 89119.
SHARE ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of
our common stock in the public market after this offering could adversely affect market prices prevailing from time to time and
could impair our ability to raise capital through the sale of our equity securities. We are unable to estimate the number
of shares of common stock that may be sold in the future.
Upon the completion of this offering, we
will have 1,682,673,126 outstanding shares of common stock if we complete the maximum offering hereunder. All of the shares sold
in this offering will be freely tradable without restriction under the Securities Act unless purchased by one of our affiliates
as that term is defined in Rule 144 under the Securities Act, which generally includes directors, officers or 5% stockholders.
Rule 144
Shares of our common stock held by any
of our affiliates, as that term is defined in Rule 144 of the Securities Act, may be resold only pursuant to further registration
under the Securities Act or in transactions that are exempt from registration under the Securities Act. In general, under Rule
144 as currently in effect, any of our affiliates would be entitled to sell, without further registration, within any three-month
period a number of shares that does not exceed the greater of:
|
|
●
|
1%
of the number of shares of common stock then outstanding, which will equal about 16,826,731 shares if fully subscribed; or
|
|
|
●
|
the
average weekly trading volume of the unrestricted common stock during the four calendar weeks preceding the filing of a Form 144
with respect to the sale.
|
Sales under Rule 144 by our affiliates
will also be subject to manner of sale provisions and notice requirements and to the availability of current public information
about us.
VALIDITY OF COMMON STOCK
The validity of the securities offered
hereby will be passed upon by Eilers Law Group, P.A.
EXPERTS
None.
PART III EXHIBITS
EXHIBIT INDEX
|
|
*
|
Filed
with Form S-1 on June 26, 2008
|
|
|
**
|
Filed
with Form 1-A on April 30, 2019
|
SIGNATURES
Pursuant to the requirements of Regulation
A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A
and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Las Vegas, Nevada on this 25th day of February 2020.
|
|
By:
|
/s/ Marc Angell
|
|
|
|
Marc Angell,
|
|
|
|
Chief Executive Officer,
Chief Financial and Accounting Officer, and Chairman
|
|
|
|
The Marquie Group, Inc.
|
This offering statement has been signed
by the following persons in the capacities and on the dates indicated.
TABLE OF CONTENTS
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders of The Marquie Group,
Inc. (formerly Music of Your Life, Inc.)
Opinion on the Financial Statements
I have audited the accompanying consolidated
balance sheets of The Marquie Group, Inc. (the “Company”) as of May 31, 2019 and 2018 and the related consolidated
statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes
(collectively referred to as the “financial statements”). In my opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of The Marquie Group, Inc. as of May 31, 2019 and 2018 and the results
of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the
United States.
Explanatory Paragraph – Going Concern
The accompanying financial statements referred
to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the financial
statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern.
Management’s plans in regard to this matter are also described in Note 12. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. My responsibility is to express an opinion on the Company’s financial statements based
on my audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
I conducted my audit in accordance with
the standards of the PCAOB. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor was I engaged to perform, an audit of its internal control over financial reporting. As part of my audit I am required to obtain
an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, I express no such opinion.
My audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. My audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. I believe that my audit provides a reasonable
basis for my opinion.
|
|
/s/ Michael T. Studer CPA
P.C.
|
|
|
Michael T. Studer CPA P.C.
|
Freeport, New York
September 13, 2019
I have served as the Company’s auditor since 2015.
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Balance Sheets
ASSETS
|
|
|
May 31,
|
|
|
May 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
6,297
|
|
|
$
|
5
|
|
|
Loans receivable from related party
|
|
|
15,950
|
|
|
|
15,950
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
22,247
|
|
|
|
15,955
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Music inventory
|
|
|
9,397
|
|
|
|
9,681
|
|
|
Trademark costs
|
|
|
10,015
|
|
|
|
7,665
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Assets
|
|
|
19,412
|
|
|
|
17,346
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
41,659
|
|
|
$
|
33,301
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
$
|
-
|
|
|
$
|
517
|
|
|
Accounts payable
|
|
|
21,085
|
|
|
|
15,607
|
|
|
Accrued interest payable on notes payable
|
|
|
260,290
|
|
|
|
252,051
|
|
|
Accrued consulting fees
|
|
|
475,350
|
|
|
|
286,650
|
|
|
Notes payable
|
|
|
1,114,919
|
|
|
|
820,753
|
|
|
Notes payable to related parties
|
|
|
155,323
|
|
|
|
178,411
|
|
|
Derivative liability
|
|
|
1,805,422
|
|
|
|
653,803
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
3,832,389
|
|
|
|
2,207,792
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
3,832,389
|
|
|
|
2,207,792
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $0.0001 par value; 20,000,000 shares authorized, 200 and 200 shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
Common stock, $0.0001 par value; 10,000,000,000 shares authorized, 382,717 and 2,277 shares issued and outstanding, respectively
|
|
|
38
|
|
|
|
-
|
|
|
Common stock payable - 1 share
|
|
|
8,460
|
|
|
|
8,460
|
|
|
Additional paid-in-capital
|
|
|
4,149,012
|
|
|
|
2,114,843
|
|
|
Accumulated deficit
|
|
|
(7,948,240
|
)
|
|
|
(4,297,794
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Deficit
|
|
|
(3,790,730
|
)
|
|
|
(2,174,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
41,659
|
|
|
$
|
33,301
|
|
The accompanying notes are an integral
part of these financial statements
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Statements of Operations
|
|
|
For the Years Ended
|
|
|
|
|
May 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
NET REVENUES
|
|
$
|
5,269
|
|
|
$
|
5,745
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Consulting fees (including stock-based compensation of $41,000 and $-0-, respectively)
|
|
|
451,000
|
|
|
|
318,196
|
|
|
Professional fees
|
|
|
88,169
|
|
|
|
71,772
|
|
|
Other selling, general and administrative
|
|
|
130,909
|
|
|
|
97,048
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
670,078
|
|
|
|
487,016
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(664,809
|
)
|
|
|
(481,271
|
)
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (expense) from derivative liability
|
|
|
(628,119
|
)
|
|
|
272,454
|
|
|
Interest expense (including amortization of debt discounts of $417,587 and $187,103, respectively)
|
|
|
(648,288
|
)
|
|
|
(416,847
|
)
|
|
Loss on conversion of notes payable and accrued interest
|
|
|
(1,709,230
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income (Expenses)
|
|
|
(2,985,637
|
)
|
|
|
(144,393
|
)
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES
|
|
|
(3,650,446
|
)
|
|
|
(625,664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(3,650,446
|
)
|
|
$
|
(625,664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED:
|
|
|
|
|
|
|
|
|
|
Net loss per common share
|
|
$
|
(30.09
|
)
|
|
$
|
(338.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
121,315
|
|
|
|
1,848
|
|
The accompanying notes are an integral part
of these financial statements
THE MARQUIE GROUP, INC.
Consolidated Statements of Stockholders’
Deficit
For the Period from June 1, 2017 to May
31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Payable
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 1, 2017
|
|
|
200
|
|
|
$
|
-
|
|
|
|
1,506
|
|
|
$
|
-
|
|
|
$
|
8,460
|
|
|
$
|
2,059,690
|
|
|
$
|
(3,672,130
|
)
|
|
$
|
(1,603,980
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
697
|
|
|
|
-
|
|
|
|
-
|
|
|
|
54,653
|
|
|
|
-
|
|
|
|
54,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
74
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500
|
|
|
|
-
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended May 31, 2018
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(625,664
|
)
|
|
|
(625,664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2018
|
|
|
200
|
|
|
|
-
|
|
|
|
2,277
|
|
|
|
-
|
|
|
|
8,460
|
|
|
|
2,114,843
|
|
|
|
(4,297,794
|
)
|
|
|
(2,174,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for merger with The Marquie Group, Inc.
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
10
|
|
|
|
-
|
|
|
|
(10
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rounded up shares issued in connection with reverse stock split
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
275,435
|
|
|
|
28
|
|
|
|
-
|
|
|
|
1,993,179
|
|
|
|
-
|
|
|
|
1,993,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41,000
|
|
|
|
-
|
|
|
|
41,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,650,446
|
)
|
|
|
(3,650,446
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2019
|
|
|
200
|
|
|
$
|
-
|
|
|
|
382,717
|
|
|
$
|
38
|
|
|
$
|
8,460
|
|
|
$
|
4,149,012
|
|
|
$
|
(7,948,240
|
)
|
|
$
|
(3,790,730
|
)
|
Note: The above statement
reflects retroactively the 1 share for 4,000 shares reverse split effective June 20, 2018 and the 1 share for 400 shares
reverse stock split effective September 4, 2019.
The accompanying notes are an integral part of these financial
statements
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Statements of Cash Flows
|
|
|
For the Years Ended
|
|
|
|
|
May 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,650,446
|
)
|
|
$
|
(625,664
|
)
|
|
Adjustments to reconcile net income (loss) to net cash used by operating activities:
|
|
|
|
|
|
|
|
|
|
Promissory note issued for services
|
|
|
-
|
|
|
|
50,000
|
|
|
Stock-based compensation
|
|
|
41,000
|
|
|
|
-
|
|
|
Depreciation of music inventory
|
|
|
3,305
|
|
|
|
7,374
|
|
|
Expense (Income) from derivative liability
|
|
|
628,119
|
|
|
|
(272,454
|
)
|
|
Amortization of debt discounts
|
|
|
417,587
|
|
|
|
187,103
|
|
|
Non-cash interest expense
|
|
|
-
|
|
|
|
20,000
|
|
|
Loss on conversion of notes payable and accrued interest
|
|
|
1,709,230
|
|
|
|
-
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
5,478
|
|
|
|
3,315
|
|
|
Accrued interest payable on notes payable
|
|
|
161,295
|
|
|
|
201,744
|
|
|
Accrued consulting fees
|
|
|
188,700
|
|
|
|
165,100
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Operating Activities
|
|
|
(495,732
|
)
|
|
|
(263,482
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Music inventory
|
|
|
(3,021
|
)
|
|
|
(3,193
|
)
|
|
Trademark costs
|
|
|
(2,350
|
)
|
|
|
(325
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities
|
|
|
(5,371
|
)
|
|
|
(3,518
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
|
(517
|
)
|
|
|
517
|
|
|
Proceeds from sale of common stock
|
|
|
-
|
|
|
|
500
|
|
|
Proceeds from notes payable
|
|
|
531,000
|
|
|
|
242,975
|
|
|
Net proceeds from notes payable to related parties
|
|
|
1,505
|
|
|
|
12,900
|
|
|
Payments on notes payable to related parties
|
|
|
(24,593
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
507,395
|
|
|
|
256,892
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
6,292
|
|
|
|
(10,108
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
5
|
|
|
|
10,113
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
6,297
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments For:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
Initial derivative liability charged to debt discounts
|
|
$
|
485,500
|
|
|
$
|
264,166
|
|
|
Conversion of debt and accrued interest into common stock
|
|
$
|
1,993,207
|
|
|
$
|
54,653
|
|
|
Common stock issued for merger with The Marquie Group, Inc.
|
|
$
|
10
|
|
|
$
|
-
|
|
|
Promissory note issued for accrued consulting fees
|
|
$
|
-
|
|
|
$
|
50,000
|
|
|
Accrued interest added to notes payable principal balances
|
|
$
|
100,192
|
|
|
$
|
-
|
|
The accompanying notes are an integral
part of these financial statements
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.
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.
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
|
|
|
|
63,615
|
|
|
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.
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.
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
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:
|
|
|
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
|
|
$
|
-
|
|
|
$
|
-
|
|
(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).
(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 (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% 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 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 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 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
|
|
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).
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
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
|
|
$
|
1,805,442
|
|
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.
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 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 1,334,285,714 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.
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.
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