UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)
   
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
For the quarterly period ended August 31, 2020
   
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______to______

 

Commission File Number: 000-54163

 

The Marquie Group, Inc.
(Exact name of registrant as specified in its Charter)

  

Florida   26-2091212

(State or other jurisdiction of

incorporation or organization)

  (I.R.S. Employee Identification No.)
     

3225 McLeod Drive, Suite 100

Las Vegas, Nevada

  89121
(Address of principal executive office)   (Zip Code)

 

(800) 351-3021

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former Name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes 
  No 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes    No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer Accelerated filer
Non-accelerated filer (Do not check if smaller reporting company) Smaller reporting company
     

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: As of February 24, 2021, there were 2,992,682,598 shares of $0.0001 par value common stock, issued and outstanding.

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  2  

TABLE OF CONTENTS

 

PART I: FINANCIAL INFORMATION  
   
Item 1: Financial Statements 4
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operation 21
Item 3: Quantitative and Qualitative Disclosures about Market Risk 23
Item 4: Controls and Procedures 23
   
PART II: OTHER INFORMATION  
   
Item 1: Legal Proceedings 24
Item 1A: Risk Factors 24
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 24
Item 3: Defaults Upon Senior Securities 24
Item 4: Mine Safety Disclosures 24
Item 5: Other Information 24
Item 6: Exhibits 25
   
SIGNATURES 25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  3  

PART I - FINANCIAL INFORMATION

 

ITEM 1.  Financial Statements

THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Balance Sheets
(Unaudited)
         
ASSETS
    August 31,   May 31,
    2020   2020
         
CURRENT ASSETS        
         
Cash and cash equivalents   $ 23,921     $ 4,742  
                 
Total Current Assets     23,921       4,742  
                 
OTHER ASSETS                
                 
Music inventory, net of accumulated depreciation                
of $15,110 and $14,243, respectively     6,379       7,222  
Trademark costs     10,365       10,365  
                 
Total Other Assets     16,744       17,587  
                 
TOTAL ASSETS   $ 40,665     $ 22,329  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
                 
CURRENT LIABILITIES                
                 
Accounts payable   $ 41,000     $ 37,455  
Accrued interest payable on notes payable     327,385       366,657  
Accrued consulting fees     677,097       614,600  
Notes payable, net of debt discounts of $373,568                
and $3,313, respectively     1,237,127       1,536,575  
Notes payable to related parties     157,323       155,323  
Derivative liability     3,455,750       1,488,745  
                 
Total Current Liabilities     5,895,682       4,199,355  
                 
TOTAL LIABILITIES     5,895,682       4,199,355  
                 
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, 2,850,445,598 and 373,710,385 shares issued                
and outstanding, respectively     285,044       37,371  
Common stock payable - 1 share     8,460       8,460  
Additional paid-in-capital     5,122,050       4,670,196  
Accumulated deficit     (11,270,571 )     (8,893,053 )
                 
Total Stockholders' Deficit     (5,855,017 )     (4,177,026 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $ 40,665     $ 22,329  

The accompanying notes are an integral part of these financial statements

  4  

 

THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Statements of Operations
(Unaudited)
         
    For the Three Months Ended
    August 31,
    2020   2019
         
NET REVENUES   $ 60     $ 216  
                 
OPERATING EXPENSES                
                 
Salaries and Consulting fees     76,000       109,500  
Professional fees     19,239       7,865  
Other selling, general and administrative     7,989       14,831  
                 
Total Operating Expenses     103,228       132,196  
                 
LOSS FROM OPERATIONS     (103,168 )     (131,980 )
                 
OTHER INCOME (EXPENSES)                
                 
Expense from derivative liability     (1,582,005 )     (2,728,625 )
Interest expense (including amortization of debt discounts                
  of $14,745 and $190,846, respectively)     (156,782 )     (228,631 )
Loss on conversion of notes payable and accrued interest     (535,563 )     (102,963 )
                 
Total Other Income (Expenses)     (2,274,350 )     (3,060,219 )
                 
LOSS BEFORE INCOME TAXES     (2,377,518 )     (3,192,199 )
                 
INCOME TAX EXPENSE     —         —    
                 
NET LOSS   $ (2,377,518 )   $ (3,192,199 )
                 
BASIC AND DILUTED:                
Net income (loss) per common share   $ (0.00 )   $ (3.88 )
                 
Weighted average shares outstanding     1,280,634,443       821,767  
                 

The accompanying notes are an integral part of these financial statements

  5  

THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Statements of Stockholders' Deficit
(Unaudited)
                                 
    Three Months Ended August 31, 2020
                                 
                                Total
    Preferred Stock   Common Stock   Common Stock   Additional   Accumulated   Stockholders'
    Shares   Amount   Shares   Amount   Payable   Paid-in Capital   Deficit   Deficit
                                 
Balance, May 31, 2020     200     $ —         373,710,385     $ 37,371     $ 8,460     $ 4,670,196     $ (8,893,053 )   $ (4,177,026 )
                                                                 
Common stock issued for conversion                                                                
 of debt     —         —         2,476,735,213       247,673       —         451,854       —         699,527  
                                                                 
Net loss for the three months ended                                                                
 August 31, 2020     —         —         —         —         —         —         (2,377,518 )     (2,377,518 )
                                                                 
Balance, August 31, 2020     200     $ —         2,850,445,598     $ 285,044     $ 8,460     $ 5,122,050     $ (11,270,571 )   $ (5,855,017 )
                                                                 

 

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.

 

    Three Months Ended August 31, 2019
                                 
                                Total
    Preferred Stock   Common Stock   Common Stock   Additional   Accumulated   Stockholders'
    Shares   Amount   Shares   Amount   Payable   Paid-in Capital   Deficit   Deficit
                                                                 
Balance, May 31, 2019     200     $ —         382,717     $ 38     $ 8,460     $ 4,149,012     $ (7,948,240 )   $ (3,790,730 )
                                                                 
Rounded up shares issued in connection                                                                
 with reverse stock split     —         —         2,258       —         —         —         —         —    
                                                                 
Common stock issued for conversion                                                                
  of debt     —         —         676,382       68       —         152,451       —         152,519  
                                                                 
Net loss for the three months ended                                                                
 August 31, 2019     —         —         —         —         —         —         (3,192,199 )     (3,192,199 )
                                                                 
Balance, August 31, 2019     200     $ —         1,061,357     $ 106     $ 8,460     $ 4,301,463     $ (11,140,439 )   $ (6,830,410 )
                                                                 
                                                                 

 

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

  6  

THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
             
        For the Three Months Ended
        August 31,
        2020   2019
             
CASH FLOWS FROM OPERATING ACTIVITIES:                        
                         
Net loss           $ (2,377,518 )   $ (3,192,199 )
Adjustments to reconcile net income (loss) to net                        
 cash used by operating activities:                        
Depreciation of music inventory             867       924  
Expense (income) from derivative liability             1,582,005       2,728,625  
Amortization of debt discounts             14,745       190,846  
Loss on conversion of notes payable and accrued interest             535,563       102,963  
Changes in operating assets and liabilities:                        
Accounts payable             3,546       3,339  
Accrued interest payable on notes payable             30,399       31,785  
Accrued consulting fees             62,497       68,500  
                         
Net Cash Used by Operating Activities             (147,896 )     (65,217 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:                        
                         
Music inventory             (24 )     (327 )
                         
Net Cash Used by Investing Activities             (24 )     (327 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:                        
                         
Bank overdraft             —         502  
Proceeds from notes payable             589,820       58,750  
Repayments of notes payable             (424,721 )     —    
Net proceeds from notes payable to related parties             2,000       —    
                         
Net Cash Provided by Financing Activities             167,099       59,252  
                         
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             19,179       (6,292 )
                         
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD           4,742       6,297  
                         
CASH AND CASH EQUIVALENTS, END OF PERIOD           $ 23,921     $ 5  
                         
SUPPLEMENTAL CASH FLOW INFORMATION                        
                         
Cash Payments For:                        
Interest           $ —       $ —    
Income taxes           $ —       $ —    
                         
Non-cash investing and financing activities:                        
Initial derivative liability charged to debt discounts           $ 385,000     $ 58,750  
Conversion of debt and accrued interest into common stock           $ 163,963     $ 49,556  
Accrued interest added to notes payable principal balances           $ 33,038     $ —    
                         

The accompanying notes are an integral part of these financial statements

  7  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

 

Basis of Presentation

 

The accompanying unaudited financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the three months ended August 31, 2020 are not necessarily indicative of results that may be expected for the year ending May 31, 2021. 

 

Organization

 

The Marquie Group, Inc. (formerlyouy 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., a syndicated radio network. 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 423,639,620 shares to 1,061,357 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 8), the Company merged with The Marquie Group, Inc. (“TMGI”) in exchange for the issuance of a total of 100,000 shares of our common stock to TMGI’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 TMGI business plan is to license, develop and 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.

Acquisition of Global Nutrition Experience, Inc.

On November 21, 2019 (see Note 8), the Company merged with Global Nutrition Experience, Inc. (“GNE”) in exchange for the issuance of a total of 193,000,000 shares of our common stock to GNE’s stockholder. The GNE business plan is to license intellectual property to third parties.

 

  8  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

NOTE 2 - LOANS RECEIVABLE – RELATED PARTY

 

During the year ended May 31, 2013, the Company loaned $174,950 to the Company’s current chief executive in anticipation of the merger agreement described in Note 1. The loans 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. Effective May 31, 2020, the Company agreed to waive collection of $15,950 of the remaining loans receivable balance in exchange for the chief executive officer’s agreement to waive payment of $15,950 accrued consulting fees balance due him at May 31, 2020 (see Note 11). As of August 31, 2020, the balance due on this loan was $-0-.

 

NOTE 3 - MUSIC INVENTORY

 

Music inventory consisted of the following:

 

    August 31, 2020   May 31, 2020
Digital music acquired for use in operations – at cost   $ 21,489     $ 21,465  
Accumulated depreciation     (15,110 )     (14,243 )
Music inventory – net   $ 6,379     $ 9,397  

 

The Company purchases digital music to broadcast over the radio and internet. During the three months ended August 31, 2020, the Company purchased $24 worth of music inventory. For the three months ended August 31, 2020 and 2019, depreciation of music inventory was $867 and $924, respectively.

 

NOTE 4 – ACCRUED CONSULTING FEES

Accrued consulting fees consisted of the following:

    August 31, 2020   May 31, 2020
Due to Company Chief Executive Officer pursuant to Consulting Agreement dated March 1, 2017 – monthly compensation of $10,000   $ 96,947     $ 73,450  
Due to wife of Company Chief Executive Officer pursuant to consulting agreement effective August 16, 2018 – monthly compensation of $15,000     204,100       165,100  
Due to mother of Company Chief Executive Officer pursuant to Consulting Agreement dated September 1, 2015 (which was terminated November 30, 2019) – monthly compensation of $5,000 to November 30, 2019     131,350       131,350  
Due to service provider pursuant to Consulting Agreement dated September 1, 2015 (which was terminated February 28, 2019) – monthly compensation of $5,000 to February 28, 2019     144,700       144,700  
                 
Due to service provider pursuant to Consulting Agreement dated September 1, 2015 (which was terminated November 30, 2019) – monthly compensation of $1,000 to November 30, 2019     48,000       48,000  
Due to two other service providers     52,000       52,000  
Total   $ 677,097     $ 614,600  

  9  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

The accrued consulting fees balance changed as follows:

    Three Months Ended
August 31, 2020
  Year Ended
May 31, 2020
Balance, beginning of period   $ 614,600     $ 475,350  
Compensation expense accrued pursuant to consulting agreements     75,000       369,000  
Payments to consultants     (12,503 )     (229,750 )
Balance, end of period   $ 677,097     $ 614,600  

 

See Note 9 (Commitments and Contingencies).

 

NOTE 5 - NOTES PAYABLE

 

Notes payable consisted of the following:

    August 31, 2020   May 31, 2020
Notes payable to an entity, non-interest bearing, due on demand, unsecured   $ 7,500     $ 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, 24% default rate from January 20, 2016 (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 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 10%, due on January 11, 2019, in default, 15% default interest rate from January 11, 2019 (AA)     23,167       23,167  

 

  10  

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 (DD)     35,000       35,000  
Convertible note payable to an entity, interest at 10%, due on April 4, 2019, in default (EE)     37,500       37,500  
Convertible note payable to an entity, interest at 10%, due on September 18, 2019, in default (FF)     22,500       22,500  
Convertible note payable to an entity, interest at 10%, due on September 18, 2019, in default (GG)     8,505       8,505  

Convertible note payable to an entity, interest at 10%, due on September 19, 2019, in default (HH)     188,036       200,000  
Convertible note payable to an entity, interest at 10%, due on August 4, 2019, in default (II)     125,841       170,000  
Convertible note payable to an entity, interest at 10%, due on November 13, 2019, in default (JJ)     66,930       75,000  
Convertible note payable to an entity, interest at 10%, due on November 15, 2019, in default (KK)     20,000       20,000  
Convertible note payable to an entity, interest at 10%, due on November 30, 2019, in default (LL)     5,000       5,000  
Convertible note payable to an entity, interest at 10%, due on December 6, 2019, in default (MM)     3,000       3,000  
Convertible note payable to an entity, interest at 10%, due on December 11, 2019, in default (NN)     10,000       10,000  
Convertible note payable to an entity, interest at 12%, due on March 10, 2020, in default, 24% default interest rate from March 10, 2020 (OO)     58,750       58,750  
Convertible note payable to an entity, interest at 10%, due on September 12, 2020 – net of discount of $171 and $3,313, respectively (PP)     12,329       9,187  
Convertible note payable to an entity, interest at 10%, due on April 23, 2020, in default (QQ)     —         250,000  
Convertible note payable to an entity, interest at 10%, due on August 20, 2021 – net of discount of $373,397 and $-0-, respectively (RR)     11,603       —    
Note payable to the Small Business Administration under the Payroll Protection Program, interest at 1%, due in installments through May 4, 2022, forgivable in part or whole subject to certain requirements     70,000       70,000  
Notes payable to individuals, non-interest bearing, due on demand     103,476       103,476  
Total Notes Payable     1,237,127       1,536,575  
Less: Current Portion     (1,237,127 )     (1,536,575 )
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.

  11  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

(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 7 (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.

(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 7 (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 7 (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.

(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 7 (Derivative Liability). The maturity date for each tranche funded is twelve months from the effective date of each payment.

  12  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

(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 7 (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 7 (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 7 (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, was 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 7 (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, was 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 7 (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, was 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 7 (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 7 (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, was 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 7 (Derivative Liability).

  13  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

(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, was 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 7 (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, was 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 7 (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, was 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 7 (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, was due on December 11, 2019, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date. See Note 7 (Derivative Liability).

(OO) On June 10, 2019, the Company issued a $58,750 Convertible Promissory Note to a lender for net loan proceeds of $50,000. The note bears interest at a rate of 12% per annum (24% per annum default rate), is due on March 10, 2020, 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 7 (Derivative Liability).

(PP) On September 5, 2019, the Company issued a $12,500 Convertible Promissory Note to a lender for net loan proceeds of $10,000. The note bears interest at a rate of 10% per annum, is due on September 5, 2020, 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 7 (Derivative Liability).

(QQ) On October 23, 2019, the Company issued a $260,000 Convertible Promissory Note to a lender for net loan proceeds of $234,000. The note bears interest at a rate of 10% per annum, is due on April 23, 2020, 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 7 (Derivative Liability).

(RR) On August 20, 2020, the Company issued a $385,000 Convertible Promissory Note to a lender which paid off the principal and accrued interest for the note described in (QQ) above. The note bears interest at a rate of 10% per annum, is due on August 20, 2021, 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 (1) the closing bid price of the Common Stock on the Trading Day immediately preceding the date of the conversion, or (2) the par value of the Common Stock. See Note 7 (Derivative Liability).

  14  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

Concentration of Notes Payable:

 

The principal balance of the notes payable was due to:

 

    August 31, 2020   May 31, 2020
         
Lender A   $ 23,167     $ 23,167  
Lender B     188,036       258,750  
Lender C     517,007       420,000  
Lender D     110,500       110,500  
14 other lenders     780,151       727,471  
                 
Total     1,618,861       1,539,888  
                 
Less debt discounts     (375,568 )     (3,313 )
                 
Net   $ 1,243,293     $ 1,536,575  

 

NOTE 6 - NOTES PAYABLE – RELATED PARTIES

 

Notes payable – related parties consisted of the following:

 

    August 31,
2020
  May 31,
2020
Note payable to Company law firm (and owner of 2,500 shares of common stock since August 16, 2018), non-interest bearing, due on demand, unsecured   $ 2,073       2,073  
Notes payable to The OZ Corporation (owner of 2,500 shares of common stock since August 16, 2018), non-interest bearing, due on demand, unsecured     103,250       103,250  
Note payable to the Chief Executive Officer, non-interest bearing, due on demand, unsecured     2,000       —    
Convertible note payable to John D. Thomas P.C. (Company law firm and owner of 2,500 shares of common stock since August 16, 2018), interest at 10%, due on demand, convertible at the option of the lender into shares of Company common stock equal to 60% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date.  See Note 7 (Derivative Liability)     50,000       50,000  
 Total Notes Payable     157,323       155,323  
Less: Current Portion     (157,323 )     (155,323 )
Long-Term Notes Payable   $ —       $ —    

 

  15  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

 

NOTE 7 - DERIVATIVE LIABILITY

 

The derivative liability at August 31, 2020 and May 31, 2020 consisted of:

    August 31, 2020   May 31, 2020
    Face Value   Derivative Liability   Face Value   Derivative Liability
Convertible note payable issued December 29, 2015, due December 29, 2016 (M)   $ 40,000     $ 160,000     $ 40,000     $ 53,333  
Convertible note payable issued April 5, 2017, due on demand (W)     29,000       145,000       29,000       38,667  
Convertible note payable issued April 5, 2017, due on demand (X)     21,500       107,500       21,500       28,667  
Convertible note payable issued January 11, 2018, due on January 11, 2019 (AA)     23,167       92,668       23,167       30,889  
Convertible note payable issued December 1, 2017, due on demand (BB)     50,000       83,333       50,000       50,000  
Convertible note payable issued December 1, 2017, due on demand (CC)     50,000       83,333       50,000       50,000  
Convertible note payable issued March 5, 2018, due on March 5, 2019 (DD)     35,000       140,000       35,000       46,667  
Convertible note payable issued April 4, 2018, due on April 4, 2019 (EE)     37,500       150,000       37,500       50,000  
Convertible note payable issued September 18, 2018, due on September 18, 2019 (FF)     22,500       90,000       22,500       30,000  
Convertible note payable issued September 18, 2018, due on September 18, 2019 (GG)     8,506       34,022       8,506       34,022  
Convertible note payable issued December 19, 2018, due on September 19, 2019 (HH)     188,036       752,147       200,000       266,667  
Convertible note payable issued February 4, 2019, due on August 4, 2019 (II)     132,007       528,029       170,000       226,667  
Convertible note payable issued February 13, 2019, due on November 13, 2019 (JJ)     66,929       267,718       75,000       100,000  
Convertible note payable issued November 15, 2018, due on November 15, 2019 (KK)     20,000       80,000       20,000       26,667  
Convertible note payable issued November 30, 2018, due on November 30, 2019 (LL)     5,000       20,000       5,000       6,667  
Convertible note payable issued December 6, 2018, due on December 6, 2019 (MM)     3,000       12,000       3,000       4,000  
Convertible note payable issued December 11, 2018, due on December 11, 2019 (NN)     10,000       40,000       10,000       13,333  
Convertible note payable issued June 10, 2019, due on March 10, 2020 (OO)     58,750       235,000       58,750       78,333  
Convertible note payable issued September 5, 2019, due on September 5, 2020 (PP)     12,500       50,000       12,500       20,833  
Convertible note payable issued October 23, 2019, due on April 23, 2020 (QQ)     —         —         250,000       333,333  
Convertible note payable issued August 20, 2020, due on August 20, 2021 (RR)     385,000       385,000       250,000       333,333  
Totals   $ 1,198,395     $ 3,455,750     $ 1,121,423     $ 1,488,745  

  16  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

 

The above convertible notes contain a variable conversion feature based on the future trading price of the Company common stock. Therefore, the number of shares of common stock issuable upon conversion of the notes is indeterminate. Accordingly, we have recorded the fair value of the embedded conversion features as a derivative liability at the respective issuance dates of the notes and charged the applicable amounts to debt discounts and the remainder to other expense. The increase (decrease) in the fair value of the derivative liability from the respective issuance dates of the notes to the measurement dates is charged (credited) to other expense (income). The fair value of the derivative liability of the notes is measured at the respective issuance dates and quarterly thereafter using the Black Scholes option pricing model.

 

Assumptions used for the calculations of the derivative liability of the notes at August 31, 2020 include (1) stock price of $0.0002 per share, (2) exercise prices ranging from $0.00004 to $0.001 per share, (3) terms ranging from -0- days to 365 days, (4) expected volatility of 920% and (5) risk free interest rates ranging from 0.08% to 0.12%.

 

Assumptions used for the calculations of the derivative liability of the notes at May 31, 2020 include (1) stock price of $0.0005 per share, (2) exercise prices ranging from $0.00012 to $0.00018 per share, (3) terms ranging from 0 days to 97 days, (4) expected volatility of 863% and (5) risk free interest rates ranging from 0.13% to 0.14%.

 

Concentration of Derivative Liability:

 

The derivative liability relates to convertible notes payable due to:

 

    August 31, 2020   May 31, 2020
         
Lender A   $ 92,668     $ 30,889  
Lender B     987,146       345,000  
Lender C     918,028       560,000  
Lender D     267,718       100,000  
Lender E     442,000       151,500  
6 other lenders     748,190       301,356  
                 
Total   $ 3,455,750     $ 1,488,745  

 

NOTE 8 - EQUITY TRANSACTIONS

 

On October 3, 2016, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock from 500,000,000 to 2,000,000,000 shares and to change the par value of both the common stock and preferred stock from $0.001 per share to $0.0001 per share.

 

On November 9, 2016, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock from 2,000,000,000 to 10,000,000,000 shares and to amend the voting rights for the Series A Preferred Stock. As amended, each share of Series A Preferred Stock shall have voting rights equal to four times the sum of (a) all shares of Common Stock issued and outstanding at the time of voting; plus (b) the total number of votes of all other classes of preferred stock which are issued and outstanding at the time of voting; divided by (c) the number of shares of Series A Preferred Stock issued and outstanding at the time of voting. The Series A Preferred Stock has no conversion, liquidation, or dividend rights.

  17  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

 

On August 16, 2018, the Company entered into a Merger Agreement by and among the Company, and The Marquie Group, Inc., a Utah Corporation (“TMG”), pursuant to with the Company merged with TMG. The Company is the surviving corporation. Each shareholder of TMG received one (1) share of common stock of the Company for every one (1) share of TMG common stock held as of August 16, 2018. In accordance with the terms of the merger agreement, all of the shares of TMG held by TMG shareholders were cancelled, and 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 February 29, 2020) (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 February 29, 2020) (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) were 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 9. 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 three months ended November 30, 2018.

 

During the year ended May 31, 2020, the Company issued an aggregate of 62,458,453 shares of common stock for the conversion of notes payable and accrued interest in the aggregate amount of $78,315. We incurred a loss on the conversion of notes payable and accrued interest of $159,802, which represents the excess of the $238,117 fair value of the 62,458,453 shares at the dates of conversion over the $78,315 amount of debt satisfied.

 

On August 28, 2019, the Securities and Exchange Commission (the “SEC”) issued a Notice of Qualification regarding a Form 1-A filed by the Company in connection with the Company’s offering of up to 1,333,333,333 shares of common stock at a price of $0.0075 per share or a total offering of $10,000,000. The end date of the offering is August 28, 2020. On December 26, 2019, the Company amended its Form 1-A Offering Circular to reduce the offering price from $0.0075 per share to $0.0035 per share. As part of this offering, during the three months ended February 29, 2020, the Company issued an aggregate of 58,438,096 shares of common stock for cash in the amount of $287,200.

 

On November 21, 2019, the Company merged with Global Nutrition Experience, Inc. (“GNE”) in exchange for the issuance of a total of 160,000,000 shares of our common stock to GNE’s stockholders. Following the merger, the Company had 161,061,647 shares of common stock issued and outstanding. GNE was incorporated on November 21, 2019. The stockholder of GNE prior to the merger who received the 160,000,000 shares was the Angell Family Trust. Pursuant to ASC 805-50-30-5 relating to transactions between entities under common control, the intellectual property of GNE (and the issuance of the 160,000,000 shares of common stock) were recorded at $-0-, the historical cost of the property to GNE. During the three months ended February 29, 2020, the Company issued an additional 33,000,000 shares of common stock as part of the merger.

 

  18  

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

August 31, 2020

(Unaudited)

During the three months ended August 31, 2020, the Company issued an aggregate of 2,476,735,213 shares of common stock for the conversion of notes payable and accrued interest in the aggregate amount of $163,964. We incurred a loss on the conversion of notes payable and accrued interest of $535,563, which represents the excess of the $699,587 fair value of the 2,476,735,213 shares at the dates of conversion over the $164,025 amount of debt satisfied.

 

At August 31, 2020, there are no stock options or warrants outstanding.

NOTE 9 - 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 4 – 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 provided for monthly compensation of $5,000 and was terminated as of November 30, 2019. The other 3 consulting agreements provided for monthly compensation totaling $6,500 and were terminated as of November 30, 2019.

 

Corporate Consulting Agreement

 

On March 14, 2018, the Company executed a Corporate Consulting Agreement (the “Agreement”) with a consulting firm entity (the “Consultant”). The Agreement provided for the Consultant to perform certain investor relations and other services for the Company. The term of the Agreement was 4 months but the Agreement provided that the Company could terminate the Agreement for any reason at any time upon 5 days written prior notice. The Agreement provided for 8 payments of cash fees totaling $240,000 to be paid to the Consultant over 4 months.

 

On April 1, 2018, the Company notified the Consultant that the Agreement was terminated. A total of $25,000 was paid to the Consultant in March 2018 which was expensed and included in “Salaries and Consulting Fees” in the Consolidated Statement of Operations for the year ended May 31, 2018. No other amounts were accrued at August 31, 2020 and May 31, 2020.

 

On October 16, 2018 (see Note 8), 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.

 

Consulting Agreement with New Jersey Entity

 

On December 5, 2019 and January 13, 2020, the Company paid $50,000 and $50,000, respectively to a consulting firm entity (the “Consultant”) pursuant to Consulting Agreements dated December 4, 2019 and January 11, 2020. The Consulting Agreements provide for the Consultant to perform certain strategic planning, business development, and investor relations services for the Company for total compensation of $100,000 cash (which was expensed and included in “Other Selling, General and Administrative Expenses” in the Consolidated Statement of Operations for the here months ended February 29, 2020. The terms of the Consulting Agreements are for 90 days each.

  19  

NOTE 10 - 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 August 31, 2020, the Company had negative working capital of $5,871,761 and an accumulated deficit of $11,270,571. 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, 2021 and with the expected cash requirements for the coming year, there is substantial doubt as to the Company’s ability to continue operations.

 

The Company is attempting to improve these conditions by way of financial assistance through issuances of notes payable and additional equity and by generating revenues through sales of products and services.

 

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

NOTE 11 – SUBSEQUENT EVENTS

 

Subsequent to August 31, 2020, the Company issued an aggregate of 142,237,000 shares of common stock for the conversion of notes payable and accrued interest in the aggregate amount of $4,267.

 

 

 

 

 

 

 

 

 

 

 

 

 

  20  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

 

The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

 

BUSINESS OVERVIEW

 

The Marquie Group is a direct to consumer, health and beauty products platform with a pipeline of innovative solutions to pervasive wellness concerns that use advanced formulations of plant-based, amino-acid and CBD alternatives to chemical ingredients. Utilizing our syndicated radio network subsidiary, Music of Your Life, the Company is able to market its products directly to the consumer using commercials to our AM, FM and HD radio station affiliates, and globally over the internet. Our principal source of revenue comes from selling radio spots, or commercials on the network, and licensing our trade names. 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, product development and product marketing costs. General and administrative expenses are comprised of administrative wages; 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.

 

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.

 

RESULTS OF OPERATION

 

Following is management’s discussion of the relevant items affecting results of operations for the three months ended August 31, 2020 and 2019.

 

Revenues. The Company generated net revenues of $60 and $216 during the three months ended August 31, 2020 and 2019, respectively. Revenues were generated from spot sales on our syndicated radio network. The decrease in revenues in 2020 resulted from large amounts of down time experienced in 2020 due to the COVID-19 pandemic.

 

Cost of Sales. Our cost of sales were $-0- for the three months ended August 31, 2020 and 2019. Our cost of sales in the future will consist 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.

 

Salaries and Consulting Fees. Salaries and consulting fees were $76,000 and $109,500 for the three months ended August 31, 2020 and 2019, respectively. We expect that salaries and consulting expenses will increase as we add personnel to build our multi-media entertainment business.

 

Professional Fees. Professional fees were $19,239 and $7,865 for the three months ended August 31, 2020 and 2019, respectively. Professional fees consist mainly of the fees related to the audits and reviews of the Company’s financial statements as well as the filings with the Securities and Exchange Commission. 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 $7,989 and $14,831 for the three months ended August 31, 2020 and 2019, respectively. We anticipate that SG&A expenses will increase commensurate with an increase in our operations.

 

  21  

Other Income (Expenses). The Company had net other expenses of $2,274,350 for the three months ended August 31, 2020 compared to net other expenses of $3,060,219 for the three months ended August 31, 2019. During the three months ended August 31, 2020, the company recorded expense on the change in the fair value of the derivative liability in the amount of $1,582,005. During the three months ended August 31, 2019, the company recorded expense on the change in the fair value of the derivative liability in the amount of $2,728,625. During the three months ended August 31, 2020 and 2019, other expenses incurred were also comprised of interest expenses related to notes payable in the amount of $156,782 and $228,6931, which included the amortization of debt discounts of $14,745 and $190,846, respectively. During the three months ended August 31, 2020 and 2019, the Company recorded a loss on the conversion of notes payable and accrued interest in the amount of $535.563 and $102,963, respectively, based on difference between the fair market value of the stock at issuance and the amount of notes payable and accrued interest converted.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of August 31, 2020, our primary source of liquidity consisted of $23,921 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 August 31, 2020 of $5,871,761 and $11,270,571, respectively, which raises doubt about our ability to continue as a going concern. We generated a net loss for the three months ended August 31, 2020 of $2,377,518. 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.

 

CRITICAL ACCOUNTING PRONOUNCEMENTS

 

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.

 

  22  

Our significant accounting policies are summarized in Note 2 of our financial statements included in our May 31, 2020 Form 10-K. While all 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.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

We have reviewed accounting pronouncements issued during the past two years 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 periods presented in this report.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (“SPE”s).

 

Item 3. Quantitative and Qualitative Disclosures about Market Risks

 

Not applicable because we are a smaller reporting company.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures 

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses (such as the absence of an audit committee and absence of qualified independent directors) in its internal control over financial reporting.

 

Changes in Internal Controls Over Financial Reporting

 

There have been no changes in the Company's internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Currently we are not aware of any litigation pending or threatened by or against the Company.

 

Item 1A. Risk Factors

 

Not applicable because we are a smaller reporting company.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

See Note 8 in the notes to the financial statements.

 

With respect to the transactions in Note 8 to the financial statements, 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.

  

Item 3. Defaults Upon Senior Securities.

 

The Company has not paid the principal and interest due on 21 notes payable aggregating $882,395 at August 31, 2020. See Note 5 to the Consolidated Financial Statements.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information.

 

None.

 

 

 

 

 

 

  24  

 

Item 6. Exhibits.

 

Exhibit No.   Description
3.1   Amended and Restated Articles of Incorporation of Music of Your life, Inc.
3.2   Amended and Restated Bylaws of Music of Your Life, Inc.
31.1   Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1   Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document
     
     

 


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

   

  The Marquie Group, Inc.
   
Date: March 05, 2021 By:  /s/  Marc Angell
    Marc Angell
    Chief Executive Officer
    (Duly Authorized Officer and Principal Executive Officer)
     

 

 

  25  

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