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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 February 29, 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 May 26, 2020, there were 373,710,385 shares of $0.0001 par value common stock, issued and outstanding.

 

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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	22
Item 3: Quantitative and Qualitative Disclosures about Market Risk	24
Item 4: Controls and Procedures	24
PART II: OTHER INFORMATION
Item 1: Legal Proceedings	25
Item 1A: Risk Factors	25
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3: Defaults Upon Senior Securities	25
Item 4: Mine Safety Disclosures	25
Item 5: Other Information	25
Item 6: Exhibits	26
SIGNATURES	26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1.  Financial Statements

 

THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Balance Sheets
ASSETS
		February 29,				May 31,
		2020				2019
		(Unaudited)
CURRENT ASSETS
Cash and cash equivalents		$	21,024			$	6,297
Loans receivable from related party			15,950				15,950
Total Current Assets			36,974				22,247
OTHER ASSETS
Music inventory			7,774				9,397
Trademark costs			10,240				10,015
Total Other Assets			18,014				19,412
TOTAL ASSETS		$	54,988			$	41,659
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Bank overdraft		$	—			$	—
Accounts payable			38,046				21,085
Accrued interest payable on notes payable			269,013				260,290
Accrued consulting fees			644,050				475,350
Notes payable			1,384,423				1,114,919
Notes payable to related parties			155,323				155,323
Derivative liability			2,071,056				1,805,422
Total Current Liabilities			4,561,911				3,832,389
TOTAL LIABILITIES			4,561,911				3,832,389
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, 266,313,434 and 382,717 shares issued
and outstanding, respectively			26,631				38
Common stock payable - 1 share			8,460				8,460
Additional paid-in-capital			4,617,024				4,149,012
Accumulated deficit			(9,159,038	)			(7,948,240	)
Total Stockholders' Deficit			(4,506,923	)			(3,790,730	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	54,988			$	41,659

 

 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
(Unaudited)
		For the Three Months Ended								For the Nine Months Ended
		February 29,				February 28,				February 29,				February 28,
		2020				2019				2020				2019
NET REVENUES		$	163			$	1,496			$	379			$	4,469
OPERATING EXPENSES
Salaries and Consulting fees (including stock-based
compensation of $-0-, $-0-, $-0- and
$41,000, respectively)			76,000				71,500				295,000				239,000
Professional fees			21,678				20,578				73,326				60,773
Other selling, general and administrative			145,229				71,714				166,774				104,752
Total Operating Expenses			242,907				163,792				535,100				404,525
LOSS FROM OPERATIONS			(242,744	)			(162,296	)			(534,721	)			(400,056	)
OTHER INCOME (EXPENSES)
Income (expense) from derivative liability			3,496,084				(458,385	)			65,616				(1,635,356	)
Interest expense (including amortization of debt
discounts of $153,284, $112,355, $464,247 and
$200,925, respectively)			(187,218	)			(211,592	)			(604,496	)			(344,376	)
Loss on conversion of notes payable and accrued interest			(34,234	)			(1,053,012	)			(137,197	)			(1,354,627	)
Total Other Income (Expenses)			3,274,632				(1,722,989	)			(676,077	)			(3,334,359	)
INCOME (LOSS) BEFORE INCOME TAXES			3,031,888				(1,885,285	)			(1,210,798	)			(3,734,415	)
INCOME TAX EXPENSE			—				—				—				—
NET INCOME (LOSS)		$	3,031,888			$	(1,885,285	)		$	(1,210,798	)		$	(3,734,415	)
BASIC AND DILUTED:
Net income (loss) per common share		$	0.01			$	(0.04	)		$	(0.01	)		$	(0.11	)
Weighted average shares outstanding			225,416,390				52,250,028				80,746,862				34,603,973

 The accompanying notes are an integral part of these financial statements

 

THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Consolidated Statements of Stockholders' Deficit
(Unaudited)
		Nine Months Ended February 29, 2020
																														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	)
Rounded up shares issued in connection
with reverse stock split			—				—				290				—				—				—				—				—
Common stock issued for merger
with Global Nutrition Experience, Inc.			—				—				160,000,000				16,000				—				(16,000	)			—				—
Net loss for the three months ended
November 30, 2019			—				—				—				—				—				—				(1,050,487	)			(1,050,487	)
Balance, November 30, 2019			200				—				161,061,647				16,106				8,460				4,285,463				(12,190,926	)			(7,880,897	)
Common stock issued for cash			—				—				58,438,096				5,844				—				281,356				—				287,200
Common stock issued for merger
with Global Nutrition Experience, Inc.			—				—				33,000,000				3,300				—				(3,300	)			—				—
Common stock issued for conversion
of debt			—				—				13,813,691				1,381				—				53,505				—				54,886
Net income for the three months ended
February 29, 2020			—				—				—				—				—				—				3,031,888				3,031,888
Balance, February 29, 2020			200			$	—				266,313,434			$	26,631			$	8,460			$	4,617,024			$	(9,159,038	)		$	(4,506,923	)

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.

		Nine Months Ended February 28, 2019
																														Total
		Preferred Stock								Common Stock								Common Stock				Additional				Accumulated				Stockholders'
		Shares				Amount				Shares				Amount				Payable				Paid-in Capital				Deficit				Deficit
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				—				—				—				—				—
Net loss for the three months ended
August 31, 2018			—				—				—				—				—				—				(133,879	)			(133,879	)
Balance, August 31, 2018			200				—				102,282				10				8,460				2,114,833				(4,431,673	)			(2,308,370	)
Common stock issued for conversion
of debt			—				—				10,750				1				—				333,749				—				333,750
Common shares issued for services			—				—				5,000				1				—				40,999				—				41,000
Net loss for the three months ended
November 30, 2018			—				—				—				—				—				—				(1,715,251	)			(1,715,251	)
Balance, November 30, 2018			200				—				118,032				12				8,460				2,489,581				(6,146,924	)			(3,648,871	)
Common stock issued for conversion
of debt			—				—				31,218				3				—				1,166,354				—				1,166,357
Net loss for the three months ended
February 28, 2019			—				—				—				—				—				—				(1,885,285	)			(1,885,285	)
Balance, February 28, 2019			200			$	—				149,250			$	15			$	8,460			$	3,655,935			$	(8,032,209	)		$	(4,367,799	)

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
(Unaudited)
						For the Nine Months Ended
						February 29,				February 28,
						2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss						$	(1,210,798	)		$	(3,734,415	)
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Stock-based compensation							—				41,000
Depreciation of music inventory							2,698				2,490
Expense (income) from derivative liability							(65,616	)			1,635,356
Amortization of debt discounts							464,247				200,925
Loss on conversion of notes payable and accrued interest							137,197				1,354,627
Changes in operating assets and liabilities:
Accounts payable							16,961				(3,162	)
Accrued interest payable on notes payable							48,909				74,045
Accrued consulting fees							168,700				129,200
Net Cash Used by Operating Activities							(437,702	)			(299,934	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Music inventory							(1,075	)			(2,275	)
Trademark costs							(225	)			(2,350	)
Net Cash Used by Investing Activities							(1,300	)			(4,625	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft							—				(517	)
Proceeds from sale of common stock							287,200				—
Proceeds from notes payable							331,250				456,000
Repayments of notes payable							(164,721	)			—
Repayments of notes payable to related parties							—				(24,593	)
Net proceeds from notes payable to related parties							—				1,505
Net Cash Provided by Financing Activities							453,729				432,395
NET INCREASE IN CASH AND CASH EQUIVALENTS							14,727				127,836
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD							6,297				5
CASH AND CASH EQUIVALENTS, END OF PERIOD						$	21,024			$	127,841
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Interest						$	—			$	—
Income taxes						$	—			$	—
Non-cash investing and financing activities:
Initial derivative liability charged to debt discounts						$	331,250			$	400,500
Conversion of debt and accrued interest into common stock						$	70,208			$	145,479
Common stock issued for merger with The Marquie Group, Inc.						$	—			$	4,000
Common stock issued for merger with Global Nutrition Experience, Inc.						$	19,300			$	—

The accompanying notes are an integral part of these financial statement

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 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 nine months ended February 29, 2020 are not necessarily indicative of results that may be expected for the year ending May 31, 2020. 

 

Organization

 

The Marquie Group, Inc. (formerly 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, with and without non-THC CBD oil.

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.

 

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 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. As of February 29, 2020, the balance due on this loan was $15,950.

 

NOTE 3 - MUSIC INVENTORY

 

Music inventory consisted of the following:

 

		February 29, 2020				May 31, 2019
Digital music acquired for use in operations – at cost		$	21,151			$	20,076
Accumulated depreciation			(13,377	)			(10,679	)
Music inventory – net		$	7,774			$	9,397

 

The Company purchases digital music to broadcast over the radio and internet. During the nine months ended February 29, 2020, the Company purchased $1,075 worth of music inventory. For the nine months ended February 29, 2020 and 2019, depreciation of music inventory was $2,698 and $2,490, respectively.

 

NOTE 4 – ACCRUED CONSULTING FEES

Accrued consulting fees consisted of the following:

		February 29, 2020				May 31, 2019
Due to Company Chief Executive Officer pursuant to Consulting Agreement dated March 1, 2017 – monthly compensation of $10,000		$	100,900			$	74,300
Due to wife of Company Chief Executive Officer pursuant to consulting agreement effective August 16, 2018 – monthly compensation of $15,000			165,100				90,500
Due to mother of Company Chief Executive Officer pursuant to Consulting Agreement dated September 1, 2015 – monthly compensation of $5,000			131,350				101,350
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 – monthly compensation of $1,000			50,000				45,000
Due to two other service providers			52,000				19,500
Total		$	644,050			$	475,350

 

The accrued consulting fees balance changed as follows:

		Nine Months Ended February 29, 2019				Year Ended May 31, 2019
Balance, beginning of period		$	475,350			$	286,650
Compensation expense accrued pursuant to consulting agreements			294,000				399,000
Payments to consultants			(125,300	)			(210,300	)
Balance, end of period		$	644,050			$	475,350

 

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

See Note 9 (Commitments and Contingencies).

 

NOTE 5 - NOTES PAYABLE

 

Notes payable consisted of the following:

		November 30, 2019				May 31, 2018
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 (I)			25,000				25,000

 

 

 

 

 

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

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 April 21, 2017 (R)			—				35,496
Convertible note payable to an entity, interest at 10%, due on June 13, 2017 (S)			—				64,233
Convertible note payable to an entity, interest at 12%, due on October 31, 2017 (U)			—				8,313
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 (Z)			—				54,992
Convertible note payable to an entity, interest at 10%, due on January 11, 2019, in default (AA)			23,167				35,381
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 – net of discount of $-0- and $6,781, respectively (FF)			22,500				15,719
Convertible note payable to an entity, interest at 10%, due on September 18, 2019, in default – net of discount of $-0- and $5,425, respectively (GG)			8,505				12,575
Convertible note payable to an entity, interest at 10%, due on September 19, 2019, in default – net of discount of $-0- and $81,022, respectively (HH)			200,000				118,978
Convertible note payable to an entity, interest at 10%, due on August 4, 2019, in default – net of discount of $-0- and $61,050, respectively (II)			170,000				108,950

 

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

 

Convertible note payable to an entity, interest at 10%, due on November 13, 2019, in default – net of discount of $-0- and $45,604, respectively (JJ)			75,000				29,396
Convertible note payable to an entity, interest at 10%, due on November 15, 2019, in default – net of discount of $-0- and $9,205, respectively (KK)			20,000				10,795
Convertible note payable to an entity, interest at 10%, due on November 30, 2019, in default – net of discount of $-0- and $2,507, respectively (LL)			5,000				2,493
Convertible note payable to an entity, interest at 10%, due on December 6, 2019, in default – net of discount of $-0- and $1,553, respectively (MM)			3,000				1,447
Convertible note payable to an entity, interest at 10%, due on December 11, 2019, in default – net of discount of $144 and $5,315, respectively (NN)			9,856				4,685
Convertible note payable to an entity, interest at 12%, due on March 10, 2020 – net of discount of $2,144 and $-0-, respectively (OO)			56,606				—
Convertible note payable to an entity, interest at 10%, due on September 12, 2020 – net of discount of $6,455 and $-0-, respectively (PP)			6,045				—
Convertible note payable to an entity, interest at 10%, due on April 23, 2020 – net of discount of $76,721 and $-0-, respectively (QQ)			173,279				—
Notes payable to individuals, non-interest bearing, due on demand			103,475				103,476
Total Notes Payable			1,384,423				1,114,919
Less: Current Portion			(1,384,423	)			(1,114,919	)
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.

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

(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.

(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 bore interest at a rate of 10% per annum (24% per annum default rate), was due on April 21, 2017, and was 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 bore interest at a rate of 10% per annum (24% per annum default rate), was due on June 13, 2017, and was convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to $0.0005 per share.

(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 bore interest at a rate of 12% per annum (24% per annum default rate), was due on October 31, 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 7 (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 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.

(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 bore interest at a rate of 12% per annum (24% per annum default rate), was due on March 16, 2018, 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 7 (Derivative Liability).

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

(AA) On January 11, 2018, the Company issued a $500,000 Convertible Promissory Note to a lender. During the quarter ended February 28, 2018, the Company borrowed $88,000 (of the $500,000), and received net loan proceeds of $75,000. The note bears interest at a rate of 10% per annum and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 15 Trading Day period prior to the Conversion Date. See Note 7 (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 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).

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

(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).

(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).

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

 

Concentration of Notes Payable:

 

The principal balance of the notes payable was due to:

 

		February 29, 2020				May 31, 2019
Lender A		$	133,667			$	296,414
Lender B			258,750				200,000
Lender C			420,000				170,000
14 other lenders			657,470				666,967
Total			1,469,887				1,333,381
Less debt discounts			(85,464	)			(218,462	)
Net		$	1,384,423			$	1,114,919

 

NOTE 6 - NOTES PAYABLE – RELATED PARTIES

 

Notes payable – related parties consisted of the following:

 

		February 29, 2020				May 31, 2019
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
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			155,323				155,323
Less: Current Portion			(155,323	)			(155,323	)
Long-Term Notes Payable		$	—			$	—

 

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

 

NOTE 7 - DERIVATIVE LIABILITY

 

The derivative liability at February 29, 2020 and May 31, 2019 consisted of:

 

		November 30, 2019								May 31, 2019
		Face Value				Derivative Liability				Face Value				Derivative Liability
Convertible note payable issued December 29, 2015, due December 29, 2016 (M)		$	40,000			$	64,000			$	40,000			$	60,000
Convertible note payable issued January 31, 2017, due August 31, 2017 (U)			—				—				8,313				12,470
Convertible note payable issued April 5, 2017, due on demand (W)			29,000				67,667				29,000				55,769
Convertible note payable issued April 5, 2017, due on demand (X)			21,500				50,167				21,500				41,346
Convertible note payable issued June 16, 2017, due on March 16, 2018 (Z)			—				—				54,992				82,488
Convertible note payable issued January 11, 2018, due on January 11, 2019 (AA)			23,167				37,067				35,381				53,072
Convertible note payable issued December 1, 2017, due on demand (BB)			50,000				61,111				50,000				55,555
Convertible note payable issued December 1, 2017, due on demand (CC)			50,000				61,111				50,000				55,555
Convertible note payable issued March 5, 2018, due on March 5, 2019 (DD)			35,000				56,000				35,000				52,500
Convertible note payable issued April 4, 2018, due on April 4, 2019 (EE)			37,500				60,000				37,500				56,250
Convertible note payable issued September 18, 2018, due on September 18, 2019 (FF)			22,500				36,000				22,500				56,250
Convertible note payable issued September 18, 2018, due on September 18, 2019 (GG)			8,505				28,800				18,000				45,000
Convertible note payable issued December 19, 2018, due on September 19, 2019 (HH)			200,000				320,000				200,000				500,000
Convertible note payable issued February 4, 2019, due on August 4, 2019 (II)			170,000				272,000				170,000				396,667
Convertible note payable issued February 13, 2019, due on November 13, 2019 (JJ)			75,000				120,000				75,000				187,500
Convertible note payable issued November 15, 2018, due on November 15, 2019 (KK)			20,000				32,000				20,000				50,000
Convertible note payable issued November 30, 2018, due on November 30, 2019 (LL)			5,000				8,000				5,000				12,500
Convertible note payable issued December 6, 2018, due on December 6, 2019 (MM)			3,000				4,800				3,000				7,500
Convertible note payable issued December 11, 2018, due on December 11, 2019 (NN)			10,000				16,000				10,000				25,000
Convertible note payable issued June 10, 2019, due on March 10, 2020 (OO)			58,750				109,667				—				—
Convertible note payable issued September 5, 2019, due on September 5, 2020 (PP)			12,500				33.333				—				—
Convertible note payable issued October 23, 2019, due on April 23, 2020 (QQ)			250,000				633,333				—				—
Totals		$	1,121,422			$	2,071,056			$	885,186			$	1,805,422

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 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 February 29, 2020 include (1) stock price of $0.002 per share, (2) exercise prices ranging from $0.0006 to $0.0008 per share, (3) terms ranging from -0- days to 189 days, (4) expected volatility of 848% and (5) risk free interest rates ranging from 1.11% to 1.45%.

 

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%.

 

Concentration of Derivative Liability:

 

The derivative liability relates to convertible notes payable due to:

 

		February 29, 2020				May 31, 2019
Lender A		$	227,201			$	479,155
Lender B			429,667				512,469
Lender C			905,333				260,572
Lender D			120,000				187,500
6 other lenders			388,855				365,726
Total		$	2,071,056			$	1,805,422

 

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

 

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.

 

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 nine months ended February 29, 2020, the Company issued an aggregate of 14,490,073 shares of common stock for the conversion of notes payable and accrued interest in the aggregate amount of $70,208. We incurred a loss on the conversion of notes payable and accrued interest of $137,197, which represents the excess of the $207,406 fair value of the 4,490,073 shares at the dates of conversion over the $70,209 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.

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

 

At February 29, 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 May 31, 2019 and February 29, 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 three months ended February 29, 2020). The terms of the Consulting Agreements are for 90 days each.

 

THE MARQUIE GROUP, INC.

(formerly Music of Your Life, Inc.)

Notes to the Consolidated Financial Statements

February 29, 2020

(Unaudited)

 

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 February 29, 2020, the Company had negative working capital of $4,524,937 and an accumulated deficit of $9,159,038. 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 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 February 29, 2020, the Company sold a total of 59,428,571 shares of its Form 1-A common stock to 3 investors at a price of $0.0035 per share for net proceeds of $208,000.

 

Subsequent to February 29, 2020, the Company issued an aggregate of 47,968,380 shares of common stock for the conversion of notes payable and accrued interest in the aggregate amount of $9,609.

 

 

 

 

 

 

 

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 and six months ended February 29, 2020 and February 28, 2019.

 

Revenues. The Company generated net revenues of $163 and $1,496 during the three months ended February 29, 2020 and February 28, 2019, respectively. The Company generated net revenues of $379 and $4,469 during the nine months ended February 29, 2020 and February 28, 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 and nine months ended February 29, 2020 and February 28, 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 $71,500 for the three months ended February 29, 2020 and February 28, 2019, respectively. Salaries and consulting fees were $295,000 and $239,000 (including stock-based compensation of $-0- and $41,000) for the nine months ended February 29, 2020 and February 28, 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 $21,678 and $20,578 for the three months ended February 29, 2020 and February 28, 2019, respectively. Professional fees were $73,326 and $60,773 for the nine months ended February 29, 2020 and February 28, 2019, respectively. 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 $145,229 and $71,714 for the three months ended February 29, 2020 and February 28, 2019, respectively. Other selling, general and administrative expenses were $166,774 and $104,752 for the nine months ended February 29, 2020 and February 28, 2019, respectively. We anticipate that SG&A expenses will increase commensurate with an increase in our operations.

Other Income (Expenses). The Company had net other income of $3,274,632 for the three months ended February 29, 2020 compared to net other expenses of $1,722,989 for the three months ended February 28, 2019. The Company had net other expenses of $676,077 for the nine months ended February 29, 2020 compared to net other expenses of $3,334,359 for the nine months ended February 28, 2019. During the nine months ended February 29, 2020, the company recorded income on the change in the fair value of the derivative liability in the amount of $65,616. During the nine months ended February 28, 2019, the company recorded expense on the change in the fair value of the derivative liability in the amount of $1,635,356. Other expenses incurred were also comprised of interest expenses related to notes payable in the amount of $604,496 and $344,376, which included the amortization of debt discounts of $464,247 and $200,925, respectively. During the nine months ended February 29, 2020 and February 28, 2019, the Company recorded a loss on the conversion of notes payable and accrued interest in the amount of $137,197 and $1,354,627, 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 February 29, 2020, our primary source of liquidity consisted of $21,024 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 February 29, 2020 of $4,524,937 and $9,159,038, respectively, which raises doubt about our ability to continue as a going concern. We generated a net loss for the nine months ended February 29, 2020 of $1,210,798. 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.

 

Our significant accounting policies are summarized in Note 2 of our financial statements included in our May 31, 2019 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.

 

 

 

 

 

 

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 20 notes payable aggregating $881,672 at February 29, 2020. See Note 5 to the Consolidated Financial Statements.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information.

 

None.

 

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

 

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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: May 29, 2020	By:	/s/  Marc Angell
		Marc Angell
		Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)