UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| (Mark One) | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended November 30, 2018 | |
| ☐ | 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 January 10, 2019, there were 52,073,402 shares of $0.0001 par value common stock, issued and outstanding.
| 2 |
| 3 |
PART I - FINANCIAL INFORMATION
| THE MARQUIE GROUP, INC. | ||||||||
| (formerly Music of Your Life, Inc.) | ||||||||
| Consolidated Balance Sheets | ||||||||
| ASSETS | ||||||||
| November 30, | May 31, | |||||||
| 2018 | 2018 | |||||||
| (Unaudited) | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 5,142 | $ | 5 | ||||
| Loans receivable from related party | 15,950 | 15,950 | ||||||
| Total Current Assets | 21,092 | 15,955 | ||||||
| OTHER ASSETS | ||||||||
| Music inventory | 8,842 | 9,681 | ||||||
| Trademark costs | 7,990 | 7,665 | ||||||
| Total Other Assets | 16,832 | 17,346 | ||||||
| TOTAL ASSETS | $ | 37,924 | $ | 33,301 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Bank overdraft | $ | — | $ | 517 | ||||
| Accounts payable | 32,303 | 15,607 | ||||||
| Accrued interest payable on notes payable | 289,129 | 252,051 | ||||||
| Accrued consulting fees | 409,850 | 286,650 | ||||||
| Notes payable | 904,323 | 820,753 | ||||||
| Notes payable to related parties | 179,916 | 178,411 | ||||||
| Derivative liability | 1,871,274 | 653,803 | ||||||
| Total Current Liabilities | 3,686,795 | 2,207,792 | ||||||
| TOTAL LIABILITIES | 3,686,795 | 2,207,792 | ||||||
| STOCKHOLDERS' DEFICIT | ||||||||
| Preferred Stock, $0.0001 par value; 20,000,000 shares | ||||||||
| authorized, 200 and 200 shares issued and outstanding | — | — | ||||||
| Common stock, $0.0001 par value; 10,000,000,000 shares | ||||||||
| authorized, 47,212,865 and 910,610 shares issued | ||||||||
| and outstanding, respectively | 4,721 | 91 | ||||||
| Common stock payable - 75 shares | 8,460 | 8,460 | ||||||
| Additional paid-in-capital | 2,484,872 | 2,114,752 | ||||||
| Accumulated deficit | (6,146,924 | ) | (4,297,794 | ) | ||||
| Total Stockholders' Deficit | (3,648,871 | ) | (2,174,491 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 37,924 | $ | 33,301 | ||||
| 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 | For the Six Months Ended | |||||||||||||||
| November 30, | November 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| NET REVENUES | $ | 598 | $ | 401 | $ | 2,973 | $ | 3,237 | ||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Salaries and Consulting fees (including stock-based | ||||||||||||||||
| compensation of $41,000, $-0-, $41,000, and $-0-, | ||||||||||||||||
| respectively) | 104,500 | 64,000 | 167,500 | 137,696 | ||||||||||||
| Professional fees | 37,557 | 30,105 | 40,195 | 39,369 | ||||||||||||
| Other selling, general and administrative | 24,671 | 13,722 | 33,038 | 32,146 | ||||||||||||
| Total Operating Expenses | 166,728 | 107,827 | 240,733 | 209,211 | ||||||||||||
| LOSS FROM OPERATIONS | (166,130 | ) | (107,426 | ) | (237,760 | ) | (205,974 | ) | ||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||
| Income (expense) from derivative liability | (1,174,761 | ) | (7,747 | ) | (1,176,971 | ) | 399,870 | |||||||||
| Interest expense (including amortization of debt discounts | ||||||||||||||||
| of $48,115, $12,333, $88,570 and $58,118, respectively) | (72,745 | ) | (48,722 | ) | (132,784 | ) | (107,365 | ) | ||||||||
| Loss on conversion of notes payable and accrued interest | (301,615 | ) | — | (301,615 | ) | — | ||||||||||
| Total Other Income (Expenses) | (1,549,121 | ) | (56,469 | ) | (1,611,370 | ) | 292,505 | |||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (1,715,251 | ) | (163,895 | ) | (1,849,130 | ) | 86,531 | |||||||||
| INCOME TAX EXPENSE | — | — | — | — | ||||||||||||
| NET INCOME (LOSS) | $ | (1,715,251 | ) | $ | (163,895 | ) | $ | (1,849,130 | ) | $ | 86,531 | |||||
| BASIC AND DILUTED: | ||||||||||||||||
| Net income (loss) per common share | $ | (0.04 | ) | $ | (0.23 | ) | $ | (0.07 | ) | $ | 0.13 | |||||
| Weighted average shares outstanding | 44,620,557 | 714,939 | 25,925,585 | 670,721 | ||||||||||||
| 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 Cash Flows | ||||||||
| (Unaudited) | ||||||||
| For the Six Months Ended | ||||||||
| November 30, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | (1,849,130 | ) | $ | 86,531 | |||
| Adjustments to reconcile net income (loss) to net | ||||||||
| cash used by operating activities: | ||||||||
| Stock-based compensation | 41,000 | — | ||||||
| Depreciation of music inventory | 1,638 | — | ||||||
| Expense (Income) from derivative liability | 1,176,971 | (399,870 | ) | |||||
| Amortization of debt discounts | 88,570 | 58,118 | ||||||
| Non-cash interest expense | — | 20,000 | ||||||
| Loss on conversion of notes payable and accrued interest | 301,615 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Music inventory | (799 | ) | (1,109 | ) | ||||
| Accounts payable | 16,696 | 14,167 | ||||||
| Accrued interest payable on notes payable | 39,213 | 29,247 | ||||||
| Accrued consulting fees | 123,200 | 98,800 | ||||||
| Net Cash Used by Operating Activities | (61,026 | ) | (94,116 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Trademark costs | (325 | ) | (325 | ) | ||||
| Net Cash Used by Investing Activities | (325 | ) | (325 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Bank overdraft | (517 | ) | — | |||||
| Proceeds from notes payable | 65,500 | 75,975 | ||||||
| Net proceeds from notes payable to related parties | 1,505 | 8,900 | ||||||
| Net Cash Provided by Financing Activities | 66,488 | 84,875 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 5,137 | (9,566 | ) | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 5 | 10,113 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 5,142 | $ | 547 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Cash Payments For: | ||||||||
| Interest | $ | — | $ | — | ||||
| Income taxes | $ | — | $ | — | ||||
| Non-cash investing and financing activities: | ||||||||
| Initial derivative liability charged to debt discounts | $ | 40,500 | $ | 37,000 | ||||
| Conversion of debt and accrued interest into common stock | $ | 32,135 | $ | 34,553 | ||||
| Common stock issued for merger with The Marquie Group, Inc. | $ | 4,000 | $ | — | ||||
| The accompanying notes are an integral part of these financial statements | ||||||||
| 6 |
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(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 six months ended November 30, 2018 are not necessarily indicative of results that may be expected for the year ending May 31, 2019.
Organization
Music of Your Life, Inc. (hereafter, “we”, ”our”, ”us”, “MYL”, or the ”Company”) was incorporated on January 30, 2008, in the State of Florida, as ZhongSen International Tea Company, with the principal business objective of providing sales and marketing consulting services to small to medium sized Chinese tea producing companies who wish to export and distribute high quality Chinese tea products worldwide. The Company commenced business activities in August, 2008, when it entered into a related party Sales and Marketing Agreement with Yunnan Zhongsen Group, Ltd. However, due to lack of capital, the Company was unable to implement its business plan fully. On May 31, 2013, the Company entered into a merger agreement (the “Merger”) with Music of Your Life, Inc., a Nevada corporation (“MYL Nevada”). As a result of the Merger, MYL Nevada is a wholly-owned subsidiary of the Company, and the Company is now operating a multi-media entertainment company, producing television shows and radio programming. The Company changed its name to Music of Your Life, Inc. effective July 26, 2013.
Reverse Stock Split
Effective June 20, 2018, the Company effectuated a 1 share for 4,000 shares reverse stock split which reduced the issued and outstanding shares of common stock from 3,642,441,577 shares to 912,863 shares. The accompanying financial statements have been retroactively adjusted to reflect this reverse stock split.
Acquisition of The Marquie Group, Inc.
On August 16, 2018 (see Note 7), the Company merged with The Marquie Group, Inc. (“TMG”) in exchange for the issuance of a total of 40,000,002 shares of our common stock to TMG’s stockholders. Following the merger, the Company had 40,912,865 shares of common stock issued and outstanding. On December 5, 2018, the Company amended and restated its Articles of Incorporation providing for a change in the Company’s name from “Music of Your Life, Inc.” to “The Marquie Group, Inc.”
NOTE 2 - LOANS RECEIVABLE – RELATED PARTY
During the year ended May 31, 2013, the Company loaned $174,950 to the Company’s current chief executive in anticipation of the merger agreement described in Note 1. The loans are non-interest bearing and due on demand. Effective May 31, 2015, the Company agreed to waive collection of $100,000 of the remaining $115,950 loans receivable balance in exchange for the chief executive officer’s agreement to waive payment of the $100,000 accrued consulting fees balance due him at May 31, 2015 (see Note 8). As of November 30, 2018, the balance due on this loan was $15,950.
| 7 |
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
NOTE 3 - MUSIC INVENTORY
Music inventory consisted of the following:
| November 30, 2018 | May 31, 2018 | |||||||
| Digital music acquired for use in operations – at cost | $ | 17,854 | $ | 17,055 | ||||
| Accumulated depreciation | (9,012 | ) | (7,374 | ) | ||||
| Music inventory – net | $ | 8,842 | $ | 9,681 | ||||
The Company purchases digital music to broadcast over the radio and internet. During the six months ended November 30, 2018, the Company purchased $799 worth of music inventory. For the six months ended November 30, 2018 and 2017, depreciation of music inventory was $1,638 and $-0-, respectively.
NOTE 4 - NOTES PAYABLE
Notes payable consisted of the following:
| November 30, 2018 | May 31, 2018 | |||||||
| Notes payable to an entity, non-interest bearing, due on demand, unsecured | $ | 25,000 | $ | — | ||||
| Note payable to an individual, due on May 22, 2015, in default (B) | 25,000 | 25,000 | ||||||
| Note payable to an entity, non interest bearing, due on February 1, 2016, in default (D) | 50,000 | 50,000 | ||||||
| Note payable to a family trust, stated interest of $2,500, due on October 31, 2015, in default (E) | 7,000 | 7,000 | ||||||
| Note payable to a corporation, stated interest of $5,000, due on October 21, 2015, in default (G) | 50,000 | 50,000 | ||||||
| Note payable to a corporation, stated interest of $5,000, due on November 6, 2015, in default (H) | 50,000 | 50,000 | ||||||
| Note payable to an individual, stated interest of $2,500, due on December 20, 2015, in default (I) | 25,000 | 25,000 | ||||||
| Convertible note payable to an entity, interest at 12%, due on December 29, 2016, in default (M) | 40,000 | 40,000 | ||||||
| Note payable to a family trust, interest at 10%, due on November 30, 2016, in default (P) | 25,000 | 25,000 | ||||||
| Convertible note payable to an entity, interest at 10%, due on March 17, 2017, in default (Q) | 33,686 | 33,686 | ||||||
| Convertible note payable to an entity, interest at 10%, due on April 1, 2017, in default (R) | 31,250 | 46,250 | ||||||
| Convertible note payable to an entity, interest at 10%, due on June 13, 2017, in default – net of discount of $-0- and $1,940, respectively (S) | 40,750 | 40,750 | ||||||
| Convertible note payable to an entity, interest at 12%, due on August 16, 2017, in default (T) | 21,900 | 36,900 | ||||||
| 8 |
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
| Convertible note payable to an entity, interest at 12%, due on October 31, 2017, in default – net of discount of $-0- and $20,288, respectively (U) | 46,750 | 46,750 | ||||||
| Convertible note payable to an individual, interest at 10%, due on demand (V) | 46,890 | 46,890 | ||||||
| Convertible note payable to an individual, interest at 8%, due on demand (W) | 29,000 | 29,000 | ||||||
| Convertible note payable to an individual, interest at 8%, due on demand (X) | 21,500 | 21,500 | ||||||
| Convertible note payable to an entity, interest at 10%, due on demand (Y) | 8,600 | 8,600 | ||||||
| Convertible note payable to an entity, interest at 12%, due on March 16, 2018, in default (Z) | 37,000 | 37,000 | ||||||
| Convertible note payable to an entity, interest at 10% – net of discount of $10,126 and $54,247, respectively (AA) | 77,874 | 33,753 | ||||||
| Convertible note payable to an entity, interest at 10%, due on demand (CC) | 50,000 | 50,000 | ||||||
| Convertible note payable to an entity, interest at 10%, due on March 5, 2019 – net of discount of $9,110 and $26,658, respectively (DD) | 25,890 | 8,342 | ||||||
| Convertible note payable to an entity, interest at 10%, due on April 4, 2019 – net of discount of $12,842 and $31,644, respectively (EE) | 24,658 | 5,856 | ||||||
| Convertible note payable to an entity, interest at 10%, due on September 18, 2019 – net of discount of $18,000 and $-0-, respectively (FF) | 4,500 | — | ||||||
| Convertible note payable to an entity, interest at 10%, due on September 18, 2019 – net of discount of $14,400 and $-0-, respectively (GG) | 3,600 | — | ||||||
| Notes payable to individuals, non-interest bearing, due on demand | 103,475 | 103,476 | ||||||
| Total Notes Payable | 904,323 | 820,753 | ||||||
| Less: Current Portion | (904,323 | ) | (820,753 | ) | ||||
| Long-Term Notes Payable | $ | — | $ | — |
(B) On April 22, 2015, the Company issued a $25,000 Promissory Note, non-interest bearing (interest at 24% per annum after May 22, 2015), due at maturity on May 22, 2015. The Company also agreed to issue 500,000 shares of common stock, valued at $50,000 on April 22, 2015, as part of the note agreement. The proceeds of the note were allocated between the principal and the market value of the stock resulting in the Company recording a discount on the debt of $16,667. This amount was amortized over the 30 days life of the promissory note.
(D) On July 24, 2015, the Company issued a $50,000 Promissory Note to Kodiak Capital Group, LLC (“Kodiak”) for services rendered in association with the Equity Purchase Agreement (See Note 8). As amended and restated January 4, 2016, the note is non-interest bearing and was due on February 1, 2016.
| 9 |
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
(E) On July 31, 2015, the Company issued a $25,000 Promissory Note with a stated interest amount of $2,500 due at maturity on October 31, 2015. The Company also issued 1,000,000 shares of common stock, valued at $38,000, as part of the note agreement. The proceeds of the note were allocated between the principal and the market value of the stock resulting in the Company recording a discount on the debt of $15,079. This amount was amortized over the 90 days life of the promissory note.
(G) On August 6, 2015, the Company issued a $50,000 Promissory Note with a stated interest amount of $5,000 due at maturity on October 21, 2015. The Company also agreed to issue 2,000,000 shares of common stock, valued at $76,000, as part of the note agreement. The proceeds of the note were allocated between the principal and the market value of the stock resulting in the Company recording a discount on the debt of $30,159. This amount was amortized over the 75 days life of the promissory note.
(H) On August 21, 2015, the Company issued a $50,000 Promissory Note with a stated interest amount of $5,000 due at maturity on November 6, 2015. The Company also agreed to issue 2,000,000 shares of common stock, valued at $60,000, as part of the note agreement. The proceeds of the note were allocated between the principal and the market value of the stock resulting in the Company recording a discount on the debt of $27,273. This amount was amortized over the 75 days life of the promissory note.
(I) On September 21, 2015, the Company issued a $25,000 Promissory Note with a stated interest amount of $2,500 due at maturity on December 20, 2015. The Company also agreed to issue 1,000,000 shares of common stock, valued at $30,000, as part of the note agreement. The proceeds of the note were allocated between the principal and the market value of the stock resulting in the Company recording a discount on the debt of $13,636. This amount was amortized over the 90 days life of the promissory note. In the event that all principal and interest are not paid to the lender by January 20, 2016, the Company is obligated to issue another 1,000,000 shares of common stock to the lender and for interest to accrue at a rate of 24% per annum commencing on January 21, 2016.
(M) On December 29, 2015, the Company issued a $20,000 Convertible Promissory Note to a lender for net loan proceeds of $15,000. The note bears interest at a rate of 12% per annum, is due on December 29, 2016, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest closing bid price during the 30 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(P) On June 3, 2016, the Company issued a $25,000 Promissory Note. The note bears interest at a rate of 10% per annum and was due on November 30, 2016.
(Q) On June 17, 2016, the Company issued a $50,750 Convertible Promissory Note to a lender for net loan proceeds of $44,000. The note bears interest at a rate of 10% per annum (24% per annum default rate), was due on March 17, 2017, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 55% of the lowest Trading Price during the 25 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(R) On July 21, 2016, the Company issued a $56,250 Convertible Promissory Note to a lender for net loan proceeds of $50,000. The note bears interest at a rate of 10% per annum (24% per annum default rate), was due on April 21, 2017, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to $2.00 per share.
(S) On September 13, 2016, the Company issued a $40,750 Convertible Promissory Note to a lender for net loan proceeds of $35,000. The note bears interest at a rate of 10% per annum (24% per annum default rate), was due on June 13, 2017, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to $2.00 per share.
| 10 |
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
(T) On November 16, 2016, the Company issued a $47,000 Convertible Promissory Note to a lender for net loan proceeds of $40,000. The note bears interest at a rate of 12% per annum (24% per annum default rate), was due on August 16, 2017, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 25 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(U) On January 31, 2017, the Company issued a $46,750 Convertible Promissory Note to a lender for net loan proceeds of $40,000. The note bears interest at a rate of 12% per annum (24% per annum default rate), was due on October 31, 2017, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 25 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(V) On May 3, 2017, the Company issued a $72,750 Convertible Promissory Note to a lender as a replacement for the principal and interest due on an earlier promissory note. The note bears interest at a rate of 10% per annum, is due on demand, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to $0.5172 per share.
(W) On April 5, 2017, the Company issued a $35,000 Convertible Promissory Note to a lender as a replacement for the principal and interest due on an earlier promissory note. The note bears interest at a rate of 8% per annum, is due on demand, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 40% of the lowest Trading Price during the 5 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(X) On April 5, 2017, the Company issued a $27,500 Convertible Promissory Note to a lender as a replacement for the principal and interest due on an earlier promissory note. The note bears interest at a rate of 8% per annum, is due on demand, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 40% of the lowest Trading Price during the 5 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(Y) On March 1, 2017, the Company issued a $8,600 Convertible Promissory Note to a vendor of the Company to convert certain accounts payable due to the vendor. The note bears interest at a rate of 10% per annum, is due on demand, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to the higher of $0.16 per share or 60% of the lowest Trading Price during the 5 Trading Day period prior to the Conversion Date.
(Z) On June 16, 2017, the Company issued a $37,000 Convertible Promissory Note to a lender for net loan proceeds of $31,000. The note bears interest at a rate of 12% per annum (24% per annum default rate), was due on March 16, 2018, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 25 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(AA) On January 11, 2018, the Company issued a $500,000 Convertible Promissory Note to a lender. During the quarter ended February 28, 2018, the Company borrowed $88,000 (of the $500,000), and received net loan proceeds of $75,000. The note bears interest at a rate of 10% per annum and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 15 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability). The maturity date for each tranche funded is twelve months from the effective date of each payment.
(CC) On December 1, 2017, the Company issued a $50,000 Convertible Promissory Note to a vendor in settlement of certain accrued consulting fees of $50,000. The note bears interest at a rate of 10% per annum, is due on demand, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 60% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
| 11 |
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
(DD) On March 5, 2018, the Company issued a $35,000 Convertible Promissory Note to a lender for net loan proceeds of $33,000. The note bears interest at a rate of 10% per annum, is due on March 5, 2019, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(EE) On April 4, 2018, the Company issued a $37,500 Convertible Promissory Note to a lender for net loan proceeds of $35,500. The note bears interest at a rate of 10% per annum, is due on April 4, 2019, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(FF) On September 18, 2018, the Company issued a $22,500 Convertible Promissory Note to a lender for net loan proceeds of $17,500. The note bears interest at a rate of 10% per annum, is due on September 18, 2019, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
(GG) On September 18, 2018, the Company issued a $18,000 Convertible Promissory Note to a lender for net loan proceeds of $14,000. The note bears interest at a rate of 10% per annum, is due on September 18, 2019, and is convertible at the option of the lender into shares of the Company common stock at a Conversion Price equal to 50% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability).
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THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
NOTE 5 - NOTES PAYABLE – RELATED PARTIES
Notes payable – related parties consisted of the following:
| November 30, 2018 | May 31, 2018 | |||||||
| Note payable to wife of Company’s chief executive officer, non-interest bearing, due on demand, unsecured | $ | 24,593 | $ | 23,088 | ||||
| Note payable to Company law firm (and owner of 10,000,000 shares of common stock since August 16, 2018), non-interest bearing, due on demand, unsecured | 2,073 | 2,073 | ||||||
| Notes payable to The OZ Corporation (owner of 10,000,000 shares of common stock since August 16, 2018), non-interest bearing, due on demand, unsecured | 103,250 | 103,250 | ||||||
| Convertible note payable to John D. Thomas P.C. (Company law firm and owner of 10,000,000 shares of common stock since August 16, 2018), interest at 10%, due on demand, convertible at the option of the lender into shares of Company common stock equal to 60% of the lowest Trading Price during the 20 Trading Day period prior to the Conversion Date. See Note 6 (Derivative Liability) | 50,000 | 50,000 | ||||||
| Total Notes Payable | 179,916 | 178,411 | ||||||
| Less: Current Portion | (179,916 | ) | (178,411 | ) | ||||
| Long-Term Notes Payable | $ | — | $ | — | ||||
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THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
NOTE 6 - DERIVATIVE LIABILITY
The derivative liability at November 30, 2018 and May 31, 2018 consisted of:
| November 30, 2018 | May 31, 2018 | |||||||||||||||
| Face Value | Derivative Liability | Face Value | Derivative Liability | |||||||||||||
| Convertible note payable issued December 29, 2015, due December 29, 2016 (M) | $ | 40,000 | $ | 291,512 | $ | 40,000 | $ | 40,000 | ||||||||
| Convertible note payable issued June 17, 2016, due March 17, 2017 (Q) | 33,686 | 93,215 | 33,686 | 27,561 | ||||||||||||
| Convertible note payable issued November 16, 2016, due August 16, 2017 (T) | 21,900 | 68,905 | 36,900 | 47,000 | ||||||||||||
| Convertible note payable issued January 31, 2017, due October 31, 2017 (U) | 46,750 | 147,092 | 46,750 | 46,750 | ||||||||||||
| Convertible note payable issued April 5, 2017, due on demand (W) | 29,000 | 65,183 | 29,000 | 43,500 | ||||||||||||
| Convertible note payable issued April 5, 2017, due on demand (X) | 21,500 | 48,326 | 21,500 | 32,250 | ||||||||||||
| Convertible note payable issued June 16, 2017, due on March 16, 2018 (Z) | 37,000 | 116,415 | 37,000 | 37,000 | ||||||||||||
| Convertible note payable issued January 11, 2018 (AA) | 88,000 | 332,683 | 88,000 | 171,204 | ||||||||||||
| Convertible note payable issued December 1, 2017, due on demand (BB) | 50,000 | 122,764 | 50,000 | 33,333 | ||||||||||||
| Convertible note payable issued December 1, 2017, due on demand (CC) | 50,000 | 122,764 | 50,000 | 33,333 | ||||||||||||
| Convertible note payable issued March 5, 2018, due on March 5, 2019 (DD) | 35,000 | 141,195 | 35,000 | 68,915 | ||||||||||||
| Convertible note payable issued April 4, 2018, due on April 4, 2019 (EE) | 37,500 | 153,293 | 37,500 | 72,957 | ||||||||||||
| Convertible note payable issued September 18, 2018, due on September 18, 2019 (FF) | 22,500 | 93,293 | — | — | ||||||||||||
| Convertible note payable issued September 18, 2018, due on September 18, 2019 (GG) | 18,000 | 74,634 | — | — | ||||||||||||
| Totals | $ | 530,836 | $ | 1,871,274 | $ | 505,336 | $ | 653,803 | ||||||||
The above convertible notes contain a variable conversion feature based on the future trading price of the Company common stock. Therefore, the number of shares of common stock issuable upon conversion of the notes is indeterminate. Accordingly, we have recorded the fair value of the embedded conversion features as a derivative liability at the respective issuance dates of the notes and charged the applicable
| 14 |
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
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 November 30, 2018 include (1) stock price of $0.085 per share, (2) exercise prices ranging from $0.0103 to $0.0262 per share, (3) terms ranging from -0- days to 292 days, (4) expected volatility of 756% and (5) risk free interest rates ranging from 2.31% to 2.58%.
Assumptions used for the calculations of the derivative liability of the notes at May 31, 2018 include (1) stock price of $0.0001 per share ($0.40 per share adjusted for the June 20, 2018 1 share for 4,000 shares reverse stock split, (2) exercise prices ranging from $0.00004 to $0.00006 per share ($0.16 to $0.24 per share adjusted for the June 20, 2018 1 share for 4,000 shares reverse stock split, (3) terms ranging from 0 days to 278 days, (4) expected volatility of 527% and (5) risk free interest rates ranging from 1.76% to 2.23%.
NOTE 7 - EQUITY TRANSACTIONS
On October 3, 2016, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock from 500,000,000 to 2,000,000,000 shares and to change the par value of both the common stock and preferred stock from $0.001 per share to $0.0001 per share.
On November 9, 2016, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock from 2,000,000,000 to 10,000,000,000 shares and to amend the voting rights for the Series A Preferred Stock. As amended, each share of Series A Preferred Stock shall have voting rights equal to four times the sum of (a) all shares of Common Stock issued and outstanding at the time of voting; plus (b) the total number of votes of all other classes of preferred stock which are issued and outstanding at the time of voting; divided by (c) the number of shares of Series A Preferred Stock issued and outstanding at the time of voting. The Series A Preferred Stock has no conversion, liquidation, or dividend rights.
During the year ended May 31, 2018, the Company issued an aggregate of 278,818 shares (as adjusted for the June 20, 2018 reverse stock split) of common stock for the conversion of notes payable and interest in the aggregate amount of $54,653.
During the year ended May 31, 2018, the Company issued 29,500 shares (as adjusted for the June 20, 2018 reverse stock split) of common stock for cash in the amount of $500.
On August 16, 2018, the Company entered into a Merger Agreement by and among the Company, and The Marquie Group, Inc., a Utah Corporation (“TMG”), pursuant to with the Company merged with TMG. The Company is the surviving corporation. Each shareholder of TMG received one (1) share of common stock of the Company for every one (1) share of TMG common stock held as of August 16, 2018. In accordance with the terms of the merger agreement, all of the shares of TMG held by TMG shareholders were cancelled, and 40,000,002 shares of common stock of the Company were issued to the TMG shareholders.
TMG was incorporated on August 3, 2018. The merger provides the Company with certain registered trademarks and intellectual property of TMG with respect to health, beauty, and social networking products. The three stockholders of TMG prior to the merger who received the 40,000,002 shares are (1) Marc Angell (CEO of the Company) and Jacquie Angell (20,000,002 shares), (2) The OZ Corporation (holder of $103,250 of Company notes payable at May 31, 2018 and November 30, 2018) (10,000,000 shares), and (3) John Thomas P.C. (Company law firm and holder of $52,073 of Company notes payable at May 31, 2018 and November 30, 2018) (10,000,000 shares). Pursuant to ASC 805-50-30-5 relating to transactions between entities under common control, the intellectual property of TMG (and the issuance of the 40,000,002 shares of common stock) was recorded at $-0-, the historical cost of the property to TMG.
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THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
During the six months ended November 30, 2018, the Company issued an aggregate of 4,300,000 shares of common stock for the conversion of notes payable and accrued interest in the aggregate amount of $32,135. We incurred a loss on the conversion of notes payable and accrued interest of $301,615, which represents the excess of the $333,750 fair value of the 4,300,000 shares at the dates of conversion over the $32,135 amount of debt satisfied.
On October 16, 2018, the Company issued 2,000,000 shares of its common stock to the consulting firm entity discussed in Note 8. The $41,000 estimated fair value of the 2,000,000 shares (based on the
$0.0205 closing price of our common stock on October 16, 2018) has been expensed and included in “Salaries and Consulting Fees” in the three months ended November 30, 2018.
At November 30, 2018, there are no stock options or warrants outstanding.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Service Agreements
On November 5, 2012, the Company executed a General Services Agreement with the Company’s chief executive officer. The agreement provided for monthly compensation of $10,000 and was to remain in full force and effect until either party provided 30 days notice of termination to the other party. Effective May 31, 2015, the chief executive officer agreed to waive payment of the $100,000 accrued consulting fees balance due him at May 31, 2015 in exchange for the Company’s agreement to waive collection of $100,000 of the remaining $115,950 loans receivable balance due from the chief executive officer at May 31, 2015 before this transaction (see Note 2). On May 31, 2015, this agreement was terminated.
On March 1, 2017, the Company executed a Consulting Agreement with the Company’s chief executive officer. The agreement provides for monthly compensation of $10,000 through December 31, 2020. The Company may terminate the agreement at any time without cause. For the six months ended November 30, 2018 and 2017, consulting fees expensed under this Consulting Agreement were $60,000 and $60,000, respectively. At November 30, 2018 and May 31, 2018, accrued consulting fees under this Consulting Agreement were $129,800 and $71,800, respectively.
On November 15, 2012 and June 3, 2013, the Company executed General Services Agreements with two other service providers. The agreements provided for monthly compensation of $1,000 and $500, respectively, and were to remain in full force and effect until either party provided 90 days and 30 days, respectively, notice of termination to the other party. Effective September 1, 2015, these two agreements were replaced by Consulting Agreements to provide for monthly compensation of $5,000 to each of the two service providers. The term of the agreements is from September 1, 2015 to December 31, 2016 and thereafter on a month-to-month basis. The Company may terminate both of these Consulting Agreements at any time without cause. For the six months ended November 30, 2018 and 2017, consulting fees expensed under these 2 Consulting Agreements totaled $60,000 and $60,000, respectively. At November 30, 2018 and May 31, 2018, accrued consulting fees under these 2 Consulting Agreements were $241,050 and $181,850, respectively.
Effective September 1, 2015, the Company entered into a Consulting Agreement with another service provider. The agreement provides for monthly compensation of $1,000 for a term from September 1, 2015 to December 31, 2016 and thereafter on a month-to-month basis. The Company may terminate this Consulting Agreement at any time without cause. For the six months ended November 30, 2018 and 2017, consulting fees expensed under this Consulting Agreement totaled $6,000 and $6,000, respectively. At November 30, 2018 and May 31, 2018, accrued consulting fees under this Consulting Agreement was $39,000 and $33,000, respectively.
| 16 |
THE MARQUIE GROUP, INC.
(formerly Music of Your Life, Inc.)
Notes to the Consolidated Financial Statements
November 30, 2018
(Unaudited)
Corporate Consulting Agreement
On March 14, 2018, the Company executed a Corporate Consulting Agreement (the “Agreement”) with a consulting firm entity (the “Consultant”). The Agreement provided for the Consultant to perform certain investor relations and other services for the Company. The term of the Agreement was 4 months but the Agreement provided that the Company could terminate the Agreement for any reason at any time upon 5 days written prior notice. The Agreement provided for 8 payments of cash fees totaling $240,000 to be paid to the Consultant over 4 months.
On April 1, 2018, the Company notified the Consultant that the Agreement was terminated. A total of $25,000 was paid to the Consultant in March 2018 which was expensed and included in “Salaries and Consulting Fees” in the Consolidated Statement of Operations for the year ended May 31, 2018. No other amounts were accrued at May 31, 2018.
On October 16, 2018 (see Note 7), the Company issued 2,000,000 shares of its common stock to the Consultant. On October 26, 2018, the Consultant advised the Company that it had not been notified that the Agreement was terminated on April 1, 2018 and that the Company is in default of the Agreement.
NOTE 9 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At November 30, 2018, the Company had negative working capital of $3,665,703 and an accumulated deficit of $6,146,924. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
To date the Company has funded its operations through a combination of loans and sales of common stock. The Company anticipates another net loss for the fiscal year ended May 31, 2019 and with the expected cash requirements for the coming year, there is substantial doubt as to the Company’s ability to continue operations.
The Company is attempting to improve these conditions by way of financial assistance through issuances of notes payable and additional equity and by generating revenues through sales of products and services.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 10 - SUBSEQUENT EVENTS
On December, 19, 2018, the Company issued a $200,000 Convertible Promissory Note to a lender for net proceeds of $178,000. The note bears interest at a rate of 10% per annum, is due on December 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, 2019 or (ii) 50% of the lowest Trading Price during the 25 Trading Day period prior to the Conversion Date.
From December 1, 2018 to January 10, 2019, the Company issued a total of 4,860,537 shares of its common stock for the conversion of notes payable and accrued interest in the aggregate amount of approximately $39,000.
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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
We are a multi-media entertainment company that currently produces live radio programming 24 hours a day, syndicated to AM, FM and HD terrestrial radio stations around the country. The network is also heard streaming across the Internet using our registered trademark, iRadio®. Music of Your Life® has been on the air since 1978, making it the longest running syndicated music radio network in the world. 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. General and administrative expenses are comprised of administrative wages and benefits; occupancy and office expenses; outside legal, accounting and other professional fees; travel and other miscellaneous office and administrative expenses. Selling and marketing expenses include selling/marketing wages and benefits, advertising and promotional expenses, as well as travel and other miscellaneous related expenses.
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 November 30, 2018 and 2017.
Revenues. The Company generated net revenues of $598 and $401 during the three months ended November 30, 2018 and 2017, respectively. The Company generated net revenues of $2,973 and $3,237 during the six months ended November 30, 2018 and 2017, respectively. Revenues were generated from spot sales, digital sales and subscription based sales from the live radio programming through radio stations around the country.
Cost of Sales. Our cost of sales were $-0- for the three and six months ended November 30, 2018 and 2017. 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 $104,500 (including stock-based compensation of $41,000) and $64,000 for the three months ended November 30, 2018 and 2017, respectively. Salaries and consulting fees were $167,500 (including stock-based compensation of $41,000) and $137,696 for the six months ended November 30, 2018 and 2017, respectively. We expect that salaries and consulting expenses, that are cash instead of share-based, will increase as we add personnel to build our multi-media entertainment business.
Professional Fees. Professional fees were $37,557 and $30,105 for the three months ended November 30, 2018 and 2017, respectively. Professional fees were $40,195 and $39,369 for the six months ended November 30, 2018 and 2017, 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 $24,671 and $13,722 for the three months ended November 30, 2018 and 2017, respectively. Other selling, general and administrative expenses were $33,038 and $32,146 for the six months ended November 30, 2018 and 2017, respectively. We anticipate that SG&A expenses will increase commensurate with an increase in our operations.
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Other Income (Expenses). The Company had net other expenses of $1,549,121 for the three months ended November 30, 2018 compared to net other expenses of $56,469 for the three months ended November 30, 2017. The Company had net other expenses of $1,611,370 for the six months ended November 30, 2018 compared to net other income of $292,505 for the six months ended November 30, 2017. During the six months ended November 30, 2018 and 2017, the company recorded a gain (loss) on the change in the fair value of the derivative liability in the amount of ($1,176,971) and $399,870, respectively. Other expenses incurred were comprised of interest expenses related to notes payable in the amount of $132,784 and $107,365, which included the amortization of debt discounts of $88,570 and $58,118, during the six months ended November 30, 2018 and 2017, respectively. During the six months ended November 30, 2018, the Company recorded a loss on the conversion of notes payable and accrued interest in the amount of $301,615 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 November 30, 2018, our primary source of liquidity consisted of $5,142 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 November 30, 2018 of $3,665,703 and $6,146,924, respectively, which raises doubt about our ability to continue as a going concern. We generated a net loss for the six months ended November 30, 2018 of $1,849,130. 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, 2018 Form 10-K. While all of these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of
| 19 |
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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Currently we are not aware of any litigation pending or threatened by or against the Company.
Not applicable because we are a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended August 31, 2018 the Company issued an aggregate of 40,000,002 shares of common stock for the merger of The Marquie Group, Inc. See Note 7 in the notes to the financial statements.
During the six months ended November 30, 2018, the Company issued an aggregate of 4,300,000 shares of common stock for the conversion of notes payable and accrued interest in the aggregate amount of $32,135.
On October 16, 2018, the Company issued 2,000,000 shares of its common stock to the consulting firm entity discussed in Note 8 for services.
With respect to the transactions noted above, each of the recipients of securities of the Company was an accredited investor, or is considered by the Company to be a “sophisticated person”, inasmuch as each of them has such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of receiving securities of the Company. No solicitation was made and no underwriting discounts were given or paid in connection with these transactions. The Company believes that the issuance of its securities as described above was exempt from registration with the Securities and Exchange Commission pursuant to Section 4(2) of the Securities Act of 1933.
Item 3. Defaults Upon Senior Securities.
The Company has not paid the principal and interest due on 14 notes payable aggregating $483,336 at November 30, 2018. See Note 4 to the Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
Not Applicable.
None.
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| 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 | |
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.
| Music of Your Life, Inc. | ||
| Date: January 22, 2018 | By: | /s/ Marc Angell |
| Marc Angell | ||
| Chief Executive Officer | ||
| (Duly Authorized Officer and Principal Executive Officer) | ||
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