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, Inc. ("TMGI), is a direct-to-consumer sales and marketing
company with an exclusive pipeline of innovative health and beauty products. The
Company markets these products through its wholly owned subsidiary Music of Your
Life, a syndicated radio network heard nationwide on AM, FM and HD terrestrial
radio stations, and simulcast over the internet. This is made possible by 30 and
60 second commercials airing every hour which are targeted toward the Music of
Your Life listening audience. Broadcasting more than 40 years, Music of Your
Life is the longest running music radio format in syndication.
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 radio network, product development
and product marketing costs. General and administrative expenses are comprised
of administrative wages; office expenses; outside legal, accounting, and other
professional fees; travel and other miscellaneous office and administrative
expenses. Selling and marketing expenses include selling/marketing wages and
benefits, advertising and promotional expenses, as well as travel and other
miscellaneous related expenses.
Because we have incurred losses, income tax expenses are immaterial. No tax
benefits have been booked related to operating loss carryforwards, given our
uncertainty of being able to utilize such loss carryforwards in future years. We
anticipate incurring additional losses during the coming year.
RESULTS OF OPERATION
Following is management's discussion of the relevant items affecting results of
operations for the three months ended August 31, 2021 and 2020.
Revenues. The Company generated no net revenues during the three months ended
August 31, 2021 compared to $60 during the three months ended August 31, 2020.
Revenues were generated from spot sales on our syndicated radio network.
Cost of Sales. Our cost of sales were $-0- for the three months ended August 31,
2021 and 2020. 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. Accrued salaries and consulting fees were $30,000
and $76,000 for the three months ended August 31, 2021 and 2020, 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 $-0- and $19,239 for the three months
ended August 31, 2021 and 2020, respectively. Professional fees consist mainly
of the fees related to the audits and reviews of the Company's financial
statements as well as the filings with the Securities and Exchange Commission.
We did not incur any professional fees during the quarter ended August 31, 2021.
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 $4,161 and $7,989 for the three months ended August
31, 2021 and 2020, respectively. We anticipate that SG&A expenses will increase
commensurate with an increase in our operations.
22
Table of Contents
Other Income (Expenses).The Company had net other expenses of $2,968,187 for the
three months ended August 31, 2021 compared to net other expenses of $2,274,350
for the three months ended August 31, 2020. During the three months ended August
31, 2021 and 2020, the company recorded expense on the change in the fair value
of the derivative liability in the amount of $1,271,434 and $1,582,005,
respectively. During the three months ended August 31, 2021 and 2020, other
expenses incurred were also comprised of interest expenses related to notes
payable in the amount of $243,261 and $156,782, which included the amortization
of debt discounts of $100,374 and $14,745, respectively. During the three months
ended August 31, 2021 and 2020, the Company recorded a loss on the conversion of
notes payable and accrued interest in the amount of $1,453,492 and $535,563,
respectively, based on difference between the fair market value of the stock at
issuance and the amount of notes payable and accrued interest converted.
LIQUIDITY AND CAPITAL RESOURCES
As of August 31, 2021, our primary source of liquidity consisted of $-0- in cash
and cash equivalents. We hold our cash reserves in a major United States bank.
Since inception, we have financed our operations through a combination of short
and long-term loans, and through the private placement of our common stock.
We have sustained significant net losses which have resulted in negative working
capital and an accumulated deficit at August 31, 2021 of $6,279,358 and
$14,764,585, respectively, which raises doubt about our ability to continue as a
going concern. We generated a net loss for the three months ended August 31,
2021 of $3,002,348. 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, 2021 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.
23
Table of Contents
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).
© Edgar Online, source Glimpses