Marquie Group, Inc. SEC 10-Q Report

The Marquie Group, Inc., an emerging direct-to-consumer firm specializing in marketing, product development, and media, has released its Form 10-Q report for the three months ended August 31, 2024. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces.

Financial Highlights

• Net Revenues: $0. The company generated no net revenues for Broadcasting and Digital Media during the three months ended August 31, 2024, and 2023.
• Loss from Operations: $(60,640). The company reported a loss from operations of $60,640 for the three months ended August 31, 2024, compared to a loss of $77,543 for the same period in 2023.
• Net Income (Loss): $(204,944). The company reported a net loss of $204,944 for the three months ended August 31, 2024, compared to a net income of $353,082 for the same period in 2023.
• Net Income (Loss) Per Common Share: $(0.00). The net loss per common share was $(0.00) for the three months ended August 31, 2024, compared to a net income per common share of $0.00 for the same period in 2023.

Business Highlights

• Business Overview: The Marquie Group, Inc. is an emerging direct-to-consumer firm specializing in marketing, product development, and media, including a dynamic radio and digital network. The company focuses on crafting and promoting top-tier health and beauty solutions showcased through engaging radio content.
• Operating Segments: The company has two operating segments: (1) Broadcast, and (2) Health and Beauty. These segments reflect how the company assesses performance and allocates resources.
• Broadcast Segment: The foundational business includes the ownership and operation of a syndicated radio network. Advertising revenue is generated from spot sales on the network and is impacted by the rates charged for programming and advertising time, the level of airtime sold, and the number of impressions delivered.
• Health and Beauty Segment: This segment includes Whim®, an emerging beauty brand blending Nature, Nutrition, and Science to offer safe and effective products. The brand aims to provide responsible beauty options, with products exclusively made in the USA.
• Revenue Segments: The company did not generate net revenues for Broadcasting and Digital Media during the three months ended August 31, 2024, and 2023. Revenue for Health and Beauty is expected to be included in the upcoming annual 10-K report for the year ending May 31, 2025.
• Cost of Sales: The cost of sales for Broadcasting and Digital Media was $-0- for the three months ended August 31, 2024, and 2023. Future costs will consist of licensing costs, royalties, and operational and staffing costs.
• Salaries and Consulting Expenses: Executive salaries remain unpaid and accruing. Accrued salaries and consulting expenses were $60,000 for the three months ended August 31, 2024, and 2023. These expenses are expected to increase as the company adds personnel to build its health and beauty business.
• Professional Fees: Professional fees were $-0- for the three months ended August 31, 2024, compared to $16,976 for the same period in 2023. These fees mainly relate to audits, reviews, and SEC filings. An increase in professional fees is anticipated as operations scale up.
• Other Selling, General and Administrative Expenses: These expenses were $640 for the three months ended August 31, 2024, compared to $567 for the same period in 2023. An increase in SG&A expenses is expected with the expansion of operations.
• Future Outlook: The company anticipates strong sales growth in the Health and Beauty segment driven by demand for safer beauty solutions. Continued innovation is expected to exceed sales expectations. The company is also attempting to improve financial conditions through additional equity issuances and generating revenues from product sales.

Strategic Initiatives

• Strategic Initiatives: The Marquie Group, Inc. has undertaken several strategic initiatives to improve its financial position and expand its business operations. The company has entered into multiple agreements to secure funding and support its growth. On October 13, 2022, the company entered into a Standby Equity Commitment Agreement with MacRab, LLC, allowing the company to sell up to $5 million of its common stock. Additionally, on May 21, 2024, the company entered into a Note Purchase Agreement with QC for a loan of up to $500,000, issuing a convertible note and a warrant to purchase shares of common stock. The company also acquired a 25% stake in Simply Whim, Inc., a skin care product development company, for $6.2 million, which includes issuing shares and a promissory note. These initiatives are aimed at enhancing the company's product offerings and expanding its market presence in the health and beauty sector.
• Capital Management: The Marquie Group, Inc. has engaged in several capital management activities to address its financial challenges and support its operations. The company has issued convertible notes and promissory notes to raise funds, with various terms and interest rates. As of August 31, 2024, the company had significant notes payable, including those to related parties, amounting to $1,454,633 and $2,082,715, respectively. The company has also issued shares of common stock for consulting and investor relations services, as well as for the conversion of notes payable and accrued interest. During the year ended May 31, 2024, the company issued an aggregate of 2,265,475,967 shares of common stock for the conversion of notes payable and accrued interest, and 185,000,000 shares for consulting and investor relations services. These activities are part of the company's efforts to manage its capital structure and improve liquidity.
• Future Outlook: The Marquie Group, Inc. faces substantial doubt about its ability to continue as a going concern due to significant net losses, negative working capital, and an accumulated deficit. The company plans to address these challenges by securing additional funding through equity issuances and generating revenues from its health and beauty products. The company has entered into a new Standby Equity Financing Agreement with MacRab, LLC, on September 27, 2024, to raise up to $1.25 million. The company is also focused on expanding its health and beauty segment, particularly through its investment in Simply Whim, Inc., and expects strong sales growth driven by demand for safer beauty solutions. The company aims to continue its efforts to improve its financial position and support its strategic initiatives, although it acknowledges the inherent risks and uncertainties associated with its operations.

Challenges and Risks

• Liquidity and Financial Condition: The Marquie Group, Inc. faces several significant challenges and risks that could impact its business operations and financial condition. The company has sustained significant net losses, resulting in negative working capital and an accumulated deficit as of August 31, 2024. This raises substantial doubt about the company's ability to continue as a going concern. The primary sources of liquidity are minimal, with $-0- in cash and cash equivalents, and the company has relied on short and long-term loans and private placements of common stock to finance operations. Without additional revenues, working capital loans, or equity investment, there is substantial doubt about the company's ability to continue operations.
• Market and Competitive Risks: The company’s business is subject to inherent risks associated with small public companies, including the ability to generate sufficient revenues and sales, attract additional capital, and compete with larger companies with greater financial, production, and marketing resources. The company’s capital resources are insufficient for ongoing operations, particularly given the resources necessary to expand its multi-media entertainment business. The lack of additional funds could materially affect the company and may cause it to substantially curtail or even cease operations, potentially resulting in a total loss of investment for shareholders.
• Seasonal Fluctuations: The company’s results are subject to seasonal fluctuations, with second and fourth quarter advertising revenue typically exceeding first and third quarter revenue. This seasonality corresponds with fluctuations in the retail industry, impacting the company’s broadcasting revenue.
• Tax Considerations: The company has incurred losses, and income tax expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards due to uncertainty about utilizing such loss carryforwards in future years. The company anticipates incurring additional losses in the coming year.

SEC Filing: Marquie Group, Inc. [ TMGI ] - 10-Q - Oct. 21, 2024