10-K/A: Marquie Group Amends 10-K, Reveals Going Concern Doubts

The Marquie Group, Inc. filed an amended annual report to correct a minor revenue omission, while auditors continue to express substantial doubt about the company's ability to continue as a going concern amidst significant losses and capital shortfalls.

Summary

• The filing is an amendment (10-K/A) to the Annual Report for the fiscal year ended May 31, 2025, correcting an omission of approximately $11,040 in revenue, which is stated to have no material impact on overall financial results.
• The company reported a net loss of $(948,452) for the year ended May 31, 2025, a significant increase from $(165,456) in the prior year.
• The accumulated deficit reached $(15,811,938) as of May 31, 2025, with cash and cash equivalents at a critically low $1,071.
• Auditors have expressed substantial doubt about the company's ability to continue as a going concern due to recurring losses, the accumulated deficit, and a substantial shortfall in operating capital.
• Disclosure controls and procedures, as well as internal control over financial reporting, were deemed not effective as of May 31, 2025.
• The company is reliant on investor support and is raising capital through two active S-1 Registrations, anticipating future dilution for shareholders.
• Salaries and consulting fees for the CEO and other related parties remain largely unpaid and accruing for the year ended May 31, 2025, though $1,154,017 in accrued consulting fees were forgiven by shareholders in 2025.
• Many notes payable are in default, including a $2,000,000 note to the CEO's wife related to the Simply Whim acquisition.
• The company owns 100% of Music of Your Life, Inc. (a syndicated radio network) and 25% of Simply Whim, Inc. (a health and beauty brand), with intentions to acquire a controlling interest in Simply Whim.
• Marc Angell, the CEO, holds super-voting Series A Preferred Stock, giving him unilateral control over key corporate matters.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by a growing net loss, substantial accumulated deficit, critically low cash, and negative working capital. The 'going concern' doubt, ineffective internal controls, and numerous defaulted debts indicate significant operational and financial instability. While there are strategic plans and some positive developments like the Ulta Beauty settlement, the fundamental financial health is extremely poor, and reliance on dilutive capital raises is a major concern.

Positives

• Successfully settled a co-existence agreement with Ulta Beauty on May 10, 2024, regarding the 'Whim' trademark, allowing the company to expand its product offerings under the brand.
• The Music of Your Life network is expanding its audience reach through social media platforms and plans to add new affiliated radio stations on a monthly payment schedule, creating a new recurring revenue stream.
• The company is actively pursuing capital raises through two S-1 Registrations to fund operations and growth initiatives.
• Music of Your Life is undertaking an effort to convert its entire music catalogue to the FLAC lossless format, aiming to offer a much-improved audio experience.
• The company has a strong intellectual property portfolio, including multiple registered trademarks for both its broadcast and health & beauty segments.

Negatives

• Reported a significant net loss of $(948,452) for the year ended May 31, 2025, a substantial increase from $(165,456) in the prior year.
• Accumulated deficit has grown to $(15,811,938), and the company has negative working capital of $5,750,188, raising substantial doubt about its ability to continue as a going concern.
• Cash and cash equivalents are critically low at $1,071 as of May 31, 2025.
• Disclosure controls and procedures and internal control over financial reporting were deemed ineffective, indicating significant weaknesses in financial oversight.
• All salaries for the year ended May 31, 2025, remain unpaid and accruing, highlighting severe liquidity issues.
• Many notes payable are in default, and the derivative liability significantly increased from $206,113 in 2024 to $625,824 in 2025.
• The company's shares are classified as 'penny stocks,' which makes it more difficult for broker-dealers to sell and for purchasers to liquidate their investment.
• No formal audit, compensation, or nominating committees exist, and there is no audit committee financial expert.
• The company does not maintain insider trading policies and procedures.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses, an accumulated deficit of $15,811,938, and a significant shortfall in operating capital.
• The company is highly reliant on investor support and additional capital raises, which are not guaranteed and will likely be substantially dilutive to current shareholders.
• The classification of the company's shares as 'penny stocks' may reduce trading activity and make it difficult for stockholders to sell their securities.
• Ineffective disclosure controls and procedures and internal control over financial reporting pose risks of financial misstatement and lack of oversight.
• The company's business model is subject to inherent risks associated with small public companies, including the ability to generate sufficient revenue, attract capital, compete effectively, and manage public company reporting costs.
• The loss of CEO Marc Angell would likely have a material adverse effect on the company, and key-man insurance is not guaranteed to be affordable or obtainable.
• Many notes payable are in default, indicating potential legal and financial challenges from creditors.
• The company does not subscribe to traditional audience measuring services for most of its radio stations, which could impact its ability to attract and justify advertising rates to clients.

Future Outlook

The company anticipates another net loss for the fiscal year ended May 31, 2026, and expects to require considerable amounts of financing to make significant advancements in its business strategy. It plans to acquire a controlling interest in Simply Whim in the coming fiscal year and will continue to raise capital through active S-1 Registrations, which will likely result in substantial dilution for current shareholders. The Music of Your Life network aims to add affiliated radio stations on a monthly payment schedule to generate new recurring revenue and will continue converting its music catalogue to FLAC for improved listener experience. Simply Whim plans to expand its cancer care products and launch an advertising campaign around 'Age is Not a Skin Type'.

Management Comments

• Our company remains reliant on investor support to provide sufficient working capital until we can independently generate enough revenue to maintain operations independently.
• Shareholders should anticipate dilution in the coming months as we draw down on these equity lines.
• Without these or similar investment vehicles, our Company would face serious challenges meeting its objectives.
• Our commitment to offering products that utilize safe and effective ingredients to promote whole-body health, with a particular focus on anti-aging and cancer prevention, remains steadfast.
• The focus for 2025 onward is to add affiliated radio stations, increasing the syndication footprint and listeners.
• We forecast strong sales growth next year [for Health and Beauty], driven by demand for safer beauty solutions, and plan to exceed these expectations with continued innovation.
• We intend to acquire a controlling interest in Simply Whim in the coming fiscal year, which will be reflected in future balance sheet calculations.
• The loss of our CEO Marc Angell would likely have a material adverse effect on the Company. We intend to reduce this risk by obtaining key-man insurance if affordable insurance coverage may be obtained.

Industry Context

The company operates in the evolving radio broadcasting and direct-to-consumer health and beauty sectors. The radio industry, while facing challenges from digital streaming, is seeing modest growth in ad revenues, with internet radio showing a strong CAGR of 10.1%. The U.S. beauty products market is large ($172 billion in 2022), and the dietary supplements market is also growing (5.7% CAGR). The company's strategy to integrate its radio network for advertising its health and beauty products aligns with direct-to-consumer trends and leverages its existing media assets. Its focus on 'safer beauty solutions' and adherence to global ingredient standards positions it within a growing niche responding to increased consumer awareness of product safety, contrasting with the perceived lag in U.S. regulations.

Comparison to Industry Standards

• The company's financial performance, with a net loss of $(948,452) and an accumulated deficit of $(15,811,938), is significantly below industry standards for profitable, growing companies in both broadcasting and consumer goods.
• Its cash reserves of $1,071 and negative working capital of $5,750,188 are indicative of severe financial distress, far below liquidity benchmarks for healthy public companies.
• The reliance on related-party loans and the default status of numerous notes payable suggest a lack of access to conventional financing, unlike well-capitalized industry peers.
• The ineffectiveness of disclosure controls and internal control over financial reporting falls short of best practices for corporate governance and financial transparency, especially when compared to larger, more established public companies like Ulta Beauty (NASDAQ: ULTA) with whom they have a trademark agreement.
• The 'penny stock' classification and associated trading difficulties contrast sharply with the liquidity and investor interest enjoyed by companies listed on major exchanges.
• While the company's Music of Your Life network boasts a long history and unique content, its current revenue generation of $11,040 is negligible compared to the multi-billion dollar radio and music streaming markets reported by BIA Advisory Services and PwC.
• Simply Whim's entry into the beauty and dietary supplements market faces intense competition from established multinational brands and well-funded niche players, making its projected sales growth challenging to achieve without substantial capital.

Corporate Governance

Related Party Transactions

• Marc Angell (CEO) and Jacquie Angell (spouse of CEO) received 50,000 shares of common stock in the August 16, 2018 merger with The Marquie Group, Inc.
• Marc Angell holds 200 shares of Series A Preferred Stock, giving him super-voting rights (80% of total voting power as of May 31, 2023) and unilateral control over key corporate matters.
• Accrued consulting fees due to Marc Angell (CEO), his wife, and his mother, totaling $351,700 as of May 31, 2025, with $1,154,017 in accrued consulting fees forgiven by shareholders in FY2025.
• A $2,000,000 promissory note payable to the wife of the Chief Executive Officer, part of the Simply Whim acquisition, bearing 12% interest and due September 20, 2023 (now in default).
• Notes payable to the Company's law firm ($2,073) and The OZ Corporation ($69,250), both of which own common stock and are considered related parties.
• Notes payable to the Chief Executive Officer ($15,492).

Stakeholder Impact

• Shareholders face significant dilution from ongoing capital raises, risk of substantial loss of investment due to going concern doubts, and reduced liquidity due to penny stock classification. The super-voting rights of the CEO's preferred stock limit common shareholders' influence.
• Employees/Consultants: Salaries for the year ended May 31, 2025, remain unpaid, indicating financial instability and potential impact on morale and retention.
• Creditors: Many notes payable are in default, increasing credit risk and potential for legal action. The $2,000,000 note to the CEO's wife is also in default.
• Customers (Music of Your Life): Potential for improved audio quality with FLAC conversion and expanded programming, but the company's financial instability could impact long-term service reliability.
• Customers (Simply Whim): Benefit from a focus on high-quality, safe products, but the company's financial health could affect product availability or customer service.
• Regulatory Bodies: Ineffective internal controls and lack of insider trading policies could lead to increased scrutiny.

Next Steps

• Acquire a controlling interest in Simply Whim in the coming fiscal year.
• Continue raising capital through two active S-1 Registrations.
• Expand the Music of Your Life affiliate network by implementing a competitively priced, monthly fee-based service for terrestrial radio stations.
• Convert the entire Music of Your Life catalogue from original source material to the FLAC format.
• Launch an advertising campaign for Simply Whim using the trademark 'Age is Not a Skin Type'.
• Fill identified executive and board positions and hire additional support staff when adequate capital is available.
• Obtain key-man insurance for CEO Marc Angell if affordable.
• Syndicate the 'Street Talk' feature for an additional revenue stream.
• Prepare for the 50th anniversary of Music of Your Life with a commemorative broadcast and possibly a television show.

Key Dates

Recommendation

The company exhibits severe financial distress, including a substantial net loss, a rapidly growing accumulated deficit, critically low cash reserves, and negative working capital, leading to explicit 'going concern' doubts from auditors. The ineffectiveness of internal controls and disclosure procedures indicates significant governance and operational risks. Furthermore, the company's reliance on highly dilutive equity financing, numerous defaulted debts, and the 'penny stock' classification severely undermine investor confidence and liquidity. The concentration of control with the CEO through super-voting shares, coupled with significant related-party transactions and unpaid management salaries, points to a high-risk investment profile with little prospect for near-term recovery or shareholder value creation.

Keywords

SEC Filing, 10-K/A, The Marquie Group, TMGI, Music of Your Life, Simply Whim, Financial Report, Going Concern, Net Loss, Accumulated Deficit, Capital Raise, Dilution, Radio Network, Health and Beauty, Skincare, Dietary Supplements, Penny Stock, Corporate Governance, Internal Controls, Related Party Transactions, Trademarks, Broadcast Advertising, Digital Media