10-K: Marquie Group Faces Going Concern Doubt Amidst Losses

The Marquie Group reported significant losses and a substantial accumulated deficit, raising doubts about its ability to continue operations, despite strategic shifts into health and beauty.

Summary

• The Marquie Group, Inc. (TMGI) reported a net loss of $959,492 for the fiscal year ended May 31, 2025, significantly higher than the $165,456 loss in the prior year.
• The company has an accumulated deficit of $15,822,978 as of May 31, 2025, and minimal cash reserves of $1,071, leading to substantial doubt about its ability to continue as a going concern.
• TMGI generated no revenues from its Broadcasting segment for the years ended May 31, 2025, and 2024, following the closure of its advertising agency partner, MSH Marketing, in 2023.
• The company is actively raising capital through two S-1 Registrations with separate funding groups, which is expected to result in shareholder dilution.
• TMGI beneficially owns 25% of Simply Whim, a direct-to-consumer skincare and healthy supplements brand, and plans to acquire a controlling interest in the coming fiscal year.
• A settlement and co-existence agreement was reached with Ulta Beauty on May 10, 2024, regarding the 'Whim' trademark, allowing TMGI to expand its Whim product offerings.
• The 'Music of Your Life' radio network, a wholly-owned subsidiary, is the longest-running syndicated music radio network globally, with plans to convert its music catalog to FLAC format for improved audio quality and expand its affiliate network through monthly fee-based services.
• The company has no official employees, with Marc Angell (CEO) being the only non-employee officer/director, and relies on part-time staff and outsourced services.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by significant losses, a large accumulated deficit, and critically low cash, leading to a going concern warning. While strategic initiatives are in place, their impact on profitability is yet to be seen, and reliance on dilutive capital raises is a major concern.

Positives

• Secured a favorable settlement and co-existence agreement with Ulta Beauty regarding the 'Whim' trademark, allowing for expansion of product offerings.
• The 'Music of Your Life' radio network boasts a long-standing legacy (since 1978) and extensive reach, broadcasting to AM, FM, HD stations, and over 90 countries via the internet.
• Strategic initiatives are underway to enhance the radio network, including converting the music catalog to FLAC for superior audio quality and expanding affiliate stations with a new monthly fee-based revenue model.
• Simply Whim, the health and beauty brand, is committed to high-quality, safe, and effective products, adhering to strict global ingredient regulations, and targeting the growing anti-aging and cancer prevention markets.
• The company has a strong intellectual property portfolio, including multiple registered trademarks for both its broadcasting and health/beauty segments.

Negatives

• Reported a significant net loss of $959,492 for the fiscal year ended May 31, 2025, an increase from $165,456 in the prior year.
• Accumulated deficit reached $15,822,978 as of May 31, 2025, indicating a history of substantial losses.
• Current cash and cash equivalents are critically low at $1,071 as of May 31, 2025, raising serious liquidity concerns.
• The company generated no revenues from its Broadcasting segment for the past two fiscal years (2025 and 2024) due to the advertising agency MSH Marketing going out of business.
• Management has concluded that disclosure controls and procedures, as well as internal control over financial reporting, were not effective as of May 31, 2025.
• All salaries for the year ending May 31, 2025, remain unpaid and accruing, including those for the CEO and other related parties.
• The company is reliant on investor support to provide sufficient working capital and anticipates further dilution for current shareholders from ongoing capital raises.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses, accumulated deficit, and insufficient operating capital.
• Reliance on investor support for working capital, with no guarantee of future financing on acceptable terms, could lead to curtailment or cessation of operations.
• Future equity financing will likely be substantially dilutive to current shareholders due to ongoing capital raising efforts through S-1 Registrations.
• The company's shares are classified as 'penny stocks,' making it more difficult for broker-dealers to sell the stock and for purchasers to liquidate their investment.
• The loss of CEO Marc Angell would likely have a material adverse effect on the company, and key-man insurance is not yet secured.
• Increased costs associated with maintaining public company reporting requirements pose a challenge for a company with limited financial resources.
• The company does not subscribe to traditional audience measuring services for most of its radio stations, which could impact advertising sales and competitive positioning.

Future Outlook

The company anticipates another net loss for the fiscal year ending May 31, 2026, and expects salaries and consulting expenses to increase as it builds its health and beauty business. It intends to acquire a controlling interest in Simply Whim in the coming fiscal year. The 'Music of Your Life' network has an ambitious sales forecast, aiming to add affiliated radio stations on a monthly payment schedule for recurring revenue and plans a 50th-anniversary commemorative broadcast and potential television show. The company also plans to enhance monetization capabilities using the Triton Audio Marketplace and launch an advertising campaign for Whim products using the 'Age is Not a Skin Type' trademark.

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."
• "Looking ahead, we have an ambitious sales forecast for the growth of Music of Your Life, positioning it as the definitive listener destination for the Great American Songbook."
• "The focus for 2025 onward is to add affiliated radio stations, increasing the syndication footprint and listeners. Most of these new stations will be on a monthly payment schedule instead on commercial barter which will provide a new recurring revenue stream for the Company."
• "We forecast strong sales growth next year, 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."
• "Our management has concluded that, as of May 31, 2024, our internal control over financial reporting is not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted accounting principles."

Industry Context

The Marquie Group operates in the evolving radio broadcasting and growing health and beauty industries. The radio industry, while facing digital challenges, is seeing modest growth in ad revenues (PwC forecasts 0.9% CAGR for broadcast radio ad sales through 2027) and significant growth in internet radio (10.1% CAGR to $72.76 billion by 2029). The U.S. beauty products market is large ($172 billion in 2022), with the skincare category being a key segment. The dietary supplements market is also expanding rapidly ($50.91 billion in 2022, 5.7% CAGR to 2030), driven by an aging population and focus on preventive healthcare. TMGI's strategy to integrate broadcasting with direct-to-consumer health and beauty products aims to leverage its radio network for advertising, bypassing traditional models, and capitalizing on consumer demand for safer beauty solutions.

Comparison to Industry Standards

• Music of Your Life, with over 400,000 hours of continuous broadcasting since 1978, is considered the longest-running music radio network globally, a unique historical asset compared to competitors like Westwood One and ABC Radio Networks.
• The company's streaming bitrate of 320 kbs and use of FLAC lossless codec for its music catalog aims to offer an 'unbeatable sound quality' and 'much-improved experience which cannot be found on any free streaming service today,' positioning it above many standard streaming services.
• Simply Whim's commitment to adhering to 'strict global ingredient regulations rather than just the FDA's list of banned substances' for its beauty products sets a higher standard compared to many U.S. beauty brands that may use ingredients considered toxic elsewhere.
• The company's reliance on advertising barter arrangements for terrestrial radio stations, while traditional, is being supplemented by a new 'competitively priced, monthly fee-based service' for affiliates, a disruptive approach compared to traditional syndication models.
• The company's current social media following of over 400,000 is noted as significantly smaller compared to 'millions of followers for some of our largest social and search competitors,' indicating a need for substantial growth in digital reach.

Management Changes

Corporate Governance

Legal Proceedings

• The company currently has no litigation pending, threatened, contemplated, or unsatisfied judgments.

Related Party Transactions

• Marc Angell (CEO) holds 200 shares of Series A Preferred Stock, granting him super-voting rights (equal to four times the sum of all common and other preferred shares divided by Series A shares), allowing him to unilaterally determine the election of the Board and other substantive matters.
• Marc and Jacquie Angell (wife of CEO) received 50,000 shares of common stock in the August 16, 2018 merger with The Marquie Group, Inc.
• Accrued consulting fees are due to Marc Angell (CEO) for $20,000 monthly compensation, totaling $728,817 as of May 31, 2024 (forgiven in FY2025, but new accruals for FY2025 are $120,000).
• Accrued consulting fees are due to Jacquie Angell (wife of CEO) for $15,000 monthly compensation, totaling $305,200 as of May 31, 2025 (agreement expired May 31, 2021, but fees accrued).
• Accrued consulting fees are due to the mother of the CEO for $5,000 monthly compensation, totaling $131,350 as of May 31, 2025 (agreement terminated November 30, 2019, but fees accrued).
• A promissory note in the face amount of $2,000,000 was issued to the wife of the Chief Executive Officer as part of the 25% acquisition of Simply Whim, Inc., bearing 12% interest and due on September 20, 2023.
• Notes payable to the Chief Executive Officer total $15,492 as of May 31, 2025, non-interest bearing and due on demand.
• Notes payable to the Company's law firm (owner of 2,500 common shares) total $2,073 as of May 31, 2025, non-interest bearing and due on demand.
• Notes payable to The OZ Corporation (owner of 2,500 common shares) total $69,250 as of May 31, 2025, non-interest bearing and due on demand.

Stakeholder Impact

• **Shareholders**: Face significant dilution from ongoing capital raises and the risk of losing their entire investment due to the company's going concern issues and penny stock classification. The low market value and lack of dividends offer no immediate returns.
• **Employees/Consultants**: Salaries for the CEO and other consultants remain unpaid and accruing, indicating financial strain on individuals providing services to the company.
• **Customers (Simply Whim)**: May benefit from the company's commitment to high-quality, safe beauty products and expanded offerings following the Ulta Beauty settlement.
• **Listeners (Music of Your Life)**: Could experience improved audio quality with the FLAC conversion and expanded programming, but the company's financial instability could jeopardize long-term service continuity.
• **Creditors**: Face uncertainty regarding repayment of notes payable, especially those in default, given the company's severe liquidity issues and going concern warning.
• **Regulatory Bodies**: The company's ineffective internal controls and lack of insider trading policies may draw increased scrutiny.

Next Steps

• Acquire a controlling interest in Simply Whim in the coming fiscal year.
• Add affiliated radio stations to the 'Music of Your Life' network, implementing a monthly fee-based service for recurring revenue.
• Convert the entire 'Music of Your Life' music catalog from original source material to the FLAC lossless format.
• Syndicate the 'Street Talk' feature as a pay-to-play program for affiliates.
• Enhance monetization capabilities by utilizing the Triton Audio Marketplace.
• Expand audience reach through various social media platforms, including adding TikTok in the near future.
• Launch an advertising campaign for Whim products using the trademark 'Age is Not a Skin Type'.
• Hire additional support staff and personnel when adequate capital becomes available.
• Obtain key-man insurance for CEO Marc Angell if affordable coverage can be obtained.

Key Dates

Recommendation

The Marquie Group presents an extremely high-risk investment. The company reported a substantial net loss of nearly $1 million for FY2025, an accumulated deficit exceeding $15.8 million, and critically low cash reserves of just $1,071. Both management and auditors have expressed 'substantial doubt' about its ability to continue as a going concern. The primary Broadcasting segment generated no revenue for two consecutive years, and while the Health and Beauty segment shows promise, it has yet to contribute to revenue. The company's reliance on highly dilutive equity financing, coupled with its penny stock status, makes it difficult for investors to liquidate holdings without significant losses. Furthermore, ineffective internal controls and a lack of independent board oversight raise serious governance concerns. For a seasoned investor, these factors collectively point to an unsustainable financial position and a 'strong sell' recommendation.

Keywords

The Marquie Group, TMGI, Music of Your Life, Simply Whim, Health and Beauty, Radio Network, SEC Filing, 10-K, Financial Reporting, Going Concern, Dilution, Skincare, Dietary Supplements, Broadcasting, OTC Markets