ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is listed
on the OTCQB under the symbol “MYLI”. We had approximately 2,251 registered holders of our common stock as of May 31,
2017. Registered holders do not include those stockholders whose stock has been issued in street name. The last reported price
for our common stock on September 7, 2017 was $0.0001 per share.
The following table reflects
the high and low closing sales prices per share of our common stock during each calendar quarter as reported on the OTCQB, during
the two fiscal years ended May 31:
|
|
Price Range(1)
|
|
|
High
|
|
Low
|
Fiscal May 31, 2017
|
|
|
|
|
|
|
|
|
Fourth quarter
|
|
$
|
0.0003
|
|
|
$
|
0.0001
|
|
Third quarter
|
|
$
|
0.0003
|
|
|
$
|
0.0002
|
|
Second quarter
|
|
$
|
0.0013
|
|
|
$
|
0.0003
|
|
First quarter
|
|
$
|
0.013
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Fiscal May 31, 2016
|
|
|
|
|
|
|
|
|
Fourth quarter
|
|
$
|
0.02
|
|
|
$
|
0.002
|
|
Third quarter
|
|
$
|
0.07
|
|
|
$
|
0.009
|
|
Second quarter
|
|
$
|
0.10
|
|
|
$
|
0.131
|
|
First quarter
|
|
$
|
0.065
|
|
|
$
|
0.02
|
|
____________________
|
(1)
|
The above quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission
and may not necessarily represent actual transactions.
|
Dividends and Distributions
We have not paid any cash
dividends on our common stock since inception and do not anticipate paying cash dividends in the foreseeable future. We expect
that that any future earnings will be retained for use in developing and/or expanding our business.
Sales of Unregistered Securities
On August 18, 2015, the
Company issued an aggregate of 2,000,000 shares of unregistered common stock to certain accredited investors in exchange for cash
in the aggregate amount of $50,000.
On August 18, 2015, the
Company issued 1,000,000 shares of its common stock to certain consulting personnel for services provided.
On November 4, 2015, the
Company issued 500,000 shares of unregistered common stock to an accredited investor in consideration of interest accrued in respect
of a $25,000 loan to the Company.
On January 11, 2016, the
Company issued 1,000,000 shares of unregistered common stock to an accredited investor in consideration of the investor making
a $25,000 loan to the Company.
On February 25, 2016 the
Company converted into 2,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on July 20, 2015.
On March 8, 2016 the Company
converted into 500,000 shares of common stock, a portion of that certain convertible promissory note originally issued by the Company
on July 20, 2015.
On April 14, 2016, the
Company issued 1,000,000 shares of unregistered common stock to an accredited investor in consideration of interest and penalties
accrued in respect of a $25,000 loan to the Company.
On May 5, 2016, the Company
sold 18,400,000 shares of unregistered common stock to an accredited investor for a purchase price of $100,000.
On May 9, 2016, the Company
converted into 4,722,173 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On May 26, 2016, the Company
converted into 5,442,760 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On June 10, 2016, the Company
converted into 5,713,863 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On June 14, 2016, the Company
converted into 5,714,446 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On June 15, 2016 the Company
issued converted into 9,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on July 31, 2015.
On June 17, 2016, the Company
issued an aggregate of 10,000,000 shares to two consultants of the Company pursuant to the Company’s 2016 Equity Incentive
Plan.
On June 20, 2016, the Company
converted into 5,714,413 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On June 22, 2016, the Company
converted into 6,284,750 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On June 23, 2016, the Company
converted into 6,284,767 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On June 27, 2016, the Company
converted into 6,283,659 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On June 30, 2016, the Company
converted into 8,458,790 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On July 6, 2016, the Company
converted into 8,458,091 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On July 12, 2016, the Company
converted into 8,400,000 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On July 14, 2016, the Company
converted into 8,450,000 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On July 15, 2016, the Company
converted into 8,438,636 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On July 19, 2016, the Company
converted into 7,272,727 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on September 25, 2015.
On August 9, 2016, the
Company issued an aggregate of 10,000,000 shares to two consultants of the Company pursuant to the Company’s 2016 Equity
Incentive Plan.
On August 24, 2016, the
Company converted into 11,328,671 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on September 25, 2015.
On August 29, 2016, the Company converted into
11,426,720 shares of common stock, a portion of that certain convertible promissory note originally issued by the Company on September
25, 2015.
On September 2, 2016, the
Company converted into 11,426,720 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on September 25, 2015.
On September 9, 2016, the
Company converted into 13,288,300 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on September 25, 2015.
On March 2, 2017, the Company
converted into 14,674,363 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on March 17, 2016.
On March 7, 2017, the Company
converted into 83,531,205 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on December 22, 2015.
On March 20, 2017, the
Company converted into 500,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on August 15, 2014.
On March 24, 2017, the
Company converted into 107,159,459 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on December 22, 2015.
On March 27, 2017, the
Company converted into 54,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on December 22, 2015.
On April 5, 2017, the Company
converted into 100,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on July 31, 2015.
On April 5, 2017, the Company
converted into 100,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on June 23, 2015.
On April 25, 2017, the
Company converted into 62,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on June 17, 2016.
On April 26, 2017, the
Company converted into 111,274,646 shares of common stock, a portion of that certain convertible promissory note originally issued
by the Company on December 22, 2015.
On May 3, 2017, the Company
converted into 100,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on August 15, 2014.
On May 12, 2017, the Company
converted into 62,000,000 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on June 17, 2016.
On May 23, 2017, the Company
converted into 88,750,000 shares of common stock, a portion of that certain convertible promissory note originally issued by the
Company on June 17, 2016.
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.
Penny Stock Rules
The SEC has also adopted
rules that regulate broker-dealer practices in connection with transactions in “penny stocks” as such term is defined
by Rule 15g-9. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the NASDAQ system provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system).
Our shares constitute penny
stocks under the Exchange Act. The shares may remain penny stocks for the foreseeable future. The classification of our shares
as penny stocks makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult
for a purchaser to liquidate his or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or
her shares in MYL will be subject to the penny stock rules.
The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure
document approved by the SEC, which: (i) contains a description of the nature and level of risk in the market for penny stocks
in both public offerings and secondary trading; (ii) contains a description of the broker’s or dealer’s duties to the
customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements
of the Securities Act; (iii) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for
penny stocks and significance of the spread between the bid and ask price; (iv) contains a toll-free telephone number for inquiries
on disciplinary actions; (v) defines significant terms in the disclosure document or in the conduct of trading in penny stocks;
and (vi) contains such other information and is in such form as the SEC shall require by rule or regulation. The broker-dealer
also must provide to the customer, prior to effecting any transaction in a penny stock, (i) bid and offer quotations for the penny
stock; (ii) the compensation of the broker-dealer and its salesperson in the transaction; (iii) the number of shares to which such
bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
(iv) monthly account statements showing the market value of each penny stock held in the customer’s account.
In addition, the penny
stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must
make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s
written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks,
and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing
the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders
may have difficulty selling those securities.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONTENTS
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
18
|
|
|
|
Consolidated Balance Sheets
|
|
19
|
|
|
|
Consolidated Statements of Operations
|
|
20
|
|
|
|
Consolidated Statements of Stockholders’ Deficit
|
|
21
|
|
|
|
Consolidated Statements of Cash Flows
|
|
22
|
|
|
|
Notes to the Consolidated Financial Statements
|
|
23
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Music of Your Life, Inc.
I have audited the accompanying consolidated balance sheets of Music
of Your Life, Inc. (the “Company”) as of May 31, 2017 and 2016 and the related consolidated statements of operations,
stockholders’ deficit, and cash flows for the years then ended. These financial statements are the responsibility of the
Company’s management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Music of Your Life, Inc. as of May 31, 2017 and2016 and
the consolidated results of their operations and cash flows for the yearsthen ended in conformity with accounting principles generally
accepted in the United States.
The accompanying financial statements referred to above have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the financial statements, the Company’s
present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans
in regard to this matter are also described in Note 12. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Michael T. Studer CPA P.C.
Michael T. Studer CPA P.C.
Freeport, New York
September 13, 2017
MUSIC OF YOUR LIFE, INC.
|
Consolidated Balance Sheets
|
|
ASSETS
|
|
|
May 31,
|
|
May 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
10,113
|
|
|
$
|
24,213
|
|
Loans receivable from related party
|
|
|
15,950
|
|
|
|
15,950
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
26,063
|
|
|
|
40,163
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits for acquisition of intangible assets (less allowance for
|
|
|
|
|
|
|
|
|
impairment of $243,000 and $243,000, respectively)
|
|
|
—
|
|
|
|
—
|
|
Music inventory
|
|
|
13,862
|
|
|
|
8,019
|
|
Trademark
|
|
|
7,340
|
|
|
|
5,290
|
|
|
|
|
|
|
|
|
|
|
Total Other Assets
|
|
|
21,202
|
|
|
|
13,309
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
47,265
|
|
|
$
|
53,472
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
12,292
|
|
|
$
|
8,970
|
|
Accrued interest payable on notes payable
|
|
|
59,489
|
|
|
|
91,804
|
|
Accrued consulting fees
|
|
|
171,550
|
|
|
|
61,800
|
|
Notes payable
|
|
|
733,562
|
|
|
|
466,096
|
|
Notes payable to related parties
|
|
|
12,261
|
|
|
|
4,761
|
|
Derivative liability
|
|
|
662,091
|
|
|
|
270,298
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
1,651,245
|
|
|
|
903,729
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
1,651,245
|
|
|
|
903,729
|
|
|
|
|
|
|
|
|
|
|
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, 2,409,170,431 and 124,211,492 shares issued
|
|
|
|
|
|
|
|
|
and outstanding, respectively
|
|
|
240,917
|
|
|
|
12,421
|
|
Common stock payable - 300,000 shares
|
|
|
8,460
|
|
|
|
8,460
|
|
Additional paid-in-capital
|
|
|
1,818,773
|
|
|
|
1,504,599
|
|
Accumulated deficit
|
|
|
(3,672,130
|
)
|
|
|
(2,375,737
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Deficit
|
|
|
(1,603,980
|
)
|
|
|
(850,257
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$
|
47,265
|
|
|
$
|
53,472
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
|
MUSIC OF YOUR LIFE, INC.
|
Consolidated Statements of Operations
|
|
|
|
For the Year Ended
|
|
|
May 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
NET REVENUES
|
|
$
|
4,252
|
|
|
$
|
4,616
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Consulting fees (including stock-based compensation
|
|
|
|
|
|
|
|
|
of $96,900 and $33,000, respectively)
|
|
|
325,750
|
|
|
|
202,500
|
|
Professional fees
|
|
|
164,174
|
|
|
|
107,011
|
|
Selling, general and administrative
|
|
|
178,715
|
|
|
|
172,039
|
|
Provision for impairment of intangible assets
|
|
|
—
|
|
|
|
243,000
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
668,639
|
|
|
|
724,550
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(664,387
|
)
|
|
|
(719,934
|
)
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (expense) from derivative liability
|
|
|
(168,307
|
)
|
|
|
(95,048
|
)
|
Interest expense (including amortization of debt discounts
|
|
|
|
|
|
|
|
|
of $403,610 and $222,197 respectively)
|
|
|
(463,699
|
)
|
|
|
(365,181
|
)
|
Promissory Note issued to entity for services relating to
|
|
|
|
|
|
|
|
|
Equity Financing Agreement
|
|
|
—
|
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
|
Total Other Income (Expenses)
|
|
|
(632,006
|
)
|
|
|
(510,229
|
)
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES
|
|
|
(1,296,393
|
)
|
|
|
(1,230,163
|
)
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(1,296,393
|
)
|
|
$
|
(1,230,163
|
)
|
|
|
|
|
|
|
|
|
|
BASIC AND DILUTED:
|
|
|
|
|
|
|
|
|
Net loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
842,677,919
|
|
|
|
95,028,464
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
|
MUSIC OF YOUR LIFE, INC.
|
Consolidated Statements of Stockholders' Deficit
|
For the Period from June 1, 2015 to May 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Common Stock
|
|
Additional
|
|
Accumulated
|
|
Stockholders'
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Payable
|
|
Paid-in Capital
|
|
Deficit
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 1, 2015
|
|
|
—
|
|
|
|
—
|
|
|
|
83,446,559
|
|
|
|
8,345
|
|
|
|
—
|
|
|
|
973,339
|
|
|
|
(1,145,574
|
)
|
|
|
(163,890
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued as part of Promissory Note loans
|
|
|
—
|
|
|
|
—
|
|
|
|
7,700,000
|
|
|
|
770
|
|
|
|
—
|
|
|
|
116,406
|
|
|
|
—
|
|
|
|
117,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for services
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
—
|
|
|
|
32,900
|
|
|
|
—
|
|
|
|
33,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock to be issued for late fees on promissory notes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,460
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for late fees on promissory notes
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
(25,000
|
)
|
|
|
24,900
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
10,164,933
|
|
|
|
1,016
|
|
|
|
—
|
|
|
|
11,544
|
|
|
|
—
|
|
|
|
12,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
|
|
—
|
|
|
|
—
|
|
|
|
20,900,000
|
|
|
|
2,090
|
|
|
|
—
|
|
|
|
110,510
|
|
|
|
—
|
|
|
|
112,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt ($150,000) and accrued interest ($75,000) satisfied from December 2015 foreclosure of property securing February 2013 Promissory Note
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
225,000
|
|
|
|
—
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares issued for services
|
|
|
200
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2016
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,230,163
|
)
|
|
|
(1,230,163
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2016
|
|
|
200
|
|
|
|
—
|
|
|
|
124,211,492
|
|
|
|
12,421
|
|
|
|
8,460
|
|
|
|
1,504,599
|
|
|
|
(2,375,737
|
)
|
|
|
(850,257
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
1,671,958,939
|
|
|
|
167,196
|
|
|
|
—
|
|
|
|
93,195
|
|
|
|
—
|
|
|
|
260,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for services
|
|
|
—
|
|
|
|
—
|
|
|
|
113,000,000
|
|
|
|
11,300
|
|
|
|
—
|
|
|
|
85,600
|
|
|
|
—
|
|
|
|
96,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000,000
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
(10,000
|
)
|
|
|
—
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature of convertible notes issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
145,379
|
|
|
|
—
|
|
|
|
145,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,296,393
|
)
|
|
|
(1,296,393
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, May 31, 2017
|
|
|
200
|
|
|
$
|
—
|
|
|
|
2,409,170,431
|
|
|
$
|
240,917
|
|
|
$
|
8,460
|
|
|
$
|
1,818,773
|
|
|
$
|
(3,672,130
|
)
|
|
$
|
(1,603,980
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
|
MUSIC OF YOUR LIFE, INC.
|
Consolidated Statements of Cash Flows
|
|
|
|
For the Years Ended
|
|
|
May 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,296,393
|
)
|
|
$
|
(1,230,163
|
)
|
Adjustments to reconcile net loss to net
|
|
|
|
|
|
|
|
|
cash used by operating activities:
|
|
|
|
|
|
|
|
|
Provision for impairment of intangible assets
|
|
|
—
|
|
|
|
243,000
|
|
Preferred stock issued for services
|
|
|
—
|
|
|
|
10,000
|
|
Common stock payable for late fees
|
|
|
—
|
|
|
|
33,460
|
|
Common stock issued for services
|
|
|
96,900
|
|
|
|
33,000
|
|
Promissory Note issued to entity for services relating to
|
|
|
|
|
|
|
|
|
Equity Financing Agreement
|
|
|
—
|
|
|
|
50,000
|
|
Expense (income) from derivative liability
|
|
|
168,307
|
|
|
|
95,048
|
|
Amortization of debt discounts
|
|
|
403,610
|
|
|
|
222,197
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Music inventory
|
|
|
(5,843
|
)
|
|
|
(3,874
|
)
|
Accounts payable
|
|
|
17,280
|
|
|
|
(2,954
|
)
|
Accrued interest payable on notes payable
|
|
|
60,089
|
|
|
|
80,275
|
|
Accrued consulting fees
|
|
|
109,750
|
|
|
|
61,500
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Operating Activities
|
|
|
(446,300
|
)
|
|
|
(408,511
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits for acquisition of intangible assets
|
|
|
—
|
|
|
|
(59,000
|
)
|
Trademark
|
|
|
(2,050
|
)
|
|
|
(1,075
|
)
|
|
|
|
|
|
|
|
|
|
Net Cash Used by Investing Activities
|
|
|
(2,050
|
)
|
|
|
(60,075
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock
|
|
|
40,000
|
|
|
|
112,600
|
|
Proceeds from notes payable
|
|
|
414,250
|
|
|
|
447,750
|
|
Proceeds from notes payable to related parties
|
|
|
7,500
|
|
|
|
—
|
|
Payments on notes payable
|
|
|
(27,500
|
)
|
|
|
(82,500
|
)
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
|
434,250
|
|
|
|
477,850
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(14,100
|
)
|
|
|
9,264
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
24,213
|
|
|
|
14,949
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
|
10,113
|
|
|
$
|
24,213
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments For:
|
|
|
|
|
|
|
|
|
Interest
|
|
|
—
|
|
|
$
|
29,250
|
|
Income taxes
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Initial derivative liability charged to debt discounts
|
|
|
223,485
|
|
|
$
|
175,250
|
|
Conversion of debt and accrued interest into common stock
|
|
|
260,391
|
|
|
$
|
12,560
|
|
Beneficial conversion feature of convertible notes issued
|
|
|
|
|
|
|
|
|
recorded as debt discount and credited to additional paid-in capital
|
|
|
145,379
|
|
|
$
|
—
|
|
Conversion of notes payable ($67,750) and accrued interest
|
|
|
|
|
|
|
|
|
($67,500) into convertible notes payable
|
|
|
135,250
|
|
|
$
|
—
|
|
Common stock issued as part of Promissory Note loans recorded
|
|
|
|
|
|
|
|
|
as debt discounts and credited to common stock and additional
|
|
|
|
|
|
|
|
|
paid in capital
|
|
|
—
|
|
|
$
|
117,176
|
|
Debt ($150,000) and accrued interest ($75,000) satisfied from
|
|
|
|
|
|
|
|
|
December 2015 foreclosure of property securing February
|
|
|
|
|
|
|
|
|
2013 Promissory Note
|
|
|
—
|
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements
|
NOTE 1 -ORGANIZATION
Music of Your Life, Inc. (the “Company”)
was incorporated under the laws of the State of Florida on January 30, 2008 under the name of “Zhong Sen International Tea
Company”. From January 2008 to May 2013, the Company operated with the principal business objective of providing sales and
marketing consulting services to small to medium sized Chinese tea producing companies who wished to export and distribute high
quality Chinese tea products worldwide. On May 31, 2013 (the “Closing Date”), the Company entered into a Merger Agreement
(the “Merger Agreement”) by and among the Company, Music of Your Life, Inc., a Nevada corporation (“MYL Nevada”)
incorporated October 10, 2012, and Music of Your Life Merger Sub, Inc., a Utah corporation ("Merger Sub"), pursuant to
which MYL Nevada merged with Merger Sub. Each shareholder of MYL Nevada received ten (10) shares of common stock of the Company
for every one (1) share of MYL Nevada held as of May 31, 2013. In accordance with the terms of the merger agreement, all of the
shares of MYL Nevada held by MYL Nevada shareholders were cancelled and 100 shares of MYL Nevada were issued to the Company. 34,860,000
shares of common stock of the Company were issued to the MYL Nevada shareholders. As a result of the merger, MYL Nevada became
a wholly-owned subsidiary of the Company, and on July 26, 2013, the Company changed its name to Music of Your Life, Inc., and is
now operating a multi-media entertainment company, producing live concerts, television shows and radio programming. On May 20,
2014 the Company acquired 100% of the outstanding stock of iRadio, Inc., a Utah corporation. A total of 20,000,000 shares were
issued to the shareholders of iRadio. The Company was the surviving corporation. iRadio was an entity related to the Company by
common ownership.
NOTE 2 -SIGNIFICANT
ACCOUNTING POLICIES
This summary of significant accounting
policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements
and notes are representations of the Company’s management who are responsible for their integrity and objectivity. These
accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently
applied in the preparation of the financial statements. The following policies are considered to be significant:
a. Accounting
Method
The Company recognizes income and
expenses based on the accrual method of accounting. The Company has elected a May 31 year-end.
b. Cash
and Cash Equivalents
Cash equivalents are generally comprised
of certain highly liquid investments with original maturities of less than three months.
c. Use
of Estimates in the Preparation of Financial Statements
The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
d. Basic
and Fully Diluted Net Loss per Share of Common Stock
In accordance with Financial Accounting
Standards No. ASC 260, “Earnings per Share,” basic net loss per common share is based on the weighted average number
of shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of
common shares plus dilutive common share equivalents outstanding during the period. Dilutive instruments (such as convertible notes
payable and common stock purchase warrants) have not been included and calculated for the year end computations as their effect
is antidilutive.
e. Revenue
Recognition
Revenue is recognized upon completion
of services or delivery of goods where the sales price is fixed or determinable and collectability is reasonably assured. Advance
customer payments are recorded as deferred revenue until such time as they are recognized. The Company does not offer any cash
rebates. Returns or discounts, if any, are netted against gross revenues.
f. Recent
Accounting Pronouncements
We have reviewed accounting pronouncements
issued 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 years ended May 31, 2017 and 2016.
Certain other accounting pronouncements
have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been
adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards
is not expected to be material.
g. Income
Taxes
The Financial Accounting Standards
Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature: Financial Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48)). FASB ASC 740-10 clarifies the accounting
for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with prior literature FASB Statement
No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that
a tax position will be sustained will be sustained upon examination based upon the technical merits of the position. If the
more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial
statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions
in accordance with recognition and measurement standards established by FASB ASC 740-10.
Deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit
carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.
At May 31, 2017, the Company had
net operating loss carryforwards of approximately $2,324,331 which may be offset against future taxable income through 2037. No
tax benefit has been reported in the financial statements because the potential tax benefits of the net operating loss carryforwards
are offset by a valuation allowance of the same amount.
Due to the change in ownership provisions
of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual
limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to future use.
Net deferred
tax assets consist of the following components as of May 31, 2017 and 2016:
|
|
May 31, 2017
|
|
May 31, 2016
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
NOL Carryover
|
|
$
|
790,273
|
|
|
$
|
576,897
|
|
Valuation allowance
|
|
|
(790,273
|
)
|
|
|
(576,897
|
)
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
The income tax provision differs
from the amount of income tax determined by applying the U.S. federal and state income tax rates of 34% to pretax income for the
years ended May 31, 2017 and 2016 due to the following:
|
|
May 31, 2017
|
|
May 31, 2016
|
Expected tax (benefit) at 34%
|
|
$
|
(440,774
|
)
|
|
$
|
(418,255
|
)
|
Non-deductible provision for impairment
|
|
|
—
|
|
|
|
82,620
|
|
Non-deductible stock-based expenses
|
|
|
32,946
|
|
|
|
25,996
|
|
Non-deductible expense (non-taxable income) from derivative liability
|
|
|
57,225
|
|
|
|
32,316
|
|
Non-deductible amortization of debt discounts
|
|
|
137,227
|
|
|
|
75,547
|
|
Change in valuation allowance
|
|
|
213,376
|
|
|
|
201,776
|
|
Provision for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
A reconciliation of the beginning
and ending amount of unrecognized tax benefits is as follows:
|
|
|
Year Ended May 31, 2017
|
|
|
|
Year Ended May 31, 2016
|
|
Beginning balance
|
|
$
|
—
|
|
|
$
|
—
|
|
Additions based on tax positions related to current year
|
|
|
—
|
|
|
|
—
|
|
Additions for tax positions of prior years
|
|
|
—
|
|
|
|
—
|
|
Reductions for tax positions of prior years
|
|
|
—
|
|
|
|
—
|
|
Reductions in benefit due to income tax expense
|
|
|
—
|
|
|
|
—
|
|
Ending balance
|
|
$
|
—
|
|
|
$
|
—
|
|
At May 31, 2017, the Company
had no unrecognized tax benefits that, if recognized, would affect the effective tax rate.
The Company did not have any
tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase
or decrease within the next 12 months.
The Company includes interest
and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income
taxes. As of May 31, 2017, the Company had no accrued interest or penalties related to uncertain tax positions.
h.
Concentrations of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risks consist of cash and cash equivalents. The Company places cash and cash equivalents
at well-known quality financial institutions. Cash and cash equivalents at banks are insured by the Federal Deposit Insurance Corporation
for up to $250,000. The Company did not have any cash or cash equivalents in excess of this amount at May 31, 2017.
i. Principles
of Consolidation
The consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States and include
the Company and its wholly-owned subsidiary. All inter-company accounts and transactions have been eliminated.
j. Advertising
Advertising costs, which are expensed
as incurred, were $4,578 and $13,709 for the years ended May 31, 2017 and 2016, respectively.
NOTE 3 - FINANCIAL INSTRUMENTS
The Company has adopted FASB ASC
820-10-50, “
Fair Value Measurements.
” This guidance defines fair value, establishes a three-level valuation
hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three
levels are defined as follows:
Level 1 inputs
to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs
to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs
to valuation methodology are unobservable and significant to the fair measurement.
The carrying amounts reported in
the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments
and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and
their expected realization and their current market rate of interest.
NOTE 4 - 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 10). As of May 31, 2017, the balance
due on this loan was $15,950.
NOTE 5 –DEPOSITS FOR ACQUISITION OF INTANGIBLE
ASSETS
During the years ended May 31, 2016
and 2015 the Company paid $59,000 and $158,000, respectively, to the wife of the chief executive officer as deposits for certain
trademarks and other intellectual property to be assigned to the Company. Under the agreement, if the Company failed to pay a total
of $250,000 by December 31, 2015, the Company was to forfeit all rights, title and interest in the trademarks and intellectual
property unless extended by her. As of the date of this filing, the agreement has not been extended but the Company continues to
use the intangible assets and is in negotiations to extend the agreement.
At May 31, 2016, it was not certain
whether the intangible assets will ultimately be assigned to the Company. Further, it was not more likely than not that the Company
will be able to generate sufficient future cash flows from these assets to recover any or all of the $243,000 deposits balance.
Accordingly, the Company recognized a provision for impairment expense of $243,000 at May 31, 2016 and reduced the net carrying
balance of the deposits for acquisition of intangible assets to $-0-.
NOTE 6 - MUSIC INVENTORY
The Company purchases digital music
to broadcast over the radio and internet. During the year ended May 31, 2017, the Company purchased $5,843 worth of music inventory.
The amount of music inventory held at May 31, 2017 was $13,862.
NOTE 7 -NOTES PAYABLE
Notes payable consisted of the following:
|
|
May 31,
2017
|
|
May 31,
2016
|
Notes payable to a corporation, non-interest bearing, due on demand, unsecured
|
|
$
|
63,750
|
|
|
$
|
30,000
|
|
Note payable to an individual, stated interest of $15,000, due on October 15, 2014 (A)
|
|
|
—
|
|
|
|
50,000
|
|
Note payable to an individual, due on May 22, 2015, in default (B)
|
|
|
25,000
|
|
|
|
25,000
|
|
Note payable to an individual, non-interest bearing, due on August 23, 2015 (C)
|
|
|
—
|
|
|
|
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
|
|
|
|
25,000
|
|
Note payable to an individual, stated interest of $2,500, due on October 31, 2015 (F)
|
|
|
—
|
|
|
|
25,000
|
|
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 10%, due on June 25, 2016 (J)
|
|
|
—
|
|
|
|
36,826
|
|
Note payable to an individual, stated interest of $2,500, due on December 18, 2015, in default (K)
|
|
|
25,000
|
|
|
|
25,000
|
|
Convertible note payable to an entity, interest at 12%, due on December 22, 2016 (L)
|
|
|
—
|
|
|
|
8,798
|
|
Convertible note payable to an entity, interest at 12%, due on December 22, 2016, in default (M)
|
|
|
20,000
|
|
|
|
8,415
|
|
Convertible note payable to an entity, interest at 10%, due on November 12, 2016 (N)
|
|
|
—
|
|
|
|
14,122
|
|
Convertible note payable to an entity, interest at 10%, due on November 12, 2016 (O)
|
|
|
—
|
|
|
|
17,935
|
|
Note payable to a family trust, interest at 10%, due on November 30, 2016, in default (P)
|
|
|
25,000
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on March 17, 2017, in default (Q)
|
|
|
46,126
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on June 13, 2017 (R)
|
|
|
56,250
|
|
|
|
—
|
|
|
Convertible note payable to an entity, interest at 10%, due on April 21, 2017 – net of discount of $1,940 and $-0-, respectively (S)
|
|
|
38,810
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 12%, due on August 16, 2017 – net of discount of $13,256 and $-0-, respectively (T)
|
|
|
33,744
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 12%, due on October 31, 2017 – net of discount of $20,288 and $-0-, respectively (U)
|
|
|
26,462
|
|
|
|
—
|
|
Convertible note payable to an individual, interest at 10%, due on demand (V)
|
|
|
59,820
|
|
|
|
—
|
|
Convertible note payable to an individual, interest at 8%, due on demand (W)
|
|
|
29,000
|
|
|
|
—
|
|
Convertible note payable to an individual, interest at 8%, due on demand (X)
|
|
|
21,500
|
|
|
|
—
|
|
Convertible note payable to an entity, interest at 10%, due on demand (Y)
|
|
|
8,600
|
|
|
|
—
|
|
Notes payable to individuals, non-interest bearing, due on demand
|
|
|
72,500
|
|
|
|
—
|
|
Total Notes Payable
|
|
|
733,562
|
|
|
|
466,096
|
|
Less: Current Portion
|
|
|
(733,562
|
)
|
|
|
(466,096
|
)
|
Long-Term Notes Payable
|
|
$
|
—
|
|
|
$
|
—
|
|
(A) On August 15, 2014, the Company
issued a $50,000 Promissory Note with a stated interest amount of $15,000 due at maturity on October 14, 2014. The Company also
issued 350,000 shares of common stock, valued at $52,500, 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 $25,610. This
amount was amortized over the 60 days life of the promissory note. See (V) below.
(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.
(C) On June 23, 2015, the Company
issued a $25,000 Promissory Note, non-interest bearing, due at maturity on August 23, 2015. The Company also agreed to issue 500,000
shares of common stock, valued at $20,000, 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 $11,111. This amount was amortized
over the 60 days life of the promissory note. See (W) below.
(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 is due
on February 1, 2016.
(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.
(F) On July 31, 2015, the Company
issued a second $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. See (X) below.
(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.
(J) On September 25, 2015, the Company
issued a $55,750 Convertible Promissory Note to a lender for net loan proceeds of $45,000. The note bears interest at a rate of
10% per annum (24% per annum default rate), was due on June 25, 2016, and was convertible at the option of the lender into shares
of the Company common stock at a Conversion Price equal to the lesser of (a) 55% of the lowest Trading Price during the 25 Trading
Day period prior to the Conversion Date or (b) $.00605 per share. See Note 9 (Derivative Liability).
(K) On November 13, 2015, the Company
issued a $25,000 Promissory Note with a stated interest amount of $2,500 due at maturity on December 18, 2015. The Company also
agreed to issue 200,000 shares of common stock, valued at $6,000, 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
$4,839. This amount was amortized over the 35 days life of the promissory note. In the event that all principal and interest are
not paid to the lender by December 18, 2015, the Company is obligated to pay late fees of 5,000 shares of common stock per day
for the first 60 days after December 18, 2015, and beginning with the 61
st
day after December 18, 2015, any balance
owed shall accrue interest at a rate of 10% per annum.
(L) On December 22, 2015, the Company
issued a $20,000 Convertible Promissory Note to a lender for net loan proceeds of $15,000. The note bore interest at a rate of
12% per annum, was due on December 22, 2016, and was 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 9 (Derivative Liability).
(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, was due on December 22, 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 9 (Derivative Liability).
(N) On February 12, 2016, the Company
issued a $35,500 Convertible Promissory Note to a lender for net loan proceeds of $27,000. The note bore interest at a rate of
10% per annum (24% per annum default rate), was due on November 12, 2016, and was convertible at the option of the lender into
shares of the Company common stock at a Conversion Price equal to the lesser of (a) 55% of the lowest Trading Price during the
25 Trading Day period prior to the Conversion Date or (b) $.00605 per share. See Note 9 (Derivative Liability).
(O) On March 17, 2016, the Company
issued a $44,000 Convertible Promissory Note to a lender for net loan proceeds of $30,000. The note bore interest at a rate of
10% per annum (24% per annum default rate), was due on September 17, 2016, and was convertible at the option of the lender into
shares of the Company common stock at a Conversion Price equal to the lesser of (a) 65% of the lowest Trading Price during the
30 Trading Day period prior to the Conversion Date or (b) 65% of the lowest Market Price during the 30 day Trading Day period prior
to the Conversion Date. See Note 9 (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 7 (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), is 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 $0.0005 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), is 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 $0.0005 per share.
(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), is 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 7 (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), is 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 7 (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 the promissory note described
in (A) above. 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 $0.0001293 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 the promissory
note described in (C) above. 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 7 (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 the promissory
note described in (F) above. 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 7 (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 $0.00004 per share or 60% of the lowest Trading Price during
the 5 Trading Day period prior to the Conversion Date.
NOTE 8 - NOTES PAYABLE – RELATED PARTIES
Notes payable – related parties
consisted of the following:
|
|
May 31,
2017
|
|
May 31,
2016
|
Note payable to wife of Company’s chief executive officer, non-interest bearing, due on demand, unsecured
|
|
$
|
10,188
|
|
|
$
|
2,688
|
|
Note payable to Company law firm, non-interest bearing, due on demand, unsecured
|
|
|
2,073
|
|
|
|
2,073
|
|
Total Notes Payable
|
|
|
12,261
|
|
|
|
4,761
|
|
Less: Current Portion
|
|
|
(12,261
|
)
|
|
|
(4,761
|
)
|
Long-Term Notes Payable
|
|
$
|
—
|
|
|
$
|
—
|
|
NOTE 9 – DERIVATIVE LIABILITY
The derivative liability at May 31,
2017 and 2016 consisted of:
|
|
May 31, 2017
|
|
May 31, 2016
|
|
|
Face Value
|
|
Derivative Liability
|
|
Face Value
|
|
Derivative Liability
|
Convertible note payable issued September 25,2015, due June 25, 2016 (J)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
36,826
|
|
|
$
|
50,218
|
|
Convertible note payable issued December 22, 2015, due December 22, 2016 (L)
|
|
|
—
|
|
|
|
—
|
|
|
|
20,000
|
|
|
|
44,000
|
|
Convertible note payable issued December 29, 2015, due December 29, 2016 (M)
|
|
|
20,000
|
|
|
|
60,000
|
|
|
|
20,000
|
|
|
|
44,000
|
|
Convertible note payable issued February 12, 2016, due November 12, 2016 (N)
|
|
|
—
|
|
|
|
—
|
|
|
|
35,500
|
|
|
|
67,773
|
|
Convertible note payable issued March 17, 2016, due September 17, 2016 (O)
|
|
|
—
|
|
|
|
—
|
|
|
|
44,000
|
|
|
|
64,307
|
|
Convertible note payable issued June 17, 2016, due March 17, 2017 (Q)
|
|
|
46,127
|
|
|
|
121,607
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued November 16, 2016, due August 16, 2017 (T)
|
|
|
47,000
|
|
|
|
166,098
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued November 16, 2016, due August 16, 2017 (U)
|
|
|
46,750
|
|
|
|
168,552
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued April 5, 2017, due on demand (W)
|
|
|
29,000
|
|
|
|
81,667
|
|
|
|
—
|
|
|
|
—
|
|
Convertible note payable issued April 5, 2017, due on demand (X)
|
|
|
21,500
|
|
|
|
64,167
|
|
|
|
—
|
|
|
|
—
|
|
Totals
|
|
$
|
367,197
|
|
|
$
|
662,091
|
|
|
$
|
156,326
|
|
|
$
|
270,298
|
|
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 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 May 31, 2017 include (1) stock price of $0.0002 per share, (2) exercise prices ranging
from $0.00005 to $0.00006 per share, (3) terms ranging from 0 days to 92 days, (4) expected volatility of 490% and (5) risk free
interest rates ranging from 0.86% to 0.98%.
Assumptions used for the calculations
of the derivative liability of the notes at May 31, 2016 include (1) stock price of $0.0023 per share, (2) exercise prices ranging
from $0.0010 to $0.0013 per share, (3) terms ranging from 25 days to 212 days, (4) expected volatility of 445% and (5) risk free
interest rates ranging from 0.27% to 0.49%.
NOTE 10 - EQUITY TRANSACTIONS
During the year ended May 31, 2016,
the Company issued an aggregate of 7,700,000 shares of common stock to accredited investors in consideration of loans made to the
Company.
During the year ended May 31, 2016,
the Company issued an aggregate of 1,000,000 shares of common stock for consulting services rendered to the Company and was recorded
as consulting fees on the statement of operations in the amount of $33,000.
During the year ended May 31, 2016,
the Company issued 1,000,000 shares of common stock for late fees on promissory notes.
During the year ended May 31, 2016,
the Company issued an aggregate of 10,164,933 shares of common stock for the conversion of notes payable and interest in the aggregate
amount of $12,560.
During the year ended May 31, 2016,
the Company issued an aggregate of 20,900,000 shares of common stock for cash in the aggregate amount of $112,600.
On March 4, 2016, the Company issued
200 shares of Series A Preferred Stock to our chief executive officer for consulting services rendered to the Company and was recorded
as consulting fees on the statement of operations in the amount of $10,000. Each share of Series A Preferred Stock was entitled
to 2,000,000 votes. The Series A Preferred Stock had no conversion, liquidation, or dividend rights.
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 continues to have no conversion, liquidation, or dividend rights.
During the year ended May 31, 2017,
the Company issued an aggregate of 1,671,958,939 shares of common stock for the conversion of notes payable and interest in the
aggregate amount of $260,391.
During the year ended May 31, 2017,
the Company issued an aggregate of 113,000,000 shares of common stock for consulting services rendered to the Company and was recorded
as consulting fees on the statement of operations in the amount of $96,900.
During the year ended May 31, 2017,
the Company issued an aggregate of 500,000,000 shares of common stock for cash in the aggregate amount of $40,000.
At May 31, 2017 and 2016, there are
no stock options or warrants outstanding.
NOTE 11 - 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 4). 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 years ended May 31, 2017
and 2016, the chief executive officer was paid $136,500 and $-0-, 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.
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.
Equity Purchase Agreement
On July 24, 2015, the Company executed
an Equity Purchase Agreement and a Registration Rights Agreement with Kodiak Capital Group, LLC (“Kodiak”) and issued
a Promissory Note to Kodiak with a $50,000 face value for services rendered in association with the Equity Purchase Agreement (see
(D) on Note 7). The Equity Purchase Agreement (which expired July 24, 2016) provided for Kodiak to purchase up to $1,000,000 of
the Company’s common stock to be sold at a 30% discount to market. The Company was required to file and have declared effective
a Registration Statement with the SEC relating to these shares. The Company initially filed a Registration Statement with the SEC
on October 9, 2015; the amended Registration Statement was declared effective on February 17, 2016.
NOTE 12 - 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 May 31, 2017, the Company had negative working capital of $1,625,182
and an accumulated deficit of $3,762,130. 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, 2018 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 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 13 - SUBSEQUENT EVENTS
On June 30, 2017 and August 2, 2017,
the Company issued an aggregate of 190,950,000 shares of common stock for the conversion of debt.