---

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



|(Mark One)                                    
|----------------------------------------------
|                                              
|☒                                             
|                                              
|For the quarterly period ended August 31, 2016
|                                              
|☐                                             



For the transition period from ______to______



Commission File Number: 000-54163



|Music of Your Life, Inc.                              
|------------------------------------------------------
|(Exact name of registrant as specified in its Charter)



|Florida                                                                |  | 26-2091212                          
|---------------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of
        incorporation or organization) |  | (I.R.S. Employee Identification No.)
|                                                                       |  |                                     
|3225 McLeod Drive, Suite 100
        Las Vegas, Nevada                 |  | 89121                               
|(Address of principal executive office)                                |  | (Zip Code)                          



(800) 351-3021

(Registrant’s telephone number,
including area code)



Not Applicable

(Former Name, former address
and former fiscal year, if changed since last report)



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.Yes ☒
No ☐



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes
☒ No
☐



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act:



|Large accelerated filer                                           | ☐ | Accelerated filer         | ☐
|----------------------------------------------------------------- | - | ------------------------- | -
|Non-accelerated filer (Do not check if smaller reporting company) | ☐ | Smaller reporting company | ☒




Table of Contents






Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes☐No
☒



Indicate the number of shares outstanding
of each of the issuer’s classes of common stock as of the latest practicable date: As of October 18, 2016, there were 380,956,153
shares of $0.001 par value common stock, issued and outstanding.



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2


Table of Contents




|PART I: FINANCIAL INFORMATION                                                                |   
|-------------------------------------------------------------------------------------------- | --
|                                                                                             |   
|Item 1: Financial Statements                                                                 | 3 
|Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operation | 15
|Item 3: Quantitative and Qualitative Disclosures about Market Risk                           | 17
|Item 4: Controls and Procedures                                                              | 17
|                                                                                             |   
|PART II: OTHER INFORMATION                                                                   |   
|                                                                                             |   
|Item 1: Legal Proceedings                                                                    | 18
|Item 1A: Risk Factors                                                                        | 18
|Item 2: Unregistered Sales of Equity Securities and Use of Proceeds                          | 18
|Item 3: Defaults Upon Senior Securities                                                      | 18
|Item 4: Mine Safety Disclosures                                                              | 18
|Item 5: Other Information                                                                    | 18
|Item 6: Exhibits                                                                             | 19
|                                                                                             |   
|SIGNATURES                                                                                   | 19

































































































3


Table of Contents


PART I - FINANCIAL INFORMATION



ITEM 1.  Financial Statements





|MUSIC OF YOUR LIFE, INC.                                                 
|-------------------------------------------------------------------------
|Consolidated Balance Sheets                                              
|                                                                         
|ASSETS                                                                   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|CURRENT ASSETS                                                           
|                                                                         
|Cash and cash equivalents                                                
|Loans receivable from related party                                      
|                                                                         
|Total Current Assets                                                     
|                                                                         
|OTHER ASSETS                                                             
|                                                                         
|Deposits for acquisition of intangible assets (less allowance for        
|impairment of $243,000 and $243,000, respectively)                       
|Music inventory                                                          
|Trademark                                                                
|                                                                         
|Total Other Assets                                                       
|                                                                         
|TOTAL ASSETS                                                             
|                                                                         
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                    
|                                                                         
|CURRENT LIABILITIES                                                      
|                                                                         
|Accounts payable                                                         
|Accrued interest payable on notes payable                                
|Accrued consulting fees                                                  
|Notes payable                                                            
|Notes payable to related parties                                         
|Derivative liability                                                     
|                                                                         
|Total Current Liabilities                                                
|                                                                         
|TOTAL LIABILITIES                                                        
|                                                                         
|STOCKHOLDERS' DEFICIT                                                    
|                                                                         
|Preferred Stock, $0.001 par value; 20,000,000 shares                     
|authorized, 200 and 200 shares issued and outstanding                    
|Common stock, $0.001 par value; 500,000,000 shares                       
|authorized, 282,867,775 and 124,211,492 shares issued                    
|and outstanding, respectively                                            
|Common stock payable - 300,000 shares                                    
|Additional paid-in-capital                                               
|Accumulated deficit                                                      
|                                                                         
|Total Stockholders' Deficit                                              
|                                                                         
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                              
|                                                                         
|The accompanying notes are an integral part of these financial statements





4


Table of Contents






|MUSIC OF YOUR LIFE, INC.                                                 
|-------------------------------------------------------------------------
|Consolidated Statements of Operations                                    
|(Unaudited)                                                              
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|NET REVENUES                                                             
|                                                                         
|OPERATING EXPENSES                                                       
|                                                                         
|Salaries and Consulting fees                                             
|Professional fees                                                        
|Selling, general and administrative                                      
|                                                                         
|Total Operating Expenses                                                 
|                                                                         
|LOSS FROM OPERATIONS                                                     
|                                                                         
|OTHER INCOME (EXPENSES)                                                  
|                                                                         
|Income (expense) from derivative liability                               
|Interest expense (including amortization of debt discounts               
|of $66,334 and $35,290 respectively)                                     
|                                                                         
|Total Other Income (Expenses)                                            
|                                                                         
|LOSS BEFORE INCOME TAXES                                                 
|                                                                         
|INCOME TAX EXPENSE                                                       
|                                                                         
|NET LOSS                                                                 
|                                                                         
|BASIC AND DILUTED:                                                       
|Net loss per common share                                                
|                                                                         
|Weighted average shares outstanding                                      
|                                                                         
|The accompanying notes are an integral part of these financial statements





5


Table of Contents






|MUSIC OF YOUR LIFE, INC.                                                 
|-------------------------------------------------------------------------
|Consolidated Statements of Cash Flows                                    
|(Unaudited)                                                              
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                    
|                                                                         
|Net loss                                                                 
|Adjustments to reconcile net loss to net                                 
|cash used by operating activities:                                       
|Common stock issued for services                                         
|Expense (income) from derivative liability                               
|Amortization of debt discounts                                           
|Changes in operating assets and liabilities:                             
|Music inventory                                                          
|Accounts payable                                                         
|Accrued interest payable on notes payable                                
|Accrued consulting fees                                                  
|                                                                         
|Net Cash Used by Operating Activities                                    
|                                                                         
|CASH FLOWS FROM INVESTING ACTIVITIES:                                    
|                                                                         
|Deposits for acqusition of intangible assets                             
|Trademark                                                                
|                                                                         
|Net Cash Used by Investing Activities                                    
|                                                                         
|CASH FLOWS FROM FINANCING ACTIVITIES:                                    
|                                                                         
|Proceeds from notes payable                                              
|Payments on notes payable                                                
|                                                                         
|Net Cash Provided by Financing Activities                                
|                                                                         
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                
|                                                                         
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                           
|                                                                         
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                 
|                                                                         
|SUPPLEMENTAL CASH FLOW INFORMATION                                       
|                                                                         
|Cash Payments For:                                                       
|Interest                                                                 
|Income taxes                                                             
|                                                                         
|Non-cash investing and financing activities:                             
|Beneficial conversion feature credited to additional paid in capital     
|Initial derivative liability charged to debt discounts                   
|Conversion of debt and accrued interest into common stock                
|                                                                         
|The accompanying notes are an integral part of these financial statements





6


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MUSIC OF YOUR LIFE, INC.

Notes to the Consolidated Financial
Statements

August 31, 2016

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND ORGANIZATION



Basis of Presentation



The accompanying unaudited
financial statements are presented in accordance with generally accepted accounting principles for interim financial information
and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management,
all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not
misleading, have been included. Operating results for the three months ended August 31, 2016 are not necessarily indicative of
results that may be expected for the year ending May 31, 2017.



Organization



Music of Your Life, Inc. (hereafter,
“we”, ”our”, ”us”, “MYL”, or the ”Company”) was incorporated on January
30, 2008, in the State of Florida, as ZhongSen International Tea Company, with the principal business objective of providing sales
and marketing consulting services to small to medium sized Chinese tea producing companies who wish to export and distribute high
quality Chinese tea products worldwide. The Company commenced business activities in August, 2008, when it entered into a related
party Sales and Marketing Agreement with Yunnan Zhongsen Group, Ltd. However, due to lack of capital, the Company was unable to
implement its business plan fully. On May 31, 2013, the Company entered into a merger agreement (the “Merger”) with
Music of Your Life, Inc., a Nevada corporation (“MYL Nevada”). As a result of the Merger, MYL Nevada is a wholly-owned
subsidiary of the Company, and the Company is now operating a multi-media entertainment company, producing television shows and
radio programming. The Company changed its name to Music of Your Life, Inc. effective July 26, 2013.



NOTE 2 - 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 9). As of August 31, 2016, the
balance due on this loan was $15,950.



NOTE 3 - 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 is 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-.

7


Table of Contents




MUSIC OF YOUR LIFE, INC.

Notes to the Consolidated Financial
Statements

August 31, 2016

(Unaudited)



NOTE 4 - MUSIC INVENTORY



The Company purchases digital
music to broadcast over the radio and internet. During the three months ended August 31, 2016, the Company purchased $1,687 worth
of music inventory. The amount of music inventory held at August 31, 2016 was $9,706.



NOTE 5 - NOTES PAYABLE



Notes payable consisted of
the following:



|                                                                                                                                            |  | August 31, 2016 |        | May 31, 2016
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | ------------
|Notes payable to a corporation, non interest bearing, due on demand, unsecured                                                              |  | $               | 43,000 |             
|Note payable to an individual, stated interest of $15,000, due on October 15, 2014, in default (A)                                          |  |                 | 23,750 |             
|Note payable to an individual, due on May 22, 2015, in default (B)                                                                          |  |                 | 25,000 |             
|Note payable to an individual, non interest bearing, due on August 23, 2015, in default (C)                                                 |  |                 | 25,000 |             
|Note payable to an entity, non interest bearing, due on February 1, 2016, in default (D)                                                    |  |                 | 50,000 |             
|Note payable to a family trust, stated interest of $2,500, due on October 31, 2015, in default (E)                                          |  |                 | 7,000  |             
|Note payable to an individual, stated interest of $2,500, due on October 31, 2015, in default (F)                                           |  |                 | 25,000 |             
|Note payable to a corporation, stated interest of $5,000, due on October 21, 2015, in default (G)                                           |  |                 | 50,000 |             
|Note payable to a corporation, stated interest of $5,000, due on November 6, 2015, in default (H)                                           |  |                 | 50,000 |             
|Note payable to an individual, stated interest of $2,500, due on December 20, 2015, in default (I)                                          |  |                 | 25,000 |             
|Convertible note payable to an entity, interest at 10%, due on June 25, 2016 (J)                                                            |  |                 | —      |             
|Note payable to an individual, stated interest of $2,500, due on December 18, 2015, in default (K)                                          |  |                 | 25,000 |             
|Convertible note payable to an entity, interest at 12%, due on December 22, 2016 – net of discount of $6,175 and $11,202, respectively  (L) |  |                 | 13,825 |             
|Convertible note payable to an entity, interest at 12%, due on December 22, 2016 – net of discount of $6,557 and $11,585, respectively (M)  |  |                 | 13,443 |             
|Convertible note payable to an entity, interest at 10%, due on November 12, 2016 – net of discount of $9,458 and $21,378, respectively (N)  |  |                 | 7,302  |             
|Convertible note payable to an entity, interest at 10%, due on November 12, 2016 – net of discount of $4,065 and $26,065, respectively (O)  |  |                 | 39,935 |             
|Note payable to a family trust, interest at 10%, due on November 30, 2016 (P)                                                               |  |                 | 25,000 |             



8


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MUSIC OF YOUR LIFE, INC.

Notes to the Consolidated Financial
Statements

August 31, 2016

(Unaudited)





|Convertible note payable to an entity, interest at 10%, due on March 17, 2017 – net of discount of $36,808 and $-0-, respectively (Q) |  |   | 13,942   |   |  |   | —        |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | - | -------- | - |  | - | -------- | -
|Convertible note payable to an entity, interest at 10%, due on April 21, 2017 – net of discount of $47,833 and $-0-, respectively (R) |  |   | 8,417    |   |  |   | —        |  
|Note payable to an individual, non interest bearing, due on demand                                                                    |  |   | 25,000   |   |  |   | —        |  
|                                                                                                                                      |  |   |          |   |  |   |          |  
|Total Notes Payable                                                                                                                   |  |   | 495,614  |   |  |   | 466,096  |  
|Less: Current Portion                                                                                                                 |  |   | (495,614 | ) |  |   | (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.



(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.



(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 stockresulting
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.



(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.

9


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MUSIC OF YOUR LIFE, INC.

Notes to the Consolidated Financial
Statements

August 31, 2016

(Unaudited)



(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), is due on June 25, 2016, and is 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 7 (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 61st 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 bears interest
at a rate of 12% per annum, is 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 7 (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, is 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 7 (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 bears interest
at a rate of 10% per annum (24% per annum default rate), is due on November 12, 2016, and is 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 7 (Derivative Liability).



10


Table of Contents






MUSIC OF YOUR LIFE, INC.

Notes to the Consolidated Financial
Statements

August 31, 2016

(Unaudited)



(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 bears interest at a
rate of 10% per annum (24% per annum default rate), is due on September 17, 2016, and is 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 7 (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 is 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), is 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 the lower of (a) $0.0005 per share or (b) the closing bid price
three business days after the date of the Notice of Conversion. See Note 7 (Derivative Liability).



NOTE 6 - NOTES PAYABLE – RELATED PARTIES



Notes payable – related
parties consisted of the following:



|                                                                                                          |  | August 31, 2016 |        | May 31, 2016
|--------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | ------------
|Note payable to wife of Company’s chief executive officer, non-interest bearing, due on demand, unsecured |  | $               | 2,688  |             
|Note payable to Company law firm, non-interest bearing, due on demand, unsecured                          |  |                 | 2,073  |             
|Total Notes Payable                                                                                       |  |                 | 4,761  |             
|Less: Current Portion                                                                                     |  |                 | (4,761 | )           
|Long-Term Notes Payable                                                                                   |  | $               | —      |             



11


Table of Contents




MUSIC OF YOUR LIFE, INC.

Notes to the Consolidated Financial
Statements

August 31, 2016

(Unaudited)



NOTE 7 – DERIVATIVE LIABILITY



The derivative liability at
August 31, 2016 consisted of:



|                                                                             |  | Face Value |         | Derivative Liability
|---------------------------------------------------------------------------- |  | ---------- | ------- | --------------------
|Convertible note payable issued December 22, 2015, due December 22, 2016 (L) |  | $          | 20,000  |                     
|Convertible note payable issued December 29, 2015, due December 29, 2016 (M) |  |            | 20,000  |                     
|Convertible note payable issued February 12, 2016, due November 12, 2016 (N) |  |            | 35,500  |                     
|Convertible note payable issued March 17, 2016, due September 17, 2016 (O)   |  |            | 44,000  |                     
|Convertible note payable issued June 17, 2016, due March 17, 2017 (Q)        |  |            | 50,750  |                     
|Convertible note payable issued July 21, 2016, due April 21, 2017 (R)        |  |            | 56,250  |                     
|Totals                                                                       |  | $          | 226,500 |                     



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 ($537,992 total for the three months
ended August 31, 2016) and charged the applicable amounts to debt discounts ($107,000 total for the three months ended August 31,
2016) and the remainder to other expense ($430,992 total for the three months ended August 31, 2016). The increase (decrease) in
the fair value of the derivative liability from the respective issuance dates of the notes to the measurement date ($485,940 total
decrease for the three months ended August 31, 2016) 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 August 31, 2016 include (1) stock price
of $0.001 per share, (2) exercise prices ranging from $0.0005 to $0.00065 per share, (3) terms ranging from 17 days to 233 days,
(4) expected volatility of 508% and (5) risk free interest rates ranging from 0.26% to 0.51%.



NOTE 8 - EQUITY TRANSACTIONS



During the quarter ended August
31, 2016 the Company issued a total of 20,000,000 shares of common stock to 3 service providers for legal, accounting and consulting
services rendered to the Company. The total fair value of the 20,000,000 shares at dates of issuance was $69,000, which has been
charged to salaries and consulting fees ($18,500) and professional fees ($50,500) on the statement of operations.



During the quarter ended August
31, 2016 the Company issued an aggregate of 138,656,283 shares of common stock for the conversion of notes payable and accrued
interest in the aggregate amount of $106,884.



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MUSIC OF YOUR LIFE, INC.

Notes to the Consolidated Financial
Statements

August 31, 2016

(Unaudited)



NOTE 9 - 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 2). As of May 31, 2015,
this agreement has been terminated. For the three months ended August 31, 2016, the chief executive officer was paid $32,000 in
consulting fees.



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 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 5). 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 10 - 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 August 31, 2016, the Company had negative working capital
of $960,926 and an accumulated deficit of $2,646,594. 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, 2017 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 notes payable and additional equity and by generating
revenues through sales of products and services.



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MUSIC OF YOUR LIFE, INC.

Notes to the Consolidated Financial
Statements

August 31, 2016

(Unaudited)



The financial statements do
not include any adjustments that might result from the outcome of this uncertainty.



NOTE 11 - SUBSEQUENT EVENTS



From August 31, 2016 to October
18, 2016, the Company issued an aggregate of 98,088,378 shares of common stock for the conversion of notes payable and accrued
interest.



On October 3, 2016, the Company amended its Articles
of Incorporation to increase the number of authorized shares of common stock from 500,000,000 shares to 2,000,000,000 shares and
to change the par value of both the common stock and preferred stock from $0.001 per share to $0.0001 per share.





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Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operation



The following discussion contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the
forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes
that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that
the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed
in this report.



BUSINESS OVERVIEW



We are a multi-media entertainment
company that currently produces live radio programming 24 hours a day, syndicated to AM, FM and HD terrestrial radio stations around
the country. The network is also heard streaming across the Internet using our registered trademark, iRadio®. Music of Your
Life® has been on the air since 1978, making it the longest running syndicated music radio network in the world. Our principal
source of revenue comes from selling radio spots, or commercials on the network, and licensing our trade names. Expenses which
comprise the costs of goods sold will include licensing agreements and royalties, as well as operational and staffing costs related
to the management of the Company’s syndicated network. General and administrative expenses are comprised of administrative
wages and benefits; occupancy and office expenses; outside legal, accounting and other professional fees; travel and other miscellaneous
office and administrative expenses. Selling and marketing expenses include selling/marketing wages and benefits, advertising and
promotional expenses, as well as travel and other miscellaneous related expenses.



Because we have incurred
losses, income tax expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards, given our
uncertainty of being able to utilize such loss carryforwards in future years. We anticipate incurring additional losses during
the coming year.



RESULTS OF OPERATION



Following is management’s
discussion of the relevant items affecting results of operations for the three months ended August 31, 2016 and 2015.



Revenues. The Company
generated net revenues of $1,193 and $2,718 during the three months ended February 29, 2016 and 2015, respectively. Revenues were
generated from spot sales, digital sales and subscription based sales from the live radio programming through radio stations around
the country.



Cost of Sales. Our
cost of sales were $-0- for both the three months ended Augusts 31, 2016 and 2015. Our cost of sales in the future will consist
principally of licensing costs and royalties associated with our syndicated radio network, other related services provided directly
or outsourced through our affiliates, as well as operational and staffing costs with respect thereto.



Salaries and Consulting
Fees. Salaries and consulting fees were $96,350 and $39,500 for the three months ended August 31, 2016 and 2015, respectively.
This expense category included stock-based compensation to consultants of $18,500 and $33,000 for the three months ended August
31, 2016 and 2015, respectively. We expect that salaries and consulting expenses, that are cash instead of share-based, will increase
as we add personnel to build our multi-media entertainment business.



Professional Fees.
Professional fees were $90,465 and $14,282 for the three months ended August 31, 2016 and 2015, respectively. This expense category
included stock based compensation to service providers of $50,000 for the three months ended August 31, 2016. We anticipate that
professional fees will increase in future periods as we scale up our operations.

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Selling, General and
Administrative Expenses. Selling, general and administrative expenses were $59,902 and $42,796 for the three months ended August
31, 2016 and 2015, respectively. We anticipate that SG&A expenses will increase commensurate with an increase in our operations.



Other Income (Expense).
The Company had net other expenses of $25,333 and $40,858 for the three months ended August 31, 2016 and 2015, respectively. During
the three months ended August 31, 2016, other expenses incurred were comprised of interest expenses related to notes payable in
the amount of $80,281, which included the amortization of debt discounts of $66,334. During the three months ended August 31, 2016,
the Company also recorded a gain on the change in fair value of derivative liability in the amount of $54,948.



LIQUIDITY AND CAPITAL RESOURCES



As of August 31, 2016,
our primary source of liquidity consisted of $41,744 in cash and cash equivalents. We hold most of our cash reserves in local checking
accounts with local financial institutions. Since inception, we have financed our operations through a combination of short and
long-term loans, and through the private placement of our common stock.



We have sustained significant
net losses which have resulted in negative working capital and an accumulated deficit at August 31, 2016 of $960,926 and $2,646,594,
respectively, which raises doubt about our ability to continue as a going concern. We generated a net loss for the three months
ended August 31, 2016 of $270,857. Without additional revenues, working capital loans, or equity investment, there is substantial
doubt as to our ability to continue operations.



We believe these conditions
have resulted from the inherent risks associated with small public companies. Such risks include, but are not limited to, the ability
to (i) generate revenues and sales of our products and services at levels sufficient to cover our costs and provide a return for
investors, (ii) attract additional capital in order to finance growth, and (iii) successfully compete with other comparable companies
having financial, production and marketing resources significantly greater than those of the Company.



We believe that our capital
resources are insufficient for ongoing operations, with minimal current cash reserves, particularly given the resources necessary
to expand our multi-media entertainment business. We will likely require considerable amounts of financing to make any significant
advancement in our business strategy. There is presently no agreement in place that will guarantee financing for our Company, and
we cannot assure you that we will be able to raise any additional funds, or that such funds will be available on acceptable terms.
Funds raised through future equity financing will likely be substantially dilutive to current shareholders. Lack of additional
funds will materially affect our Company and our business, and may cause us to substantially curtail or even cease operations.
Consequently, you could incur a loss of your entire investment in the Company.



CRITICAL ACCOUNTING PRONOUNCEMENTS



Our financial statements and related
public financial information are based on the application of generally accepted accounting principles in the United States (“GAAP”).
GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an
impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information
contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our
use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We
base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor
significant estimates made during the preparation of our financial statements.

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Our significant accounting policies
are summarized in Note 2 of our financial statements included in our May 31, 2015 Form 10-K. While all of these significant accounting
policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined
to be critical are those policies that have the most significant impact on our financial statements and require management to use
a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given
current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause
a material effect on our results of operations, financial position or liquidity for the periods presented in this report.



Revenue Recognition



We recognize revenue on arrangements
in accordance with FASB ASC No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when
the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability
of the resulting receivable is reasonably assured.



RECENT ACCOUNTING PRONOUNCEMENTS



We have reviewed accounting pronouncements
issued during the past two years and have adopted any that are applicable to the Company. We have determined that none had a material
impact on our financial position, results of operations, or cash flows for the periods presented in this report.



OFF-BALANCE SHEET ARRANGEMENTS



We do not have any off-balance sheet
arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose
entities” (“SPE”s).



Item 3. Quantitative and Qualitative
Disclosures about Market Risks



Not applicable because we are a smaller
reporting company.



Item 4. Controls
and Procedures



Evaluation of Disclosure Controls
and Procedures



Pursuant to Rule 13a-15(b) under the
Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of
the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer
(“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e)
under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO
and CFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required
to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely
decisions regarding required disclosure as a result of continuing material weaknesses (such as the absence of an audit committee
and absence of qualified independent directors) in its internal control over financial reporting.



Changes in Internal Controls Over
Financial Reporting



There have been no changes in the Company's
internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely
to materially affect, the Company's internal control over financial reporting.



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PART II - OTHER INFORMATION



Item 1. Legal Proceedings.



Currently we are not aware of any litigation
pending or threatened by or against the Company.



Item 1A. Risk Factors



Not applicable because we are a smaller
reporting company.



Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds



During the quarter
ended August 31, 2016 the Company issued 20,000,000 shares to 3 service providers of common stock for legal, accounting, and consulting
services rendered to the Company which was recorded as expenses on the statement of operations in the amount of $69,000.



During the quarter
ended August 31, 2016 the Company issued an aggregate of 138,656,283 shares of common stock for the conversion of notes payable
and accrued interest in the aggregate amount of $106,884.



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.



Item 3. Defaults Upon Senior Securities.



The Company has not paid the principal
and interest due on ten notes payable aggregating $305,750 at August 31, 2016. See Note 5 to the Consolidated Financial Statements.



Item 4. Mine Safety Disclosures



Not Applicable.



Item 5. Other Information.



None.



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Item 6. Exhibits.



|Exhibit No. |  | Description                                                                                            
|----------- |  | -------------------------------------------------------------------------------------------------------
|3.1         |  | Amended and Restated Articles of Incorporation of Music of Your life, Inc.                             
|3.2         |  | Amended and Restated Bylaws of Music of Your Life, Inc.                                                
|31.1        |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|32.1        |  | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|101.INS     |  | XBRL Instance Document                                                                                 
|101.SCH     |  | XBRL Taxonomy Extension Schema Document                                                                
|101.CAL     |  | XBRL Taxonomy Extension Calculation Linkbase Document                                                  
|101.DEF     |  | XBRL Taxonomy Extension Definition Linkbase Document                                                   
|101.LAB     |  | XBRL Taxonomy Extension Label Linkbase Document                                                        
|101.PRE     |  | XBRL Taxonomy Extension Presentation Linkbase Document                                                 
|            |  |                                                                                                        
|            |  |                                                                                                        



---





SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.



|                       | Music of Your Life, Inc.
|---------------------- | ------------------------
|                       |                         
|Date: October 24, 2016 | By:                     
|                       |                         
|                       |                         
|                       |                         
|                       |                         





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