Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: February 28, 2021.

TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT

For the transition period from to

Commission file number: 333-85072

DBMM GROUP

DIGITAL BRAND MEDIA & MARKETING GROUP, INC.

WWW.DBMMGROUP.COM

(Exact name of small business issuer as specified in its charter)

845 Third Avenue, 6th Floor, New York, NY 10022

(Address of principal executive offices)

Florida

State of incorporation

59-3666743

IRS Employer Identification No.

(646) 722-2706

(Issuer's telephone number, including area code)

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 registrant 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 every Interactive Data File required to be submitted 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 such Files). Yes ☒ No ☐

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

Large Accelerated Filer ☐ Accelerated Filer ☐

Non-Accelerated Filer ☐ Smaller Reporting Company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	DBMM	OTC Markets

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date:

Date	Shares Outstanding
April 12, 2021	757,718,631

INDEX

	Page No
PART I. CONDENSED CONSOLIDATED FINANCIAL INFORMATION - UNAUDITED

Item 1. Condensed Consolidated Financial Statements	3
Condensed Consolidated Balance Sheets as of February 28, 2021 (unaudited) and August 31, 2020 (audited)	3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Six months ended February 28, 2021 and February 29, 2020 (unaudited)	4
Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Six months ended February 28, 2021 and February 29, 2020 (unaudited)	5
Condensed Consolidated Statements of Cash Flows for the Six months ended February 28, 2021 and February 29, 2020 (unaudited)	6
Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds	34
Item 3. Defaults Upon Senior Securities	34
Item 4. Submission of Matters to a Vote of Security Holders	34
Item 5. Other Information	34
Item 6. Exhibits	35

SIGNATURES	36

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

DIGITAL BRAND MEDIA & MARKETING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	(Unaudited)			(Audited)
	February 28,			August 31,
	2021			2020
ASSETS

CURRENT ASSETS
Cash	$	50,463		$	34,461
Accounts receivable, net		11,801			15,333
Prepaid expenses and other current assets		470			470
Total current assets		62,734			50,264

Property and equipment - net		1,420			1,978

TOTAL ASSETS	$	64,154		$	52,242

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	516,687		$	438,246
Accrued interest		690,853			587,397
Accrued compensation		1,424,386			1,436,686
Derivative liability		701,503			773,676
Loans payable, net		1,251,704			980,109
Officers loans payable		75,830			77,044
Convertible debentures, net		840,791			840,791
		5,501,754			5,133,949

Loan payable, net of short-term portion		48,243			49,656


TOTAL LIABILITIES		5,549,997			5,183,605

STOCKHOLDERS' DEFICIT
Preferred stock, Series 1, par value .001; authorized 2,000,000 shares; 1,995,185, and 1,995,185 shares issued and outstanding		1,995			1,995
Preferred stock, Series 2, par value .001; authorized 2,000,000 shares; 0 and 0 shares issued and outstanding		-			-
Common stock, par value .001; authorized 2,000,000,000 shares; 757,718,631, and 757,718,631, shares issued and outstanding		757,718			757,718
Additional paid in capital		9,270,444			9,270,444
Other comprehensive loss		(41,730	)		(16,787	)
Accumulated deficit		(15,474,270	)		(15,144,733	)

TOTAL STOCKHOLDERS' DEFICIT	$	(5,485,843	)	$	(5,131,363	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	64,154		$	52,242

See Notes to Unaudited Condensed Consolidated Financial Statements

DIGITAL BRAND MEDIA & MARKETING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Unaudited						Unaudited
	For the Three Months Ended						For the Six Months Ended
	Feb. 28, 2021			Feb. 29, 2020			Feb. 28, 2021			Feb. 29, 2020

SALES	$	38,117		$	80,666		$	75,082		$	240,800

COST OF SALES		9,416			92,055			99,739			193,337

GROSS PROFIT		28,701			(11,389	)		(24,657	)		47,463

COSTS AND EXPENSES
Sales, general and administrative		121,875			94,371			239,094			252,389
Gain on extinguishment of debt		-			-			-			(192,977	)

TOTAL OPERATING (GAIN) EXPENSES		121,875			94,371			239,094			59,412

OPERATING GAIN (LOSS)		(93,174	)		(105,760	)		(263,751	)		(11,949	)

OTHER (INCOME) EXPENSE
Interest expense		54,918			67,594			137,959			178,736
Change in fair value of derivative liability		(66,217	)		(10,485	)		(72,173	)		(14,084	)
TOTAL OTHER (INCOME) EXPENSE		(11,299	)		57,109			65,786			164,652

NET LOSS	$	(81,875	)	$	(162,869	)	$	(329,537	)	$	(176,601	)

OTHER COMPREHENSIVE LOSS
Foreign exchange translation		19,198			(1,469	)		17,071			(2,671	)
COMPREHENSIVE LOSS		(62,677	)		(164,338	)		(312,466	)		(179,272	)

NET LOSS PER SHARE
Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF SHARES
Basic and diluted		757,718,631			757,718,631			757,718,631			757,718,631

See Notes to Unaudited Condensed Consolidated Financial Statements

DIGITAL BRAND MEDIA & MARKETING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

	For the Six Months Ended February 28,
	(Unaudited)
	2021			2020
Series 1
Preferred Stock
Shares, beginning and end of year		1,995,185			1,995,185

Preferred Stock
Balance, beginning and end of year	$	1,995		$	1,995

Series 2
Preferred Stock
Shares, beginning and end of year		-			-

Preferred Stock
Balance, beginning and end of year	$	-		$	-

Common Stock
Shares, beginning and end of year		757,718,631			757,718,631

Balance, beginning and end of year	$	757,718		$	757,718

Additional paid-in capital
Balance, beginning and end of year	$	9,270,444		$	9,270,444

Other Accumulated Comprehensive Income (Loss)
Balance, beginning of year	$	(16,787	)	$	9,216
Other comprehensive income (loss)		(24,943	)		(2,671	)
Balance, end of year	$	(41,730	)	$	6,545

Accumulated Deficit
Balance, beginning of year	$	(15,144,733	)	$	(14,488,947	)
Net loss		(329,537	)		(176,601	)
Balance, end of period	$	(15,474,270	)	$	(14,665,548	)

Total Stockholders' Deficit	$	(5,485,843	)	$	(4,628,846	)

See Notes to Unaudited Condensed Consolidated Financial Statements

DIGITAL BRAND MEDIA & MARKETING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months Ended
	(Unaudited)
	February 28,			February 29,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(329,537	)	$	(176,601	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		558			1,751
Change in fair value of derivative liability		(72,173	)		(14,084	)
Gain on extinguishment of debt		-			(192,977	)

Changes in operating assets and liabilities:
Accounts receivable		3,532			16,355
Provision for bad debt		-			1,294
Prepaid expenses and other current assets		-			-
Accounts payable and accrued expenses		78,441			(4,965	)
Accrued interest		103,456			106,736
Accrued compensation		(12,300	)		102,000

NET CASH USED IN OPERATING ACTIVITIES		(228,023	)		(160,491	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment		-			(521	)

NET CASH USED IN INVESTING ACTIVITIES		-			(521	)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from loan payable		228,168			217,843
Officer loans payable		(1,214	)		(59,268	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		226,954			158,575


EFFECT OF VARIATION OF EXCHANGE RATE OF CASH
HELD IN FOREIGN CURRENCY		17,071			584

NET INCREASE/(DECREASE) IN CASH		16,002			(1,853	)

CASH - BEGINNING OF PERIOD		34,461			17,563

CASH - END OF PERIOD		50,463			15,710

Supplemental disclosures of cash flow information:
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	-
Non-cash investing and financing activities:
Common Stock issued in connection with debt	$	-		$	-

See Notes to Unaudited Condensed Consolidated Financial Statements

DIGITAL BRAND MEDIA & MARKETING GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION AND GOING CONCERN

Nature of Business and History of the Company

Digital Brand Media & Marketing Group, Inc. (“The Company”) is an OTC:PK listed company. The Company was organized under the laws of the State of Florida on September 29, 1998.

The Company strategically focuses on developing the business of its wholly owned and revenue generating online marketing services company, Digital Clarity. With deep DNA in its operating market, blending the services of an experienced professional workforce leveraging a technology offering positions the Company in a strong, forward looking structure. Digital Clarity operates in the growing area of digital marketing that helps companies make the most of the digital economy focusing on areas such as Search Engine Marketing (Google, Yahoo! & Bing), Social Media (Twitter, Facebook & LinkedIn) and Internet Strategy Planning including Design, Analytics and Mobile Marketing.

Following the acquisition of Digital Clarity in 2011 the Company has been honing its business model to be the differentiating service provider in digital marketing space to its clients and prospective business as DBMM grows into one of the leaders in the industry going forward.

Today, DBMM Group crafts, designs and executes digital marketing strategies across multiple ad platforms and social media networks for a broad array of clients to help each of them establish a uniform brand identity across the digital universe. The product offering is a unique value proposition of intelligent analytics provided by an experienced digital marketing and technology team. Therefore, DBMM Group is a blend of data, strategy and creative execution.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 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 normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended February 28, 2021 are not necessarily indicative of the results that may be expected for the year ending August 31, 2020. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended August 31, 2020.

Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis. The financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern.

The Company has outstanding loans and convertible notes payable aggregating $2.1 million at February 28, 2021 and doesn’t have sufficient cash on hand to satisfy such obligations. The preceding raise substantial doubt about the ability of the Company to continue as a going concern. However, the Company generated proceeds of $226,954 from financing activities in the six months ending February 28, 2021. The Company also has a non-binding Commitment Letter from an investor of $250,000 which also includes a right of first refusal on additional capital raise up to $3 million which will contribute to satisfying such obligations and fund any potential cash flow deficiencies from operations for the foreseeable future.

Accordingly, the accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Stylar (DBA Digital Clarity). All significant inter-company transactions are eliminated.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of cash in banks. The Company considers cash equivalents to include all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company had no cash equivalents as of February 28, 2021.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest. Accounts receivable are presented net of allowance for doubtful accounts.

The Company has a policy of reserving for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the bad debt expense after all means of collection have been exhausted and the potential for recovery is considered remote. At February 28, 2021, the Company recognized $0, as the allowance for doubtful accounts.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets (primarily three to five years).

Revenue Recognition

Revenue is recognized upon transfer of control of promised or services to customers in an amount that reflects the consideration we expect to receive in exchange for those services. We enter into contracts that can include various combinations of services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

Nature of Services

The Company generally provides its services to companies, primarily located in Europe but with international exposure. The Company generally provides its services ratably over the terms of the contract and bills such services at a monthly fixed rate. Some of the services are billed quarterly. The Company’s services are sold without guarantees.

Significant Judgments

Our contracts with customers sometimes often include promises to transfer multiple services to a customer. Determining whether services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

Judgment is required to determine Standalone Selling Price (SSP) for each distinct performance obligation. The Company uses a single amount to estimate SSP for items that are not sold separately, including set-up services, monthly search advertising services, and monthly optimization and management.

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing.

The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Included in these estimates are assumptions about the collection of its accounts receivable, converted amount of cash denominated in a foreign currency, and estimated amounts of cash, the derivative liability could settle, if not in common shares. Actual results could differ from those estimates.

Income Taxes

The Company follows the provisions of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

The Company has adopted ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open.

Earnings (loss) per common share

The Company utilizes the guidance per FASB Codification “ASC 260 "Earnings Per Share". Basic earnings per share is calculated on the weighted effect of all common shares issued and outstanding and is calculated by dividing net income available to common stockholders by the weighted average shares outstanding during the period. Diluted earnings per share, which is calculated by dividing net income available to common stockholders by the weighted average number of common shares used in the basic earnings per share calculation, plus the number of common shares that would be issued assuming conversion of all potentially dilutive securities outstanding, is not presented separately as it is anti- dilutive. Such securities have been excluded from the per share computations as of February 28, 2021 and February 29, 2020.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of February 28, 2021, which consist of convertible instruments and rights to shares of the Company’s common stock and determined that such derivatives meet the criteria for liability classification under ASC 815.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.

During the six-month period ended February 28, 2021 and February 29, 2020, the Company had notes payable outstanding in which the conversion rate was variable and undeterminable. Accordingly, the Company has recognized a derivative liability in connection with such instruments. The Company uses judgment in determining the fair value of derivative liabilities at the date of issuance at every balance sheet thereafter and in determining which valuation is most appropriate for the instrument (e.g., Binomial method), the expected volatility, the implied risk-free interest rate, as well as the expected dividend rate.

Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, or ASC 820, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below.

Level 1	Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level 2	Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The Company did not have any Level 2 or Level 3 assets or liabilities as of February 28, 2021, with the exception of its derivative liability which are valued based on Level 3 inputs.

Cash is considered to be highly liquid and easily tradable as of February 28, 2021 and therefore classified as Level 1 within our fair value hierarchy.

In addition, FASB ASC 825-10-25 Fair Value Option, or ASC 825-10-25, was effective January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”.

Professional standards generally provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of “Conventional Convertible Debt Instrument”.

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Stock Based Compensation

We account for the grant of stock options and restricted stock awards in accordance with ASC 718, “Compensation-Stock Compensation.” ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements) common stock and additional paid-in capital). This reclassification has no effect on the reported results of operations.

Foreign Currency Translation

Assets and liabilities of subsidiaries operating in foreign countries are translated into U.S. dollars using either the exchange rate in effect at the balance sheet date or historical rate, as applicable. Results of operations are translated using the average exchange rates prevailing throughout the year. The effects of exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are included in a separate component of stockholders’ equity (accumulated other comprehensive loss), while gains and losses resulting from foreign currency transactions are included in operations.

Business Combinations

In accordance with Accounting Standards Codification 805, "Business Combinations" ("ASC 805") the Company records acquisitions under the purchase method of accounting, under which the acquisition purchase price is allocated to the assets acquired and liabilities assumed based upon their respective fair values. The Company utilizes management estimates and, in some instances, may require an independent third-party valuation firm to assist in determining the fair values of assets acquired, liabilities assumed, and contingent consideration granted. Such estimates and valuations require us to make significant assumptions, including projections of future events and operating performance.

Recently Issued Accounting Pronouncements

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	Estimated Life	February 28, 2021			August 31, 2020
Computer and office equipment	3 to 5 years	$	23,920		$	23,920
Less: Accumulated depreciation			(22,500	)		(21,942	)
		$	1,420		$	1,978

Depreciation expense amounted to $558 and $1,751, for the six-month periods ended February 28, 2021 and February 29, 2020, respectively.

NOTE 4 – LOANS PAYABLE

February 28,

2021

August 31,

2020

Loans payable

1,299,947

1,029,765

During the six-month periods ended February 28, 2021 and February 29, 2020, the Company generated loan proceeds of $228,168 and $217,843, respectively.

	February 28, 2021		August 31, 2020
Loans payable short-term	$	1,251,704	$	980,109
Loans payable long-term		48,243		49,656
	$	1,299,947	$	1,029,765

The loans payables are generally due on demand, are unsecured, and are bearing interest at a range of 2-12%, with the exception of one loan payable to a financial institution. Such loan, which amounted to $66,716 at February 28, 2021 bears interest rate at 2.5%, is unsecured, matures in May 2026 with principal and interest payable monthly starting in May 2021. This loan is part of a Bounce Back Loan Scheme from the UK Government.

There are a fixed number of shares to be granted through specific grants in funding agreements which have not been issued yet. None of these shares are convertible. Those shares are included in the accrued expenses and interest expense and were valued based on current market price at the time of the agreement.

The company may have to provide additional consideration (which may be in cash, shares or other financial instruments) up to amounts accrued to satisfy its obligations under certain unsecured loans payable.

The aggregate schedule maturities of the Company’s loans payable outstanding as of February 28, 2021 are as follows:

2021	$	1,251,704
2022		11,578
2023		11,578
2024		11,578
2025		11,578
Thereafter		1,931
	$	1,299,947

NOTE 5 – CONVERTIBLE DEBENTURES

At February 28, 2021, and August 31, 2020 convertible debentures consisted of the following:

	February 28, 2021		August 31, 2020
Convertible notes payable	$	840,791	$	840,791
Unamortized debt discount		-		-
Total	$	840,791	$	840,791

The convertible notes payable matured through February 28, 2021, and bear interest at ranges between 6% and 15%. The convertible notes are convertible at ratios varying between 45% and 50% of the closing price at the date of conversion through, at its most favorable terms for the holders, the average of the three lowest closing bids for a period of 5-30 days prior to conversion.

NOTE 6 – OFFICERS LOANS PAYABLE

February 28,

2021

August 31,

2020

Officers loans payable

75,830

77,044

The loans payables are due on demand, are unsecured, and are non-interest bearing.

NOTE 7 – DERIVATIVE LIABILITIES

The Company accounts for the embedded conversion features included in its convertible instruments as derivative liabilities. The aggregate fair value of derivative liabilities at February 28, 2021, and August 31, 2020 amounted to $701,503 and $773,676 respectively. At each measurement date, the fair value of the embedded conversion features was based on the lattice binomial method using the following assumptions:

	February 28, 2021	August 31, 2020
Effective Exercise price	0.0015 - 0.0040	0.0010 - 0.0076
Effective Market price	.0040	0.0076
Volatility	51.08%	82.15%
Risk-free interest	0.08%	0.12%
Terms	365 days	365 days
Expected dividend rate	0%	0%

The expected volatility is based on the historical volatility of comparable companies.

Changes in the derivative liabilities during the three-month period ended February 28, 2021 is as follows:

Balance at August 31, 2020	$	773,676
Embedded conversion features at issuance		-
Changes in fair value of derivative liabilities		(72,713	)
Balance, February 28, 2021	$	701,503

NOTE 8 – ACCRUED COMPENSATION

As of February 28, 2021, and August 31, 2020, the Company owes $1,424,386 and $1,436,686, respectively, in accrued compensation and expenses to certain directors and consultants. The amounts are non-interest bearing.

NOTE 9 – COMMON STOCK AND PREFERRED STOCK

Preferred Stock- Series 1 and 2

The designation of the Preferred Stock- Series 1 is as follows: Authorized 2,000,000 shares, par value of $0.001. One share of the Company’s Preferred Stock- Series is convertible into 53.04 shares of the Company’s common stock, at the holder’s option and with the Company’s acquiescence, and has three votes per share.

The designation of the Preferred Stock- Series 2 is as follows: Authorized 2,000,000 shares, par value of $0.001. One share of the Company’s Preferred Stock- Series is convertible into one share of the Company’s common stock, at the holder’s option and with the Company’s acquiescence, and has no voting rights.

Common Stock

The Authorized Shares were increased to 2,000,000,000 in April 4, 2016.

During the three months ended February 28, 2021, and November 30, 2019, the Company issued 0, and 0 shares of its common stock, respectively.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its facilities under non-cancellable operating leases which are renewable monthly. The leases have monthly base rents. The latest monthly base rent for the Company’s facilities ranges between $255 and $1,025.

Total rental expense amounted to $9,258 for the six-month period ended February 28, 2021.

Consulting Agreement

The annual compensation of Linda Perry amounts to $150,000 for her role as a consultant and as Executive Director for US interface to provide oversight regarding external regulatory reporting requirements. In addition, Ms. Perry is the lead executive for capital funding requirements and business development. The agreement has a rolling three-year term through September 2022.

Legal Proceedings

From time to time, the Company has become or may become involved in certain lawsuits and legal proceedings which arise in the ordinary course of business. The Company intends to vigorously defend its positions. However, litigation is subject to inherent uncertainties and an adverse result in those or other matters may arise from time to time that may harm its financial position, or our business and the outcome of these matters cannot be ultimately predicted.

NOTE 11 – FOREIGN OPERATIONS

As of February 28, 2021, a majority of our revenues and assets are associated with subsidiaries located in the United Kingdom. Assets at February 28, 2021 and revenues for the six-month period ended February 28, 2021 were as follows unaudited

	United States		Great Britain		Total
Revenues	$	-	$	75,082	$	75,082
Total revenues	$	-	$	75,082	$	75,082
Identifiable assets at February 28, 2021	$	21,963	$	42,191	$	64,154

As of February 29, 2020, a majority of our revenues and assets are associated with subsidiaries located in the United Kingdom. Assets at February 29, 2020 and revenues for the six-month period ended February 29, 2020 were as follows unaudited

	United States		Great Britain		Total
Revenues	$	-	$	240,800	$	240,800
Total revenues	$	-	$	240,800	$	240,800
Identifiable assets at February 29, 2020	$	4,592	$	50,525	$	55,117

NOTE 12 – SUBSEQUENT EVENTS

The Company has analyzed its operations subsequent to February 28, 2021 through the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Readers are cautioned that certain statements contained herein are forward-looking statements and should be read in conjunction with our disclosures under the heading "Forward-Looking Statements" above. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. This discussion also should be read in conjunction with the notes to our consolidated financial statements contained in Item 8. "Financial Statements and Supplementary Data" of this Report.

OPERATIONS OVERVIEW/OUTLOOK

The Company developed a document called the Creds Deck which provides a description to prospective clients of Digital Clarity’s value proposition http://www.dbmmgroup.com/wp-content/uploads/2020/11/Digital-Clarity-Creds-Deck_DB64F.pdf.

Coronavirus lockdown has halted many business processes starting from manufacturing, supply chain to logistics, and marketing. Digital Clarity is no exception, and the negative impact is measurable.

Some businesses have closed or paused their digital marketing activities temporarily, because of this uncertainty. That mindset results in drastically decreased online traffic, sales, engagement, conversation, and pushed down search ranking.

Digital marketing is not a quick-fix solution to gain momentum. Therefore, it does not give companies visibility overnight. Many companies using digital marketing techniques such as search engine optimization (SEO) or social media marketing, are already aware that implementations take three to four months’ time to achieve positive results. Our company mantra remains, “ROI is our DNA.”

This means that although there has been a slowdown in existing business and new business development has also slowed considerably there is a need for reinforcement of the digital values proposition to bring or maintain a company’s brand front and center.

Operationally, fiscal year 2020 has been important in continuing the direction of the Company and steering it toward a scaled growth plan which has been in neutral while the Company addressed certain external challenges beyond its control. This has also been impacted by the worldwide pandemic of Covid-19. Nevertheless, The Company continued to focus on the positive, proven operating model and used that model to a certain maintain of existing clients and through its digital infrastructure, is perfectly placed to expand geographic reach to new clients in 2021.

Through a turbulent 2020 to date, DBMM continues to build on its strengths. Like the rest of the world, the effect of Covid-19 and the Pandemic that still persists are a paramount concern, the Company has strong relationships within the market will continue to extend its business focus to a wide variety of industry verticals.

The heart of the business is its marketing consultancy. DBMM Group’s main business Digital Clarity works in the area of Digital Marketing. Understanding each client and developing the model to individualize the outlook has been essential and is differentiating and is its competitive advantage. This kind of close relationship with its clients resulted in Digital Clarity being considered a close professional and trusted advisor.

WHY DIGITAL EXPERTS ARE IN DEMAND

The world is changing, and technology is taking the lead. Today, everything is going digital -- entertainment, health, real estate, banking and even currencies. This is, however, understandable. In North America alone, 95% of the population are online (statista).

With everything turning to digital, it means companies are also jumping online to market their businesses. And to survive the challenges of digital marketing, brands need to keep up with the latest trends. Successfully reaching one’s target audience is no longer just putting out TV and print ads. These days, social media is the new arena of digital marketers, with Statista claiming 4.6 billion people are active social media users as of October 2020.

To keep up with the ever-changing scene, digital marketing experts need to stay in step with the evolving tech trends. Social media marketing companies like ours work tirelessly to research consumers and what makes them engage with brands. We try to find the best online solutions that will cater to our clients’ end-users’ queries in the easiest and most cost-efficient way possible -- be it by developing new technology or adapting to trends.

RELENTLESS DIGITAL GROWTH POSITIONS DIGITAL CLARITY AS A LEADER

The need for seasoned expertise and insight is in huge demand. Digital Clarity’s strength, heritage and reach in the digital marketing puts the DBMM brand in an excellent position for investment and growth. Digital Clarity’s strength in Search Engine Marketing, Analytics and Social Media means that the Company is ready to feed on that demand and leapfrog into a powerful revenue focused vehicle.

SHOPPERS STILL USE A MIX OF DIGITAL TOUCHPOINTS DURING COVID-19 ALONG THE BUYING JOURNEY

	●	In the discovery and evaluation part of the journey, search engines, social media feeds, and influencers are popular ways for shoppers to get product inspiration outside a brand’s properties.
	●	In the buying part of the journey, there are new types of purchase points emerge. Mobile wallets are behind e-mail as a place to make purchases. And 14% of shoppers are making purchases through social media

Customers Still Face Silos Across Channels – THE DIGITAL LANDCAPE THROUGH THE PANDEMIC

	●	Customers are accessing multiple touchpoints during a purchase but there is a significant disconnect within companies.
	●	75% of consumers expect consistent interactions across all departments.
	●	However, 58% say that they feel like they’re communicating with separate departments and not one company.
	●	And when it comes to service issues, 70% of customers expect all of the reps to have the same information about them, but 64% say that they have to re-explain issues.

DIGITAL SALES ARE BECOMING MORE ACTIVE THAN HOLIDAY PERIOD

	●	In today’s environment, unified channels and customer service are more important than ever, as non-essential businesses closed their doors to help slow the spread of Covid-19. This meant that retailers and shoppers alike had to pivot overnight to a digital-only reality.
	●	Digital sales growth by 18% in Q1 2020 compared to Q1 2019
	●	We see traffic growth by 13% in Q1 2020 compared to Q1 2019. - Desktop and Social Surge in Traffic - In addition to the rise in digital commerce and traffic, there are two more unusual trends.
	●	The first relates to desktop traffic. In Q1 2019, desktop traffic declined by 9%, but grew by 9% in Q1 2020. With people stuck inside and not on the move, there’s a pronounced switch to desktop traffic and purchases.
	●	Another trend is that traffic from social media has grown quickly. In Q1 2019, the share of traffic coming from social media was 6%. This jumped to 8% for Q1 2020.

VERTICALS EXPERIENCE DIFFERENT ORDER GROWTH - THE SURGE IN DIGITAL COMMERCE IS NOT EVENLY DISTRIBUTED

	●	Home related goods clearly saw astonishing growth, up 70% in Q1 2020.
	●	Learning and active apparel experienced growth over 35% in digital orders in Q1 2020.
	●	However, luxury and general apparel only grew around 10% in Q1 2020, which is lower than their Q1 2019 performances.

AREAS THAT DIGITAL CLARITY EXCEL ARE AREAS THAT NEED TO BE CONSIDERED TODAY

	●	Market from Home - Deploy campaigns quickly from home, collaborate across teams and keep marketers engaged with apps
	●	Engage Customers with Empathy - Listening to customers, use real-time data to better understand their current situation and needs
	●	Personalize Digital Communications - Accelerate digital channel adoptions, deliver the right message, to the right person, at the right time
	●	Optimize Budget Spends – Digital Clarity unify marketing performance and make real-time decisions to minimize the negative impact

SOURCES FROM: DELOITTE DIGITAL AND SALESFORCE 2020

Among, its range of services, Digital Clarity help companies ‘get found’ on search engines like Google. The Market Share chart from Statista, we can see that Google has the lion’s share of the search market worldwide. As a Google Premier Partner, Digital Clarity are well placed to advise, consult and grow companies, in 2021 and beyond.

From Google’s parent Alphabet’s latest results, In the third quarter of 2020, Google's revenue amounted to 46.02 billion U.S. dollars, up from 37.99 billion U.S. dollars in the preceding quarter. Google's main revenue source is advertising through Google sites and its network.

HOW MACHINE LEARNING IS ENHANCING DIGITAL MARKETING STRATEGY

Digital Clarity applies strategy to algorithmic based machine learning tools. The launch of Google’s new machine learning tool, RankBrain which contributes to search engine results, left many people wondering what impact machine learning would have in the realm of Search Engine Optimization (SEO).

With the tech industry going crazy for all things Artificial Intelligence (AI), Natural Language Processing (NLP), machine learning, and chatbots – companies like Digital Clarity help brands make sense of this ever-changing landscape.

MACHINE LEARNING AND DIGITAL MARKETING

Because machine learning is being used to solve a huge set of diverse problems with the help of data, channels, content, and context, as marketers, Digital Clarity stands to benefit from this information and phenomenon as a whole. But, as the information we gather grows, digital marketing as we know it is set to change. Digital Clarity will be at the forefront of this change.

SEARCH ENGINE OPTIMIZATION

From an SEO point of view, keywords could become less important. Search engines receive more revenue for ads when they provide users with higher quality content. As a result, the algorithm they use needs to be more focused on providing each user with content that will serve a specific purpose, rather than be packed with the right keyword density. Therefore, the need to start thinking about the quality of your content as a ranking factor on search engines. This is where Digital Clarity come and help shape content ‘in the right way’ to help it get found.

PAY PER CLICK (PPC) CAMPAIGNS

With Google launching new “smart” features such as Google Smart Bidding, Smart Display Campaigns, and In-Market Audience to help businesses maximize conversions, it is clear that the future of PPC lies in machine learning.

To become more strategic and take PPC campaigns to the next level for its clients, Digital Clarity:

●	Get to grips with the metrics that are most valuable to your business
●	Understand obstacles that could get in the way of meeting your goals
●	Know the underlying performance drivers to make more strategic decisions

SEARCH - OVERALL

Search makes up half (52%) of this, increasing on par at 15% to £3.3bn, next is non-video display at £1.33bn (+9%), then video display £967m (40%). Classifieds remains at £726m and other remained at £41m.

DIGITAL CLARITY EMBRACE GOOGLE’S MACHINE LEARNING MARKETING SUITE

Machine learning and AI have grown at a rapid pace and are an integral part of day-to-day search advertising management and planning. Though machine learning has been an integral part of the ad world, what has been more significant has been the addition of Artificial Intelligence or AI. According to a recent report in The Harvard Business Review by Deloitte, AI in Digital Marketing is not just getting bigger, it’s getting far more persuasive.

MIT researchers recently unveiled a chip that can perform inference using neural network computations three to seven times faster than previous chips, and with up to 95 percent less power consumption. Dozens of companies working on new generations of AI chips—for use both in and outside of data centers—are attracting significant investment. These companies raised more than $1.5 billion in funding last year, nearly twice the amount they raised the year before.

According to Gartner, 80% of emerging technologies will have AI foundations by 2021 and beyond.

DIGITAL CLARITY PERFECTLY POSITIONED FOR THE FUTURE

According to Gartner's Digital Business Acceleration report: Where to Focus Now, Enterprises have the intention of becoming more digital due to COVID-19.

CONTENT MARKETING

Although still extremely important, the internet has become inundated with too much content. There is consensus among companies that in order to succeed, brands need to be creating content that is valuable to readers. To do this, you need to understand consumer trends, data and engagement. Machine learning tools alongside Digital Clarity’s strategic approach allows its clients to reduce the amount of time spent tracking data, as well as better decipher that data to create actionable tasks that will lead to success.

THE GROWTH OF DIGITAL MARKETING & CONSULTANCY SERVICES

The skill set historically owned by agencies offering disciplines such as UX, design, creativity, customer-centric data analytics and customer engagement is now being immersed with large consultancy businesses whose traditional bread and butter was Digital Transformation.

Accenture, Deloitte, IBM, KPMG, McKinsey and PricewaterhouseCoopers rank among the most aggressive players in acquiring and partnering with agencies such as Digital Clarity. They present not only an opportunity for Digital Clarity but also a prospective exit and investment opportunity.

Digital Clarity have continued to develop their Digital Consulting and Strategy Planning offering. The forward-looking program is to be a recognized leader in this field and fulfill companies seeking Digital Transformation for their originations.

DIGITAL MARKETING SERVICES

There is no denying that 2020 and first quarter of 2021 has proved challenging for Digital Marketing Services. When the pandemic hit in March 2020, many companies’ long-term plans and strategies were thrown out the window, as everyone from the frontlines to the C-suite shifted into fire-fighting mode. Many worked around the clock by leveraging remote technology.

Most businesses, except for those engaged in essentials, have been at a standstill and enterprises are cutting back on costs. The axe falls on marketing. The virus has brought most scheduled digital marketing plans to a grinding halt or slowed them down. The impact is felt in digital marketing, with predicted patterns now appearing skewed.

During the main part of the lock-down., Google announced $800 million in funding and grants for businesses advertisers. It has on offer $ 340 million in credits for active advertisers. The clear opportunity is at the foundation of the Company, namely the need to expedite and continue to encourage development in the digital marketing services sector. The marketing services product is labor intensive and thus the Company must jumpstart the growth by significant capital to grow simultaneously in multiple geographies.

The Company’s outlook remains robust for 2021 and the foreseeable future, particularly as businesses adjust and redirect their retail business to online digital marketing in the COVID Post COVID world.

KEY MILESTONES

During the fiscal year 2020 ending August 31,2020 and through the first quarter of 2021 ending February 28, 2021, revenues decreased due to external circumstances out of the company’s control which placed enormous pressure on the operating business.

Despite these circumstances, the client base is expanding in base number and the size of client serviced. At any point in time, our clients represent a variety of industries. Many of these clients choose to operate under an NDA as our clients see DBMM as a competitive advantage. Under that disclaimer, we cannot share all clients’ names, but here are a few key clients representing diverse verticals, as follows:

Digital Clarity shortlisted for prestigious UK Search Awards in the hotly contested ‘Best Use of Search’ along with client Bentley SYNCHRO, a global construction project management software company that supports the professional needs of those responsible for creating and managing the world’s infrastructure.

Synergy SKY, a Norwegian based company that develops and markets software platforms to manage all meetings and video conferences, announce online marketing partnership with Digital Clarity.

Digital Clarity release SEO Guides for business during Covid-19 Pandemic. The company has a long history with Google search both paid and organic, with these guides specifically focusing on three core areas:

●

The Importance of a Strong Internal Linking Strategy

●

How to Get to the Top of Google

●

How Much Does SEO Cost?

The Luxury Property Show partners with Digital Clarity. The Luxury Property Show at Olympia London and is the only event in Europe dedicated to luxury and high-value property aimed at High-net-Worth Individuals.

Ad World Masters, a worldwide ranking of agencies based on state-of-the-art scoring algorithms, has named its top agencies for 2019 – worldwide. Digital Clarity has won a Silver award for the United Kingdom. Ad World Masters Agency of the Year highlights the best agencies around the world, based on its underlying technology and unique data.

Other examples are representative of the diversity of client base. DBMM's approach using a client's analytics and executing an individualized model to increase ROI as the prime objective, spans a wide range of industries.

Digital Clarity’s services are in demand and the company is pursuing opportunities in Formula 1, Aviation and high-end marketing for Luxury Brands.

Core industry verticals for Digital Clarity include: Managed Service Providers, Unified Communication Companies and discretionary advice for professional service providers.

SEARCH REMAINS KEY, BUT GROWTH EBBS SLIGHTLY DURING PANDEMIC

Total UK digital ad spend fell 5% between January-June 2020 with the market reflecting the impact of the Covid-19 pandemic," according to PWC and IAB (retrospective) public reporting of advertising data.

Conducted with PwC, the analysis shows that Display (video) and Search were the biggest drivers of growth between January and June 2019 – up 27% and 13% respectively.

Search now accounts for £3.7 billion of total H1 digital ad spend, while combined Display (video and non-video) is worth £2.8 billion, a 17% annual uplift. Non-video remains the largest Display format (up 8% YoY to £1.45 billion), but video formats are growing fast (up 27% to £1.32 billion).

THE NEED FOR PROFESSIONAL CONSULTANCY & OPPORTUNITY FOR MASSIVE GROWTH

Four consultancies lead Ad Age's ranking of the 10 largest agency companies in the world. With combined revenue of $13.2 billion, the marketing services units of Accenture, PwC, IBM and Deloitte sit just below WPP, Omnicom, Publicis Groupe, Interpublic and Dentsu. Last year, only two consultancies—Accenture Interactive and IBM iX—made the top 10. IBM iX was the first to break into the top 10.

Given the experience of the team, Digital Clarity’s advisory and consultancy is in demand. With the recent growth in these business areas, and the rise of consultancies, it is confirmation that Digital Clarity is headed in the right direction for growth.

THE GROWTH OF DIGITAL TRANSFORMATION WORLDWIDE

The global digital transformation market size was valued at USD 284.38 billion in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 22.5% from 2020 to 2027. During 2020 as Covid-19 emerged, Digital Clarity began to evolve their consultancy to take advantage of the increasing demand by corporations to digitally transform their organization for 2021 and beyond.

Growing demand for the adoption of the Internet of Things (IoT) across industries is promoting the introduction of connected and data-rich solutions. These solutions are capable of embedding intelligence into business operations to facilitate better and more effective customer engagements. Growing usage of smartphones, mobile devices, and applications is promoting digitization.

Digital transformation supports organizations in mitigating risks and handling disruption such as marketplace fluctuation, corporate restructuring, and geopolitical environment that are unanticipated, and can lead to unpredictable results.

THE IMPORTANCE OF STRATEGIC CONSULTANCY IN 2021 AND BEYOND

Digital Clarity is dedicated to helping its clients align their business objectives and utilize digital marketing to acquire and retain customers.

The company's marketing consultancy process is centered around a brands business objective. The approach is consultative and leverage's years of expertise within the digital marketplace and across a wide range of industry sectors.

Alongside helping companies understand their ‘why’, the company also helps shape a robust and measured strategy to achieve business objectives.

Over the years, Digital Clarity has identified that all too often clients are unclear why, how and where to invest their budgets to get the best return. In response, the company has developed a Strategic Consultancy service helps prioritize investment and resources to achieve the given goals.

Digital Clarity has created a unique Diagnosis Workshop that helps brands identify needs as well as assess the opportunity available. The core focus is to help reduce wastage and increase results.

Areas of focus include:

●

Cost analysis

●

Audit current channels

●

Digital strategy planning

●

ROI projection planning

●

Digital consulting & training

GLOBAL AD SPEND CONTINUES

Competitive landscape

Digital advertising is the fastest-growing segment of the global market for advertising spending. The increasing use of smartphones and the availability of cheap internet services are the two major factors propelling the growth prospects for this market. More than 30% of the companies are planning to spend around 75% of their advertising expenditures on digital marketing within the next five years.

“U. S. Marketers are expected to spend $110.1 billion on digital ads this year, or 51% of the $214.6 billion total U.S. advertising spending forecast, excluding political ads. Newspapers, radio, magazines, and local television now account for just 21% of the U.S. ad market.” From The Wall Street Journal.

DIGITAL CLARITY HAS A COMPETITIVE ADVANTAGE

Digital Clarity operate in a highly commoditized market but have over the years build a stellar reputation that makes it different from its competitors. Some of these areas include:

Our DNA is Strategically Driven

We believe the path to successful customer acquisition lies in understanding a client’s business – not just running a campaign. We seek to help clients understand that success has to be objective and measurable.

We are Business Led

Digital marketing is not a cost but an asset. Not a line in a spreadsheet but an emotive force that if done right, will bring real business change and growth.

We are Digital Thinkers

Marketing has to be at the heart of the business. Delivering real innovation in digital marketing requires not just knowledge but authority and bravery. We think digital. We drive results.

Our goal is to deliver Digital Performance

We help our clients to understand their goals and objectives, using digital marketing to drive new business opportunities and retain their current customers.

In April 2020, HIS Markit, research firm, reported: “Each dollar that companies spent on advertising in the United States last year, led to $9 in sales.

THE GROWTH OF SOCIAL MEDIA E-COMMERCE

Enabling consumers to finalize a purchase while remaining within social apps has been a goal for social platforms for some time now. Social commerce is seen to have the potential to be a major revenue generator and an important way to diversify revenue streams beyond advertising. Across Asia, networks like WeChat and Line have successfully facilitated commerce via their platforms, allowing consumers to carry out a range of commerce activities from booking taxis to paying for restaurant bills or items in-store.

But social commerce has been a tough sell in many Western markets. Online consumer habits here can be difficult to change, especially when it comes to the potentially sensitive information involved in financial transactions. Social media can play a big role in the purchase journey right up to the point of purchase, but the appetite to complete a final purchase within the platform remains low. Most will move to retail sites. These benefits must be intrinsically social or deeply embedded with payment systems, and must be grounded in consumer-engagement strategies, in order for social commerce to achieve the roaring success seen in APAC.

The prospect of using “buy” buttons on social media in the U.S. has not quite gained traction. The growing role of social networks as a way of researching products does, however, provide social video with a strong value-proposition in The Social Path to Purchase % who say they do the following furthering the social commerce agenda in this market. In the U.S.

The expectation is that US ecommerce sales will surge 35.8% to $190.47 billion, offsetting brick and mortar declines in 2020 holiday season.

Source: emarketer.com

WORLDWIDE E-COMMERCE GROWTH OPPORTUNITIES

Retail e-commerce sales worldwide continue to grow exponentially year on year and projected to grow to $4.5 trillion by 2021. Online shopping is one of the most popular online activities worldwide, Goldman Sachs expects on-line shopping retail sales in China to grow to $1.7 trillion by 2020. Usage varies by region.

GLOBAL RETAIL ECOMMERCE SALES WILL REACH $4.5 TRILLION BY 2021

Cumulative data from Statista anticipates a 246.15% increase in worldwide ecommerce sales, from $1.3 trillion in 2014 to $4.5 trillion in 2021. That’s a nearly threefold lift in online revenue.

GLOBAL ECOMMERCE RETAIL SALES TO HIT $4.9 TRILLION BY 2021

New studies projected that the worldwide retail eCommerce sales will reach a new high by 2021. Ecommerce businesses should anticipate a 265% growth rate, from $1.3 trillion in 2014 to $4.9 trillion in 2021. This shows a future of steady upward trend with no signs of decline.

But, what’s even more significant is that global eCommerce sales have been steadily eroding the worldwide retail market. In fact, by 2021, it will account for 17.5% of the total global retail sales.

OMNICHANNEL SHOPPING WILL BECOME MORE PREVALENT

As the lines blur between the physical and digital environment, multiple channels will become more prevalent in customers’ path to purchase. This is evidenced by 73% of customers using multiple channels during their shopping journey. What it means for eCommerce is to understand how their customers buy, which marketing channels do they engage with, and their motivations and main drivers to purchase. In the simplest sense, omnichannel shopping means decoding what, where, when, why, and how people are purchasing the products you sell on a particular channel.

Every single touchpoint is important because it puts every single piece of the puzzle into a whole story. Knowing your customers’ touch points before they purchase will better inform your brand of how to promote your products and allocate your marketing budget. More and more people are doing their shopping on social media platforms. With the improvement of social media’s selling capabilities, social media platforms are more than just advertising channels. People can now conveniently and quickly purchase products on their chosen social media platform.

B2B ECOMMERCE IS A BIGGER GIANT

B2B (business-to-business) eCommerce is the online selling and marketing of products from one business to another. And when compared to the B2C (business-to-consumer) eCommerce industry, B2B eCommerce is projected to be two times higher than B2C by 2020.

In the US alone, B2B eCommerce sales will hit 1.184 trillion dollars by 2021.

The predominance of B2B ecommerce means that B2B businesses must improve and simplify their shopping journey, channeling the B2C ordering experience. The B2B shopping experience is a lot more complicated than that of a B2C buyer.

Because of the nature of the transaction, B2B buyers usually need to go through various steps, including sales representative interaction, negotiations, and approvals before they can make a successful purchase. In short, B2B eCommerce businesses must adapt to a more seamless transaction building advanced functionality quote management, price negotiation, easy ordering, order and inventory management for the B2B market.

According to Forbes Magazine in 2020 the largest ecommerce markets are:

1	China:	$672 billion
2	United States:	$340 billion
3	United Kingdom:	$99 billion
4	Japan:	$79 billion
5	Germany:	$73 billion
6	France:	$43 billion
7	South Korea:	$37 billion
8	Canada:	$30 billion
9	Russia	$20 billion
10	Brazil	$19 billion

GROWTH IN INVESTOR AWARENESS AND OUTREACH.

During 2021, Digital Brand Media & Marketing Group, Inc. will initiate a significant effort to raise positive awareness of DBMM's growth potential on a global basis. The Company had to defer its 2020 plans until certain SEC Matters regarding the delinquent filings brought current in July 2018, remain open. The global pandemic made it impossible to initiate any Investor Awareness Programme.

Hopefully in 2021 the strategic outreach will be directed at investors around the world who understand the digital marketplace and its expanding influence on consumer decisions. DBMM will target new investors through a global digital and traditional integrated investor outreach campaign which will be run by Digital Clarity, with third parties, as required, for distribution. In all areas, the Company will act in the interests of all stakeholders.

In the full industry context of dramatic expansion of digital footprints, there has been no direct correlation between DBMM's revenues and its share price. Economic and industry analysts have opined that the industry multiple continues to grow to, in some cases, 25-30 times revenues. DBMM will expand its client and geographic scale, thus increasing revenues. There were matters outside of DBMM's control which caused growth to be in neutral, and in 2020 the pandemic threw all planning into disarray. With capital infusion, 2021 will follow the model of a growing client base and geographic reach until it achieves a TBD level of profitability. This benchmark will replicate successful industry models in digital technology and marketing.

FINANCIAL OVERVIEW/OUTLOOK

DBMM has been honing its commercial model since the acquisition of Digital Clarity (“DC”) in 2011 which has been cash-flow positive as an operating company since its acquisition. External events outside of DBMM's control has precluded the growth expected to this point, however, its margins will continue to be strong on an annual basis, and once the business reaches appropriate scale with assumed profitability and cross-over point, DBMM trajectory suggests a resultant very successful business for all of its stakeholders.

The Company growth plan was first deferred until Brexit was passed and executed with the EU, which it appears to have been done recently, but remaining challenging and frustrating is the open SEC Matter, superimposed by a global pandemic beginning in March 2020. There is now a vaccine which is rolling out, and hopefully should eventually normalize the SEC which has been operating remotely. Once a Final Order has been issued, the growth plan will recommence. Clients and shareholders will benefit as the market cap grows acknowledging that digital technology and marketing continues to be one of the fastest growing industries in the world, even amidst the pandemic.

Once the growth trajectory occurs, the clients benefit immediately due to a wider range of resources; the shareholders will benefit as the market cap grows. The media market multiple far exceeds the “old” manufacturing multiples, as digital technology and marketing has become one of the fastest growing industries in the world today.

The good news is DBMM’s standing in the sector is strong because Digital Clarity as a brand is positive, particularly for its size. The industry environment continues to grow exponentially and the future of digital marketing as an essential strategy for any consumer-facing business has been proven over-and-over as certain retail businesses are forced to close their doors for lack of or an ineffective digital presence. DBMM's brand, Digital Clarity, increases its valuation with client case studies and industry awards resulting in its being considered a leader in the sector for its size. DBMM's increasing client base, coupled with decreasing certain kind of debt and expenses, positions the Company to attract mezzanine financing, something sought after by many and achieved by few.

Coincidently during the fiscal year 2020 and through the second quarter of 2021, revenues have slowed down temporarily due to Brexit unease in the UK and clients concern about trade issues with or without the European Union. So, in the midst of the uncertainty caused by the Brexit slowdown, the COVID -19 global outbreak has caused further slowdown as clients paused and business development much different during an initial lockdown, then lifted only to be reinstated on November 5, 2020. That only made the uncertainty further exacerbated, while clients need to extend or double down on their digital footprint as the industry has become essential during the pandemic. Nevertheless, Digital Clarity is revising its model to adjust to changing circumstances, when client revenues are paused or delayed.

The operating unit has successfully received UK government relief during the last fiscal year and anticipates additional relief during 2021. The business is undergoing some real pain during Covid-19, as their clients and new client development had to undergo re-modeling to adjust to an eroding retail business, with an accelerating need to expand the online expansion and often the timing is not in sync. The elephant generally cannot dance without a lot of reorganization, especially not this fast. There has been revenue erosion while the landscape is in this uncertainty. The UK Prime Minister locked down the country beginning in January 2021, which only exacerbates the need for clients to evolve its digital footprint with speed and unplanned risk inherent in that approach. The risk adverse gradual evolution was preferred by the vast majority of business, now has no choice. Long term that is a positive development for Digital Clarity, but short term has impacted revenues negatively.

The Company received a commitment for future working capital in order to grow the Company in key markets, with the intent to move to DBMM profitability following a return to normal trading. At that point, DBMM would not require future financing until it was ready to acquire 1-2 additional companies to complement and further develop the digital marketing business. Growth capital will increase as the client base re-balanced and expands in size and scope.

Going forward, there will be an emphasis on investor awareness as soon as the SEC dismissal has been affirmed by the full commission. DBMM has been current in its filings since July 2018 and is encouraged by the outlook after normal trading has recommenced. DBMM intends to make significant strides in aggressively widening its brand exposure using a variety of digital and social channels. There are investors around the globe who understand the digital marketplace and its increasing influence on consumer decisions. DBMM will be targeting these new investors in the public market through a global digital and traditional, integrated campaign which will be run by Digital Clarity, with third parties, as required for distribution.

The expectations for fiscal year 2021 remain to return to normal trading following affirmance of the dismissal by the full commission. The Company intends to move ahead thereafter to the scaled, growth plan in multiple geographies to benefit all stakeholders, being mindful of the impact of the global pandemic.

SIX-MONTH PERIOD ENDED FEBRUARY 28, 2021

We had approximately $50,000 in cash and our working capital deficiency amounted to approximately $5.4 million at February 28, 2021.

During the six-month period ended February 28, 2021, we used cash in our operating activities amounting to approximately $228,000. Our cash used in operating activities was comprised of our net of approximately $329,000 adjusted primarily for the following:

Accounts payable, accrued expenses, accrued interest, and accrued compensation, of approximately $170,000, resulting from a short fall in liquidity and capital resources.

Additionally, the following variations in operating assets and liabilities during the six-month period ended February 28, 2021 impacted our cash used in operating activity:

During the six-month period ended February 28, 2021, we generated cash from financing activities of $226,954 which primarily consists of the proceeds from demand notes payable of $228,168.

SIX-MONTH PERIOD ENDED FEBRUARY 29, 2020

We had approximately $16,000 in cash and our working capital deficiency amounted to approximately $4.6 million at February 29, 2020.

During the six-month period ended February 29, 2020, we used cash in our operating activities amounting to approximately $160,000. Our cash used in operating activities was comprised of our net loss from continuing operations of $176,601 adjusted for the following:

Change in fair value of derivative liability of $14,084.

Nonrecurring gain in extinguishment of debt of $ 192,977

Additionally, the following variations in operating assets and liabilities impacted our cash used in operating activity:

A decrease in our accounts payable and accrued expenses of approximately $4,965

An increase in our accrued salaries of approximately $102,000

During the quarter ended February 29, 2020, we generated cash from financing activities of $158,575, which consist of the proceeds from the issuance of loan payables.

RESULTS OF OPERATIONS

Unaudited Consolidated Operating Results

	For the Three Months Ended												For the Six Months Ended
							Increase/			Increase/									Increase/			Increase/
	February 28,			February 29,			(Decrease)			Decrease			February 28,			February 29,			(Decrease)			Decrease
	2021			2020			$			%			2021			2020			$			%

SALES	$	38,117		$	80,666		$	(42,549	)		-53	%	$	75,082		$	240,800		$	(165,718	)		-69	%

COST OF SALES		9,416			92,055			(82,639	)		-90	%		99,739			193,337			(93,598	)		-48	%

GROSS PROFIT		28,701			(11,389	)		40,090			37	%		(24,657	)		47,463			(72,120	)		-20	%

COSTS AND EXPENSES
Sales, general and administrative		121,875			94,371			27,504			29	%		239,094			252,389			(13,295	)		-5	%
Gain on extinguishment of debt		-			-			-			0	%		-			(192,977	)		(192,977	)		100	%

TOTAL OPERATING (GAIN) EXPENSES		121,875			94,371			27,504			29	%		239,094			59,412			(206,272	)		95	%

OPERATING GAIN (LOSS)		(93,174	)		(105,760	)		12,586			8	%		(263,751	)		(11,949	)		134,152			-115	%

OTHER (INCOME) EXPENSE
Interest expense		54,918			67,594			(47,176	)		-19	%		137,959			178,736			(75,277	)		-23	%
Change in fair value of derivative liability		(66,217	)		(10,485	)		(55,732	)		532	%		(72,173	)		(14,084	)		58,089			-412	%
TOTAL OTHER EXPENSE		(11,299	)		57,109			(102,908	)		513	%		65,786			164,652			(17,188	)		-435	%

NET LOSS	$	(81,875	)	$	(162,869	)	$	115,494			-50	%	$	(329,537	)	$	(176,601	)	$	(118,436	)		87	%

(NM): not meaningful

We currently generate revenue through our Pay-Per-Click Advertising, Search Engine Marketing, Search Engine Optimization Services, Web Design, Social Media, Digital analytics and Advisory Services.

For the three- and six-month period ended February 28, 2021 our primary sources of revenue are the Per-Click Advertising, Web Design, and Social Media. These primary sources amounted to 43%, 49%, 6% of our revenues during the three-month period ended February 28, 2021.

Revenue is recognized upon transfer of control of promised or services to customers in an amount that reflects the consideration the Company expect to receive in exchange for those services. The Company enter into contracts that can include various combinations of services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

The decrease in our revenues during the three and six-month period ended February 28, 2021, when compared to the prior year, is due to Brexit unease in the UK and clients concern about trade issues with or without the European Union, and the uncertainty associated with COVID-19 and its impact on Digital Clarity’s clients.

During the three and six-month period ended February 28, 2021, our cost of sales decreased due to reduction in compensation is correlated to our decreased revenues for the respective periods.

The sales, general and administrative expenses during the six-month period ended February 29, 2020 were consistent when compared to the prior period.

Gain on extinguishment of debt decreased during the three- and six-month period ended February 28, 2021, when compared to the comparable prior period. The increase is attributable to an analysis of certain liabilities based on initial assessments performed by the Company during such period which deemed them extinguished pursuant to statute of limitations. Such analysis was not performed in the comparable current period.

Interest expense, which include interest accrued on certain notes and loans, decreased during the three and six-month period ended February 28, 2021 primarily attributable to fewer new loan payables issued with certain considerations, during the three and six-month period ended February 28, 202.

The increase on derivative liabilities is primarily attributable to increase in the Company’s estimated volatility used in the assumptions to compute its fair value at February 28, 2021 when compared to February 29, 2020

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As a “smaller reporting company”, as defined by Rule 10(f)(1) of Regulation S-K, the Company is not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, management, including our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Act.

Based upon the evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of February 28, 2021. Our management concluded that the consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations and cash flows for the period presented in accordance with GAAP.

Changes in Internal Controls Over Financial Reporting:

There were no changes in our internal control over financial reporting during the quarter ended February 28, 2021 identified in connection with the evaluation thereof by our management, including our Principal Executive Officer and Principal Financial Officer, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The U.S. Securities & Exchange Commission instituted an Administrative Proceeding, File No. 3-17990, on May 16, 2017 to revoke the Company's registration statement because of delinquent filings. A hearing was held on August 9, 2017 and the Initial Decision to revoke the registration was dated November 16, 2017. The order was subsequently remanded by order of the U.S. Supreme Court in December 2017. The Company responded to the Remand with evidence of mitigating circumstances under a Protective Order and filed all its delinquent filings: a Super 10-K for 2015-2016-2017 on May 31, 2018 and 10-Q's for 2018 1Q, 2Q on June 22, 2018 and 3Q on July 15, 2018, its due date.

The Hearing for January 15, 2019 was re-scheduled because of government shutdown. Digital Brand entered a Motion to Dismiss the Proceedings on March 19, 2019 based on being current as of July 2018, and all filings to date have been filed on time for the 2019 fiscal year. The facts were presented at the hearing. The Division did not support the dismissal in a response to which Digital Brand filed two Amendments to the Consolidated 10-K for 2015- 2016-2017 and the 10-K for 2018 on April 23 and 24, 2019 respectively, and Amendments No. 2 on October 1, 2019 to supersede language in Part II, Item 9A. On November 12, 2019, Carol Fox Foelak, Administrative Law Judge, Securities & Exchange Commission ordered an Initial Decision/Dismissal of the Proceeding. The Dismissal becomes effective under Rule 360 of the Commission's Rules of Practice, 17 C.F.R., Section 201.360, following the Commission’s Order of Finality. On December 3, 2019 The Division of Enforcement Submitted a Petition for Review of Judge Carol Fox Foelak’s Initial Decision dismissing the Administrative Proceedings rendered on November 12, 2019. The Company filed a Motion for summary affirmance of the Initial Decision on December 20, 2019. The Motion for Summary Affirmance was not opposed by Enforcement.

On January 25, 2021, the Commission denied the Company’s Motion for Summary Affirmance of Judge Carol Fox-Foelak’s Dismissal of November 12, 2019 and granted the Division’s Petition for Review and set a briefing schedule beginning February 24, 2021. The Commission concluded that “briefing in the ordinary course would...assist the Commission. This appeal raises issues as to which we have an interest in articulating our views and important matters of public interest, including the proper application of the standard that governs determination of sanctions in a Section 12(j) proceeding.” The Company is disappointed that so much time has been lost and intends to vociferously support the original Dismissal after 15+ months.

Item 1A. Risk Factors

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this item.

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

None

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

31.1

Principal Executive Officer Rule 13a-14(a) Certification

Principal Financial Officer

Executive Director

32.1

Principal Executive Officer Sarbanes-Oxley Act Section 906 Certification

Principal Financial Officer

Executive Director

SIGNATURES

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

DIGITAL BRAND MEDIA & MARKETING GROUP, INC.

Date: April 12, 2021

By: /s/ Linda Perry

Linda Perry

Principal Executive Officer

Principal Financial Officer

Executive Director

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