10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended May 31, 2018
[  ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
	For the transition period from _________ to ________
	Commission file number: 333-85072

DIGITAL BRAND MEDIA & MARKETING GROUP, INC.

WWW.DBMMGROUP.COM

(Exact name of registrant as specified in its charter)

Florida	59-3666743
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
747 Third Avenue New York, NY 10017	10017
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number: (646) 722-2706

Indicate by checkmark 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 [X]

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 [X ]   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”, “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	[ X ]
		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 provide 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 [X]

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

Date	Shares Outstanding
July 18, 2018	745,718,631

INDEX
	Page No
PART I. CONDENSED CONSOLIDATED FINANCIAL INFORMATION - UNAUDITED	3
Item 1. Condensed Consolidated Financial Statements	3
Condensed Consolidated Balance Sheets as of May 31, 2018 (unaudited) and August 31, 2017	F-1
Condensed Consolidated Statements of Operations for the Three and Nine months ended May 31, 2018 and 2017 (unaudited)	F-2
Condensed Consolidated Statements of Cash Flows for the Nine months ended May 31, 2018 and 2017 (unaudited)	F-3
Notes to Unaudited Condensed Consolidated Financial Statements	F-4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	45
Item 4. Controls and Procedures	45
PART II. OTHER INFORMATION	46
Item 1. Legal Proceedings	46
Item 1A. Risk Factors	46
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds	46
Item 3. Defaults Upon Senior Securities	46
Item 4. Submission of Matters to a Vote of Security Holders	47
Item 5. Other Information	47
Item 6. Exhibits	47
SIGNATURES	48

PART I.

FINANCIAL INFORMATION

ITEM I.

FINANCIAL STATEMENTS

DIGITAL BRAND MEDIA & MARKETING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
		(Unaudited)
		May 31, 2018	August 31, 2017
ASSETS
CURRENT ASSETS
	Cash	$ 85,136	$ 55,262
	Accounts receivable, net	34,863	55,376
	Prepaid expenses and other current assets	476	1,491
	Total current assets	120,475	112,129
	Property and equipment - net	3,703	3,805
TOTAL ASSETS		$ 124,178	$ 115,934
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
	Accounts payable and accrued expenses	$ 329,639	$ 385,628
	Accrued interest	312,217	255,198
	Accrued compensation	1,010,231	882,643
	Loans payable	562,000	370,000
	Derivative liability	707,074	740,953
	Convertible debentures	840,791	840,791
TOTAL CURRENT LIABILITIES		3,761,952	3,475,213
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; 745,718,631, and 745,718,631, shares issued and outstanding	745,718	745,718
	Additional paid in capital	9,274,044	9,274,044
	Other comprehensive loss	(15,924)	(24,961)
	Accumulated deficit	(13,643,607)	(13,356,075)
TOTAL STOCKHOLDERS' DEFICIT		(3,637,774)	(3,359,279)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$ 124,178	$ 115,934
See Notes to Unaudited Condensed Consolidated Financial Statements
F-1

DIGITAL BRAND MEDIA & MARKETING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
		For the Three Months Ended May 31,		For the Nine Months Ended May 31,
		Unaudited		Unaudited
		2018	2017	2018	2017
SALES		$ 88,502	$ 136,693	$ 415,471	$ 389,184
COST OF SALES		101,532	83,073	313,522	220,559
GROSS PROFIT		(13,030)	53,620	101,949	168,625
COSTS AND EXPENSES
	Sales, general and administrative	140,572	9,140	366,340	209,769
TOTAL OPERATING EXPENSES		140,572	9,140	366,340	209,769
OPERATING INCOME (LOSS)		(153,602)	44,480	(264,391)	(41,144)
OTHER (INCOME) EXPENSES
	Interest expense	20,048	20,175	57,019	54,862
	Change in fair value of derivative liability	(15,830)	412,715	(33,879)	(303,252)
TOTAL OTHER (INCOME) EXPENSES		4,218	432,890	23,140	(248,390)
NET (LOSS) INCOME		$ (157,820)	$ (388,410)	$ (287,531)	$ 207,246
OTHER COMPREHENSIVE LOSS
	Foreign exchange translation	481	(211)	9,038	6,492
COMPREHENSIVE (LOSS) INCOME		$ (157,339)	$ (388,621)	$ (278,493)	$ 213,738
NET LOSS PER SHARE
	Basic and diluted	$ (0.000)	$ (0.001)	$ (0.000)	$ 0.000
WEIGHTED AVERAGE NUMBER OF SHARES
	Basic and diluted	745,718,631	745,718,631	745,718,631	745,718,631
See Notes to Unaudited Condensed Consolidated Financial Statements
F-2

DIGITAL BRAND MEDIA & MARKETING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Nine Months Ended May 31,
	Unaudited
	2018	2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$ (287,531)	$ 207,246
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation	102	214
Change in fair value of derivative liability	(33,879)	(303,252)
Changes in operating assets and liabilities:
Accounts receivable	20,511	(26,382)
Prepaid expenses and other current assets	1,015	-
Accounts payable and accrued expenses	(55,989)	(28,308)
Accrued interest	57,019	50,857
Accrued compensation	127,588	130,596
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(171,164)	30,971
CASH FLOWS FROM INVESTING ACTIVITIES	-	-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans payable	192,000	-
NET CASH PROVIDED BY FINANCING ACTIVITIES	192,000	-
NET INCREASE IN CASH	20,836	30,971
EFFECT OF VARIATION OF EXCHANGE RATE OF CASH
HELD IN FOREIGN CURRENCY	9,038	5,993
CASH - BEGINNING OF PERIOD	55,262	4,518
CASH - END OF PERIOD	$ 85,136	$ 41,482
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$ -	$ -
Cash paid for taxes	$ -	$ -
See Notes to Unaudited Condensed Consolidated Financial Statements
F-3

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. (f/k/a RTG Ventures, 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 nine months ended May 31, 2018 are not necessarily indicative of the results that may be expected for the year ending August 31, 2018. Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. These reclassifications had no impact on our previously reported net loss or accumulated deficit. 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, 2017.

F-4

Going Concern

The accompanying unaudited 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 $1.4 million at May 31, 2018 and doesn’t have sufficient cash on hand to satisfy such obligations. The Company has received a non-binding commitment letter from an investor of $250,000 (plus a right of first refusal on additional equity raise up to $3.0 million) which will contribute to satisfying such obligations and fund any potential cash flow deficiencies from operations for the foreseeable future.

Accordingly, the accompanying unaudited condensed 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. There were no cash equivalents as of May 31, 2018.

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 May 31, 2018, the Company recognized $8,634, as the allowance for doubtful accounts.

Property and Equipment

Property and equipment is 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).

F-5

Revenue Recognition

The Company follows the guidance of ASC Topic 605, formerly, SAB 104 for revenue recognition. In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

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. 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.

F-6

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 May 31, 2018 and 2017.

Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of May 31, 2018, 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 nine-month period ended May 31, 2018 and 2017, 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., Black-Scholes 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.

F-7

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 other Level 2 or Level 3 assets or liabilities as of May 31, 2018, 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 May 31, 2018, 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”.

F-8

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 to employees 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.

Foreign Currency Translation

Assets and liabilities of subsidiaries operating in foreign countries are translated into U.S. dollars using both 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.

F-9

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606), to clarify the principles of recognizing revenue and create common revenue recognition guidance between U.S. GAAP and International Financial Reporting Standards. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services and is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services. In addition, ASC 606 requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The ASC is effective for fiscal years beginning after December 15, 2017, including interim reporting periods therein. The Company is currently evaluating the impact of the adoption of ASU 2016-12 on the Company’s financial statements.

In January 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either operating or financing, with such classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact ASU 2016-02 will have on our condensed consolidated financial statements and associated disclosures.

In August 2016, FASB issued accounting standards update ASU-2016-15, “Statement of Cash Flows” (Topic 230) - Classification of Certain Cash Receipts and Cash Payments”, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2018, and interim periods with fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of ASU 2016-15 on the Company’s financial statements.

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: 3 to 5 years	May 31, 2018	August 31, 2017
Computer and office equipment		$ 20,618	$ 20,618
Less: Accumulated depreciation		(16,915)	(16,813)
		$ 3,703	$ 3,805

Depreciation expense amounted to $102 and $214 for the nine-month periods ended May 31, 2018 and 2017, respectively.

F-10

NOTE 4 - LOANS PAYABLE

	May 31, 2018	August 31, 2017
Loans payable	$562,000	$370,000

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

During the nine-month period ended May 31, 2018 and 2017, the Company generated loan proceeds of $192,000 and $0, respectively, $57,000 was from related parties.

NOTE 5 – CONVERTIBLE DEBENTURES

At May 31, 2018 and August 31, 2017 convertible debentures consisted of the following:

	May 31, 2018	August 31, 2017
Loans payable	$840,791	$840,791
Unamortized debt discount	-	-
Total	$840,791	$840,791

The convertible notes payable mature through January 2016, and they bear interest at ranges between 6% and 15%. The convertible promissory 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. As of May 31, 2018, an aggregate of $840,791 of convertible promissory notes have matured and remain unpaid.

NOTE 6 - DERIVATIVE LIABILITIES

Changes in the derivative liabilities during the nine-month period ended May 31, 2018 is as follows:

Balance at August 31, 2017	$740,953
Changes in fair value of derivative liabilities	(33,879)
Balance, May 31, 2018	$707,074

NOTE 7 – 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.

F-11

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.

NOTE 8 - FOREIGN OPERATIONS

As of May 31, 2018, a majority of our revenues and assets are associated with subsidiaries located in the United Kingdom. Assets at May 31, 2018 and revenues for the nine-month period ended May 31, 2018 were as follows (unaudited):

	United States	Great Britain	Total
Revenues	$3,627	$411,844	$415,471
Total revenues	$3,627	$411,844	$415,471
Identifiable assets at May 31, 2018	$5,700	$79,436	$85,136

As of May 31, 2017, a majority of our revenues and assets are associated with subsidiaries located in the United Kingdom. Assets at May 31, 2017 and revenues for the year ended May 31, 2017 were as follows (unaudited):

	United States	Great Britain	Total
Revenues	$40,627	$348,557	$389,184
Total revenues	$40,627	$348,557	$389,184
Identifiable assets at May 31, 2017	$0	$41,482	$41,482

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Legal Proceedings

1.

The Company is involved in a litigation, Asher Enterprises, Inc. v. Digital Brand Media & Marketing Group, Inc. and Linda Perry, Index No. 600717/2014, in the Supreme Court of the State of New York, sitting in the County of Nassau. The Plaintiff alleged $337,500 in damages based on breach of contract allegations arising from the Company’s untimely periodic filings in December 2013. On September 18, 2014, the Court declined to grant the plaintiff’s application for default judgment and Linda Perry was removed as a defendant. The Court awarded judgment in favor of the Plaintiff on July 15, 2015 in the amount of $122,801.87, which does not offset $25,000 paid in settlement efforts. On February 22, 2016 a Settlement Agreement was signed by the parties for a total of $85,000 to Asher Enterprises. (See Note 10 Subsequent Events).

F-12

2.   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. That order was subsequently remanded by Order of the United States Supreme Court in December 2017. The Remand is still pending. The Company is vigorously defending its position and has responded to the Remand with evidence of mitigating circumstances, and subsequent definitive positive actions to rectify its delinquent filings. A Super 10-K for 2015-2016-2017, Q1 2018, Q2 2018, and this document, are definitive evidence, available to the public in EDGAR.

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 these or other matters may arise from time to time that may harm our financial position, or our business and the outcome of these matters cannot be ultimately predicted.

NOTE 10 – SUBSEQUENT EVENTS

The Company management has evaluated events occurring subsequent to May 31, 2018 through July 16, 2018, the date that these condensed consolidated financial statements were issued.

On June 18, 2018 the Legal Proceeding entitled Asher Enterprises, Inc. v. Digital Brand Media & Marketing Group, Inc. has been settled by the parties.

F-13

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

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 condensed consolidated financial statements contained in in F-1 through F-3. "Financial Statements and Supplementary Data" of this Report.

Operations Overview/Outlook

Operationally, 2015-2017 has been important in continuing the direction of the Company and steering it toward a scaled growth plan. The model developed in fiscal 2014 has been reinforced and is differentiating to clients, therefore, the model will continue into fiscal 2018, and beyond.

Entertainment/Fashion/Sports/Automotive/Ecommerce/ Investment Banking Solutions

DBMM continues to build on its strengths. The company had strong relationships within the market and intends to build its business focus in a wide variety of industry verticals.

The heart of the business is the 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. This kind of close relationship with the client resulted in Digital Clarity being considered a close professional advisor.

In fiscal year 2018, the Company will continue to focus on the positive, proven operating model and use that model to expand geographic reach with existing and new clients.

Digital Marketing Services

2018 will continue to see exponential growth in the adoption of Social Media as communication, marketing and engagement avenues. An acceptance of change is driving revenue. The future growth in mobile search is one of the fastest growing ancillary businesses. It was clear that the direction, talent and growth of the Company is in its human capital and outside relationships which must be proactive in order to differentiate itself from competition.

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 outlook is robust for the foreseeable future.

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Key Milestones

Certain new significant clients representing a variety of industries were added to client roster. The Company’s clients tend to operate with a NDA, as our clients see us a competitive advantage. Accordingly, we cannot share all clients’ brands or company name

Recently the company has been hired by the prestigious organizational group, British Marine. British Marine are the membership body for nautical and sea faring craft and include Super and Luxury Yacht companies such as Sunseeker and Princess Yachts.

Digital Clarity have been hired to audit Google Search and Analytics for British Marine’s top show, The London Boat Show and one of Europe’s largest events, The Southampton Boat Show. The company is in talk to act as digital advisor with British Marine for the Abu Dhabi Boat Show. These shows will fit into the circuit that incorporates Fort Lauderdale, Monaco and Cannes Boat & Yachting events.

Digital Clarity are also working with sponsors and potential sponsors of a Formula 1 team that are in the top 5 racing teams in this prestigious and global sport.

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, span a wide range of industries.

Digital Clarity continues to expand into high end Real Estate and Luxury brands and is building a strong network on High Net-worth and Ultra High Net-worth Individuals.

NOTABLE EVENTS - INDUSTRY AWARDS & RECOGNITION

Digital Clarity Named in Top Ten Best Social Media Marketing Firms in the UK for 6th Year

(http://Topseos.com/uk/best-social-media-marketing-companies) “Topseos.co.uk, an independent research firm, revealed the listing of the top 10 best social media marketing agencies in the UK based on their strength and competitive advantage. Social media marketing companies are put through a methodical analysis to ensure the rankings contain the absolute best companies the search marketing industry has to offer. Their criteria include timeliness, brand management, consultation, methodology and reach.

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Based in these criteria, Digital Clarity was awarded a spot in the top 10. The process for researching and declaring social media marketing agencies in the UK is based on the use of a set of analysis criteria and learning more about their solutions and their communications with their customers through references. The topsesos.com independent analysis team communicated directly with the clients in order to inquire about the solutions and achievement from the client’s perspective.

Digital Clarity Team Member shortlisted for top player in Under 25 UK Search Awards

The UK Search Awards have been celebrating the expertise, talent and achievements of the search industry for over half a decade and are regarded as the premiere celebration of SEO, PPC and content marketing in the UK.

The awards attract hundreds of entries from the leading search and digital agencies from across the UK and to those based elsewhere around the globe who are delivering work for the UK market.

The team member works with a range of PPC, SEO, Analytics and Social campaigns, with a specialist flair for Shopping campaigns. She works across a wide range of businesses from not for profit, ecommerce and B2B, adapting her approach and strategy to each specific client. One of her key strengths includes having the passion to learn the ins and outs of client’s industries, learning the market, competitors and their business models to insure every section of a campaign is on point and delivers results.

In the judging sessions the Young Search Professional category was said to be highly competitive and a tough one to judge.

The category and shortlist is a testament to Digital Clarity’s commitment to training and personal development.

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Digital Clarity Shortlisted for Ecommerce Awards for Excellence for ProCook

ProCook is the UK’s leading specialist cookware multi-channel retailer. With retail outlets in major towns and cities across the UK, the company also has a powerful online e-commerce presence.

ProCook has seen great growth in the last few years via PPC and SEO strategies and have been working with Digital Clarity over the past 8 years.

Results were staggering

·

PPC brand revenue uplift – 35%

·

PPC non-brand revenue uplift – 36%

·

SEO revenue uplift – 51%

·

Shopping revenue uplift – 48%

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Digital Entrepreneur Awards - Digital Clarity Shortlisted for Digital Business of the Year 2017

Sponsored by UKFast, the Digital Entrepreneur awards are the only national awards ceremony that is dedicated to internet entrepreneurialism. The awards aim to celebrate entrepreneurs from startup level right through to large corporate companies.

“The awards celebrate not only the high-profile websites and leaders driving online commerce but the silent heroes who develop the systems that change the online landscape and shape our digital future.”

Digital Clarity Research Featured in Huffington Post

Digital Clarity looked into the perils of internet addiction, especially among the young and the effects it can have to both the individual as well as broader society.

The research was deemed worthy to be published in the Huffington Post, an online paper rum by Ariana Huffington and used by journalists worldwide as both a distribution point as well as an inspiration to feed into current events and stories.

http://www.huffingtonpost.co.uk/2014/10/16/youths-controlled-internet-addiction_n_5995068.html

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Key Differentiators

The company has been strengthening foundations by continuing to streamline while developing new client relationships and revenue streams as a differentiating digital marketing and technology provider. This focus has allowed the Company to enhance brand value for its clients. 2018 will continue to be about growth and outreach utilizing five key differentiators:

1.

Brand enhancement

2.

Search

a.

PPC

b.

SEO

3.

Design

4.

Social media

5.

Analytics

1. STRENGTHS: BRAND ENHANCEMENT

Digital Clarity is an evolving Strategic Brand Consultancy that 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.

As the online world becomes increasingly sophisticated and complex, Digital Clarity concentrates on core areas that help business navigate through an often-confusing mosaic choice of systems and platforms. Focusing on the areas of Search, Social Media and Design, all of Digital Clarity work is underpinned by a unique understanding of Analytics. This aspect is often a missed piece of the jigsaw that makes up the digital marketing mix. The five differentiators, presented to clients as an integrated model, result in being selected over competition in the majority of presentations.

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2.  STRENGTHS: SEARCH:

PPC

Definition:

PPC stands for Pay-per-Click Advertising. It is an abbreviation for a number of search advertising platforms, of which the mostly widely used is Google AdWords. PPC is one of the most effective online marketing services available, generating instant activity and instant results for new or existing websites.

The real beauty of PPC is that you only pay for an ad when a potential customer clicks on it, meaning you can bring people to your site for mere pennies while ensuring your traffic is relevant and targeted at people who are looking for your service or product. Additionally, PPC is highly measurable and can be closely monitored, allowing your business to keep a close eye on return-on-investment (ROI).

The major platforms used for PPC are:

·

Google AdWords (Global)

·

Microsoft Bing

·

Yandex (Russia)

·

Baidu (China)

·

AdWords Audit

Key Areas of Service:

·

Budget Management

·

Keyword Research

·

Conversion Rate Optimization

·

Bid Optimization

·

Dedicated PPC Management

As an elite consultancy, Digital Clarity has extensive experience in PPC management and implementation ranging from small independent businesses with one or two ad campaigns to multi-national ecommerce websites which utilize hundreds of ads and thousands of keywords. Whatever the nature and size of the account, Digital Clarity understands the importance of utilizing a programmatic, well-defined approach:

·

Strategy.

By understanding the business, demographics and audience, Digital Clarity makes sure that campaigns hit the ground running from day one.

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·    Implementation.

Digital Clarity uses experience to put in place the best structure, keywords, ad copy and bidding strategies to maximize the effectiveness of your account.

·

Optimization.

Digital Clarity rigorously interrogates and checks client accounts to ensure optimal performance, with regular reviews of all aspects of each campaign.

·

Reporting.

By defining and explaining the numbers of each account, Digital Clarity provides the information needed to steer things in the right direction for each client’s business.

PPC AUDIT

From selecting the right keywords, to the settings and structure. It is important that we allow time to research and refine the account in order to save on wasted spend as well as increasing conversions.

This audit would cover Google and Bing account setup.

·

KEYWORD RESEARCH

·

AD AUDIT AND OPTIMIZE - INCLUDING AD EXTENSIONS

·

BUDGET AND BIDDING STRATEGIES FOR THE TARGET AUDIENCE

·

DEVICE & LOCATION STRATEGIES

·

REMARKETING LISTS & STRATEGY

PPC STRATEGY

Digital Clarity’s unique PPC strategy affords the opportunity to test and change things based on results. Testing ads, optimizing keywords and enhancing the ways to target the right audience are just a few areas which will be covered.

Weekly updates and monthly reporting will be provided to identify areas of improvement and things which need to be optimized further.

·

KEYWORD REFINEMENT & SEARCH QUERY

·

AD COPY TESTING

·

LOCATION MANAGEMENT AND KEYWORD TESTING

·

BUDGET ALLOCATION & CONTINUED CPC AND KEYWORD BID STRATEGIES FOR ROI

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3.  STRENGTHS: SEARCH:

SEO

Definition:

When customers look for service on Google or another search engine, they might find a client company’s business - or they might find a competitor. SEO (Search Engine Optimization) is the process by which you can help ensure that your site appears first in the rankings. These rankings are determined by the search engine’s algorithms: programs which trawl the internet indexing details about each site, in order to deliver relevant results when people search. If your website does not perform well according to the algorithm’s criteria, your rank will be lower, and people will not be able to find your site; this is what makes partnering with the right SEO agency such a crucial part of your digital marketing activity.

Digital Clarity is at the vanguard of this sector, having implemented countless SEO plans for a broad array of clients in a number of different industries. These plans included:

·

Onsite Technical Audit

·

Quality Content Creation

·

Meta, Tags & Technical Optimization

·

Website Structure

·

Use of Optimum Keywords

·

Link Building & Referrals

·

Social Media Integration

Search Algorithms

SEO strategy is changing all the time, and the rate of change continues to increase dramatically in the last 12-18 months. Changes to the Google algorithm in particular have shifted the landscape of search optimization, including named updates such as Penguin, Panda, and Hummingbird. These changes can have huge consequences: well-performing sites can lose visibility and poor performers can gain it, literally overnight. It is therefore absolutely essentially that a website’s SEO is closely curated and managed, making sure one is always ahead of the curve.

SEO Can Deliver Results for Business

By applying website optimization to your site for better search engine performance, you will gain more traffic and brand recognition as more and more people are able to find you online. This in turn allows more sales and conversions, leading to higher profits and better return on your digital investment. Contact our team today to find out how we can improve your performance.

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Google Dominates Search

4. STRENGTHS: DESIGN:

Definition:

Web design encompasses many different skills and disciplines in the production and maintenance of websites.

A site can be the most functional, user-friendly and search-optimized in the world; if people don't like the look of it, they will bounce off your page and never come back. Making sure a site looks good and that it reflects your brand company identity is the difference between success and failure, and having a good web design agency on your side is more important than ever.

Web Design Services:

·

e-Commerce

·

Device Compatibility

·

Web Development

·

Mobile Compatibility

·

Process & Planning

·

Content Management System (CMS)

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Changes in the Last Few Years

With 43% growth in mobile devices and tablets, the game has changed. It’s no longer enough for a site to look great on a PC; it has to be able to scale from a widescreen view of a modern flat screen monitor to the narrow portrait of an Android mobile screen; it has to spin and rotate with the movements of an iPad. This aspect of website design is called ‘responsiveness,’ and in the last few years has gone from being ‘nice to have’ to absolutely essential, necessitating a complete website redesign in many cases. Digital Clarity have years of experience in building functional, beautiful websites which work across all devices.

Digital Clarity’s Unique Proposition

Specialist creative agencies are great at making things pretty and applying their own methodologies and ideas to client websites, both creatively and financial, and operating analytics. Digital Clarity takes a different approach: combining a client’s ideas, vision and brand identity with our experience and expertise to produce sites which perfectly blend form and functionality. Additionally, Digital Clarity does not design in a bubble; the sites built integrate seamlessly with PPC campaigns, SEO activity, and are fully optimized to perform as part of a greater whole. Digital Clarity does not just build websites; the company’s role as a website design agency is part of an integrated approach which will help achieve the overall business goal.

5. STRENGTHS: SOCIAL MEDIA:

Definition

Social media refers to sites where users interact with each other on a large scale, including Facebook, Twitter, LinkedIn, Pinterest, Imgur, Tumblr and many others. Begun as a social phenomenon, the growth in use of social media sites over the past decade has made it impossible to ignore for any brand or business.

·

Social Media Audit

·

Content Creation

·

Social Media Management

·

Social Media Set Up

·

Reporting

·

Blog Writing

·

Content Strategy

·

Reputation Management

·

Social Media Advertising

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The Need for Social Media

Social media can help achieve business goals by allowing greater engagement with the customer base, audience and stakeholders. A company doesn’t just need a brand anymore: it needs a face, a voice, and maybe even a heart. As well as being a central component of how customers see a company. It can also yield other opportunities: Promotions, customer feedback, and even just having a little fun can all be used to bring you closer to your clients and users, informing strategy, guiding your product offering and in the long term, increasing sales and profits.

·

Online adults aged 18-34 are most likely follow a brand via social networking (95%). (Source: MarketingSherpa)

·

71% of consumers who have had a good social media service experience with a brand are likely to recommend it to others. (Source: Ambassador)

·

2.56 billion global mobile social media users, equaling 34% penetration; globally with 1 million new active mobile social users added every day (Source: We Are Social).

·

96% of the people that discuss brands online do not follow those brands’ owned profiles. (Source: Brandwatch)

·

Visual content is more than 40 times more likely to get shared on social media than other types of content. (Source: HubSpot)

Digital Clarity’s Value Proposition

As a Digital Marketing and Technology Agency, Digital Clarity has been helping brands manage their social presence since before ‘social media’ had been coined as a phrase. Using our integrated methodology, we will incorporate a social presence as part of an overall offering, utilizing the platforms which are most appropriate to each business in the best possible way. Whether you need from-scratch implementation, or just want a social media audit to benchmark your activity, Digital Clarity have the expertise to deliver the results you need.

Digital Clarity have a strong track record of increasing membership numbers, creating deeper engagement, and measuring the success of your activity to help inform social media marketing strategy and guide development.

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Number of social media users worldwide from 2010 to 2021 (in billions)

The Market for Growth in Social

Digital Clarity incorporate Social Media strategy wherever possible. There is continued opportunities to grow business via social networks and social analytics.

·

Social-media advertising spend will grow rapidly through 2018. It’s up 40year and will top $8.5 billion, growing to nearly $14 billion in 2018, a five-year compound annual growth rate (CAGR) of 18%.

·

Social media ad spend has reached the mobile-tipping point. Spending on mobile social-media ads, including mobile app-install ads, will surpass non-mobile spend by the end of this year in the US. In 2018, two-thirds of social-media ad spend will go to mobile, creating a $9.1 billion social-media market.

·

Mobile app-install ads and programmatic buying are also growth drivers. Analyses suggest that mobile app-install ads could account for anywhere from one-quarter to more than one-half of Facebook’s mobile ad revenues.

·

Social programmatic ad platforms are also growth engines. Spending on FBX, Facebook’s programmatic platform, increased by 150% year-over-year globally.

·

Prices are increasing as performance and targeting improve, even as ad loads stay steady on the established platforms. Facebook, for example, is not likely to increase the amount of in-feed native ads an average user will see.

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6.STRENGTHS: ANALYTICS

Definition:

Analytics is the act of analyzing data from your website, marketing campaigns and user activity. It can include everything from what time of day people are most likely to click on your PPC ads, right down to how long users are spending on individual pages on your site. Analytics can help you locate problems, find areas for improvement, form projections for the future and help you get the best out of your marketing budget.

·

Google Analytics

·

Goal Setting

·

Tag Management

·

3rd Party Analytics

·

Funnel Planning

·

Attribution Modelling

·

Path Analysis

·

Link Testing

Why Analytics Are Important

Knowing how to identify trends and interrogate data is of paramount importance to any marketing department. Analytics gives you answers to some of the most important questions you should be asking about your campaigns, maximizing effectiveness when things go well and providing solutions when things go wrong. Without this information, what appears to be a successful campaign could be failing to achieve its full potential, and there may be critical problems of which many companies may not be aware.

Digital Clarity’s Unique Proposition

What really sets Digital Clarity apart is the company’s ability to translate numbers into action. Analytics is extremely important, but for many, it is difficult to draw meaningful conclusions from the data, or to know how to act on the knowledge gained from this analysis. Online marketing is a sea of numbers, data and statistics; Digital Clarity turns this information into actionable insights for business.

Digital Clarity’s knowledge of analytics methodologies puts us at the forefront of our industry. We can use this experience to help guide strategy and deliver action points with recommendations, rather than just presenting you with meaningless statistics. With this knowledge in hand, you can implement solutions which will help you get the most out of your online presence. Digital Clarity also offers Google Analytics training to help businesses get the most out of this powerful tool independently.

As the internet and mobile arena continues to mature, the need to make sense of and manage companies through this often-complex market is clearly an area of massive growth. The Company is confident that the talent and experience within the digital marketing team is poised for a major springboard in 2018, but must be expanded significantly in order to support the global reach intended.

Artist Collaboration, through experts with existing relationships, will be exploited in the longer term after the Company integrates many of the new clients in the pipeline. As a strategic advantage, artists and brands will leverage their celebrity status through consultancies such as Digital Clarity to enhance and drive their brand in the complex arena of social media.

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Market Reach

The Company has reach and experience across a large number of vertical markets including, but not limited to: Entertainment/Fashion/Sports/Automotive/Ecommerce.

Relationships and Industry Contacts

The team at Digital Clarity have professional and personal contacts, including some long-term relationships, at companies such as Google, Microsoft and Facebook, often being invited to attend strategic market briefings and insights. The resultant collaboration is invaluable.

Partnerships, strategic alliances and agency management have allowed Digital Clarity to work on some of the biggest brands, sitting behind the agencies as a support and resource to deliver very high-quality service and results to their clients.

TEAM EXPERTISE COMPANY KEY ASSETS

Examples:

·

PPC campaign experience especially Google AdWords existed

·

SEO evolution from aggressive link building and onsite SEO through to strategic marketing and integration of inbound marketing

·

Website design and development based on results driven design and planning Brand consultancy

·

Social media management and advertising. Several clients have been “won” directly via Digital Clarity’s internal social media strategy

·

Sales and account management experience from multi-disciplined backgrounds

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Evolution and Flexibility

The market is continually changing. Digital Clarity has always remained ahead of the curve and given their clients peace of mind by remaining a true strategic partner.

Creative, Individualized Solutions and Customer Service

Case Studies and testimonials reflect the client-centric approach of Digital Clarity. Being selected over larger more established firms, support that we provide the client with skills that are differentiating. The Digital Clarity Brand is being established positively.

Growth Opportunities in the Market

As the use of web mobile sites and applications grow, so do the complexities and challenges of using these sites and platforms commercially. Digital Clarity directs business through the maze of an often confusing and sophisticated set of barriers, to create a clear path for the customer to our client’s product or service. As this market matures, the need for companies to rely on the services from Digital Clarity can only grow. Here we look at some of the growth areas in Digital Clarity’s arsenal integrating the key trends going forward:

·

More Mobile

·

More Social

·

More Informed

·

More Experiential

·

More Real-Time

·

More Global

·

More Multichannel

These trends translate to being “always on.”

Growth & Opportunities in Search

Search remains the foundation of digital marketing. Businesses now spend 24% of total marketing budget on paid search by 2017.

·

US digital ad spending will approach $85 billion – Interactive Advertising Bureau.

·

U.S. search spend grew by 11 percent Year over Year, while ROI improved by 26 percent – Adobe

·

72% of Consumers Want Mobile-Friendly Sites – Google Research

·

2 million search queries are made on Google, every minute – Google

·

Growth in Corporate Search – All Fortune 100 Companies have a Google Plus Account

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Growth & Opportunities in Social Media

Number of social network users worldwide from 2010 to 2018 (in billions)

INSTAGRAM GROWTH

Instagram has seen a phenomenal growth rate, much to the detriment of Twitter. Both remain powerful though Instagram’s video and photographic social channel is far outpacing twitter.

Top brands on Instagram are seeing a per-follower engagement rate of 4.21% which is 58 times higher than on Facebook and 120 times higher than on Twitter (Source: Hootsuite)

Instagram has become a powerful platform for marketers and its potential cannot be overlooked any longer.

Media brands are the most active whereas business services, financial services, and fast moving consumer goods have the lowest percentage of brands represented on Instagram. (Source: Simply Measured)

Also, the increase in business activity on Instagram the brand posting frequency is becoming more normalized and standardized to highlight the increase in a more measurable approach.

90% of Instagram users are younger than 35 (Source: Science Daily)

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Instagram has become the social media network for targeting millennials. 32% of teenagers consider Instagram to be the most important social network. Female internet users are more likely to use Instagram than men, at 38% vs. 26%.

Products were the top content types for the top 200 global brands in terms of engagement, at 60% in 2017 beating lifestyle category by over 20%. (Source: Hootsuite)

This is great news for marketers since people who follow brands on Instagram are aware and accept the fact that they’re going to be exposed to products.

Posts tagged with another user (56%) or location (79%) have significantly higher engagement rates (Source: Simply Measured)

GROWTH OPPORTUNITIES IN LONDON & THE UK MARKET

Digital Clarity’s presence in the UK provides an excellent springboard into mainland Europe as London remains the gateway into both Northern and Southern European markets.

From the recent Internet Advertising Bureau (IAB) and (Price Waterhouse Coopers) PwC Report:

·

At half year, the total UK digital advertising market is worth £5.56bn, up 13.8% y-o-y

·

Mobile is driving almost all growth in the market

·

At £2.37bn, mobile now makes up 43% of all digital

·

Mobile is accounting for 57% of all digital display advertising

·

Online video has overtaken banners as the largest display format, up 46% year-on-year

·

Outstream is now the largest video format, at 52% of all online video

·

Social revenue is now over £1 billion

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WORLDWIDE E-COMMERCE GROWTH OPPORTUNITIES FOR DIGITAL CLARITY

China overtook the online the US-Market as the world’s largest online market in 2015. Online shopping is one of the most popular online activities worldwide, Goldman Sachs expects on-line shopping retail sales in China to grow at an annual average of 23% over the next 4 years, topping $1.7 trillion by 2020, but the usage varies by region - in 2016, an estimated 19% of all retail sales in China occurred via internet but in Japan the share was only 6.7%. Desktop PCs are still the most popular device for placing online shopping orders, but mobile devices, especially smartphones, are catching up. Fast.

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Worldwide Retail Ecommerce Sales Will Reach $2.8 Trillion in 2018.

Double-digit growth will continue through 2020, when sales will top $4 trillion. Retail ecommerce sales—which include products and services (barring travel, restaurant and event ticket sales) ordered via the internet over any device.

eMarketer expects retail ecommerce sales will increase to $4.058 trillion in 2020, making up 14.6% of total retail spending that year.

Global Retail Ecommerce Sales Will Reach $4.5 Trillion by 2021

Global B2B Ecommerce Sales Dominate B2C

In 2017, B2C ecommerce sales exceeded $2.3 trillion worldwide. B2B ecommerce, on the other hand, will reach $77 trillion. Those two data points represent a 234.78% difference in market size.

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Retail Ecommerce’s Global Spread Makes International Sales Non-Negotiable

According to Business.com, the 10 largest ecommerce markets in the world 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

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THE NEED FOR PROFESSIONAL CONSULTANCY & OPPORTUNITY FOR MASSIVE GROWTH

For the first time ever, four consultancies have cracked 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.

Digital advertising spending worldwide to 2020 (in billion U.S. dollars)

Digital advertising is expected to grow to $335.5 billion by 2020.

Internet companies generate their revenue through various means. Google, for instance, makes use of its advertisement services such as Google AdWords – which takes advantage of Google searches and appear as small advertisements next to search results – and Google AdSense which generates advertisements based on a user’s search history and location, among others. Advertisements based on AdSense appear all across Google-owned sites including YouTube and Google Finance. The online company also profits from the development of Android OS, licensing and mobile apps as well as the recent development of hardware such as the Nexus mobile device series and Google Glass.

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The Growth of the Marketing Led Companies in Market Capitalization

·

Revenue in the "Social Media Advertising" segment amounts to $32 billion in 2017.

·

Revenue is expected to show an annual growth rate (CAGR 2017-2021) of 10.9 % resulting in a market volume of $48,917m in 2021.

·

The average revenue per Internet user currently amounts to $11.45.

·

The revenue in the "Social Media Advertising" segment currently corresponds to 0.05 % of the country's GDP.

WORLD'S MOST VALUABLE BRAND

Amazon has officially replaced Google as the most valuable brand in the world, according to brand consultancy Brand Finance. Amazon's brand value is $150.8 billion, an increase of 42% from 2016, based on business performance and marketing investment. The second most valuable global brand is Apple, at $146.3billion. Google is third highest, with a $120.9 billion valuation. (Business Insider.com)

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GROWTH IN INVESTOR AWARENESS AND OUTREACH.

Digital Brand Media & Marketing Group, Inc. is initiating a significant effort to raise investor awareness on a global basis. The strategic outreach is directed at investors around the world who understand the digital marketplace and its expanding influence on consumer decisions. DBMM is targeting these 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 the full industry context of dramatic expansion of digital footprints, there has been no direct correlation between DBMM's (increasing) revenues and its pps. Economic and industry analysts state the multiple for digital media has continued to grow to 25-30 times revenues.

FINANCIAL OVERVIEW/OUTLOOK

DBMM (the “Company”) has been honing its commercial model since the acquisition of Digital Clarity (“DC”) in 2011; DC has been cash-flow positive as an operating company since its acquisition. Going forward, as the Company is scaling up, with growth capital to expand proportionately, the focus will be on the digital marketing global triangle of London, New York and Los Angeles. Margins continue to be robust, and once the business reaches appropriate scale with assumed profitability after growth capital infusion and the crossover point is established, DBMM will become a successful business for all its stakeholders.

The clients benefit immediately; the shareholders will benefit as the market cap grows. The media market multiple far exceeds the manufacturing cap multiple, as digital marketing technology has become one of the fastest-growing industries in the world today.

For context, Benjamin Graham, a British-born investor who inspired Warren Buffett, repeated endlessly (his colleagues have said): “In the short term, the stock market is a voting machine. In the long run it’s a weighing machine that measures a Company’s true value.”

The business has been sound from the acquisition of DC, and the Company has been developing incrementally, but not nearly at the pace management would like because of the non-operating hurdles faced since the Company was required to re-audit in 2013, and the litigation thereafter, creating a series of mitigating circumstances beyond the Company’s control. The Company continues to address the challenges and is very encouraged by the identification of long-term investors who infused capital into DBMM beginning in the 1Q2018, specifically to bring its delinquent filings current. Capital was finally available for this purpose, to prepare a Super 10-K for 2015-2016-2017, providing 3 years of audited financial statements to the public. (The Super 10-K was filed May 31, 2018. The Q1 2018 was filed on June 22, 2018, and the Q2 was filed on June 25, 2018.)

Equally important, DBMM now has a “normal” cash-flow model of investment, focused on growth identified, and secured, to support the Company’s Business Plan going forward. That fact reinforces a commitment that reporting will take place as required and the Company can return to the growth model envisioned before outside influences interfered to the detriment of DBMM. The long-term investors are just that, not short-term equity players. Likewise, the economic environment globally has recovered and is on an upswing, unlike the Financial Recession, so mezzanine financing is (finally) available. The industry is very attractive to investors, and DBMM using the technology of tech giants, coupled with data available from social media platforms, is specifically attractive as a business.

40

Analysis indicates that large marketing and advertising entities are acquiring differentiating digital marketing companies, rather than developing the expertise organically. That fact acknowledges DBMM’s Business Plan which would see such a sale as a potential exit strategy for consideration in a 5-8-year timeframe.

The contingency of a sale is supported by DBMM’s place in the industry, which is strong. The acquired company, Digital Clarity, won or placed in several industry awards during the past 1-2 years. With funding, the Company can broaden its reach as there are many companies in the pipeline which have been in neutral, until the infrastructure could be developed. The Company is labor-intensive, and Management has access to the “best and the brightest” as new clients are brought on board, as was expected with funding.

The industry environment continues to grow exponentially and the future of digital marketing as an essential strategy for any consumer-facing business is essential. DBMM has been honing its business model since the acquisition of its brand and is an industry leader for its size. DBMM’s increasing client base, coupled with decreasing debt and expenses, positions the Company as intended, thus attracting mezzanine financing.

Going forward, there will be an emphasis on investor awareness during fiscal years 2018 and 2019. DBMM is taking significant action to aggressively widen its brand exposure using a variety of digital and social channels. There are investors around the globe who understand the digital marketplace and its growing influence on consumer decisions. DBMM is targeting these new investors through a global digital and traditional integrated campaign which will be run by Digital Clarity, with third parties as required for distribution.

Off-Balance Sheet Arrangements

We are not currently a party to, or otherwise involved with, any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Recently Issued Accounting Pronouncements

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

Significant and Critical Accounting Policies

Our discussion of the financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of our condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities at the date of the financial statements. Management regularly reviews its estimates and assumptions, which are based on historical factors and other factors that are believed to be relevant under the circumstances. Actual results may differ from these estimates under different assumptions, estimates or conditions.

41

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. See “Notes to condensed consolidated Financial Statements” for additional disclosure of the application of these and other accounting policies.

LIQUIDITY AND CAPITAL RESOURCES

We are concentrating on activities which will grow Digital Clarity organically and by acquisition. We have spent the last four fiscal years establishing a client model for existing and new customers which can be exported geographically.

NINE-MONTH PERIOD ENDED MAY 31, 2018

We had approximately $85,000 in cash and our working capital deficiency amounted to approximately $3.6 million at May 31, 2018.

During the nine-month period ended May 31, 2018, we used cash in our operating activities amounting to approximately $171,000. Our cash used in operating activities was comprised of our net loss from continuing operations of approximately $287,000 adjusted for the following:

Change in fair value of derivative liability of $33,879 The measurement is set by ASC 815, and, primarily based on volatility, can vary significantly quarter to quarter. (See Note 2/Derivative Liabilities)

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 $55,000 An increase in our accrued salaries of approximately $127,000.

During the nine-months ended May 31, 2018, we generated cash from financing activities of $192,000, which consist of the proceeds from the issuance of loan payables.

NINE-MONTH PERIOD ENDED May 31, 2017

We had approximately $41,000 in cash and our working capital deficiency amounted to approximately $3.3 million at May 31, 2017.

During the nine-month period ended May 31, 2017, cash provided in our operating activities amounting to approximately $31,000. Our cash provided by operating activities was comprised of our net income from continuing operations of approximately $207,000 adjusted for the following:

Change in fair value of derivative liability of $303,252 The measurement is set by ASC 815, and, primarily based on volatility, can vary significantly quarter to quarter. (See Note 2/Derivative Liabilities)

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 $28,000.

An increase in accounts receivables of approximately $26,000, primarily due to timing of certain revenues during the quarter ended May 31, 2017.

42

RESULTS OF OPERATIONS

Comparison of the Results for the Three and nine-month periods Ended May 31, 2018 and 2017

Unaudited Condensed Consolidated Operating Results
	For the Three Months Ended May 31,			For the Nine Months Ended May 31,
	(Unaudited)		Increase/ (Decrease)	(Unaudited)		Increase/ (Decrease)
	2018	2017	$ 2018 vs 2017	2018	2017	$ 2018 vs 2017
SALES	$ 88,502	$ 136,693	$ (48,191)	$ 415,471	$ 389,184	$ 26,287
COST OF SALES	101,532	83,073	18,459	313,522	220,559	92,963
GROSS PROFIT	(13,030)	53,620	(66,650)	101,949	168,625	(66,676)
COSTS AND EXPENSES
Sales, general and administrative	140,572	9,140	131,432	366,340	209,769	156,571
TOTAL OPERATING EXPENSES	140,572	9,140	131,432	366,340	209,769	156,571
OPERATING LOSS	(153,602)	44,480	198,082	(264,391)	(41,144)	(223,247)
OTHER (INCOME) EXPENSES
Interest expense	20,048	20,175	127	57,019	54,862	2,157
Change in fair value of derivative liability	(15,830)	412,715	428,545	(33,879)	(303,252)	(269,373)
TOTAL OTHER (INCOME) EXPENSES	4,218	432,890	428,672	23,140	(248,390)	(271,530)
NET (LOSS) INCOME	$ (157,820)	$ (388,410)	$ (230,590)	$ (287,531)	$ 207,246	$ (494,777)
(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 nine-month period ended May 31, 2018 our primary sources of revenue are the Per-Click Advertising, Web Design and Search Engine Optimization Services. These primary sources amounted to 85% and 75% of our revenues during the three and nine-month period ended May 31, 2018. Our secondary sources of revenue are our Social Media and Email Media. These secondary sources amounted to approximately 3% of our revenues.

We recognize revenue upon the completion of our performance obligation, provided that: (1) evidence of an arrangement exists; (2) the arrangement fee is fixed and determinable; and (3) collection is reasonably assured.

43

During the three-month period ended May 31, 2018, the decrease in sales of $48,191 was simply an anomaly of timing in the third quarter, as the nine-month period also ended May 31, 2018 increased $26, 287, up 7% year on year. In addition, the Costs of Sales increased by $18,459 covering the addition of 2 new staff members including their training and assimilation, Google Search Marketing, Public Relations outreach and Submission to Industry Awards

The increase in general and administrative costs during the three-month period ended May 31, 2018 is primarily due to an increase in professional fees relating to our public filings during the third quarter of 2018 following a similar increase in the second quarter 2018.

Interest expense, which include interest accrued on certain notes, as well as amortization of debt discount and the fair value of shares issued pursuant to reset provisions of certain convertible promissory notes, if any, increased during the three-month period ended May 31, 2018 is at approximately the same level as incurred during three-month period ended May 31, 2018.

The gain or loss on derivative liabilities is primarily attributable to a change in fair value of derivative liabilities between measurement dates.

44

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

As of the end of the period covered by this quarterly report, our management evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Exchange Act. Based upon that evaluation, our Executive Director, who serves as our Principal Executive Officer and as our Principal Financial Officer has concluded that, as of May 31, 2018, our disclosure controls and procedures were effective (notwithstanding the mitigating factors outside the Company’s control) in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls

We maintain controls and procedures designed to ensure that we are able to collect the information that is required to be disclosed in the reports we file with the Securities and Exchange Commission (the "SEC") and to process, summarize and disclose this information within the time period specified in the rules of the SEC. Our management is responsible for establishing, maintaining and enhancing these procedures. Management, as described above, is also responsible, as required by the rules established by the SEC, for the evaluation of the effectiveness of these procedures.

Internal Controls

We maintain a system of internal controls designed to provide reasonable assurance that transactions are executed in accordance with management's general or specific authorization; transactions are recorded as necessary to permit preparation of financial statements in conformity with Generally Accepted Accounting Principles ("GAAP") and maintain accountability for assets. Access to assets is permitted only in accordance with management's general or specific authorization.

In conclusion, the disclosure and procedure controls provide for reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes.

45

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

1.

The Company is involved in a litigation, Asher Enterprises, Inc. v. Digital Brand Media & Marketing Group, Inc. and Linda Perry, Index No. 600717/2014, in the Supreme Court of the State of New York, sitting in the County of Nassau. The Plaintiff alleged $337,500 in damages based on breach of contract allegations arising from the Company’s untimely periodic filings in December 2013. On September 18, 2014, the Court declined to grant the plaintiff’s application for default judgment and Linda Perry was removed as a defendant. The Court awarded judgment in favor of the Plaintiff on July 15, 2015 in the amount of $122,801.87, which does not offset $25,000 paid in settlement efforts. On February 22, 2016 a Settlement Agreement was signed by the parties for a total of $85,000 to Asher Enterprises. (See Note 10 Subsequent Events).

2.

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. That order was subsequently remanded by Order of the United States Supreme Court in December 2017. The Remand is still pending. The Company is vigorously defending its position and has responded to the Remand with evidence of mitigating circumstances, and subsequent definitive positive actions to rectify its delinquent filings. A Super 10-K for 2015-2016-2017, Q1 2018, Q2 2018, and this document, are definitive evidence, available to the public in EDGAR.

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 these or other matters may arise from time to time that may harm our financial position, or our business and the outcome of these matters cannot be ultimately predicted.

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.

46

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

47

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: July 18, 2018

By: /s/ Linda Perry

Linda Perry

Principal Executive Officer

Principal Financial Officer

Executive Director

48

EX-31

Exhibit 31.1

CERTIFICATION OF EXECUTIVE DIRECTOR

UNDER SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Linda Perry, Executive Director, of Digital Brands Media and Marketing Group, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Digital Brands Media and Marketing Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 18, 2018	By:	/s/ Linda Perry
	Name:	Linda Perry
	Title:	Principal Executive Officer   Principal Financial Officer   Executive Director

EX-32

Exhibit 32.1

CERTIFICATION OF EXECUTIVE DIRECTOR

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Digital Brands Media and Marketing Group, Inc. (the “Company”) on Form 10-Q for the periods ending May 31, 2018, and 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Linda Perry, Executive Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 18, 2018	/s/ Linda Perry
	Linda Perry
	Principal Executive Officer Principal Financial Officer Executive Director

XML

Document and Entity Information - USD ($)	9 Months Ended
	May 31, 2018	Jul. 18, 2018	Feb. 28, 2018
Document and Entity Information:
Entity Registrant Name	Digital Brand Media & Marketing Group, Inc.
Document Type	10-Q
Document Period End Date	May 31, 2018
Trading Symbol	dbmm
Amendment Flag	false
Entity Central Index Key	0001127475
Current Fiscal Year End Date	--08-31
Entity Common Stock, Shares Outstanding		745,718,631
Entity Public Float			$ 223,716
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	No
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3

XML

BALANCE SHEETS - USD ($)	May 31, 2018	Aug. 31, 2017
CURRENT ASSETS:
Cash	$ 85,136	$ 55,262
Accounts receivable	34,863	55,376
Prepaid expenses and other current assets	476	1,491
TOTAL CURRENT ASSETS	120,475	112,129
Property and equipment - net	3,703	3,805
TOTAL ASSETS	124,178	115,934
CURRENT LIABILITIES:
Accounts payable and accrued expenses	329,639	385,628
Accrued Interest	312,217	255,198
Accrued salaries	1,010,231	882,643
Loan payable	562,000	370,000
Derivative liability	707,074	740,953
Convertible debentures	840,791	840,791
TOTAL CURRENT LIABILITIES	3,761,952	3,475,213
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Series 1	1,995	1,995
Common Stock	745,718	745,718
Additional paid-in capital	9,274,044	9,274,044
Other comprehensive loss	(1,524)	(24,961)
Accumulated deficit	(13,643,607)	(13,356,075)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)	(3,637,774)	(3,359,279)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 124,178	$ 115,934

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) - USD ($)	May 31, 2018	Aug. 31, 2017
Balance Sheet (Parenthetical)
Property and equipment, net	$ 3,703	$ 3,805
Convertible debentures	840,791	840,791
Common Stock, par value	$ 745,718	$ 745,718
Common Stock, authorized	2,000,000,000	2,000,000,000
Common Stock, issued	745,718,631	745,718,631
Common Stock, outstanding	745,718,631	745,718,631
Preferred Stock, par value	$ 0.001	$ 0.001

XML

STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended	9 Months Ended		15 Months Ended
	May 31, 2017	May 31, 2018	May 31, 2017	May 31, 2018
Income Statement
SALES	$ 136,693	$ 415,471	$ 389,184	$ 88,502
COST OF SALES	83,073	313,522	220,559	101,532
GROSS PROFIT	53,620	101,949	168,625	(13,030)
COSTS AND EXPENSES:
General and administrative	9,140	366,340	209,769	140,572
TOTAL OPERATING EXPENSES	9,140	366,340	209,769	140,572
OPERATING INCOME (LOSS)	44,480	(264,391)	(41,144)	(153,602)
INTEREST EXPENSE	20,175	57,019	54,862	20,048
CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITY	412,715	(33,879)	(303,252)	(15,830)
TOTAL OTHER (INCOME) EXPENSE	432,890	23,140	(248,390)	4,218
NET INCOME (LOSS)	(388,410)	(287,531)	207,246	(157,820)
OTHER COMPREHENSIVE INCOME
Foreign exchange translation expense	(211)	9,038	6,492	481
COMPREHENSIVE INCOME (LOSS)	$ (388,621)	$ (278,493)	$ 213,738	$ (157,339)
BASIC AND DILUTED - LOSS PER SHARE	$ 0.001	$ 0	$ 0	$ 0
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and Diluted	745,718,631	745,718,631	745,718,631	745,718,631

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	May 31, 2018	May 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss)	$ (287,531)	$ 207,246
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	102	214
Change in fair value of derivative liability	(33,879)	(303,252)
Changes in operating assets and liabilities:
Accounts receivable	20,511	(26,382)
Prepaid expenses and other current assets	1,015
Accrued salaries	127,588	130,596
Accrued interest	57,019	50,857
Accounts payable and accrued expenses	(55,989)	(28,308)
Net cash used in operating activities	(171,164)	30,971
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable	192,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	192,000
NET INCREASE (DECREASE) IN CASH	20,836	30,971
EFFECT OF VARIATION OF EXCHANGE RATE OF CASH HELD IN FOREIGN CURRENCY	9,038	5,993
CASH - BEGINNING OF PERIOD	55,262	4,518
CASH - END OF PERIOD	$ 85,136	$ 41,482