Filing summary
Issuer and period: The supplied filing is Truli Media Group, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2017 (the first quarter of its fiscal year ending March 31, 2018). This does not match the request metadata naming Nixxy, Inc. and “2017 Q1”; verify the issuer and reporting period before relying on this summary.
Business context
Truli reported no revenue since inception. Its business is a family-friendly and faith-based digital media platform; the company said it was also seeking to acquire an unrelated business. In October 2016, it transferred operating assets to wholly owned subsidiary Truli Media Corp. The statements are unaudited.
Financial performance and position
| Metric | Quarter ended June 30, 2017 | Comparable period / prior balance |
|---|---|---|
| Revenue | $0 | $0 in 2016 quarter |
| Operating expenses | $108,320 | $78,783; up 37% |
| Operating loss | $108,320 | $78,783 |
| Interest expense | $35,470 | $22,304 |
| Derivative fair-value gain | $41,038 | $1,142 loss |
| Net loss | $102,752 | $102,229 |
| Basic and diluted loss per share | $0.04 | $0.04 |
| Operating cash used | $84,339 | $72,756 |
| Financing cash provided | $101,000 | $62,500 |
| Cash | $18,644 | $1,983 at March 31, 2017 |
| Total liabilities | $2,896,304 | $2,776,985 at March 31, 2017 |
| Working capital deficit | $921,726 | Not clearly stated for comparable date |
| Accumulated deficit | $5,862,117 | $5,759,365 at March 31, 2017 |
There is no revenue or gross profit, so a revenue growth rate or gross margin is not meaningful. The $41,038 derivative gain was non-cash and materially offset operating and interest costs in reported net loss. Cash rose by $16,661, primarily reflecting $101,000 of financing proceeds against operating cash use. The company had $940,370 of current liabilities against $18,644 in current assets.
Changes, outlook and risks
- Operating expenses increased 37%, mainly due to higher professional and consulting fees. Interest expense increased by $13,166. Despite the derivative gain, net loss was broadly unchanged year over year.
- On April 6, 2017, the company issued $40,000 of convertible notes, convertible at $0.02 per share, with a four-month maturity. The filing says the 2016 notes’ maturities had been extended to October 8, 2017. A related-party note payable was $518,801; a separate $1,955,934 convertible note is classified as long-term. The filing reports 108,895,440 common-share equivalents, compared with 2,554,197 common shares outstanding; equivalents were excluded from diluted loss per share as anti-dilutive.
- A June 20, 2017 non-binding acquisition letter of intent was contingent on due diligence, a definitive agreement, and at least $600,000 of financing. The target’s shareholder was to provide $700,000 of services over four years. Completion and financing were not assured.
- Management stated that continued operations depend on identifying an acquisition target and obtaining additional financing. The company had no binding future funding commitments beyond the founder’s payment obligations under the note purchase agreement; it relied on the founder for operating costs and investors for public-company costs. Management said it was uncertain it could fund operations through the next fiscal year-end. The filing states that these conditions raise substantial doubt about the company’s ability to continue as a going concern.
- Disclosure controls and procedures were reported ineffective due to material weaknesses in internal control over financial reporting. Management reported no material control changes during the quarter.
- The company reported no material pending legal proceedings and no off-balance-sheet arrangements. No financial guidance was provided.
Important facts to verify
- Confirm the issuer and period: the filing is for Truli Media Group, Inc., not Nixxy, Inc., and covers the quarter ended June 30, 2017.
- Confirm current funding support, the founder’s payment of operating costs, and the status and terms of the proposed acquisition and required financing.
- Review convertible-note maturity, conversion and default terms, potential dilution, and the large gap between common shares outstanding and reported share equivalents.
- Assess liquidity and going-concern risk, including the $921,726 working capital deficit and the company’s stated uncertainty about funding operations.
- Review the material weaknesses underlying ineffective disclosure controls and whether they have since been remediated.