Business context and reporting period
The supplied filing is a Form 10-Q for Truli Media Group, Inc., a development-stage company focused on on-demand media and social networking, including family-friendly, faith-based content. It covers the quarter and nine months ended December 31, 2013, in the company’s fiscal year ending March 31, 2014. The request identifies Nixxy, Inc., but the filing itself names Truli Media Group, Inc.; confirm the issuer identity.
Financial performance and position
- Revenue: None for the three- or nine-month periods, or since inception. The company said it launched its website in July 2012 but had not generated revenue.
- Quarterly results: SG&A was $428,913 versus $476,230 in the prior-year quarter. The financial statements report net loss of $514,712 versus $491,096; the MD&A instead states $541,712 for the current quarter.
- Nine-month results: SG&A was $1,173,708 versus $869,138; net loss was $2,211,690 versus $918,207. Interest expense of $820,930 and a $250,669 convertible-note default loss contributed to the current-period loss; a $33,617 derivative fair-value gain partly offset expenses.
- Margins: Not meaningful because the company reported no revenue.
- Cash flow: Operating cash used was $632,494 for the nine months, compared with $131,009 in the prior-year period. Financing provided $651,000; ending cash was $19,802, up from $1,296 at March 31, 2013. No investing cash flows were reported.
- Liquidity and debt: Current assets were $175,686, including $19,802 cash, against current liabilities of $1,885,984; working capital deficit was $1,710,298. Liabilities included $593,609 in officer notes, $42,975 in other notes, a convertible note balance reported as $790,177 on the balance sheet, and a $146,283 derivative liability. The convertible-note note disclosure gives a different total of $790,197.
- Equity and dilution: Common shares outstanding rose to 92,950,765 from 83,651,493 at March 31, 2013. The filing reports 27,578,935 warrants outstanding and 37,365,844 potential common-share equivalents in its diluted-EPS disclosure.
Material changes, outlook, and risks
- Nine-month net loss increased substantially year over year, alongside higher SG&A and financing-related expenses. Financing raised $651,000 during the period, including convertible-note proceeds.
- A September 2013 senior convertible-debenture transaction triggered a default after incorrect statements or omissions in transaction documents. The filing says the principal and accrued interest increased to 150%, the interest rate rose to 18%, and the amounts became immediately due and payable. The company recorded a $250,669 default loss.
- The company stated it expects to need additional financing over the next 12 months and disclosed a non-binding commitment from a potential capital source, with no assurance funding will be available or sufficient. Management and the notes state that recurring losses, no revenue, limited liquidity, and financing dependence raise substantial doubt about the company’s ability to continue as a going concern.
- No specific revenue or earnings guidance was provided. Management said the nine-month results are not necessarily indicative of full-year results.
- Disclosure controls were judged ineffective. The company reported material weaknesses involving documentation of debt and equity transactions and insufficient internal financial-reporting experience. Management said transaction documentation procedures had been enhanced, but the staffing weakness remained; an outsourced accounting group had been engaged.
- The filing reports no legal proceedings, off-balance-sheet arrangements, or material market-risk disclosures.
Important facts for investors to verify
- Confirm that this Truli Media Group filing is the intended filing for Nixxy, Inc.
- Reconcile the quarter’s net loss ($514,712 in the statements versus $541,712 in MD&A) and the convertible-note balance ($790,177 versus $790,197).
- Check the balance-sheet development-stage deficit, shown as $43,382,400, against the notes and cash-flow disclosures, which state accumulated losses of $4,382,400.
- Review the defaulted debenture’s accelerated repayment terms, outstanding balance, and potential conversion dilution, as well as the availability and terms of prospective financing.
- Reconcile the filing’s warrant and common-share-equivalent counts and assess the status of the reported material weaknesses and going-concern risk.