Filing identity and reporting period
The supplied filing is Truli Media Group, Inc.’s unaudited Form 10-Q for the quarter and six months ended September 30, 2017 (fiscal Q2, fiscal year ending March 31, 2018). The request metadata names Nixxy, Inc.; the filing itself identifies Truli Media Group, Inc., so confirm the issuer before relying on this summary.
At quarter-end, Truli’s reported business was its faith-based media subsidiary, Truli Media Corp. (TMC). Subsequent events materially changed the company’s business and ownership structure.
Financial results and position
| Metric | Three months ended September 30 | Six months ended September 30 |
|---|---|---|
| Revenue | None in 2017 or 2016 | None in 2017 or 2016 |
| Operating expenses | $111,688 in 2017; $70,598 in 2016 | $220,008 in 2017; $149,381 in 2016 |
| Operating loss | $111,688 in 2017; $70,598 in 2016 | $220,008 in 2017; $149,381 in 2016 |
| Net loss | $236,565 in 2017; $92,904 in 2016 | $339,317 in 2017; $195,133 in 2016 |
| Basic and diluted loss per share | $0.09 in 2017; $0.04 in 2016 | $0.13 in 2017; $0.08 in 2016 |
Gross margin is not applicable because the company reported no revenue. Quarterly SG&A rose 58% and six-month SG&A rose 47%, which management attributed mainly to higher professional and consulting fees. Interest expense and noncash derivative remeasurement losses also increased; the six-month derivative fair-value loss was $49,637.
At September 30, cash was $15,067, total assets $15,067, current liabilities $1,173,264, total liabilities $3,129,198, and stockholders’ deficit $3,114,131. Working-capital deficit was $1,158,197; accumulated deficit was $6,098,682. The balance sheet included $562,301 of related-party notes payable, $90,000 of current convertible notes, and $1,955,934 of long-term convertible notes, in addition to accrued interest and a $96,593 derivative liability.
For the six months, operating cash outflow was $131,416, financing cash inflow was $144,500, and investing cash flow was zero. Cash increased from $1,983 to $15,067. Financing included $104,500 of related-party note proceeds and $40,000 from convertible notes.
Changes versus the comparable period
Six-month net loss increased to $339,317 from $195,133, while operating expenses increased to $220,008 from $149,381. The company continued to generate no revenue. Operating cash use declined from $188,038 to $131,416, primarily because higher payables and accrued interest offset cash operating needs, according to management.
Outlook, risks, contingencies, and subsequent events
- Going concern: Management said available cash was insufficient for the next 12 months and that additional financing was required. The filing states that substantial doubt exists about the company’s ability to continue as a going concern; it gives no operating or revenue guidance.
- Business pivot and asset sale: On October 30, 2017, the company licensed Recruiter.com software and intellectual property for a planned staffing and talent-acquisition business under the VocaWorks name. It issued Recruiter 125,000,000 common shares. On the same date, founder Michael Solomon exercised an option to acquire TMC for $5,000, so TMC ceased to be a subsidiary.
- Subsequent financing and dilution: Investors paid $600,000 for Series A preferred stock and warrants to purchase 120,000,000 common shares; reported net proceeds were approximately $481,373. The Series A accrues dividends at 10% annually and is redeemable under specified terms. The November and April convertible notes were exchanged for Series C and C-1 preferred shares. The company said it had orally agreed to modify those series’ redemption terms, but the stated modification was not documented as completed in the filing.
- Additional potential dilution and obligations: Recruiter may receive Series B preferred shares upon launch, sales, and other milestones. The new CEO’s one-year employment agreement provides a $150,000 annual salary and 500,000 stock options. The filing reports 127,554,197 common shares outstanding as of November 6, compared with 2,554,197 at September 30, following the 125 million-share issuance.
- Risks and controls: Management cited software development and functionality, competition, financing availability, and management conflicts as risks. Disclosure controls and procedures were deemed ineffective because of material weaknesses in internal control over financial reporting. The filing reported no material pending legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm the issuer identity: the request names Nixxy, Inc., while this filing is for Truli Media Group, Inc.
- Review the completed Recruiter license, the 125 million-share issuance, and the transfer of TMC to the founder; assess what assets and operations remained with the public company.
- Check the final terms and status of the Series A financing, warrants, Series B milestone consideration, and any proposed Series C/C-1 redemption amendments.
- Assess post-quarter cash needs, financing runway, and the company’s ability to launch and generate sales from VocaWorks.
- Review the material weaknesses in disclosure controls and any subsequent remediation, and reconcile the share count and potential dilution from preferred stock, warrants, and options.