Filing summary
Issuer and period: The supplied filing is Truli Media Group, Inc.’s unaudited Form 10-Q for the three months ended June 30, 2016, not a filing identified as Nixxy, Inc. or a 2016 first-quarter filing. The filing describes a faith- and family-focused digital media platform. It reports 2,553,990 common shares outstanding as of August 10, 2016.
Financial results and position
| Metric | Three months ended June 30, 2016 | Comparable 2015 period / balance-sheet comparison |
|---|---|---|
| Revenue | $0 | $0 |
| SG&A and total operating expenses | $78,783 | $72,965 |
| Net loss | $102,229 | $125,836 |
| Net loss per share, basic and diluted | $0.04 | $0.05 |
| Net cash used in operating activities | $72,756 | $114,734 |
| Cash at period end | $2,989 | $13,245 at March 31, 2016; $16,159 at June 30, 2015 |
| Total liabilities | $2,437,804 | $2,345,910 at March 31, 2016 |
| Working capital | Deficit of $478,881 | — |
The company reported no revenue from inception through June 30, 2016. No meaningful revenue margin is available. Financing activities provided $62,500 during the quarter, including $85,000 in related-party note proceeds and $22,500 in debt-settlement payments. The filing reports aggregate indebtedness of $2,193,747 in principal and interest as of June 30, 2016; the balance sheet separately lists a $1,955,934 convertible note payable to the CEO, a $190,000 officer note, and related-party accrued interest.
Changes and outlook
- SG&A increased about 8% year over year, primarily due to professional fees. Net loss improved by $23,607; management attributed lower interest expense mainly to reduced debt outstanding and lower derivative-related expense to the change in fair value.
- Operating cash use decreased year over year, while financing proceeds also declined. Cash fell by $10,256 from March 31, 2016.
- Management said the company lacked sufficient cash or firm funding commitments to meet obligations and continue planned operations, and was uncertain it could fund operations through the next fiscal year-end. It planned to seek debt or equity financing and remained dependent on CEO working-capital advances; no assurance of funding was given.
- The filing states that recurring losses, no revenue, and the working-capital deficit raise substantial doubt about the company’s ability to continue as a going concern. It warns that failure to raise funds could force curtailment or cessation of operations or bankruptcy. No numerical guidance was provided.
- The CEO, vice-president, and certain consultants were working without pay. The CEO owned approximately 52% of outstanding equity and could control the company; conversion of his note in full could increase his ownership to approximately 99%. Price-reset provisions and warrants also pose substantial dilution risk.
- Management concluded disclosure controls and procedures were not effective because of material weaknesses in internal control over financial reporting. The filing reports no material pending legal or governmental proceedings and no subsequent events requiring disclosure.
Key facts for investors to verify
- Confirm the filing’s issuer and reporting period: the source identifies Truli Media Group, Inc. and a quarter ended June 30, 2016, which conflicts with the request metadata.
- Assess the company’s ability to obtain near-term financing, reliance on CEO advances, and the terms, maturity, and settlement status of outstanding debt.
- Review the going-concern disclosures and the latest cash position, given only $2,989 of reported quarter-end cash.
- Verify the extent of potential dilution from convertible notes, warrants, and price-reset features, including the CEO’s control and conversion rights.
- Review the disclosed material weaknesses and any subsequent remediation of disclosure controls and internal controls.