Filing summary
Entity and period: The supplied filing is Truli Media Group, Inc.’s Form 10-K for the fiscal year ended March 31, 2013—not a filing identified as Nixxy, Inc. or a 2012 fourth-quarter report. Truli was a development-stage Christian and family-friendly digital media and social-networking business. Its website launched July 10, 2012.
Financial results and liquidity
| Metric | Fiscal year ended March 31, 2013 | Comparison |
|---|---|---|
| Revenue | $0 | $0 for October 19, 2011 through March 31, 2012; the comparison period covers five months, so it is not directly comparable. |
| Operating expenses | $1,054,286 | $1,031,287 in the five-month inception period. |
| Net loss | $1,114,423 | $1,031,287 in the five-month inception period. |
| Net loss per share | $0.02 | $0.03 in the five-month inception period. |
| Cash used in operations | $237,179 | Prior-period amount was $0. |
| Cash from financing | $238,475 | Prior-period amount was $0. |
| Cash at year-end | $1,296 | Prior-year amount was $0. |
| Total assets / liabilities | $78,330 / $720,975 | Prior-year assets were $0 and liabilities were $1,031,287. |
There was no revenue from which to assess gross or operating margins. At March 31, 2013, current assets were $78,330 and current liabilities were $678,000, a working-capital deficit of $599,670. Liabilities included $536,542 in notes payable to the CEO and $42,975 in long-term notes payable. The CEO’s related-party note bore 4% interest from September 30, 2012; a separate investor credit line carried 5% interest and matured December 31, 2014.
Material changes and unusual items
- In June 2012, the public company reorganized with Truli Media Group, LLC; the transaction was accounted for as a recapitalization, with Truli LLC treated as the accounting acquirer. The company also changed its name and fiscal year-end.
- In February 2013, $1.2 million of CEO-related debt and accrued interest was settled through issuance of 22,153,847 common shares at $0.054 per share. The company reported $163,661 of non-cash stock-option compensation and $105,200 of stock issued for services.
- Common shares outstanding were 83,651,493 at March 31, 2013; the filing reports 84,051,493 outstanding as of June 28, 2013. The CEO beneficially owned 77.9% as of that date.
- Management reported accumulated development-stage losses of $2,170,710. The company had one full-time employee as of year-end.
Outlook, risks, and controls
Management described advertising, premium and pay-per-view content, merchandise revenue share, and donation commissions as planned revenue sources. It reported post-year-end agreements with AdColony and YuMe for advertising and Pushpay for mobile donations, but the filing provides no clear quantified forecast or expected revenue contribution. Truli also reported agreements with more than 100 ministries and churches to provide content.
The independent auditor issued an unqualified opinion on the financial statements but included a going-concern paragraph, citing recurring losses, no revenue, and negative working capital. Management said additional financing and commercialization were necessary; the filing gives no assurance that financing would be available. Key risks include inability to attract users or advertisers, intense competition, dependence on third-party technology and content, potential dilution, and the CEO’s control of the company. No legal proceeding was reported as likely to have a material adverse effect.
Management concluded disclosure controls and internal control over financial reporting were not effective at March 31, 2013, citing material weaknesses in transaction documentation and limited in-house financial-reporting capacity. The company reported steps to improve documentation and use an outsourced accounting group; the auditor did not audit internal controls.
Important facts for investors to verify
- Confirm the intended issuer and reporting period: the provided document names Truli Media Group, Inc. and covers the year ended March 31, 2013, not Nixxy, Inc. or 2012 Q4.
- Review the company’s subsequent financing, cash position, debt obligations, and ability to continue as a going concern.
- Verify whether the AdColony, YuMe, and Pushpay arrangements became operational and generated material revenue.
- Assess the effects of share issuances, options, and CEO ownership on dilution, governance, and minority shareholders.
- Check whether the reported internal-control weaknesses were remediated and whether financial reporting capacity improved.