Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2012, for Truli Media Group, Inc. (formerly SA Recovery Corp.). The company is a development-stage enterprise operating in the on-demand media and social networking markets, specifically aggregating family-friendly, faith-based content. On June 13, 2012, the company consummated a reverse merger with Truli Media Group, LLC, changing its name and fiscal year-end to March 31. As of the reporting date, the company had no cash and had not yet generated revenue.
Key Financial Metrics
| Metric | Three Months Ended Sep 30, 2012 | Six Months Ended Sep 30, 2012 | Inception to Sep 30, 2012 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating Expenses | $210,096 | $392,908 | $1,424,195 |
| Net Loss | $(222,130) | $(427,110) | $(1,458,397) |
| Cash and Cash Equivalents | $0 | $0 | $0 |
| Total Liabilities | $1,424,194 | $1,424,194 | $1,424,194 |
| Stockholders' Deficit | $(1,424,194) | $(1,424,194) | $(1,424,194) |
Debt and Liquidity: The company holds no cash. Total current liabilities are $1,424,194, consisting primarily of a $1,313,254 unsecured note payable to the CEO and $110,940 in accounts payable and accrued liabilities. The company has a working capital deficit of $1,424,194.
Material Changes
- Reverse Merger: The company underwent a significant restructuring on June 13, 2012, resulting in a name change from SA Recovery Corp. to Truli Media Group, Inc. and a recapitalization. Historical financial statements reflect the operations of the accounting acquirer (Truli LLC).
- Stock Activity: Following a 1:1 forward stock split effective August 10, 2012, the company issued 37,000,000 shares to LLC members and cancelled 49,147,000 shares. Outstanding common stock increased from nil to 49,997,938 shares.
- Expense Growth: Operating expenses for the six months ended September 30, 2012, were $392,908, driven by website development and administrative costs prior to the official website launch on July 10, 2012.
Outlook, Risks, and Management Commentary
Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern. The company has no revenue, a recurring net loss, and a significant accumulated deficit. Its ability to continue operations depends on obtaining additional financing and achieving profitable operations.
Financing: The company is dependent on its Founder and CEO for working capital. As of September 30, 2012, the CEO had advanced $1,313,254 via an unsecured note bearing 4% interest, repayable over 36 months. No payments were made during the quarter.
Controls and Procedures: Management concluded that disclosure controls and procedures were not effective in timely alerting them to material information required for SEC filings.
Unusual Items: The company recorded $34,202 in imputed interest expense on related party notes. All website development costs were expensed as incurred.
Investor Verification Checklist
- Cash Position: Verify the company has zero cash on hand and relies entirely on related-party debt for operations.
- Revenue Generation: Confirm the status of the website launched in July 2012 and whether any revenue has been generated since the reporting date.
- Debt Obligations: Review the terms of the $1.3M note payable to the CEO and the company's ability to service this debt without new equity financing.
- Internal Controls: Assess the implications of the ineffective disclosure controls and procedures on the reliability of future financial reporting.
- Going Concern Status: Evaluate the likelihood of the company securing the additional financing required to avoid insolvency.