Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 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 not yet launched its website or commenced revenue-generating operations.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2012 | Inception (Oct 19, 2011) to June 30, 2012 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating Expenses | $182,812 | $1,214,099 |
| Net Loss | $(204,980) | $(1,236,267) |
| Cash and Cash Equivalents | $0 | $0 |
| Total Current Liabilities | $1,214,099 | $1,214,099 |
| Notes Payable (Related Party) | $1,074,019 | $1,074,019 |
| Accumulated Deficit | $(1,261,267) | $(1,261,267) |
Liquidity: The Company reported zero cash and a working capital deficit of $1,214,099. Operations have been funded entirely by a related-party note from the CEO.
Material Changes
- Reverse Merger: The Company completed a triangular reorganization with Truli Media Group, LLC on June 13, 2012. For accounting purposes, Truli LLC is the surviving entity, and historical financials reflect Truli LLC's operations.
- Capital Structure: Following the merger, 31,073,593 shares of common stock were issued. Subsequent to the period end, 24,573,500 shares were cancelled, and 18,500,000 shares were issued to LLC members.
- Expense Recognition: Operating expenses for the quarter were $182,812, primarily for website development and administrative costs. This represents a significant portion of the total accumulated expenses since inception.
- Related Party Debt: The CEO advanced $1,074,019 via an unsecured term note. Imputed interest of $22,168 was recorded for the period.
Outlook, Risks, and Management Commentary
- Going Concern: The filing includes a substantial "Going Concern" warning. The Company has no revenue, a recurring net loss, and insufficient capital to meet current obligations. Continued existence depends on obtaining additional financing and successfully launching operations.
- Operations Launch: Management stated the website officially launched on July 10, 2012, after the reporting period. Prior results are not indicative of future performance.
- Financing Needs: The Company intends to fund future operations through equity and debt financing but noted there is no assurance these arrangements will be sufficient.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective as of the filing date.
- Debt Repayment: The related-party note requires repayment of principal and interest over 36 months beginning September 2012.
Investor Verification Checklist
- Cash Position: Verify the current cash balance, as the filing reports $0 cash with significant liabilities due.
- Financing Status: Confirm if the Company has secured the additional equity or debt financing required to meet the September 2012 debt repayment schedule.
- Revenue Generation: Assess whether the website launched in July 2012 has generated any revenue in subsequent periods.
- Share Count: Verify the current outstanding share count, noting the stock dividend and share cancellations that occurred subsequent to June 30, 2012.
- Related Party Terms: Review the specific terms of the $1.07M note payable to the CEO to understand repayment flexibility and potential dilution risks.