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Recruiter.com Group, Inc. - Annual Report: 2015 (Form 10-K)

 

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K 

(Mark One) 

      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended March 31, 2015 

or 

o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

Commission File Number 000-53641 

TRULI MEDIA GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter) 

Delaware   26-3090646

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

515 Chalette Drive, Beverly Hills, CA   90210
(Address of Principal Executive Offices)   (Zip Code)

 (310) 274-0224

(Issuer’s Telephone Number, Including Area Code) 

468 N. Camden Drive, Suite 200, Beverly Hills, CA   90210
(Former Address of Principal Executive Offices)   (Zip Code)

 Securities registered pursuant to Section 12(b) of the Act: None 

Securities registered under Section 12(g) of the Exchange Act: 

Common Stock, Par Value $0.001 Per Share  
(Title of Class)  

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☐  No  ☒ 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes  ☐  No  ☒ 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒  No  ☐ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒  No  ☐ 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of a “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.   (Check One) 

Large Accelerated Filer Accelerated Filer ☐ 
Non-accelerated Filer Smaller Reporting Company ☒ 
(do not check if smaller reporting company)  

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐   No  ☒  

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of September 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $311,042 based upon the closing price reported for such date on the OTC Pink tier of the OTC Markets Group Inc.   Solely for purposes of this disclosure, shares of common stock held by executive officers and directors of the registrant as of such date have been excluded because such persons may be deemed to be affiliates. This determination of executive officers and directors as affiliates is not necessarily a conclusive determination for any other purposes. 

 

As of July 9, 2015, the Company had 2,553,990 shares of its common stock, $0.0001 par value per share, outstanding.  

 

 

 

 
 

  

Truli Media Group, Inc.

 

ANNUAL REPORT ON FORM 10-K

FOR THE PERIOD ENDED MARCH 31, 2015

 

TABLE OF CONTENTS

 

PART I       
        
ITEM 1.  BUSINESS   1 
         
ITEM 1A.  RISK FACTORS   3 
         
ITEM 2.  PROPERTIES   11 
         
ITEM 3.  LEGAL PROCEEDINGS   11 
         
ITEM 4.  MINE SAFETY DISCLOSURES   11 
        
PART II        
         
ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUTY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES   11 
         
ITEM 6.  SELECTED FINANCIAL DATA   12 
         
ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   12 
         
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   18 
         
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   18 
         
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE    18 
         
ITEM 9A.  CONTROLS AND PROCEDURES   18 
         
ITEM 9B.  OTHER INFORMATION   19 
         
PART III       
         
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   19 
         
ITEM 11.  EXECUTIVE COMPENSATION   21 
         
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS   22 
         
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE   22 
         
ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES   23 
         
PART IV        
         
ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES   23 

 

 

 
 

 

PART I

 

Forward Looking Statements

 

Information included in this Annual Report on Form 10-K (the “Form 10-K”) contains forward-looking statements. All statements, other than statements of historical facts included in this Form 10-K regarding our strategy, future operations, future financial position, projected expenses, prospects and plans and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from our future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “future,” “plan,” or “project” or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that any projections or other expectations included in any forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including, but not limited to, decreased demand for our products and services; market acceptance of our products; the ability to protect our intellectual property rights; impact of any litigation or infringement actions brought against us; competition from other providers and products; risks in product development; inability to raise capital to fund continuing operations; changes in government regulation; the ability to complete customer transactions and capital raising transactions, and other factors, including the risk factors described in greater detail in Item 1A of this Form 10-K under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.  Except as required by applicable laws, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

 

As used in this Form 10-K, the terms "we", "us", "our", “Truli”, and the "Company" means Truli Media Group, Inc., an Delaware corporation, its wholly-owned subsidiary Truli Media Group, LLC, a Delaware limited liability company .

 

ITEM 1. BUSINESS

 

Corporate Development

 

Truli Media Group, Inc. (“Truli OK”), formerly known as SA Recovery Corp., was incorporated on July 28, 2008 in the State of Oklahoma. On June 13, 2012, the company entered into a Reorganization Agreement (the “Reorganization Agreement") with Truli Media Group, LLC, a Delaware Limited Liability Company (“Truli LLC”) and SA Recovery Merger Subsidiary, Inc., pursuant to an agreement and plan of merger.  Under the terms of the agreement and plan of merger, all of Truli LLC’s membership interests were exchanged for shares of the Truli OK’s common stock, or, at the time, approximately 74% of the fully diluted issued and outstanding common stock of Truli OK.

 

Pursuant to the Reorganization Agreement, as part of the transaction the members of and other designees of Truli LLC acquired a controlling interest in Truli OK. The company was a publicly registered corporation with nominal operations immediately prior to the merger.  For accounting purposes, Truli LLC was the surviving entity.

 

On March 17, 2015 (“Effective Date”), Truli OK effected a merger with its newly formed wholly-owned subsidiary, Truli Media Group, Inc., a Delaware corporation (“TMG”, “Truli” or, the “Company”) for the purposes of changing its state of incorporation to Delaware (the “Merger”). On the Effective Date, Truli OK also completed a reverse stock split as described below. Prior to the Merger, Truli OK was the sole stockholder of TMG. Upon completion of the Merger, Truli became the surviving entity. The Merger was effected through an agreement and plan of merger (“Merger Agreement”).

 

The Merger, including the Merger Agreement, was approved by the board of directors of the Truli OK and a majority of the outstanding capital stock pursuant to a written consent of the stockholders.

 

A certificate of merger was filed with both the Oklahoma Secretary of State and the Delaware Secretary of State on February 27, 2015. As a result of the Merger, the Company is subject to the certificate of incorporation and bylaws of TMG and shall be further governed by the Delaware General Corporation Law.

 

On the Effective Date, every fifty shares of Truli OK’s issued and outstanding common stock (“Common Stock”) was converted into one share of TMG common stock (“TMG Stock”) (the “Stock Split”). Every option and right to acquire Truli OK’s Common Stock and every outstanding warrant or right outstanding to purchase Truli OK’s Common Stock was automatically converted into options, warrants and rights to purchase TMG Stock whereby each option, warrant or right to purchase fifty shares of Common Stock was converted into an option, warrant or right to purchase one share of TMG Stock at 5,000% of the applicable exercise, conversion or strike price of such converted securities. The stockholders of the Company received no fractional shares of TMG and instead had every fractional share, option, warrant or right to purchase TMG Stock rounded up to the next whole number. Additionally, all debts and obligations of Truli OK were assumed by TMG.

 

1
 

 

All references to common stock, share and per share amounts have been retroactively restated to reflect the 1:50 reverse stock split as if it had taken place as of the beginning of the earliest period presented.

 

Business of the Company

 

Truli, headquartered in Beverly Hills, is in the on-demand media and social networking markets. Truli, with a website and multi-screen platform, has commenced operations as an aggregator of family-friendly, faith-based content, media, music and Internet Protocol Television (“IPTV”) programming.

 

Truli serves as a collaborative digital platform for members of the faith and family community worldwide, allowing them to share and deepen their faith and family values together. Truli invites ministries from various religious denominations to upload their messages to the Truli platform, at no cost. Our goal is to have an ever expanding library from these participating ministries, centralizing, serving and extending the Christian and family values message to a greater audience than previously done before. This platform delivers all types of media content to Internet accessible devices such as TVs, computers and an assortment of digital mobile devices such as tablets and smart phones. Currently, there are roughly 10,000 items in its library, with Christian content currently representing roughly 40% of the Truli Platform with roughly 60% of the platform representing family entertainment such as feature films “G” and “PG” rated, music videos focusing on family values, children’s programming, sports, education, etc. The Truli platform is also available in the Spanish language on its website which includes roughly 4,000 items in its library.

 

Strategy

 

Truli’s goal is to sign up as many ministries as possible throughout the United States and abroad.  Truli is affiliated with over two hundred fifty ministries and churches, and allows them to deliver their content through the Truli platform.  We hope to attract ministries to join our website by potentially providing benefits to them including (i) expanded dissemination of their message regardless of size, budget or location, (ii) direct user feedback from our consumers, and (iii) organization of their sermons and content as well as general technological advances to augment traditional places of worship.

 

Truli consumers have access to free content as well as certain Pay-per-View content on the interactive digital platform from which we hope to eventually derive revenue. In the event we are able to raise sufficient capital, and our website gains significant traffic, we plan to sell advertising space on our website.  We additionally plan to sell faith based merchandise through our website once we are financially able to do so. We also have created a “donation” section of our website whereby we will receive 15% of donations given to ministries and churches.

 

Truli also will allow partners to monetize their content through our platform by letting them set purchase prices for their content, and allowing them to receive money though the “donation” section of our website.

 

We have currently not generated any revenue from these business strategies and there can be no assurances that we will do so in the future.

 

Marketing

 

Due to our current lack of capital, we have halted any current marketing.  As a result we currently market in a very limited capacity, primarily through press releases. In the event that we are able to access capital in the future, we would create a marketing campaign including, (i) direct marketing to ministries outlining the benefits of our platform to their ministry, (ii) presence at trade shows and conferences including the National Religious Broadcasters Convention which networks thousands of Christian community members and business people and the international Christian Retailers Show which is the largest Christian retailer gathering in the world, and (iii) other types of marketing including but not limited to social media, press exposure, brand building at various seminars, viral and social strategies as well as the utilization of networks, bloggers, newsletters, direct calling and radio.  If we are able to raise sufficient capital we also plan on developing technology to create mobile phone applications related to our content.

 

Competition

 

We face significant competition from integrated online media companies, social networking sites, traditional print and broadcast media, search engines, and various e-commerce sites. Our competitors include many well-known and fully funded news and information websites and content providers. Several of our competitors offer an integrated variety of Internet products, advertising services, technologies, online services and/or content that may compete for the attention of our users, advertisers, developers, and publishers. We may also in the future, more directly compete with these companies to obtain agreements with third parties to promote or distribute our services. In addition, we compete with social media and networking sites which are attracting an increasing share of users, users’ online time and online advertising dollars.

 

Intellectual Property

 

We received trademarks of the term Truli Media Group and the accompanying logo that we use on our website in the fourth quarter of our fiscal year ending March 31, 2014 from the United States Patent and Trademark Office (“USPTO”).

 

2
 

 

Employees

 

As of July 9, 2015, we had four full-time employees, including our Founder and Chief Executive Officer Michael Solomon, who has forgone payment for the fiscal year. We also employ 4 part-time consultants who are not currently being paid by Truli on a consistent basis. While we have not experienced any work disruptions or stoppages we have to consider our relationships with certain consultants tenuous as a result of certain non-payments.

 

Our Website

 

Our website address is www.truli.com. Information found on our website is not incorporated by reference into this report. We make available free of charge through our website our SEC filings furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

 

ITEM 1A. RISK FACTORS 

 

We have described below a number of uncertainties and risks which, in addition to uncertainties and risks presented elsewhere in this Annual Report, may adversely affect our business, operating results and financial condition.  The uncertainties and risks enumerated below as well as those presented elsewhere in this Annual Report should be considered carefully in evaluating us, our business and the value of our securities. The following important factors, among others, could cause our actual business, financial condition and future results to differ materially from those contained in forward-looking statements made in this Annual Report or presented elsewhere by management from time to time.

 

Risks Related To Our Financial Condition.

 

We were formed on October 19, 2011 and have a limited operating history and accordingly may not be able to effectively operate our business.

 

We are still in the early stages of company development and accordingly, there is only a limited basis upon which to evaluate our prospects for achieving our intended business objectives. There can be no assurance that we will ever achieve positive cash flow or profitability, or that if either is achieved, that it will be at the levels estimated by management.

 

Prior to the date of this annual report, we have not yet generated any revenue. Our failure to generate significant revenues would seriously harm our business. Even if we are able to access capital, we anticipate that we will experience operating losses and incur significant and increasing losses in the future due to growth, expansion, development and marketing. In the event that we are able to raise adequate capital, we expect to significantly increase our sales and marketing and general and administrative expenses. As a result of these additional expenses, we would need to generate substantial revenues to become profitable. We expect to incur significant operating losses for at least the next several years.

 

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

 

The report of our independent auditors dated July 14, 2015 on our consolidated financial statements for the year ended March 31, 2015 included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. Our auditors’ doubts are based on our incurring significant losses from operations and our working capital deficit position. Our ability to continue as a going concern will be determined by our ability to obtain additional funding in the short term to enable us to realize the commercialization of our planned business operations. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertain.

 

We have a significant amount of debt which could impact our ability to continue to implement our business plan.

 

We have incurred indebtedness of our outstanding 8% convertible promissory notes currently totaling in principal and interest $172,242 as of March 31, 2015. As of the date of this report, we have been informed by the holders that we are currently in default and we have made no payments.   Unless we are able to restructure some or all of the remaining debt, and raise sufficient capital to fund our continued development, we will be unable to pay these obligations as our current operations do not generate any revenue.

 

We currently are subject to financial obligations of a settlement agreement regarding the cancellation our previously issued 12% convertible debentures and our failure to meet payments or obligations as they become due may materially harm our financial condition.

 

We entered into a settlement agreement and release of claims on August 7, 2014 with the holders of our 12% convertible debentures whereby we paid an initial payment of $301,337. We additionally owed another $180,000 to be paid over 24 monthly payments beginning on October 10, 2014. We have currently not missed any payments. In the event we default on any payment under this settlement agreement, we would be subject to substantial penalties and interest, which will have a material adverse effect on our business and financial condition.

 

3
 

 

Our chief executive officer, as well as consultants, are currently working without pay and there can be no assurances that they will continue to provide services to us.

 

Currently, our chief executive officer, as well as certain of our consultants, are not being paid for their services provided to the company due to a shortage of company funds.  In the event that we are unable to secure additional financing to begin paying employees and consultants, they may quit, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

 

Risks Related to the Company

 

There is no assurance that we will be able to attract and retain consumers to our website or generate revenues.

 

Our success depends upon our ability to obtain and retain consumers and potentially generate income from advertisers, future merchandise sales, donations to our subscriber ministries, as well as Pay-per-View content on our website. There is no assurance that we will be able to attract prospective consumers to our website, that we will be able to retain consumers that we attract, or that we will be able to generate revenue sufficient to continue our operations.

 

We will require additional capital to implement our business plan and marketing strategies which we may be unable to secure.

 

Under our business plan, we intend to build and expand our operations substantially over the next several years. Our cash on hand is insufficient for our operational needs. We therefore need additional financing for working capital purposes and to grow our business. There is no assurance that additional financing will available on acceptable terms, or at all. If we fail to obtain additional financing as needed, we may be required to reduce or halt our anticipated expansion plans and our business and results of operations could be materially, adversely affected. There can be no assurance that additional financing will be available on terms deemed to be acceptable by us, and in our stockholders’ interests.

 

Given our lack of capital, we may be unable to build, or continue to build, awareness of our brand, which could negatively impact our business, our ability to generate revenues, and/or cause our revenues to decline.

 

Our ability to build and maintain brand recognition is critical to attracting and expanding our online user base. In order to promote our brand, in response to competitive pressures or otherwise, we may find it necessary to increase our marketing budget,   hire additional marketing and public relations personnel or otherwise increase our financial commitment to creating   and maintaining brand loyalty among our clients. Given our insufficient funds, we are currently unable to promote our brand as necessary without raising additional capital. If we fail to promote and maintain our brand effectively, or incur   excessive expenses attempting to promote and maintain our brands, our business and financial results may suffer.

 

The Company relies on the proper and efficient functioning of its computer and database systems, and a malfunction could result in disruptions to its business.

 

The Company's ability to keep its business operating depends on the proper and efficient operation of its computer and database systems. Since computer and   database systems are susceptible to malfunctions and interruptions (including those due to equipment damage, power   outages, computer viruses and a range of other hardware, software and   network problems), the Company cannot guarantee that it will not experience such malfunctions or interruptions in   the future. A significant or large-scale malfunction or interruption of one or more of its computer or database   systems could adversely affect the Company's ability to keep its operations running efficiently. If a malfunction   results in a wider or sustained disruption to its business, this could have a material adverse effect on the Company's   business, financial condition and results of operations.

 

Our systems may be subject to slower response times and system disruptions that could adversely affect our revenues.

 

Our ability to attract and maintain relationships with users, advertisers and strategic partners will depend on the satisfactory performance, reliability and availability of our Internet infrastructure. System interruptions or delays that result in the unavailability of Internet sites or slower response times for users would   reduce the number of advertising impressions and leads delivered. This could reduce our prospects of revenues as the   attractiveness of our sites to users and advertisers decreases. Further, we do not have multiple site capacity for all of our services in the event of any such occurrence. We may experience service disruptions for the following reasons:

 

  occasional scheduled maintenance;

 

  equipment failure;

 

  ●  traffic volume to our websites that exceed our infrastructure’s capacity; and

 

  ●  natural disasters, telecommunications failures, power failures, other system failures, maintenance, viruses, hacking or other events outside of our control.

 

Our networks and websites must accommodate a high volume of traffic and deliver frequently updated information. They may experience slow response times or decreased traffic for a variety of reasons. There may be instances where our online networks as a whole, or our websites individually, will be inaccessible. Also, slower response times can result from general Internet problems, routing and equipment problems involving third party Internet access providers, problems with third party advertising servers, increased traffic to our servers, viruses and other security breaches, many of which problems are out of our control. In addition, our users depend on Internet service providers and online service providers for access to our online networks or websites. Such providers have experienced outages and delays in the past, and may experience outages or delays in the future. Moreover, our Internet infrastructure might not be able to support continued growth of our online networks or websites. Any of these problems could result in less traffic to our networks or websites or harm the perception of our networks or websites as reliable sources of information. Less traffic on our networks and websites or periodic interruptions in service could have the effect of reducing demand for both users and for advertisers on our networks or websites, thereby harming our financial condition and operations.

 

4
 

 

Our networks may be vulnerable to unauthorized persons accessing our systems, viruses and other disruptions, which could result in the theft of our proprietary information and/or disrupt our Internet operations making our websites less attractive and reliable for our users and advertisers.

 

Internet usage could decline if any compromise of security occurs. “Hacking” involves efforts to gain unauthorized access to information   or systems or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer   equipment. Hackers, if successful, could misappropriate proprietary information or cause disruptions in our service.

 

We may be required to expend capital and other resources to protect our websites against hackers. Our online networks could also be affected by computer viruses or other similar disruptive problems, and we could inadvertently transmit viruses across our networks to our users or other third parties. Any of these occurrences could harm our business or give rise to a cause of action against us. Providing unimpeded access to our online networks is critical to servicing our customers and providing superior customer service. Our inability to provide continuous access to our online networks could cause some of our customers to discontinue purchasing advertising programs and services and/or prevent or deter our users from accessing our networks. Our activities and the activities of third party contractors involve the storage and transmission of proprietary and personal information. Accordingly, security breaches could expose us to a risk of loss or litigation and possible liability. We cannot assure that contractual provisions attempting to limit our liability in these areas will be successful or enforceable, or that other parties will accept such contractual provisions as part of our agreements.

 

Our business, which is dependent on centrally located communications and computer hardware systems, is vulnerable to natural disasters, telecommunication and systems failures, terrorism and other problems, which could reduce traffic on our networks or websites and result in decreased capacity for advertising space.

 

Our operations are dependent on our communications systems and computer hardware, all of which are located in data centers operated by third parties. These systems could be damaged by fire, floods, earthquakes, power loss, telecommunication failures and other similar events and natural disasters. We currently have no insurance   policies to cover for loss or damages in these events. In addition, terrorist acts or acts of war may cause harm to our employees or damage our facilities, our clients, our clients’ customers and vendors, or cause us to postpone or cancel, or result in dramatically reduced attendance at, our events, which could adversely impact our revenues, costs and expenses and financial position. We are predominantly uninsured for losses and interruptions to our systems or cancellations of events caused by terrorist acts and acts of war.

  

If additional Shares are issued in the future, an investor’s ownership interest will be diluted.

 

The Company may elect to issue additional shares of common stock in the future including, without limitation, in connection with an additional capital raise. If the Company issues additional shares in the future, an Investors ownership interest in the Company will be diluted and such dilution may be substantial.

 

If Internet users do not interact with www.truli.com frequently or if we fail to attract new users to the site, our business and financial results will suffer.

 

The success of www.truli.com is largely dependent upon users constantly visiting the site for content. We need to attract users to visit our website frequently and spend increasing amounts of time on the website when they visit. If we are unable to encourage users to interact more frequently with truli.com and to increase the amount of user generated content they provide, our ability to attract new users to our website and increase the number of loyal users will be diminished and adversely affected. As a result, our business and financial results will suffer, and we will not be able to grow our business as planned.

 

We intend to generate substantial portions of our revenue through advertising so uncertainties in the Internet advertising market and our failure to increase advertising inventory on our Web properties could adversely affect our ad revenues.

 

Although worldwide online advertising spending is growing steadily, it represents only a small percentage of total advertising expenditures. Advertisers will not do business with us if their investment in Internet advertising with us does not generate sales leads, and ultimately customers, or if we do not deliver their advertisements in an appropriate and effective manner. If the Internet does not continue to be as widely accepted as a medium for advertising and the rate of advertising on the Internet increase, our ability to generate increased revenues could be adversely affected. We believe that growth in ad revenues will also depend on our ability to increase the number of pages on our website to provide more advertising inventory. If we fail to increase our advertising inventory at a sufficient rate, our ad revenues could grow more slowly than we expect, which could have an adverse effect on our financial results.

 

5
 

 

New technologies could block Internet ads from being seen by our users, which could harm our financial results.

 

Technologies have been developed, and are likely to continue to be developed, that can block the display of Internet ads. Ad-blocking technology may cause a decrease in the number of ads that we can display on our website, which could adversely affect our ad revenues and our financial results.

  

If we fail to enhance awareness of our website and provide updated content, we will be unable to generate sufficient website traffic and our business and financial condition will suffer.

 

In order to generate traffic to our website, we believe that we need to enhance awareness of our website and consistently provide updated content. We also believe that the importance of brand recognition will increase due to the relatively low barriers to entry in our market.  We believe we currently have low traffic on our website due to a lack of content, and our inability to adequately market the website given our insufficient capital. Increasing awareness and traffic will require us to spend increasing amounts of money on, and devote greater resources to, advertising, marketing and other brand-building efforts, and these investments may not be successful. Given our insufficient capital, even if these efforts are successful, they may not be cost-effective. If we are unable to enhance our website, our traffic may not increase and we may fail to attract advertisers, which could in turn result in lost revenues and adversely affect our business and financial results.

 

Risks related to Management

 

Our Chief Executive Officer, by virtue of his ownership of our securities, is currently able to control the company.

 

Our founder and Chief Executive Officer, Michael Jay Solomon, as of July 9, 2015, beneficially owns approximately 51% of the issued and outstanding equity of Truli. Our non-management shareholders will have virtually no ability to control or direct our affairs. Management will be in a position to control all of our decisions, and removal of such persons would be virtually impossible. Management will be able to significantly influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions, which could have an undesired or undesirable effect. No person should invest in Truli unless such investor is willing to place all aspects of the management of the company in the existing management.

 

We are responsible for the indemnification of our officers and directors, which, if required, could result in significant company expenditures.

 

Should our officers and/or directors require us to contribute to their defense, we may be required to spend significant amounts of our capital. Our articles of incorporation and bylaws also provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of our Company. This indemnification policy could result in substantial expenditures, which we may be unable to recoup. If these expenditures are significant, or involve issues which result in significant liability for our key personnel, we may be unable to continue operating as a going concern.

 

Given our financial situation, we may be unable to implement growth and expansion strategies.

 

We are not able to expand our product and service offerings, our client base and markets, or implement the other features of our business strategy given our insufficient capital and need for additional financing. If we are unable to successfully manage our future growth, establish and continue to upgrade our operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, our financial condition and results of operations could be materially and adversely affected.

 

Additional financing will be necessary for the implementation of our growth strategy.

 

We will require additional debt and/or equity financing to pursue our growth strategy.  Given our limited operating history and existing losses, there can be no assurance that additional financing will be available, or, if available, that the terms will be acceptable to us.  Lack of additional funding would force us to curtail substantially or even totally, our business and growth plans.

 

Furthermore, given our financial condition, future financing may involve restrictive covenants that could impose limitations on our operating flexibility.  Our failure to successfully obtain additional future funding on terms sufficient to us will seriously jeopardize our ability to continue our business and operations.

 

We depend on Michael Solomon, our Chief Executive Officer, to manage and drive the execution of our business plans and operations; the loss of Mr. Solomon would materially and adversely affect our business.

 

Currently, our CEO, Michael Solomon has forgone payment for the last three fiscal years given our financial condition. There can be no assurance that we will be successful in retaining Mr. Solomon.  A voluntary or involuntary termination of Mr. Solomon would have a materially adverse effect on our business.

 

6
 

 

Risks Related to Investment in our Company

 

The market for our common stock has been illiquid so the price of our common stock could be volatile and could decline when you want to sell your holdings.

 

Our common stock trades with limited volume on the OTC PINK tier of the OTC Markets Group under the symbol TRLI. Although a limited public market for our common stock exists, it is still relatively illiquid compared to that of a seasoned issuer. Any prospective investor in our securities should consider the limited market of our common stock when making an investment decision. No assurances can be given that the trading volume of our common stock will increase or that a liquid public market for our securities will ever materialize. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include but are not limited to: (i) actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investor; (ii) changes in financial estimates by us or by any securities analysts who might cover our stock; (iii) speculation about our business in the press or the investment community; (iv) significant developments relating to our relationships with our licensees and our advisors; (v) stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry; (vi) our potential inability to pay back outstanding notes or debentures, or contractual obligations related to the cancellation thereof; (vii) investor perceptions of our industry in general and our company in particular; (viii) the operating and stock performance of comparable companies; (ix) general economic conditions and trends; (x) major catastrophic events; (xi) announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures; (xii) changes in accounting standards, policies, guidance, interpretation or principles; (xiii) sales of our common stock, including sales by our directors, officers or significant stockholders; and (xiv) additions or departures of key personnel.

 

Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our company at a time when you want to sell your interest in us.

 

Our common stock will be subject to the “penny stock” rules of the SEC, which may make it more difficult for stockholders to sell our common stock.

 

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

The regulations applicable to penny stocks may severely affect the market liquidity for our common stock and could limit an investor’s ability to sell our common stock in the secondary market.

  

As an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements does not apply to us.

 

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.

 

We are subject to price reset provisions, variable conversion prices and adjustments related to certain of our convertible notes (including those in default) and our common stock purchase warrants which could cause significant dilution to stockholders and adversely impact the price of our common stock.

 

Certain of our securities are subject to price reset provisions, variable conversion prices and adjustments.  As a result, future sales of common stock or common stock equivalents may result in significant dilution to our shareholders.  For instance, our 8% convertible promissory notes issued in August, October, and November of 2013 are convertible into common shares at a discount to market and have price reset features.  

  

7
 

 

Additionally, 50,134 common stock purchase warrants issued as compensation to placement agents in connection with our previously cancelled 12% convertible debentures have increased to 358,098 warrants and the exercise price has been reduced from $2.50 to $0.35 as a result of subsequent debt issuances.

 

In the event of further price resets or conversion price modifications, dilution may be substantial and our stock price may be negatively impacted.

 

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results and stockholders could lose confidence in our financial reporting.

 

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed. Failure to achieve and maintain an effective internal control environment, regardless of whether we are required to maintain such controls, could also cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price. Because of our limited resources, management has concluded that our internal control over financial reporting may not be effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Furthermore, we have not obtained an independent audit of our internal controls and, as a result, we are not aware of any deficiencies which would result from such an audit. Further, at such time as we are required to comply with the internal controls requirements of the Sarbanes-Oxley Act, we may incur significant expenses in having our internal controls audited and in implementing any changes which are required.

 

We have not paid dividends on our common stock in the past and do not expect to pay dividends on our common stock for the foreseeable future. Any return on investment may be limited to the value of our common stock.

 

No cash dividends have been paid on our common stock. We expect that any income received from operations will be devoted to our future operations and growth. We do not expect to pay cash dividends on our common stock in the near future. Payment of dividends would depend upon our profitability at the time, cash available for those dividends, and other factors as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on an investor’s investment will only occur if our stock price appreciates.

 

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

 

We became a public company in June 2012 and subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act. Prior to June 2012, we had not operated as a public company and the requirements of these rules and regulations have and will likely continue to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. For example, Section 404 of the Sarbanes-Oxley Act of 2002 requires that our management report on, and our independent auditors attest to, the effectiveness of our internal controls structure and procedures for financial reporting. Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete. We may not be able to successfully complete the procedures and certification and attestation requirements of Section 404 by the time we will be required to do so. If we fail to do so, or if in the future our chief executive officer, chief financial officer or independent registered public accounting firm determines that our internal controls over financial reporting are not effective as defined under Section 404, we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Furthermore, investor perceptions of our company may suffer, and this could cause a decline in the market price of our common stock. Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion on internal controls from our independent auditors. We may need to hire a number of additional employees with public accounting and disclosure experience in order to meet our ongoing obligations as a public company, which will increase costs. Our management team and other personnel will need to devote a substantial amount of time to new compliance initiatives and to meeting the obligations that are associated with being a public company, which may divert attention from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations. In addition, because our management team has limited experience managing a public company, we may not successfully or efficiently manage our transition into a public company. 

 

Future sales of our equity securities could result in downward selling pressure on our securities, and may adversely affect the stock price.

 

In the event that our equity securities are sold, there is a risk downward pressure may result, making it difficult for an investor to sell his or her securities at any reasonable price, if at all. Future sales of substantial amounts of our equity securities in the public market, or the perception that such sales could occur, could put downward selling pressure on our securities, and adversely affect the market price of our common stock. 

 

8
 

 

Risks Related to the Industry

 

The affinity-based content aggregation and ecommerce industry is highly competitive.

 

We will be in competition with other current or potential regional, national and international companies that may offer similar services to ours. Our current competitors include Sky Angel, HopeTV, Harvest-TV, Streaming Faith, Hulu, YouTube, Pandora, Rhapsody as well as thousands of small Christian-focused web sites. Additionally, ministries providing content to the Company may also distribute their content through other mediums such as cable TV, similar online companies, their own web site, YouTube and others. It is possible that additional online media content competitors who do not directly compete with us will elect to compete in our field or emerge in the future, some of which may be larger and have greater financial and operating resources than we do. There can be no assurance that we will be able to compete against such other competitors in light of the rapidly evolving, highly competitive marketplace for these services. Our failure to maintain and enhance our competitive position could reduce our market share, decrease our profit margin and cause our revenues to grow more slowly than anticipated or not at all.

 

Online piracy of media content on our website could result in reduced revenues and increased expenditures which could materially harm our financial condition.

 

Online media content piracy is extensive in many parts of the world and is made easier by technological advances. This trend facilitates the creation, transmission and sharing of high quality unauthorized copies of online video content. The proliferation of unauthorized copies of these products will likely continue, and if it does, could have an adverse effect on the Company’s business, because these products could reduce the revenue the Company receives from its products. Additionally, in order to contain this problem, the Company may have to implement elaborate and costly security and anti-piracy measures, which could result in significant expenses and losses of revenue. There can be no assurance that even the highest levels of security and anti-piracy measures will prevent piracy.

 

Our contracts with content providers are “non-exclusive” which may affect our ability to compete, resulting in potential adverse effects to our operations and financial condition.

 

Our contracts with content providers are “non-exclusive.” As a result, content providers are able to deliver and distribute content which is available on the Truli website, through other websites including, without limitation, our direct competitors. In addition, certain of the content available on the Truli website is also available generally to the public on cable television, YouTube.com or other file sharing websites, among others. The lack of exclusive content on our website may be harmful to our ability to compete in the marketplace which could adversely affect our results of operations and financial condition.

 

Changes in technology may affect the profitability of online content and if we are unable to adapt to such technological changes, it may negatively impact our business and financial condition.

 

The online industry in general, continues to undergo significant changes, primarily due to technological developments. Due to rapid growth of technology and shifting consumer tastes, the Company cannot accurately predict the overall effect that technological growth or the availability of alternative forms of entertainment may have on the profitability of its online content and/or the Company’s business in general. Examples of such advances include downloading and streaming from the Internet onto cellular phone or other mobile devices. Other online companies may have larger budgets to exploit these growing trends. The Company cannot predict how it or its business partners will financially participate in the exploitation of its content through these emerging technologies or whether the Company or its business partners have the right to do so for all of its content. If the Company or its business partners cannot successfully exploit these and other emerging technologies, it could have a material adverse effect on the Company’s revenues and therefore on the Company’s business, financial condition and results of operations.

 

As a result of providing online media content, we may be subject to intellectual property infringement claims which could have a material adverse effect on our financial condition.

 

One of the risks of the online media content business is the possibility that others may claim that such content misappropriates or infringes the intellectual property rights of third parties with respect to their previously developed films, stories, characters, other entertainment or intellectual property. The Company is likely to receive in the future claims of infringement or misappropriation of other parties’ proprietary rights. Any such assertions or claims may materially adversely affect the Company’s business, financial condition or results of operations. Irrespective of the validity or the successful assertion of such claims, the Company could incur significant costs and diversion of resources in defending against them, which could have a material adverse effect on the Company’s business, financial condition or results of operations. If any claims or actions are asserted against the Company, the Company may seek to settle such claim by obtaining a license from the plaintiff covering the disputed intellectual property rights. The Company cannot provide any assurances, however, that under such circumstances a license, or any other form of settlement, would be available on reasonable terms or at all. Any of these occurrences could have a material adverse effect on the Company’s revenues and therefore on the Company’s business, financial condition and results of operations.

 

As a distributor of content over the Internet, we face potential liability for legal claims based on the nature and content of the materials that we distribute.

 

Due to the nature of content published on our online network, including content placed on our online network by third parties, and as a distributor of original content and   research, we face potential liability based on a variety of theories, including defamation, negligence, copyright or trademark infringement, or other legal theories based on the nature, creation or distribution of this information. Such claims may also include, among others, claims that by providing hypertext links to websites operated by third parties,   we are liable for wrongful actions by those third parties through these websites. Similar claims have been brought,   and sometimes successfully asserted, against online services. It is also possible that our users could make claims   against us for losses incurred in reliance on information provided on our networks.

 

9
 

 

In addition, we could be exposed to liability in connection with material posted to our Internet sites by third parties. For example, many of our sites offer users an opportunity to post un-moderated comments and opinions. Some of this user-generated content may infringe on third party intellectual property rights or privacy rights or may otherwise be subject to challenge under copyright laws. Such claims, whether brought in the United States or abroad, could divert management time and attention away from our business and result in significant cost to investigate and defend, regardless of the merit of these claims. In addition, if we become subject to these types of claims and are not successful in our defense, we may be forced to pay substantial damages. We have no insurance to protect us against these claims. The filing of these claims may also damage our reputation as a high quality provider of unbiased, timely analysis and result in client cancellations or overall decreased demand for our services.

 

As a distributor of media content, the Company may face potential liability for defamation, invasion of privacy, negligence, copyright or trademark infringement and other claims based on the nature and content of the materials distributed.

 

These types of claims have been brought, sometimes successfully, against distributors of media content. Any imposition of liability, given our lack of insurance coverage, could have a material adverse effect on the Company’s business, results of operations and financial condition.

 

As a result of conducting business outside of the United States, we may be subjected to additional risks related to international trade which could have a material adverse effect on our financial condition.

 

We conduct business in overseas markets and is therefore subject to risks inherent in the international distribution of media content, many of which are beyond the our control. These risks include: (i) laws and policies affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws; (ii) differing cultural tastes and attitudes, including varied censorship laws; (iii) differing degrees of protection for intellectual property; (iv) financial instability and increased market concentration of buyers in foreign television markets, including in European pay television markets; (v) the instability of foreign economies and governments; (vi) fluctuating foreign exchange rates; and (vii) war and acts of terrorism.

 

Events or developments related to these and other risks associated with international trade could adversely affect our ability to do conduct business in non-U.S. sources, which could have a material adverse effect on our business, financial condition and results of operations.

 

Changes in laws and regulations, specifically those affecting the Internet could adversely affect our business and results of operations.

 

It is possible that new laws and regulations or new interpretations of existing laws and regulations in the United States and elsewhere will be adopted covering issues affecting our business, including (i) privacy, data security and use of personally identifiable information; (ii) copyrights, trademarks and domain names; and (iii) marketing practices, such as e-mail or direct marketing.

 

Increased government regulation, or the application of existing laws to online activities, could (i) decrease the growth rate of the Internet; (ii) reduce our revenues; (iii) increase our operating expenses; or (iv) expose us to significant liabilities.

 

Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is still evolving. Therefore, we might be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our trademarks and other proprietary rights. Any impairment in the value of these important assets could cause our stock price to decline. We cannot be sure what effect any future material noncompliance by us with these laws and regulations or any material changes in these laws and regulations could have on our business, operating results and financial condition.

 

Future government regulation may impair our ability to market and sell our services.

 

Our current and planned services are subject to federal, state, local and foreign laws and regulations governing virtually all aspects of our business and product offerings. As we offer existing products and services or introduce new ones commercially, it is possible that governmental authorities will adopt new regulations that will limit or curtail our ability to market and sell such products. We may also incur substantial costs or liabilities in complying with such new governmental regulations. Our potential customers and distributors, almost all of which operate in highly regulated industries, may also be required to comply with new laws and regulations applicable to products such as ours, which could adversely affect their interest in our products.

 

Our operating results are vulnerable to adverse conditions affecting southern California.

 

Our principal executive office is located in Beverly Hills, California. Thus, our operating results are vulnerable to natural disasters or other casualties and to negative economic, competitive, demographic and other conditions affecting Southern California. We currently have no insurance coverage, and accordingly, will have no compensation for economic consequences of any loss. Should a loss occur, we could lose both our invested capital and anticipated profits from affected facilities.

 

10
 

 

ITEM 2. PROPERTIES

 

The Company currently does own any properties. The Company currently occupies minimal office space provided by our CEO, Michael Solomon, at no charge to us, at 515 Chalette Drive, Beverly Hills, CA 90210.  Our corporate telephone number is (310) 274-0224 and our fax number is (310) 274-2252. Questions and requests for additional information should be addressed to Michael Solomon at 515 Chalette Drive, Beverly Hills, CA 90210.

 

ITEM 3. LEGAL PROCEEDINGS

 

As of the date of this Annual Report, there are no material pending legal or governmental proceedings relating to our Company or properties to which we are a party, and, to our knowledge, there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which have a material interest adverse to us.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUTY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Equity Compensation Plan Information

 

The following table sets forth information as of March 31, 2015 with respect to our compensation plans under which equity securities may be issued.

 

   (a)   (b)   (c) 
   Number of Securities
to be Issued
upon Exercise of
Outstanding
Options, Warrants
and Rights
   Weighted-Average
   Exercise Price of 
Outstanding
Options,
Warrants and
Rights
   Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
 
Equity compensation plans approved by security holders:            
2014 Equity Compensation Plan  (1)   -   $-    510,798 
Total   -   $-    510,798 

 

(1) Our 2014 Equity Compensation Plan provides for the issuance of up to 510,798 common shares in the aggregate, all of which are remaining for future issuances under the Plan.

 

Market Information

 

Our common shares are quoted on the OTC PINK tier of the OTC Markets Group under the trading symbol of TRLI.  As of the date of this Annual Report, the trading in our common shares is limited and sporadic. When our common stock does trade, the trading is of a relatively low dollar volume. Accordingly, management has concluded that no public market for our common shares exists.  There can be no assurance that a public market for our common shares will develop in the future.

 

Holders

 

As of July 9, 2015, there were approximately 109 holders of record of our common stock. 

 

Dividends

 

We have not declared cash dividends on our common stock since our inception and we do not anticipate paying any cash dividends in the foreseeable future.

 

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Recent Sales of Unregistered Securities

 

The following information is given with regard to unregistered securities sold during the period covered by this report.  

 

During October 2014 we granted a total of 3,000 stock options to two consultants. The options each have a term of three years, an exercise price of $0.50 per share, vested fully on the grant date, and allow for cashless exercise at any time during the term. The options were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.

 

On September 19, 2014 we granted an option to purchase 5,000 common shares to a consultant as consideration for services. The option has a term of three years, an exercise price of $0.50 per share, vested fully on the grant date, and allows for cashless exercise at any time during the term. The option was issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.

 

On August 11, 2014 we granted an option to purchase 6,000 common shares to a member of our board of directors for board services. The option has a term of three years, an exercise price of $0.35 per share, vested fully on the grant date, and allows for cashless exercise at any time during the term. The option was issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.

 

On August 7, 2014 we entered into a settlement agreement and general release of claims whereby certain common stock purchase warrants issued to the holders of our previously issued 12% convertible debentures were cancelled. As partial consideration for the cancellation of the 1,253,343 warrants, we issued an aggregate of 630,613 shares of common stock to such holders. The shares to be issued will be exempt from registration under Section 4(2) and 3(9) of the Securities Act of 1933, as amended.

 

On August 5, 2014 we issued an option to purchase 5,000 common shares to a consultant as consideration for services. The option has a term of five years, an exercise price of $0.35 per share, vests in six equal installments over a six week period beginning on the grant date and allows for cashless exercise at any time for any vested portion of the option. The option was issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.

 

On August 28, 2013, October 2, 2013, November 7, 2013 we issued to an accredited investor, an aggregate of $117,500 in 8% convertible notes.  As of March 31, 2015, the Company has issued 58,018 shares of common stock as a result of the conversion of $25,000 in principal of the 8% convertible notes at a conversion price of 55% of the average three (3) lowest per share market values during the ten trading days preceding conversion.

 

On July 26, 2013, the Company issued 10,000 common stock purchase warrants in connection with the sale to an accredited investor of $100,000 of 8% convertible debentures.  The warrants had a term of three years and a price per share of $2.00.  The debenture is convertible into common stock at a conversion price equal to 65% of the average of the lowest three closing bid prices for the ten days prior to a conversion.  The debenture was exchanged in connection with the convertible debenture financing of September 10, 2013 and the 10,000 warrants were cancelled.

 

ITEM 6.  SELECTED FINANCIAL DATA

 

Not applicable as we are a smaller reporting company.

 

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2015 and 2014 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report. This discussion contains forward-looking statements about our business and operations. Our actual results may differ materially from those we currently anticipate as a result of many factors, including those we describe under “Risk Factors” and elsewhere in this report. See “Preliminary Note Regarding Forward Looking Statements.”

 

As used in this report, the terms "Company", "we", "our", "us" and "Truli" refer to Truli Media Group, Inc.

 

12
 

 

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.  MD&A is organized as follows:

 

  Company Overview — Discussion of our business plan and strategy in order to provide context for the remainder of MD&A.

 

  Critical Accounting Policies — Accounting policies that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

 

  Results of Operations — Analysis of our financial results comparing the year ended March 31, 2015 to 2014.

 

  Liquidity and Capital Resources — Analysis of changes in our cash flows, and discussion of our financial condition and potential sources of liquidity. 

 

The various sections of this MD&A contain a number of forward-looking statements. Such statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing and particularly in the Risk Factors section of this Annual Report. Our actual results may differ materially.

 

COMPANY OVERVIEW

 

Business

 

Truli serves as a collaborative digital platform for members of the faith and family community worldwide, allowing them to share and deepen their faith and family values together. Truli invites ministries from various religious denominations to upload their messages to the Truli platform, at no cost. These sermons are categorized into different subject matters and sub-topics for user search. Our goal is to have an ever expanding library from these participating ministries, centralizing, serving and extending the Christian and family values message to a greater audience than previously done before. This platform delivers all types of media content to Internet accessible devices such as TVs, computers and an assortment of digital mobile devices such as tablets and smart phones. The Truli website allows its users to access a library of religious and family-friendly programs, including television, sermons, concerts, movies, e-books, educational seminars, music and music videos. Currently, roughly 5,000 items in its library, with Christian content currently representing roughly 30% of the Truli Platform with roughly 70% of the platform representing family entertainment such as feature films “G” and “PG” rated, music videos focusing on family values, children’s programming, sports, education, etc. The Truli platform is also available in the Spanish language on its website.

 

Strategy

 

Truli’s goal is to sign up as many ministries as possible throughout the United States and abroad.  Truli is affiliated with over two hundred ministries and churches, and allows them to deliver their content through the Truli platform.  We hope to attract ministries to join our website by potentially providing benefits to them including (i) expanded dissemination of their message regardless of size, budget or location, (ii) direct user feedback from our consumers, and (iii) organization of their sermons and content as well as general technological advances to augment traditional places of worship. 

 

Truli consumers have access to free content as well as certain Pay-per-View content on the interactive digital platform from which we hope to eventually derive revenue. In the event we are able to raise sufficient capital, and our website gains significant traffic, we plan to sell advertising space on our website.  We additionally plan to sell faith based merchandise through our website once we are financially able to do so. We also have created a “donation” section of our website whereby we will receive 15% of donations given to ministries and churches.

 

Truli also will allow partners to monetize their content through our platform by letting them set purchase prices for their content, and allowing them to receive money though our “donation” section of the website.

 

We have currently not generated revenue from these business strategies and there can be no assurances that we will do so in the future.

 

Plan of Operation

 

Truli is currently focused on further developing its website and securing financing through which to increase our advertising and online presence.  Truli is additionally working toward increasing both the amount and diversity of its content through which to attract more users as well as more churches and ministries.

 

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Financial

 

To date, we have devoted a substantial portion of our efforts and financial resources to creating and marketing our online platform. As a result, since our inception in 2011, we have generated no revenue and have funded our operations principally through private sales of debt and equity securities. We have never been profitable and, as of March 31, 2015, we had an accumulated deficit of $5,010,816. We expect to continue to incur operating losses for the foreseeable future and expect to generate no revenue for the foreseeable future.

 

Our cash and cash equivalents balance at March 31, 2015 was $13,393, representing 100% of total assets. Based on our current expected level of operating expenditures, we are currently uncertain if we will be able to fund our operations until our next year end. This period could be shortened if there are any significant increases in spending that were not anticipated or other unforeseen events. Currently we are dependent upon working capital advances provided by our Chief Executive Officer, who is also our majority shareholder. We need to raise additional cash through the private or public sales of equity or debt securities, collaborative arrangements, or a combination thereof, to continue to fund operations and the development of our website and digital platform. There is no assurance that such financing will be available to us when needed to allow us to continue our operations or if available, on terms acceptable to us. If we do not raise sufficient funds in a timely manner, we may be forced to curtail operations, delay or stop developing or marketing our products, or cease operations altogether, or file for bankruptcy. We currently do not have commitments for future funding of cash from any source.

 

We have incurred indebtedness in the aggregate of $1,919,372 in principal and interest as of March 31, 2015, which includes $92,500 principal of our 8% convertible promissory notes, which are currently in default. As a result of the default, we recorded (i) penalties of 50% of the outstanding principal and accrued interest aggregating $49,664, and (ii) an increase of the interest rate to 22%. We are also in default on $82,975 of other notes; however we expect that we will be able to extend the maturity dates of those notes. Unless we are able to restructure some or all of this debt, and raise sufficient capital to fund our continued development, our current operations do not generate any revenue to pay these obligations. Accordingly, there can be no assurances that we will be able to pay these or other obligations which we may incur in the future and it is unlikely we will be able to continue as a going concern.

 

Our CEO and consultants are currently not being paid.  In the event financing is not obtained, we may pursue further cost cutting measures.  These events could have a material adverse effect on our business, results of operations and financial condition.

  

The independent registered public accounting firm’s report on our March 31, 2015 consolidated financial statements included in this Annual Report states that our difficulty in generating sufficient cash flow to meet our obligations and sustain operations raise substantial doubts about our ability to continue as a going concern.  The consolidated financial statements do not include any adjustment that might result should the Company be unable to continue as a going concern.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

Our consolidated   financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements. The following accounting policy is critical to understanding and evaluating our reported financial results:

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates. 

 

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”.

 

Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.  Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of “Conventional Convertible Debt Instrument”.

 

14
 

 

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

 

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

 

Stock-Based Compensation

 

The Company utilizes the Black-Scholes option-pricing model to determine fair value of options and warrants granted as stock-based compensation, which requires us to make judgments relating to the inputs required to be included in the model. In this regard, the expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents the Company’s anticipated cash dividend on common stock over the expected life of the stock options. The U.S. Treasury bill rate for the expected life of the stock options is utilized to determine the risk-free interest rate. The expected term of stock options represents the period of time the stock options granted are expected to be outstanding.

 

RESULTS OF OPERATIONS – FISCAL YEAR ENDED MARCH 31, 2015 AS COMPARED TO THE FISCAL YEAR ENDED MARCH 31, 2014

 

The Company had no revenue for the fiscal years ended March 31, 2015 and 2014. Truli officially launched its website on July 10, 2012 but, has not yet generated significant revenue.  Prior to such time, the Company was principally involved in website development and research and development activities.  Net income of $1,103,141 for the year ended March 31, 2015 and net loss of $3,943,247 for the year ended March 31, 2014 results from the operational activities described below.

 

Operating Expenses

 

Operating expenses totaled $393,258 and $1,420,086 for the years ended March 31, 2015 and 2014, respectively.  The decrease in operating expenses is the result of the following factors.

 

The Company incurred selling, general and administrative expenses of $393,258 for the fiscal year ended March 31, 2015, principally comprised of  website development costs, marketing, investor relations, professional and consulting fees and travel expense.  The decrease of 72% for 2015 compared to 2014 was primarily attributable to decreased spending on marketing, investor relations, professional and consulting fees, due to limited capital resources. We do not anticipate that the reported expenses represent a reliable indicator of future performance because we are still in the pre-revenue stage of development. Future costs are expected to be more heavily weighted towards marketing and promotion as our website potentially gains traffic and sales. 

 

15
 

 

Other Income (Expense)

 

   Year Ended   Change in 2015 
   March 31,   Versus 2014 
   2015   2014   $   % 
             
Interest expense  $(349,005)  $(3,848,094)  $3,499,089    91%
Gain on change in fair value of warrant derivative liability   1,087,275    1,576,393    (489,118)   (31%)
Gain on extinguishment of debt   759,250    -    759,250    -%
Loss on debt conversion   (1,121)   (791)   (330)   42%
Loss on default   -    (250,669)   250,669    

(100

%)
Total other income (expense)  $1,496,399   $(2,523,161)  $4,019,560    160%

 

The Company charged to operations interest expense of $349,005 and $3,848,094 for the fiscal years ended March 31, 2015 and 2014, respectively.  The decrease was primarily related to the Company’s derivative debt and warrants.  Additionally, the Company had a gain of $1,087,275 and $1,576,393 for the fiscal years ended March 31, 2015 and 2014 respectively as a result of the change in fair value of the Company’s derivative instruments.  The Company also had a loss on debt conversion of $1,121 and $791 for the fiscal years ended March 31, 2015 and 2014 respectively and a gain on extinguishment of debt of $759,250 and a loss on default of $250,669 for the fiscal years ended March 31, 2015 and 2014 respectively resulting primarily from a default on and subsequent settlement of its September 2013 convertible debentures. For more information on our convertible notes and derivative liabilities, please refer to Notes 4 and 5 to the accompanying consolidated financial statements.

 

LIQUIDITY AND CAPITAL RESOURCES

 

   Year Ended 
   Ended March 31, 
   2015   2014 
     
Cash at beginning of period  $4,249   $1,296
Net cash used in operating activities   (359,519)   (612,551)
Net cash provided by financing activities   368,663    615,504 
Cash at end of period  $13,393   $4,249 

 

The Company had cash and cash equivalents of $13,393 and $4,249 as of March 31, 2015 and 2014, respectively.  The Company’s working capital requirements arose principally from costs associated with website development, marketing and general administrative costs for both fiscal years ended March 31, 2015 and 2014. The Company has liabilities of $2,454,365 and $3,972,855 as of March 31, 2015 and 2014, respectively.  The decrease in liability is primarily a result of the settlement of our September 2013 debentures and related warrants and to the decrease in fair value of derivative liabilities related to convertible debt and common stock purchase warrants with price reset provisions. 

 

The Company owes principal and interest of $1,520,922 pursuant to a 4% unsecured term note representing advances made by its Chief Executive Officer and majority shareholder.

 

The Company additionally has an unsecured line of credit with $82,975 outstanding as of March 31, 2015 and 2014.  The line is currently in default but we expect that we will be able to extend the maturity dates of those notes.

 

The Company owes an aggregate of $92,500 on three 8% convertible debentures issued on August 28, 2013, October 2, 2013, November 7, 2013.  During March 2014, the Company issued 18,018 shares of common stock as a result of the conversion of $10,000 in principal of the 8% convertible notes at a conversion price of 55% of the average three (3) lowest per share market values during the ten trading days preceding conversion. During April 2014, $15,000 of principal was converted into 40,000 shares of common stock

 

The Company owes $135,000 in principal as a result of a debt settlement incurred with the extinguishment of our 12% convertible debentures issued on September 10, 2013. This amount will be paid in monthly installments over a 24 month period.

 

The Company spent in operating activities $359,519 and $612,551 for the fiscal years ended March 31, 2015 and 2014, respectively.  The decrease is primarily attributable to a decrease in loss (after adjusting for non-cash items) of approximately $357,000, partially offset by net changes in prepaid expenses and accounts payable.

 

16
 

 

Financing activities provided $368,663 and $615,504 to the Company during the fiscal years ended March 31, 2015 and 2014, respectively. We received advances from our Chief Executive Officer of $755,000 and $112,164 during the fiscal years ended March 31, 2015 and 2014, respectively. We received proceeds from convertible notes of $543,340 during the year ended March 31, 2014 and none during the 2015 fiscal year. The Company made payments on notes and debentures of $341,337 and $40,000 during the years ended March 31, 2015 and 2014, respectively and made payments on a debt settlement of $45,000 during the 2015 fiscal year.

 

As of March 31, 2015, we had an accumulated deficit of $5,010,816 compared to $6,113,957 as of March 31, 2014.  The decrease is attributable to the net income for the 2015 fiscal year.

 

The Company does not currently have sufficient capital in its accounts, nor sufficient firm commitments for capital to assure its ability to meet its current obligations or to continue its planned operations. The Company is continuing to pursue working capital sources and additional revenue through the seeking of the capital it needs to carry on its planned operations. However, based on its current expected level of operating expenditures, we do not believe we will be able to fund our operations in the short term without raising additional capital. There is no assurance that any of the planned activities will be successful.  

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements.

 

Recently Issued Accounting Pronouncements

 

ASU 2015-03

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. We do not expect the adoption of ASU 2015-03 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2015-02

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2015-01

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates from U.S. GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. We do not expect the adoption of ASU 2015-01 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2014-17

In November 2014, the FASB issued ASU No. 2014-17, “Business Combinations (Topic 805): Pushdown Accounting.” This ASU provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. ASU 2014-17 was effective on November 18, 2014. The adoption of ASU 2014-17 did not have any effect on our financial position, results of operations or cash flows.

 

ASU 2014-16

In November 2014, the FASB issued ASU 2014-16, “Derivatives and Hedging (Topic 815).” ASU 2014-16 addresses whether the host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not currently have issued, nor are we investors in, hybrid financial instruments. Accordingly, we do not expect the adoption of ASU 2014-16 to have any effect on our financial position, results of operations or cash flows.

 

17
 

 

ASU 2014-15

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)". ASU 2014-15 provides guidance related to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted. We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2014-12

In June 2014, the FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not expect the adoption of ASU 2014-12 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2014-09

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We are still evaluating the effect of the adoption of ASU 2014-09. On April 1, 2015, the FASB voted to propose to defer the effective date of the new revenue recognition standard by one year.

 

ASU 2014-08

In April 2014, the FASB issued ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) and Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." ASU 2014-08 amends the definition for what types of asset disposals are to be considered discontinued operations, as well as amending the required disclosures for discontinued operations and assets held for sale. ASU 2014-08 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. The adoption of ASU 2014-08 did not have any effect on our financial position, results of operations or cash flows.

 

The Company has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not expect the future adoption of any such pronouncements to have a significant impact on its results of operations, financial condition or cash flow.  

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable as we are a smaller reporting company.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

This information required by this Item is included in our Financial Statements and Supplementary Data listed in Item 15 of Part IV of this Annual Report.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There are not and have not been any disagreements between us and our accountants on any matter of accounting principles, practices or financial statement disclosure.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures. We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer who also serves as our Chief Financial Officer, has concluded that our disclosure controls and procedures were not effective to ensure that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal control over financial reporting.

 

18
 

 

Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

 

  pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

 

  ●  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

 

  ●  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2015. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls. Based on this assessment, our management has concluded that as of March 31, 2015, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles as a result of material weaknesses.

 

While we have engaged a third party accountant who is a certified public accountant to provide accounting and financial reporting services to us, we lack both an adequate number of personnel with requisite expertise in the key functional areas of finance and accounting and an adequate number of personnel to properly implement control procedures. In addition, while we have an independent director, we do not have an audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. These factors represent material weaknesses in our internal controls over financial reporting.

 

This Annual Report does not include an attestation of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.

 

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

PART III

  

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

  

The following table sets forth the names, ages and positions of our directors and executive officers as of March 31, 2015.

 

Name   Age   Position(s)
Michael Jay Solomon   77   President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors, Principal Executive Officer and Principal Financial Officer

Irving Pompadur

  80   Director

 

19
 

 

Biographical information for our directors and executive officers are as follows:

 

Michael Jay Solomon has served as, President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors, Principal Executive Officer and Principal Financial Officer since June 13, 2012. Michael began his career in film distribution by loading films onto trucks for United Artists at the age of 18. By age 30, he had become MCA/Universal’s youngest vice president, and eventually shouldered all international responsibilities for the studio. After 8 years with United Artists and 14 years with MCA, he co-founded Telepictures Corporation, responsible for creating TV syndication. Telepictures went on to become the largest U.S. television syndication company and one of the largest international television distribution companies, as well as the owner and operator of six television stations in the U.S. Telepictures became a public company (NASDAQ) after only 14 months under Michael’s leadership as Chairman and CEO. When Telepictures merged with Lorimar to form Lorimar Telepictures Corp. (American Stock Exchange), he became the new company’s President and served on its Board of Directors. He led Lorimar Telepictures to become the largest television production and distribution company in the world, producing TV series such as Dallas, Falcon Crest, Knot’s Landing and many more at their studios (formerly the MGM Studios, now SONY Studios). When Warner Bros. acquired Lorimar Telepictures, Michael became President of Warner Bros. International Television, heading up the company’s sales and marketing to television, cable and satellite companies internationally. Under his leadership, Warner Bros. became the largest TV program distribution company in the world by a full 250 percent over its competitors. Michael was a co-founder of HBO OLE (now HBO Latin America), the leading premium-TV service in Latin America, and opened the door to Western programming in China, Russia, India and many more third-world countries. Michael serves on the Board of Overseers of New York University’s Stern School of Business (25 years), is a Founder of The Sam Spiegel Film & Television School in Jerusalem, and was Founding Chairman of The Jerusalem Foundation of the West Coast of the United States. He was educated at New York University’s Stern School of Business and Boston’s Emerson College, where he was awarded an honorary Doctor of Law degree. He is a member of the international honor society Beta Gama Sigma where membership is the highest recognition a business student can receive.  Mr. Solomon was selected to serve as a director due to his deep familiarity with our business, our industry and his extensive entrepreneurial background.

 

Irving Pompadur has serviced as a director of the Company since January 24, 2013. Mr. Pompadur joined News Corporation in June 1998 as its Executive Vice President, and as President of News Corporation Eastern and Central Europe, and was a member of News Corporation's Executive Management Committee.  He was appointed Chairman of News Corp. Europe in January 2000, a position he held until 2008.   Mr. Pompadur was Chairman and Chief Executive Officer of RP Companies from 1982 to 2007, and has held executive positions at several other media companies including American Broadcasting Companies, Inc. and the Ziff Corporation. He is currently Senior Advisor to Oliver Wyman; Global Vice Chairman of Media and Entertainment at Macquarie Capital Advisors; and Chairman of Metan Development Group, a company engaged in various media activities in China.  He also serves on the Board and audit and governance committees of Nexstar Broadcasting Group, Inc. and the Board and compensation committee of IMAX Corporation. Mr. Pompadur was selected to serve as a director due to his vast business and broadcasting experience.

 

Board Committees

 

Our Board of Directors does not currently have any committees and as such the Board as a whole carries out the functions of audit, nominating and compensation committees due to our limited size, resources and due to the fact that we only have four employees.  The Board of Directors has determined that the functions of such committees will be undertaken by the entire board.

 

Director Terms

 

All directors hold office until the next annual meeting of stockholders and the election and qualification of their successors. Officers are elected annually by the board of directors and serve at the discretion of the board.

 

Director Independence

 

The Company is not listed on any national exchange, or quoted on any inter-dealer quotation service, that imposes independence requirements on any committee of the Company’s directors, such as an audit, nominating or compensation committee. For purposes of determining independence, the Company has adopted the definition of independence as contained in NASDAQ Market Place Rules 4200. Pursuant to the definition, the Company has determined that Mr. Pompadur is an independent director.

 

20
 

 

Section 16(A) Beneficial Ownership Reporting Compliance

  

Section 16(a) of the Exchange Act requires our officers, directors, and stockholders owning more than ten percent of our common stock, to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of such reports. Based solely on our review of Form 3, 4 and 5’s, we have determined that there were no reports filed late during the fiscal year ended March 31, 2015.

 

Family Relationships

 

There are no family relationships between any director, executive officer, or person nominated or chosen by the registrant to become a director or executive officer.

 

Code of Ethics

 

We have not adopted a Code of Ethics that applies to our chief executive officer because he is the sole employee of the company.  We expect to consider adopting such a code if and when we retain more management personnel.

 

ITEM 11. EXECUTIVE COMPENSATION

 

SUMMARY COMPENSATION TABLE

 

The following table sets forth information concerning the total compensation paid during our fiscal year ended March 31, 2015, and our fiscal year ended March 31, 2014, for (i) our Chief Executive Officer, Michael Jay Solomon.

 

Position   Year Ended    

Salary

($)

    

Bonus

($)

    

Stock

($)

    

All Other

($)

    

Total

($)

 
Michael Jay Solomon (CEO)   March 31, 2015    *    -    -    -    - 
    March 31, 2014    *    -    -    -    - 

 

* Michael Jay Solomon has forgone payment of $375,000 per annum due to the limited capital of the company.

 

EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS

 

We currently have a written contract with our CEO, Michael Jay Solomon.  Mr. Solomon has forgone payments for the last two fiscal years ended March 31, 2015 and 2014 respectively of $375,000 per annum due to the limited capital of the company.

 

DIRECTOR COMPENSATION

 

Director Compensation

 

Non-employee director compensation for a new director is determined on a case by case basis by the existing members of the board of directors at the time a director is elected. Future awards are determined on an ad-hoc basis by the members of the board of directors.

 

Board Compensation for year end March 31, 2015

 

Name  Fees Earned 
or Paid in
Cash ($)
   Stock
Awards ($)
   Option
Awards ($)
   Non-Equity Incentive 
Plan Compensation ($)
   Non-Qualified
Deferred
Compensation 
Earnings ($)
   All Other
Compensation ($)
   Total ($) 
Irving Pompadour           1,957(1)               

1,957

 

 

(1) Represents an option to purchase 6,000 common shares with a fair market value of $1,957 on August 11, 2014, the grant date, and an exercise price of $0.35 per share.  The option vested fully on the grant date and has a term of three years.

 

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

Securities authorized for issuance under equity compensation plans

 

Information regarding shares authorized for issuance under equity compensation plans approved and not approved by stockholders required by this Item are incorporated by reference from Item 5 of this Annual Report from the section entitled “Equity Compensation Plan Information.”

 

The following table presents information regarding the beneficial ownership of our capital stock as of July 9, 2015 by:

 

  ●  Each person, or group of affiliated persons, known by us to be the beneficial owners of 5% or more of any class of our voting securities;

 

  ●  Each person who beneficially owns outstanding shares of our preferred stock;

 

  ●  Each of our current directors and nominees;

 

  ●  Each named executive officer; and

 

  All directors and officers as a group.

 

Beneficial ownership is determined according to the rules of the SEC. Beneficial ownership means that a person has or shares voting or investment power of a security and includes any securities that person or group has the right to acquire within 60 days after the measurement date. This table is based on information supplied by officers and directors. Except as otherwise indicated, we believe that each of the beneficial owners of the common stock listed below, based on the information such beneficial owner has given to us, has sole investment and voting power with respect to such beneficial owner’s shares, except where community property laws may apply.

 

       Common Stock         
       Shares          
       Underlying          
Name and Address of Beneficial Owner(1)   Shares   Convertible Securities
(2)
   Total   Percent of Class (2) 
Directors and named Executive Officers                  
Michael Jay Solomon    1,308,878 (3)   -    1,308,878    51.2%

Irving Pompadur

   -    6,000    6,000    * 
All directors and executive officers as a group (2 persons)    1,308,878    6,000    1,314,878    51.5%
                     
Beneficial Owners of 5% or more                      
Ryan Tedder (4)    188,680    -    188,680    7.4%

 

(1)   Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table. Unless otherwise indicated, the address of the beneficial owner is Truli Media Group, Inc., 515 Chalette Drive, Beverly Hills, CA 90210.

 

(2) Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. There are 2,553,990 shares of common stock issued and outstanding as of July 9, 2015.

 

(3)   Includes 864,878 shares owned directly by Michael Jay Solomon and 444,000 shares owned by Solomon Family Trust dated December 21, 1989.

 

(4)   45 Broadway, 32nd Floor, New York, New York 10006.

 

* Less than one percent.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Information regarding disclosure of an employment relationship or transaction involving our chief executive officer and any related compensation solely resulting from that employment relationship or transaction is incorporated by reference from the section of this annual report entitled in Item 11 entitled “Executive Compensation.”

 

  The Company currently is in debt to its founder and Chief Executive Officer, principal and interest of $1,520,922 pursuant to a 4% unsecured term note representing advances. The note, which may be increased as additional funds may be advanced to the Company by the Company’s Chief Executive Officer, bears interest at 4% per annum commencing from September 30, 2012. The Company charged to operations interest expense of $43,190 and $23,721 for the fiscal years ended March 31, 2015 and 2014, respectively. Accrued interest payable is $92,313 and $49,123 at March 31, 2015 and 2014, respectively.

  

22
 

  

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Fees

 

Aggregate fees for professional services rendered to us by RBSM LLP, our independent registered public accounting firm engaged to provide accounting services for the fiscal years ended March 31, 2015 and 2014 were:

 

      Year Ended March 31,  2015       Year Ended March 31,  2014  
Audit fees   $ 40,000     $ 35,000  
Audit related fees     -       -  
Tax fees     -       -  
All other fees     -       -  
Total   $   40,000     $  35,000  

 

Policy on Pre-Approval of Audit and Permissible Non-audit Services of Independent Auditors

 

Consistent with the SEC policies regarding auditor independence, our Board of Directors has responsibility for appointing, setting compensation and overseeing the work of the independent auditor. In recognition of this responsibility, our Board of Directors has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.

 

Prior to engagement of the independent auditor for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of the following four categories of services to the Board of Directors for approval.

 

1.   Audit services include audit work performed in the preparation of financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial accounting and/or reporting standards.

 

2.   Audit-Related services are for assurance and related services that are traditionally performed by the independent auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.

 

3.   Tax services include all services performed by the independent auditor’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice.

 

4.   Other Fees are those associated with services not captured in the other categories.

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

  1. Financial Statements: See “Index to Financial Statements” in Part II, Item 8 of this Form 10-K.

 

  2. Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Form 10-K.

 

Certain of the agreements filed as exhibits to this Form 10-K contain representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations and warranties:

 

  may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements;

 

  may apply standards of materiality that differ from those of a reasonable investor;

 

  and were made only as of specified dates contained in the agreements and are subject to later developments.

 

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time, and investors should not rely on them as statements of fact.

 

23
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Dated: July 14, 2015 TRULI MEDIA GROUP, INC.  
   
  By: /s/ Michael Solomon
    Michael Solomon
    Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)

 

 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

 

SIGNATURE   TITLE   DATE

 

/s/ Michael Jay Solomon   Chief Executive Officer, President, Chief Financial Officer and  Chairman  

July 14, 2015

Michael Jay Solomon   (Principal Executive Officer, Principal Financial and Accounting Officer)    
         
/s/ Irving Pompadur   Director  

July 14, 2015

  

24
 

 

TRULI MEDIA GROUP, INC.

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

Report of RBSM LLP., Independent Registered Public Accounting Firm   F-2
     
Consolidated Balance Sheets   F-3
     
Consolidated Statements of Operations   F-4
     
Consolidated Statements of Stockholders’ Deficit   F-5
     
Consolidated Statements of Cash Flows   F-6
     
Notes to Consolidated Financial Statements   F-7

  

F-1
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of Directors and Shareholders of

Truli Media Group, Inc.

 

We have audited the accompanying consolidated balance sheets of Truli Media Group, Inc. (the “Company”) as of March 31, 2015 and 2014, and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the two years in the period ended March 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to the above present fairly, in all material respects, the financial position of Truli Media Group, Inc. as of March 31, 2015 and 2014, and the consolidated results of operations, deficit and cash flows for the two years in the period ended March 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 7 to the accompanying consolidated financial statements, the Company has not generated revenue since operations, has experienced significant losses from operations and has negative working capital which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are described in Note 7. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ RBSM LLP

New York, New York

July 14, 2015 

 

 

F-2
 

 

Truli Media Group, Inc.

Consolidated Balance Sheets

 

   March 31, 2015   March 31, 2014 
Assets        
Current Assets        
Cash and cash equivalents  $13,393   $4,249 
Total Current Assets   13,393    4,249 
           
Total Assets  $13,393   $4,249 
           
Liabilities and Stockholders’ Deficit          
Current Liabilities:          
Accounts payable and accrued liabilities  $338,935   $311,089 
Accrued interest, related party   92,313    49,123 
Notes payable - officers   1,428,609    673,609 
Notes payable, other   82,975    82,975 
Convertible note, net of unamortized debt discount of $0 and $38,881   92,500    780,625 
Debt settlement payable   90,000    - 
Derivative liability   284,033    2,075,434 
Total Current Liabilities   2,409,365    3,972,855 
Long-Term Liabilities:          
Debt settlement payable   45,000    - 
Total Liabilities   2,454,365    3,972,855 
Commitments and Contingencies          
Stockholders’ Deficit:          
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2015 and 2014   -    - 
Common stock, $0.0001 par value; 100,000,000 shares authorized; 2,553,990 and 1,883,033 shares issued and outstanding as of March 31, 2015 and 2014, respectively   255    188 
Additional paid in capital   2,569,589    2,128,913 
Common stock to be issued   -    16,250 
Accumulated deficit   (5,010,816)   (6,113,957)
Total stockholders’ deficit   (2,440,972)   (3,968,606)
Total Liabilities and Stockholders’ Deficit  $13,393   $4,249 

 

The accompanying notes are an integral part of these consolidated financial statements.

F-3
 

 

Truli Media Group, Inc.

Consolidated Statements of Operations

 

   Year ended
March 31,
   Year ended March 31, 
   2015   2014 
Operating expenses:        
Selling, general and administrative  $393,258   $1,420,086 
Total operating expenses   393,258    1,420,086 
Loss from operations   (393,258)   (1,420,086)
           
Other income (expense):          
Interest expense   (349,005)   (3,848,094)
Gain on change in fair value of derivative liability   1,087,275    1,576,393 
Gain on extinguishment of debt   759,250    - 
Loss on debt conversion   (1,121)   (791)
Loss on default   -    (250,669)
Total other income (expense)   1,496,399    (2,523,161)
           

Income (loss) from operations before income taxes

   1,103,141    (3,943,247)
Provision for income taxes   -    - 

Net income (loss)

  $1,103,141   $(3,943,247)
           
Net earnings (loss) per share – basic and diluted  $0.47   $(2.23)
           
Weighted average common shares – basic and diluted   2,329,775    1,767,580 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-4
 

 

Truli Media Group, Inc.

Consolidated Statement of Stockholders' Deficit

For the Two Years ended March 31, 2015

 

   Common stock   Common stock to be issued   Additional Paid in   Accumulated   Total Stockholders' 
   Stock   Amount   Stock   Amount   Capital   Deficit   Deficit 
Balance as of March 31, 2013   1,673,030   $167    -   $-   $1,527,897   $(2,170,710)  $(642,646)
Common stock to be issued for services   -    -    11,938    16,250    -    -    16,250 
Common stock issued for services   191,985    19    -    -    349,106    -    349,125 
Common stock issued upon debt conversion   18,018    2    -    -    18,017         18,019 
Fair value of vested stock options   -    -    -    -    33,751    -    33,751 
Fair value of warrant issued for service   -    -    -    -    584    -    584 
Extinguished derivative liability                       199,558         199,558 
Net loss   -    -    -    -    -    (3,943,247)   (3,943,247)
Balance as of March 31, 2014   1,883,033    188    11,938    16,250    2,128,913    (6,113,957)   (3,968,606)
Common stock issued in exchange for cancellation of warrants   630,613    63    -    -    360,466    -    360,529 
Common stock issued upon debt conversion   40,000    4    -    -    23,996         24,000 
Adjustment for fractional shares   344    -    -    -    -    -    - 
Fair value of vested stock options   -    -    -    -    9,582    -    9,582 
Compensation shares waived   -    -    (11,938)   (16,250)   16,250    -    - 
Extinguished derivative liability                       30,382         30,382 
Net income   -    -    -    -    -    1,103,141    1,103,141 
Balance as of March 31, 2015   2,553,990   $255    -   $-   $2,569,589   $(5,010,816)  $(2,440,972)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-5
 

 

Truli Media Group, Inc.

Consolidated Statements of Cash Flows

 

   Year ended
March 31,
   Year ended
March 31,
 
   2015   2014 
Cash Flows from Operating Activities        
Net income (loss)  $1,103,141   $(3,943,247)
Adjustments to reconcile net income (loss) to net cash used in operating activities          
Operating expenses incurred by related party on behalf of the Company   -    24,903 
Operating expenses paid directly through financings   -    114,160 
Amortization of discount on convertible debt   37,246    676,647 
Equity based compensation expense   9,582    479,359 
Change in fair market value of derivative liability   (1,087,275)   (1,576,393)
Loss on excess fair value of derivative liability at inception   148,373    3,063,436 
Loss on debt conversion   1,121    791 
Loss on default of convertible note   -    250,669 
Gain on forgiveness of debt and default penalty   (765,250)   - 
Changes in operating assets and liabilities:          
Increase in prepaid expenses   -    77,033 
Increase in accounts payable and accrued liabilities   193,543    220,091 
Net cash used in operating activities   (359,519)   (612,551)
           
Cash Flows from Investing Activities   -    - 
           
Cash Flows from Financing Activities          
Proceeds from notes payable, long term   -    40,000 
Proceeds from notes payable, related party   755,000    112,164 
Proceeds from convertible notes   -    503,340 
Payments on debt settlement   (45,000)   - 
Repayments of convertible notes   (341,337)   (40,000)
Net cash provided by financing activities   368,663    615,504 
           
Net increase in cash and cash equivalents   9,144    2,953 
           
Cash and Cash Equivalents, beginning of period   4,249    1,296 
           
Cash and Cash Equivalents, end of period  $13,393   $4,249 
           
Supplemental disclosures of cash flow information:          
Cash paid during the period for interest  $-   $- 
Cash paid during the period for income taxes  $-   $- 
           
Supplemental schedule of non-cash investing and financing activities:          
Extinguished derivative liability  $852,501   $210,095 
Common stock issued upon conversion of debt  $24,000   $18,109 
Debt converted to common stock  $15,000   $- 
Derivative liability at inception  $148,375   $2,298,167 
Common stock issued for cancellation of warrants  $360,529   $- 
Compensation shares waived  $16,250   $- 
Conversion of accrued interest into convertible note payable  $-   $1,337 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-6
 

 

 TRULI MEDIA GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015

 

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

General

 

Truli Media Group, Inc., headquartered in Beverly Hills, California, is focused on the on-demand media and social networking markets. Truli, with a website and multi-screen platform, has commenced operations as an aggregator of family-friendly, faith-based Christian content, media, music and Internet Protocol Television (“IPTV”) programming. From its inception (October 19, 2011) through the date of these consolidated financial statements, the Company has not generated any revenues and has incurred significant expenses. The Company is in the process of raising additional debt or equity capital to support the completion of its development activities. Consequently, its operations are subject to all the risks and uncertainties inherent in the establishment of a new business enterprise, including failing to secure additional funding to carry out the company’s business plan.

 

Merger and Reverse Stock Split

 

Truli Media Group, Inc. (“Truli OK”), formerly known as SA Recovery Corp., was incorporated on July 28, 2008 in the State of Oklahoma. On March 17, 2015 (“Effective Date”), Truli OK effected a merger with its newly formed wholly-owned subsidiary, Truli Media Group, Inc., a Delaware corporation (“TMG”, “Truli” or, the “Company”) for the purposes of changing its state of incorporation to Delaware (the “Merger”). On the Effective Date, Truli OK also completed a reverse stock split as described below. Prior to the Merger, Truli OK was the sole stockholder of TMG. Upon completion of the Merger, TMG will be the surviving entity. The Merger was effected through an agreement and plan of merger (“Merger Agreement”).

 

The Merger, including the Merger Agreement, was approved by the board of directors of the Company and a majority of the outstanding capital stock pursuant to a written consent of the stockholders.

 

A certificate of merger was filed with both the Oklahoma Secretary of State and the Delaware Secretary of State on February 27, 2015. As a result of the Merger, the Company is subject to the certificate of incorporation and bylaws of TMG and shall be further governed by the Delaware General Corporation Law.

 

On the Effective Date, every fifty shares of Truli OK’s issued and outstanding common stock (“Common Stock”) was converted into one share of TMG common stock (“TMG Stock”) (the “Stock Split”). Every option and right to acquire Truli OK’s Common Stock and every outstanding warrant or right outstanding to purchase Truli OK’s Common Stock was automatically converted into options, warrants and rights to purchase TMG Stock whereby each option, warrant or right to purchase fifty shares of Common Stock was converted into an option, warrant or right to purchase one share of TMG Stock at 5,000% of the applicable exercise, conversion or strike price of such converted securities. The stockholders of the Company received no fractional shares of TMG and instead had every fractional share, option, warrant or right to purchase TMG Stock rounded up to the next whole number. Additionally, all debts and obligations of Truli OK were assumed by TMG.

 

All references to common stock, share and per share amounts have been retroactively restated to reflect the 1:50 reverse stock split as if it had taken place as of the beginning of the earliest period presented.

 

Cash and Cash Equivalents

 

The Company considers all short-term highly liquid investments with a remaining maturity at the date of purchase of three months or less to be cash equivalents.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

 

Income Taxes

 

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expense or benefit are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and relate primarily to stock based compensation basis differences.  As of March 31 2015 and 2014, the Company has provided a 100% valuation against the deferred tax benefits.

 

F-7
 

  

Earnings (Loss) Per Share

 

The Company follows ASC 260, “Earnings Per Share” for calculating the basic and diluted earnings (loss) per share. Basic earnings (loss) per share are computed by dividing earnings (loss) available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common share equivalents are excluded from the diluted earnings (loss) per share computation if their effect is anti-dilutive. There were 4,365,824 and 2,897,095 outstanding common share equivalents at March 31, 2015 and 2014, respectively.

 

   March 31,   March 31, 
   2015   2014 
Options   93,040    74,760 
Warrants   358,205    1,378,785 
Convertible notes payable   3,914,579    1,443,550 
    4,365,824    2,897,095 

 

Web-site Development Costs

 

The Company has elected to expense web-site development costs as incurred.  

 

Research and Development

 

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. 

 

Fair Value

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying amount reported in the consolidated balance sheet for accounts payable and accrued expenses and notes payable approximates fair value because of the immediate or short-term maturity of these financial instruments.

 

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”.

 

Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.  Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of “Conventional Convertible Debt Instrument”.

 

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

 

F-8
 

 

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

 

Stock-Based Compensation

 

The Company utilizes the Black-Scholes option-pricing model to determine fair value of options and warrants granted as stock-based compensation, which requires us to make judgments relating to the inputs required to be included in the model. In this regard, the expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents the Company’s anticipated cash dividend on common stock over the expected life of the stock options. The U.S. Treasury bill rate for the expected life of the stock options is utilized to determine the risk-free interest rate. The expected term of stock options represents the period of time the stock options granted are expected to be outstanding.

 

Recently Issued Accounting Pronouncements

 

ASU 2015-03

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. We do not expect the adoption of ASU 2015-03 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2015-02

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2015-01

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates from U.S. GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. We do not expect the adoption of ASU 2015-01 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2014-17

In November 2014, the FASB issued ASU No. 2014-17, “Business Combinations (Topic 805): Pushdown Accounting.” This ASU provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. ASU 2014-17 was effective on November 18, 2014. The adoption of ASU 2014-17 did not have any effect on our financial position, results of operations or cash flows.

 

ASU 2014-16

In November 2014, the FASB issued ASU 2014-16, “Derivatives and Hedging (Topic 815).” ASU 2014-16 addresses whether the host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not currently have issued, nor are we investors in, hybrid financial instruments. Accordingly, we do not expect the adoption of ASU 2014-16 to have any effect on our financial position, results of operations or cash flows.

 

ASU 2014-15

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)". ASU 2014-15 provides guidance related to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted. We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash flows.

 

F-9
 

 

ASU 2014-12

In June 2014, the FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not expect the adoption of ASU 2014-12 to have a material effect on our financial position, results of operations or cash flows.

 

ASU 2014-09

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We are still evaluating the effect of the adoption of ASU 2014-09. On April 1, 2015, the FASB voted to propose to defer the effective date of the new revenue recognition standard by one year.

 

ASU 2014-08

In April 2014, the FASB issued ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) and Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." ASU 2014-08 amends the definition for what types of asset disposals are to be considered discontinued operations, as well as amending the required disclosures for discontinued operations and assets held for sale. ASU 2014-08 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. The adoption of ASU 2014-08 did not have any effect on our financial position, results of operations or cash flows.

 

The Company has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not expect the future adoption of any such pronouncements to have a significant impact on its results of operations, financial condition or cash flow.  

 

NOTE 2 — NOTES PAYABLE, RELATED PARTY

 

The Company’s Founder and Chief Executive Officer has advanced funds to the Company in the form of an unsecured term note, aggregating $1,428,609 and $673,609 payable as of March 31, 2015 and 2014, respectively. The note, which may be increased as additional funds may be loaned to the Company by the Company’s Chief Executive Officer, bears interest at 4% per annum commencing. The Company has charged to operations interest expense of $43,190 and $23,721 for the years ended March 31, 2015 and 2014, respectively. Accrued interest payable is $92,313 and $49,123 at March 31, 2015 and 2014, respectively.

 

The Company is obligated to repay the principal balance of the note along with accrued and unpaid interest payable over 36 months beginning in September 2012. No payments have been made.

 

NOTE 3 — NOTES PAYABLE, OTHER

 

On December 1, 2012, the Company entered into Unsecured Line of Credit agreement with an investor. Pursuant to the terms of the agreement, the Company promised to pay the sum up to $500,000, or the total sums advanced, together with accrued interest at the rate of 5% per annum from the date of the advance. The notes matured on December 31, 2014 and are currently in default. The Company has issued nine 5% promissory notes to the investor aggregating $82,975 as of March 31, 2015 and 2014.

 

NOTE 4 — CONVERTIBLE NOTES

 

At March 31, 2015 and 2014 convertible notes and debentures consisted of the following:

    

   March 31,
2015
   March 31,
2014
 
Convertible notes payable  $92,500   $819,506 
Unamortized debt discount   -    (38,881)
Carrying amount  $92,500   $780,625 

 

F-10
 

 

Debentures issued on July 26, 2013:

 

On July 26, 2013, the Company entered into a securities purchase agreement (the " July 2013 Agreement") with an accredited investor (the "July 2013 Investor") pursuant to which the July 2013 Investor purchased an 8% Convertible Debenture for an aggregate purchase price of $100,000 (the "July 2013 Debenture"). The July 2013 Debenture bore interest at a rate of 8% per annum and was payable upon any principal being converted on any voluntary conversion date (as to that principal amount then being converted) and the earlier of (i) July 26, 2014 or (ii) one business day after the consummation of a Subsequent Financing (as defined and described in the July 2013Agreement). The July 2013 Debenture was convertible at the option of the July 2013 Investor at any time into shares of the Company's common stock at a conversion price equal to sixty-five percent (65%) of the average of the lowest three closing bid prices of the Company's common stock for the ten trading days immediately prior to a voluntary conversion date, subject to adjustment.

 

In connection with the July 2013 Agreement, the July 2013 Investor received a warrant to purchase ten thousand shares of common stock (the “July 2013 Warrant”). The July 2013 Warrant was exercisable for a period of three years from the date of issuance, with an exercise price of $2.00, subject to adjustment.

 

On September 10, 2013, the Company cancelled the July 2013 Debenture, in the principal amount of $100,000, along with related accrued interest of $1,337, and issued a new convertible debenture in the principal amount of $101,337 with fixed conversion price of $1.00 per share as described below under “Debenture issued on September 10, 2013”. Also, the Company cancelled the 10,000 warrants issued with the debenture. 

 

Note issued on August 28, 2013:

 

On August 28, 2013, the Company issued an 8% convertible promissory note in the aggregate principal amount of $42,500 to an accredited investor (“August 2013 Note”). The note has a maturity date of May 30, 2014. The note is convertible into shares of our common stock at a conversion price of 55% of the average of the three lowest per share market values during the ten trading days immediately preceding a conversion date. We are currently in default on this convertible note and, accordingly, the Company charged to operations penalty at 50% of unpaid principal and accrued interest on the date of default of $9,886 during the year ended March 31, 2015. The Company is recording interest at 22% from the date of default.

 

During April 2014, $15,000 of principal was converted into 40,000 shares of common stock, with a value of $24,000. The Company recorded a loss on conversion of $1,121 during the year ended March 31, 2015.

 

During March 2014 $10,000 of principal was converted into 18,018 shares of common stock, with a value of $18,019. The Company recorded a loss on conversion of $791 during the year ended March 31, 2014.

 

During the years ended March 31, 2015 and 2014, the Company recorded amortization of debt discount of $5,454 and $32,100, respectively, as interest expense.

 

Debentures issued on September 10, 2013:

 

On September 10, 2013, the Company entered into securities purchase agreements with accredited investors pursuant to which the investors purchased 12% convertible debentures for aggregate gross proceeds of $501,337, which consisted of $400,000 of cash and the exchange and cancellation of an 8% convertible debenture (bearing principal and interest totaling $101,337) (“September 2013 Debentures”). The debentures bear interest at a rate of 12% per annum and their principal amounts were due on September 10, 2014. The September 2013 Debentures are payable upon any principal being converted on any voluntary conversion date (as to that principal amount then being converted). The Company may pay interest due either in cash or, at its option, through an increase in the principal amount of the September 2013 Debentures then outstanding by an amount equal to the interest then due and payable. The September 2013 Debentures were convertible at the option of the investor at any time into shares of the Company’s common stock at a conversion price equal to (i) $1.00, on any conversion date through the date that is one hundred eighty days from September 10, 2013, subject to adjustment and (ii) beginning one hundred eighty one days after September 10, 2013, it shall be equal to the lower of (A) the initial conversion price or (B) 65% of the average of the lowest three closing bid prices of the common stock for the ten trading days immediately prior to a conversion date, subject to adjustment.

 

In connection with the securities purchase agreements and issuance of the September 2013 Debentures, the investors collectively received warrants to purchase an aggregate of 501,337 shares of common stock (“September 2013 Debenture Warrants”). The warrants are exercisable for a period of three years from the date of issuance at an exercise price of $2.50 per share, subject to adjustment. The investors may exercise the warrants on a cashless basis at any time after the date of issuance. In the event the investors exercise the warrants on a cashless basis we will not receive any proceeds.

 

In connection with the above $501,337 of September 2013 Debentures, the Company made certain statements or omissions in the transaction documents that were incorrect as of the date made. Such statements or omissions resulted in an event of default under the terms of the transaction documents and the September 2013 Debentures. Upon such event of default: (i) the principal and accrued interest balance on the debentures increased to 150% of original face value, (ii) the interest rate increased to 18% (commencing 5 days after the event of default), and (iii) the amounts due under the September 2013 Debentures were accelerated and became immediately due and payable. Accordingly, the Company charged to operations loss on default of convertible note of $250,669 during the year ended March 31, 2014 and increased the principal amount of the September 2013 Debentures to $752,006. During March 2014, the Company repaid $40,000 of principal to the debenture holders.

 

During April and May of 2014, the Company repaid $40,000 of principal to the September 2013 Debentures holders. Additionally, $6,000 of penalty was forgiven.

 

F-11
 

 

On August 7, 2014 we entered into a settlement agreement and release of claims with the holders of our September 2013 Debentures. At the time of settlement, the aggregate outstanding amount due was $780,513. Pursuant to the settlement we paid an initial payment of $301,337. We additionally owe another $180,000 to be paid over 24 monthly payments beginning on October 10, 2014. In the event we default on any payment under this settlement agreement, we would be subject to substantial penalties and interest, which could have a material adverse effect on the Company’s business and financial condition. We have also extinguished the derivative liability associated with the debentures of $452,075. We have recorded a gain of $751,250 as a result of the debt extinguishment during the year ended March 31, 2015. During the year ended March 31, 2015, the Company made payments on the settlement amount aggregating $45,000.

 

Note issued on October 2, 2013:

 

On October 2, 2013, the Company issued an 8% convertible promissory note in the aggregate principal amounts of $32,500 to an accredited investor (“October 2013 Note”). The note has a maturity date of July 5, 2014. The note is convertible into shares of common stock at a conversion price of 55% of the average of the three lowest per share market values during the ten trading days immediately preceding a conversion date. We are currently in default on this convertible note and, accordingly, the Company charged to operations penalty at 50% of unpaid principal and accrued interest on the date of default of $17,233 during the year ended March 31, 2015. The Company is recording interest at 22% from the date of default.

 

During the years ended March 31, 2015 and 2014, the Company amortized debt discount of $11,304 and $21,196, respectively, to current period operations as interest expense.

 

Note issued on November 7, 2013:

 

On November 7, 2013, the Company issued an 8% convertible promissory note in the aggregate principal amount of $42,500 to an accredited investor (“November 2013 Note”). The note has a maturity date of August 12, 2014. The note is convertible into shares of our common stock at a conversion price of 55% of the average of the three lowest per share market values during the ten trading days immediately preceding a conversion date. We are currently in default on this convertible note. This note is in default and accordingly the Company charged to operations penalty at 50% of unpaid principal and accrued interest on the date of default of $22,545 during the year ended March 31, 2015. The Company is recording interest at 22% from the date of default.

 

During the years ended March 31, 2015 and 2014, the Company amortized debt discount of $20,486 and $22,014, respectively, to current period operations as interest expense. 

 

NOTE 5 — DERIVATIVES

 

The Company has identified certain embedded derivatives related to its convertible notes and common stock purchase warrants. Since certain of the notes are convertible into a variable number of shares or have a price reset feature, the conversion features of those debentures are recorded as derivative liabilities. Since the warrants have a price reset feature, they are recorded as derivative liabilities. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date and to adjust to fair value as of each subsequent balance sheet date. 

 

The Company has identified certain embedded derivatives related to its convertible notes, debentures and common stock purchase warrants. Since certain of the notes and debentures are convertible into a variable number of shares or have a price reset feature, the conversion features of those debentures are recorded as derivative liabilities. Since the warrants have a price reset feature, they are recorded as derivative liabilities. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date and to adjust to fair value as of each subsequent balance sheet date. 

 

July 2013 Debenture (issued on July 26, 2013):

 

The Company identified embedded derivatives related to the July 2013 Debenture.  These embedded derivatives included certain conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the July 2013 Debenture and to adjust the fair value as of each subsequent balance sheet date.  At the inception of the July 2013 Debenture, the Company determined a fair value of $155,502 of the embedded derivative.  The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 0.11%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 288%; and (4) an expected life of 1 year. 

  

The initial fair value of the embedded debt derivative of $155,502 was allocated as a debt discount up to the proceeds of the debenture ($100,000) with the remainder ($55,502) charged to operations as interest expense during the year ended March 31, 2014.

 

On September 10, 2013, the Company cancelled the July 2013 Debenture in the principal amount of $100,000, along with related accrued interest of $1,337, and issued a debenture in the principal amount of $101,337 with fixed conversion price of $1.00 per share as described above under “Debentures issued on September 10, 2013”. Also, the Company cancelled the 10,000 warrants issued with the debenture. Accordingly, the Company extinguished the derivative liability on this note and reclassified the balance of $155,502 to additional paid in capital.

 

F-12
 

 

August 2013 Note (issued on August 28, 2013):

 

The Company identified embedded derivatives related to the August 2013 Note.  These embedded derivatives included certain conversion features.  At the inception of the convertible promissory note, the Company determined a fair value of $69,488 of the embedded derivative.  The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 0.11%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 280%; and (4) an expected life of 0.75 year. 

 

The initial fair value of the embedded debt derivative of $69,488 was allocated as a debt discount up to the proceeds of the note ($42,500) with the remainder ($26,988) charged to operations as interest expense.

 

During March 2014, $10,000 of principal was converted into 18,018 shares of common stock. The derivative liability was reduced by $10,537 as a result of this conversion.

 

During the year ended March 31, 2014, we recorded additions to our derivative conversion liabilities related to the conversion feature attributable to interest accrued during the period. These additions aggregated $2,046 which has been charged to interest expense.

 

During the year ended March 31, 2014, the Company recorded $24,809 of income related to the change in the fair value of the derivative.

 

The fair value of the remaining embedded derivative was $36,188 at March 31, 2014, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.046%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 254%; and (4) an expected life of 0.17 year. 

 

During April 2014, $15,000 of principal was converted into 40,000 shares of common stock. The derivative liability was reduced by $9,515 as a result of this conversion.

 

During the year ended March 31, 2015, we recorded additions to our derivative conversion liabilities related to the conversion feature attributable to interest and penalties accrued during the period. These additions aggregated $15,761 for the year ended March 31, 2015 which has been charged to interest expense.

 

During the year ended March 31, 2015, the Company recorded $10,878 of expense related to the change in the fair value of the derivative.

 

The fair value of the remaining embedded derivative was $53,312 at March 31, 2015, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.02%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 484%; and (4) an expected life of three months.

  

September 2013 Debentures (issued on September 10, 2013):

   

The Company identified embedded derivatives related to the September 2013 Debentures, resulting from the price reset features of these instruments.  At the inception of the debentures, the Company determined a fair value of $1,086,647 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 0.122%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 195%; and (4) an expected life of 1 year. 

 

The initial fair value of the embedded debt derivative of $1,086,647 was allocated as a debt discount up to the proceeds of the debentures ($501,337) with the remainder ($585,310) charged to operations as interest expense.

 

During March 2014, the Company repaid $40,000 of principal to the debenture holders. As a result, $44,057 of derivative liability was reclassified to paid-in capital.

 

During the year ended March 31, 2014, the Company recorded $244,273 of income related to the change in the fair value of the derivative. 

 

The fair value of the remaining embedded derivative was $798,317 at March 31, 2014, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.081%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 288%; and (4) an expected life of 0.4375 year.

 

During April and May 2014, the Company repaid $40,000 of principal to the 12% debenture holders. As a result, $30,382 of derivative liability was reclassified to paid-in capital. On August 7, 2014, we entered into a settlement agreement with the debenture holders and the convertible debentures were extinguished. As a result, $452,075 of derivative liability was also extinguished.

  

During the year ended March 31, 2015, the Company recorded $315,860 of income related to the change in the fair value of the derivative.

 

F-13
 

 

September 2013 Debenture Warrants (issued on September 10, 2013):

 

The Company issued 501,337 September 2013 Debenture Warrants in conjunction with the September 2013 Debentures. The warrants had an initial exercise price of $2.50 per shares and a term of three years. The Company identified embedded derivatives related to these 501,337 September 2013 Warrants, resulting from the price reset features of these instruments. As a result, we have classified these instruments as derivative liabilities in the financial statements. In connection with the issuance of these warrants, we have recorded a warrant liability of $796,471, with a corresponding charge to interest expense. The value of the warrant liability was determined using the Black-Scholes method based on the following assumptions: (1) risk free interest rate of 0.875%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 171%; and (4) an expected life of 3 years.

 

The warrants issued with the September 2013 Debentures have been adjusted due to the subsequent issuance of debt. As a result, those warrants totaled 1,253,343 with an exercise price of $1.00. The Company has also recorded an expense of $1,416,749 due to the increase in the fair value of the warrants as a result of the modifications.

 

During the year ended March 31, 2014, the Company recorded $1,173,551 of income related to the change in the fair value of the derivative.

 

The fair value of the embedded derivative was $1,039,670 at March 31, 2014, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.875%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 228%; and (4) an expected life of 2.438 years.

 

On August 7, 2014, the warrants were cancelled, in exchange for the issuance of 630,613 shares of our common stock. As a result, $360,529 of derivative liability was reclassified to paid-in capital.

   

During the year ended March 31, 2015, the Company recorded $679,141 of income related to the change in the fair value of the derivative.

 

Compensation Warrants (issued on September 10, 2013):

 

During September 2013 the Company granted 50,134 warrants as compensation for consulting services. The warrants had an initial exercise price of $2.50 per shares and a term of three years. The Company identified embedded derivatives related to these 50,134 September 2013 Compensation Warrants, resulting from the price reset features of these instruments. As a result, we have classified these instruments as derivative liabilities in the financial statements. At issue, we have recorded a warrant liability of $79,647, with a corresponding charge to consulting fees. The value of the warrant liability was determined using the Black-Scholes method based on the following assumptions:  (1) risk free interest rate of 0.875%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 171%; and (4) an expected life of 3 years.

 

The compensation warrants have been adjusted due to the subsequent issuance of debt. As a result, those warrants totaled 125,334 with an exercise price of $1.00. The Company has recorded an expense of $141,675 due to the increase in the fair value of the warrants as a result of the modifications.

 

During the year ended March 31, 2014, the Company recorded $117,355 of income related to the change in the fair value of the derivative.

 

The fair value of the embedded derivative was $103,967 at March 31, 2014, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.875%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 228%; and (4) an expected life of 2.438 years. 

 

During the three months ended September 30, 2014, the Company recorded a further adjustment due to the issuance of equity instruments at a price below the exercise price of the warrants. As a result, those warrants now total 358,097 with an exercise price of $0.35. The Company has recorded an expense of $74,485 due to the increase in the fair value of the warrants as a result of the modifications during the year ended March 31, 2015.

 

During the year ended March 31, 2015, the Company recorded $155,966 of income related to the change in the fair value of the derivative.

 

The fair value of the embedded derivative was $22,486 at March 31, 2015, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.38%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 266%; and (4) an expected life of 1.44 years. 

 

October 2013 Note (issued on October 2, 2013):

 

The Company identified embedded derivatives related to the October 2013 Note.  These embedded derivatives included certain conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the note and to adjust the fair value as of each subsequent balance sheet date.  At the inception of the note, the Company determined a fair value of $47,967 of the embedded derivative.  The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 0.08%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 196%; and (4) an expected life of 0.75 year.  

 

The initial fair value of the embedded debt derivative of $47,967 was allocated as a debt discount up to the proceeds of the note ($32,500) with remained ($15,467) charged to operations as interest expense.

 

F-14
 

 

During the year ended March 31, 2014, we recorded additions to our derivative conversion liabilities related to the conversion feature attributable to interest accrued during the period. These additions aggregated $1,473 which has been charged to interest expense.

 

During the year ended March 31, 2014, the Company recorded $10,883 of income related to the change in the fair value of the derivative.

 

The fair value of the described embedded derivative of $38,557 at March 31, 2014 was determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.046%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 255%; and (4) an expected life of 0.25 year.  

 

During the year ended March 31, 2015, we recorded additions to our derivative conversion liabilities related to the conversion feature attributable to interest and penalties accrued during the period. These additions aggregated $26,564 for the year ended March 31, 2015, respectively, which has been charged to interest expense.

 

During the year ended March 31, 2015, the Company recorded $26,112 of expense related to the change in the fair value of the derivative.

 

The fair value of the described embedded derivative of $91,233 at March 31, 2015 was determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.02%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 484%; and (4) an expected life of three months.  

 

November 2013 Note (issued on November 7, 2013):

 

The Company identified embedded derivatives related to the November 2013 Note.  These embedded derivatives included certain conversion features.  The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the note and to adjust the fair value as of each subsequent balance sheet date.  At the inception of the note, the Company determined a fair value of $62,445 of the embedded derivative.  The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:  (1) risk free interest rate of 0.10%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 193%; and (4) an expected life of 0.75 year. 

 

The initial fair value of the embedded debt derivative of $62,445 was allocated as a debt discount up to the proceeds of the note ($42,500) with remained ($19,945) charged to operations as interest expense.

 

During the year ended March 31, 2014, we recorded additions to our derivative conversion liabilities related to the conversion feature attributable to interest accrued during the period. These additions aggregated $1,812 which has been charged to interest expense.

 

During the year ended March 31, 2014, the Company recorded $5,522 of income related to the change in the fair value of the derivative.

 

The fair value of the described embedded derivative of $58,735 at March 31, 2014 was determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.066%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 296%; and (4) an expected life of 0.375 year. 

 

During the year ended March 31, 2015, we recorded additions to our derivative conversion liabilities related to the conversion feature attributable to interest and penalties accrued during the period. These additions aggregated $31,563 for the year ended March 31, 2015, which has been charged to interest expense.

 

During the year ended March 31, 2015, the Company recorded $26,704 of expense, related to the change in the fair value of the derivative.

 

The fair value of the described embedded derivative of $117,002 at March 31, 2015 was determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.02%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 484%; and (4) an expected life of three months. 

 

NOTE 6 — FAIR VALUE OF FINANCIAL INSTRUMENTS

 

ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value: 

   

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

F-15
 

 

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

  

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.  

 

Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of March 31, 2015:

 

      

Fair Value Measurements at 

March 31, 2015 using:

 
  

March 31,

 2015

  

Quoted Prices

 in Active

 Markets for

 Identical

 Assets

 (Level 1)

  

Significant

 Other

 Observable

 Inputs 
(Level 2)

  

Significant

 Unobservable

 Inputs

 (Level 3)

 
Liabilities:                
Debt and Warrant Derivative Liabilities  $284,033    -    -   $284,033 

 

The debt derivative liabilities is measured at fair value using quoted market prices and estimated volatility factors based on historical prices for the Company’s common stock and are classified within Level 3 of the valuation hierarchy. 

 

The following table provides a summary of changes in fair value of the Company’s Level 3 derivative liabilities for the years ended March 31, 2015 and 2014:

 

   March 31,   March 31, 
   2015   2014 
Balance, beginning of year  $2,075,434   $- 
Additions   148,375    3,861,922 
Extinguished derivative liability   (852,501)   (210,095)
Change in fair value of derivative liabilities   (1,087,275)   (1,576,393)
   $284,033   $2,075,434 

 

NOTE 7 — GOING CONCERN

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established any sources of revenue to cover its operating expenses. The Company has not generated any revenue for the period from October 19, 2011 (date of inception) through March 31, 2015. The Company has recurring net losses, an accumulated deficit of $5,010,816 and a working capital deficit (current liabilities exceeded current assets) at March 31, 2015 of $2,395,972. Additionally, the current development stage of the company and current economic conditions create significant challenges to attaining sufficient funding for the company to continue as a going concern.

 

The Company’s ability to continue existence is dependent upon commencing its planned operations, management’s ability to develop and achieve profitable operations and/or upon obtaining additional financing to carry out its planned business. The Company intends to fund its business development, acquisition endeavors and operations through equity and debt financing arrangements. The Company is dependent upon its majority shareholder and founder to provide financing for working capital purposes. However, there can be no assurance that these arrangements will be sufficient to fund its ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might necessary should the Company be unable to continue as a going concern.

 

F-16
 

 

NOTE 8 — SHAREHOLDERS EQUITY AND CONTROL

 

Common stock

 

The Company is authorized to issue 100,000,000 shares of common stock, par value $0.0001 per share. As of March 31, 2015 and 2014 the Company had 2,553,990 and 1,883,033 shares of common stock issued and outstanding, respectively. Prior to merger with Truli Delaware on March 17, 2015, Truli OK was authorized to issue 495,000,000 shares of common stock, par value $0.001 per share.

 

On March 17, 2015, the Company completed a one-for-fifty reverse split of its common stock. All references to common stock, share and per share amounts have been retroactively restated to reflect the 1:50 reverse stock split as if it had taken place as of the beginning of the earliest period presented.

 

During April 2014, an aggregate of $15,000 of principal related to the August 2013 Note was converted into 40,000 shares of common stock valued at $24,000.

  

On August 7, 2014 we issued 630,613 shares of our common stock in exchange for the cancellation of the 1,253,343 September 2013 Debenture Warrants described in Notes 4 and 5. As a result, $360,529 of derivative liability was reclassified to paid-in capital.

 

During the year ended March 31, 2014, the Company issued 191,985 shares of its common stock for services valued at $349,125.

 

During March 2014 the Company issued 18,018 shares of common stock, valued at $18,019, upon conversion of $10,000 of debt.

 

Preferred stock

 

The Company is authorized to issue 10,000,000 shares of $0.0001 par value preferred stock. As of March 31, 2015 and 2014, the Company has no shares of preferred stock issued and outstanding. Prior to merger with Truli Delaware on March 17, 2015, Truli OK was authorized to issue 5,000,000 shares of common stock, par value $0.001 per share.

 

Stock Options

 

During August and September 2014 we granted a total of 16,000 stock options to two consultants and a director. Of these grants, 11,000 options vested upon grant and 5,000 vested over a six week period. The options have a weighted average exercise price of $0.40 and a weighted average life of 3.52 years. We have recorded an expense of $5,010 related to these options determined using the Black Scholes Model with the following weighted average assumptions: (1) risk free interest rate of 0.875-1.625%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 184-210%; and (4) an expected life of 3.52 years. 

 

During October 2014 we granted a total of 3,000 stock options to two consultants. These options vested upon grant. The options have an exercise price of $0.50 and a life of 3 years. We have recorded an expense of $794 related to these options determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 0.875%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 210-211%; and (4) an expected life of 3 years. 

 

Common stock to be issued

 

During the year ended March 31, 2014, the Company charged to operations $16,250 as fair value of 11,938 common shares to be issued to a consultant for services rendered.

 

During the year ended March 31, 2015, the consultant waived any claim on the shares, pursuant to a debt settlement agreement. As a result, $16,250 was reclassified to additional paid in capital.

 

NOTE 9 — STOCK OPTIONS AND WARRANTS

 

Stock options

 

The following table summarizes the changes in options outstanding and the related exercise prices for the shares of the Company’s common stock issued to employees and consultants at March 31, 2015:

 

    Options Outstanding   Options Exercisable  

Exercise

 Prices ($)

 

Number

 Outstanding

 

Weighted 

Average

 Remaining

 Contractual Life

 (Years)

 

Weighted

 Average

 Exercise

 Price ($)

 

Number

 Exercisable

 

Weighted

 Average

 Exercise

Price

 
$ 0.35 - 0.50   19,000   2.94   $ 0.41   19,000   $ 0.41  
$ 8.50   74,040   2.72   $ 8.50   74,040   $ 8.50  

 

F-17
 

 

The stock option activity for the two years ended March 31, 2015 is as follows:

 

  

Options

Outstanding

  

Weighted

Average

Exercise Price

 
Outstanding at March 31, 2013   74,760   $8.50 
Granted   -    - 
Exercised   -    - 
Expired or canceled   -    - 
Outstanding at March 31, 2014   74,760    8.50 
Granted   19,000    0.41 
Exercised   -    - 
Expired or canceled   (720)   8.50 
Outstanding at March 31, 2015   93,040   $6.85 

 

Warrants

 

The following table summarizes the warrants outstanding and the related exercise prices for the shares of the Company’s common stock at March 31, 2015: 

 

Exercise

Price

  

Number

Outstanding

  

Warrants 

Outstanding

Weighted Average

Remaining 

Contractual Life 

(years)

  

Weighted

Average

Exercise 
price

  

Number

Exercisable

  

Warrants 

Exercisable

Weighted

Average

Exercise 
Price

 
$     0.35-0.50    358,205    1.4   $0.35    358,205   $0.35 

 

Warrant activity for the two years ended March 31, 2015 is as follows:

 

  

Number of

Shares

  

Weighted

Average

Price Per 

Share

 
Outstanding at March 31, 2013   -   $- 
Issued   561,579    2.50 
Modifications   827,206    1.00 
Exercised   -    - 
Expired or cancelled   (10,000)   2.00 
Outstanding at March 31, 2014   1,378,785    1.00 
Issued   -    - 
Modifications   232,763    0.35 
Exercised   -    - 
Expired or cancelled   (1,253,343)   (1.00)
Outstanding at March 31, 2015   358,205   $0.35 

 

F-18
 

 

NOTE 10 — ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

As of March 31, 2015 and 2014, accounts payable and accrued liabilities for the period ending are comprised of the following:

 

   March 31,   March 31, 
   2015   2014 
Legal and professional fees payable  $148,373   $133,534 
Consulting fees payable   38,500    52,500 
Accrued interest   87,975    82,551 
Other payables   64,087    42,504 
   $338,935   $311,089 

 

NOTE 11 — INCOME TAXES

 

The Company has had losses to date, and therefore has paid no income taxes. There is no temporary timing difference in the recognition of income and expenses for financial reporting and tax purposes, and there is no permanent difference. The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes include, but not limited to, accounting for intangibles, debt discounts associated with convertible debt, equity based compensation and depreciation and amortization.

 

At March 31, 2015, the Company has available for federal income tax purposes a net operating loss carry forward of approximately $3,218,000, which expire in the year 2035, that may be used to offset future taxable income. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized. Based upon the change in ownership rules under section 382 of the Internal Revenue Code of 1986, if in the future the Company issues common stock or additional equity instruments convertible in common shares which result in an ownership change exceeding the 50% limitation threshold imposed by that section, all of the Company’s net operating losses carry forwards may be significantly limited as to the amount of use in a particular years. All or portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits.

 

At March 31, 2015 and 2014, the significant components of the deferred tax assets (liabilities) are summarized below:

 

   2015   2014 
Deferred tax assets:        
Net operating loss carryover  $1,311,000   $1,086,000 
Valuation allowance   (1,311,000)   (1,086,000)
           
Net deferred tax assets  $-   $- 
           
Statutory federal income tax rate   (35)%   (35)%
State income taxes, net of federal taxes   (6)%   (6)%
Valuation allowance   41%   41%
           
Effective income tax rate   0%   0%

 

The Company has not filed its tax returns for prior years and is in the process of bringing its filings current. 

 

NOTE 12 — COMMITMENTS AND CONTINGENCIES

 

The Company is subject to legal proceedings and claims from time to time which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its consolidated financial position, results of operations or liquidity.

 

F-19
 

 

INDEX TO EXHIBITS

 

            Incorporated by Reference

Exhibit

No.

  Description  

Filed/Furnished

Herewith

  Form  

Exhibit

No.

 

File

No.

 

Filing

Date

                         
2.01   Agreement and Plan of Merger       14C   App A   000-53641   1/26/15
                         
3.01   Certificate of Incorporation of Truli Media Group, Inc.       14C   App B   000-53641   1/26/15
                         
3.02   Bylaws of Truli Media Group, Inc.       14C   App C   000-53641   1/26/15
                         
4.01   Specimen of Common Stock Certificate       10-Q   4.01   000-53641   9/3/14
                         
4.02   Form of 12% Convertible Debenture issued September 10, 2013       8-K   4.01   000-53641   9/16/13
                         
4.03   Form of Common Stock Warrant issued to investors and placement agent September 10, 2013       8-K   4.02   000-53641   9/16/13
                         
4.04   Form of Securities Purchase Agreement – September 10, 2013       8-K   99.01   000-53641   9/16/13
                         
4.05   Subsidiary Guarantee – September 10, 2013       8-K   9.02   000-53641   9/16/13
                         
4.06   Form of 8.0% convertible debenture issued to investor on August 28, 2013, October 2, 2013, November 7, 2013       8-K   4.1   000-53641   11/27/13
                         
4.07   Form of Securities Purchase Agreement – August 28, 2013, October 2, 2013, November 7, 2013       8-K   4.2   000-53641   11/27/13
                         
4.08**   Truli Media Group 2014 Equity Compensation Plan       14C   App E   000-53641   1/26/15
                         
4.09**   Form of 2014 Equity Compensation Plan Stock Option Agreement       14C   App E   000-53641   1/26/15
                         
4.10**   Form of 2014 Equity Compensation Plan Restricted Stock Award Agreement       14C   App E   000-53641   1/26/15
                         
4.11**   Form of 2014 Equity Compensation Plan Restricted Stock Unit Agreement       14C   App E   000-53641   1/26/15
                         
10.01**   Employment Agreement of Michael Jay Solomon       10-K   10.01   000-53641   7/15/14
                         
10.02   Settlement Agreement and General Release of Claims       8-K   10.01   000-53641   8/11/14
                         
21.01   List of Subsidiaries       10-K   21.01   000-53641   7/15/14
                         
31.1   Certification of the Principal Executive Officer of Truli Media Group, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))   *                
                         
31.2   Certification of the Principal Financial Officer of Truli Media Group, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))   *                
                         
32.1   Certification of the Principal Executive Officer of Truli Media Group, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)   *                
                         
32.2   Certification of the Principal Financial Officer of Truli Media Group, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)   *                
                         
101.INS   XBRL Instance Document   *                
                         
101.SCH   XBRL Taxonomy Extension Schema   *                
                         
101.CAL   XBRL Taxonomy Extension Calculation Linkbase   *                
                         
101.DEF   XBRL Taxonomy Extension Definition Linkbase   *                
                         
101.LAB   XBRL Taxonomy Extension Label Linkbase   *                
                         
101.PRE   XBRL Taxonomy Extension Presentation Linkbase   *                

 

* Filed Herein
** Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.

 

 

25