UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: December 31, 2018

 

☐  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from:

 

Commission file number: 000-53641

 

TRULI TECHNOLOGIES, 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.)

     

  344 GROVE ST #2 #4018 JERSEY CITY, NJ

  07302
(Address of principal executive offices)   (Zip Code)

 

Issuer’s telephone number (866) 862-2979

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 every Interactive Data File required to be submitted 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 such files) Yes ☒   No ☐

 

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

 

Large accelerated filer Accelerated filer
Non-accelerated filer ☐  (Do not check if a smaller reporting company) Smaller reporting company
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

As of February 14, 2019, the number of shares of the registrant’s common stock outstanding was 139,830,306.

 

 

 

 

 

  

    Page
    number
Part I - Financial Information  
Item 1. Financial Statements (Unaudited) 1
  Condensed Consolidated Balance Sheets as of December 31, 2018 (unaudited) and March 31, 2018 1
  Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2018 and 2017 2
  Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the nine months ended December 31, 2018 and 2017 3
  Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2018 and 2017 4
  Notes to Unaudited Condensed Consolidated Financial Statements 5
  Forward-Looking Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Controls and Procedures 16
     
Part II - Other Information 17
Item 1. Legal Proceedings 17
Item 1A. Risk Factors 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Mine Safety Disclosures 17
Item 5. Other Information 17
Item 6. Exhibits 18

 

i

 

 

PART I: FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Truli Technologies, Inc.

Condensed Consolidated Balance Sheets

 

    December 31,     March 31,  
    2018     2018  
    (Unaudited)        
Assets            
             
Current assets:                
 Cash and cash equivalents   $ 984     $ 213,600  
 Miscellaneous receivable     10,043       -  
 Prepaid expenses     4,840       21,646  
                 
Total current assets     15,867       235,246  
                 
License     625,000       625,000  
Software development     101,520       57,500  
                 
Total assets   $ 742,387     $ 917,746  
                 
Liabilities and Stockholders’ Deficit                
                 
Current liabilities:                
Accounts payable and accrued liabilities   $ 235,030     $ 93,885  
Note payable, net of unamortized discount of $3,056     51,944       -  
                 
Total current liabilities     286,974       93,885  
                 
Commitments and contingencies     -       -  
                 
Redeemable Preferred Stock, Series A, Series A-1, Series B, Series C, and Series C-1, $0.0001 par value; 3,295,939 shares authorized, 1,009,539 and 716,939 shares issued and outstanding at December 31, 2018 and March 31, 2018, respectively.     2,059,764       1,696,932  
                 
Stockholders’ Deficit                
                 
Preferred stock, undesignated, $0.0001 par value; 6,704,061 and 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2018 and March 31, 2018, respectively     -       -  
Common stock, $0.0001 par value; 250,000,000 shares authorized; 138,954,197 and 131,554,197 shares issued and outstanding as of December 31, 2018 and March 31, 2018, respectively     13,895       13,155  
Additional paid-in capital     5,438,739       5,344,981  
Accumulated deficit     (7,056,985 )     (6,231,207 )
                 
Total stockholders’ deficit     (1,604,351 )     (873,071 )
                 
Total liabilities and stockholders’ deficit   $ 742,387     $ 917,746  

 

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

 

1

 

 

Truli Technologies, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

    Three Months Ended     Three Months
Ended
    Nine Months Ended     Nine Months Ended  
    December 31,
2018
    December 31,
2017
    December 31,
2018
    December 31,
2017
 
                         
Operating expenses:                        
Selling, general and administrative   $ 307,836     $ 64,867     $ 823,566     $ 284,875  
Total operating expenses     307,836       64,867       823,566       284,875  
Loss from operations     (307,836 )     (64,867 )     (823,566 )     (284,875 )
                                 
Other income (expenses):                                
Interest expense     (2,212 )     (14,714 )     (2,212 )     (84,386 )
Loss on change in fair value of derivative liability     -       (532,788 )     -       (582,425 )
Gain on extinguishment of debt     -       634,435       -       634,435  
Total other (expenses) income     (2,212 )     86,933       (2,212 )     (32,376 )
                                 
(Loss) income before income taxes     (310,048 )     22,066       (825,778 )     (317,251 )
Provision for income taxes     -       -       -       -  
Net (loss) income     (310,048 )     22,066       (825,778 )     (317,251 )
Preferred stock dividend     (606,612 )     (35,573,626 )     (9,120,668 )     (35,573,626 )
Net loss attributable to common shareholders   $ (916,660 )   $ (35,551,560 )   $ (9,946,446 )   $ (35,890,877 )
                                 
Net loss per common share – basic and diluted   $ (0.01 )   $ (0.40 )   $ (0.07 )   $ (1.15 )
                                 
Weighted average common shares – basic and diluted     138,954,197       88,152,023       135,294,561       31,190,561  

 

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

 

2

 

 

Truli Media Group, Inc.

Condensed Consolidated Statement of Stockholders’ Deficit

For the Nine Month Periods ended December 31, 2018 and 2017

(Unaudited)

 

    Common stock     Additional Paid in     Accumulated     Total Stockholders’  
    Stock     Amount     Capital     Deficit     Deficit  
Balance as of March 31, 2017     2,554,197     $ 255     $ 2,984,108     $ (5,759,365 )   $ (2,775,002 )
Stock based compensation                     188               188  
Shares issued for license     125,000,000       12,500       612,500               625,000  
Excess liabilities over assets of purchase option exercise                     616,719               616,719  
Beneficial conversion feature of preferred stock                     34,947,378               34,947,378  
Warrants issued with preferred stock                     580,645               580,645  
Deemed dividend on preferred stock                     (35,528,023 )             (35,528,023 )
Accrued preferred stock dividends                     (45,603 )             (45,603 )
Net loss                             (317,251 )     (317,251 )
Balance as of December 31, 2017     127,554,197     $ 12,755     $ 4,167,912     $ (6,076,616 )   $ (1,895,949 )
                                         
Balance as of March 31, 2018     131,554,197     $ 13,155     $ 5,344,981     $ (6,231,207 )   $ (873,071 )
Common stock issued upon conversion of preferred stock     7,400,000       740       73,260               74,000  
Stock based compensation                     157,330               157,330  
Beneficial conversion feature of preferred stock                     7,188,000               7,188,000  
Beneficial conversion feature of preferred stock dividend                     1,433,503               1,433,503  
Warrants issued with preferred stock                     288,000               288,000  
Deemed dividend on preferred stock                     (8,909,503 )             (8,909,503 )
Accrued preferred stock dividends                     (211,165 )             (211,165 )
Adjustment of redemption value of preferred stock                     74,333               74,333  
Net loss                             (825,778 )     (825,778 )
Balance as of December 31, 2018     138,954,197     $ 13,895     $ 5,438,739     $ (7,056,985 )   $ (1,604,351 )

 

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

 

3

 

 

Truli Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

    Nine Months Ended     Nine Months Ended  
    December 31,
2018
    December 31,
2017
 
             
Cash Flows from Operating Activities            
Net loss   $ (825,778 )   $ (317,251 )
Adjustments to reconcile net loss to net cash used in operating activities                
Equity based compensation expense     157,330       188  
Change in fair market value of derivative liability     -       582,425  
Loss on excess fair value of derivative liability at inception     -       7,441  
Amortization of debt discount     1,944       11,165  
Gain on extinguishment of debt     -       (634,435 )
Gain on reversal of payables     -       (98,593 )
Expenses paid through financings     -       43,627  
Changes in operating assets and liabilities:                
Decrease in prepaid expenses     16,806       -  
(Increase) in other receivables     (10,043 )     -  
Increase in accounts payable and accrued liabilities     140,878       105,591  
Increase in accrued interest     267       63,288  
Net cash used in operating activities     (518,596 )     (236,554 )
                 
Cash Flows from Investing Activities                
Cash disposed of through exercise of purchase option     -       (9,040 )
Cash paid for software development     (44,020 )     (28,750 )
Net cash used by investing activities     (44,020 )     (37,790 )
                 
Cash Flows from Financing Activities                
Proceeds from notes payable, related party     -       114,500  
Proceeds from notes     50,000       -  
Proceeds from convertible notes     -       40,000  
Advances received     -       10,000  
Proceeds from sale of preferred stock     300,000       471,373  
Net cash provided by financing activities     350,000       635,873  
                 
Net (decrease) increase in cash and cash equivalents     (212,616 )     361,529  
Cash and cash equivalents, beginning of period     213,600       1,983  
                 
Cash and cash equivalents, end of period   $ 984     $ 363,512  
                 
Supplemental disclosures of cash flow information:                
Cash paid during the period for interest   $ -     $ 2,493  
Cash paid during the period for income taxes   $ -     $ -  
                 
Supplemental schedule of non-cash investing and financing activities:                
Conversion of Series C preferred stock into common stock   $ 74,000     $ -  
Deemed dividend related to beneficial conversion feature of preferred stock   $ 8,621,503     $ -  
Deemed dividend related to warrants issued with preferred stock   $ 288,000     $ -  
Accrued preferred stock dividend   $ 211,165     $ -  
Adjustment to redemption value of preferred - per amendment to designation   $ 74,333     $ -  
Extinguished derivative liability   $ -     $ 634,435  
Preferred stock issued upon settlement of convertible debt   $ -     $ 2,203,487  
Accounts payable and advance paid through proceeds of preferred stock   $ -     $ 85,000  
Liabilities transferred through exercise of subsidiary purchase option   $ -     $ 620,759  
Common stock issued for acquisition of license   $ -     $ 625,000  
Dividend on redeemable preferred stock   $ -     $ 45,603  
Discount attributable to derivative liability   $ -     $ 11,117  

 

The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.

 

4

 

 

TRULI TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018

(Unaudited)

 

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

General

 

Truli Technologies, Inc., a Delaware corporation initially incorporated on July 28, 2008, (the “Company”) is a holding company based in Bristol, Connecticut. On June 21, 2018, pursuant to shareholder approval, the Company changed its name to Truli Technologies, Inc. from Truli Media Group, Inc. Immediately following the October 30, 2017 closing of the License Agreement (the “License”) and issuance of preferred shares described below and in Note 4, Mr. Michael Solomon, our Founder and then a director of the Company, exercised his Option, granted to him in September 2016, to purchase the Company’s subsidiary, Truli Media Corp (“TMC”) for $5,000. As a result, TMC is no longer a subsidiary of the Company.

 

On October 17, 2017, the Company formed a new, wholly-owned subsidiary, VocaWorks, Inc. (“VocaWorks”), a New Jersey corporation.

 

Prior to the exercise of the Option by Mr. Solomon to purchase TMC, the Company was focused on the on-demand media and social networking markets as an aggregator of family-friendly, faith-based Christian content, media, music and Internet Protocol Television (“IPTV”) programming. With the exercise of the Option by Mr. Solomon, the Company has exited those activities.

 

Effective October 30, 2017, the Company entered into a License with Recruiter.com, Inc., a Delaware corporation (“Recruiter”) under which Recruiter granted the Company’s newly created subsidiary, VocaWorks, a license to use certain of Recruiter’s proprietary software and related intellectual property. The Company is rebranding itself under the VocaWorks brand name and moving into the rapidly expanding field of online and mobile-enabled staffing and talent acquisition solutions through its entry into the License with Recruiter. VocaWorks will offer a native mobile iOS app solution, as well as a web-based SaaS platform offering and will facilitate the hiring of personnel, including project-based consultants, focusing initially on specialized technology talent.

 

In September 2018 the Company announced that it has signed a letter of intent to acquire Recruiter in exchange for issuing to Recruiter shareholders shares of a new series of Truli’s preferred stock (the “New Preferred”) which will be convertible into 775 million shares of Truli’s common stock. In exchange for receiving the New Preferred, Recruiter will give up the right to acquire shares of Truli’s Series B Convertible Preferred Stock (the “Series B”). See Note 4.

  

In October 2018 the Company entered into a letter of intent with Genesys Talent LLC (“Genesys”) to acquire certain assets and license certain services from Genesys in exchange for the Company issuing Genesys a new series of the Company’s preferred stock, convertible into 200 million shares of the Company’s common stock.

 

In connection with the Recruiter and Genesys transactions the Company is seeking to raise up to $1 million in a private placement offering of the Company’s new Series D Convertible Preferred Stock (the “Series D”) at an offering price of $0.02 per share. The parties who are considering investing in the private placement have requested reviewed financials from Genesys prior to making an investment in the Company and may or may not invest in the private placement based on the Genesys financials.

 

We cannot assure you we will be successful in completing the Recruiter or Genesys transactions or the private placement.

 

“Truli”, “our”, “us”, “we” or the “Company” refer to Truli Technologies, Inc. and its subsidiaries. The operations of TMC are included through the date of the exercise of the Option by Mr. Solomon. In discussing the business of the Company, we refer to the business now operated by VocaWorks except as otherwise made clear from the context.

 

From commencement of its former and current business operations through the date of these unaudited condensed consolidated financial statements, the Company has not generated any revenues and has incurred significant expenses.

 

The Company’s 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.

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements are unaudited. The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

 

These interim financial statements as of and for the three and nine months ended December 31, 2018 and 2017 are unaudited; however, in the opinion of management, such statements include all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. The results for the three and nine months ended December 31, 2018 are not necessarily indicative of the results to be expected for the year ending March 31, 2019 (“Fiscal 2019”) or for any future period. All references to December 31, 2018 and 2017 in these footnotes are unaudited.

 

These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto for the year ended March 31, 2018, included in the Company’s annual report on Form 10-K filed with the SEC on June 29, 2018.

 

The condensed consolidated balance sheet as of March 31, 2018 has been derived from the audited consolidated financial statements at that date but does not include all disclosures required by GAAP.

5

 

 

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. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has not experienced any losses related to these balances.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP 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. Included in these estimates are assumptions used to estimate useful lives of intangible assets, calculate the beneficial conversion feature of convertible preferred stock, deferred income tax asset valuation allowances, and valuation of stock based compensation expense.

 

Income Taxes

 

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes 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 benefits 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 December 31, 2018 and March 31, 2018, the Company has provided a 100% valuation against the deferred tax benefits. 

 

Earnings (Loss) Per Share

 

The Company follows Accounting Standards Codification subtopic 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. Common share equivalents of 504,209,200 and 365,034,400 were excluded from the computation of diluted earnings per share for the three and nine months ended December 31, 2018 and 2017, respectively, because their effect is anti-dilutive.

 

    December 31,     December 31,  
    2018     2017  
Options     3,705,000       80,000  
Warrants     180,000,000       120,000,000  
Convertible preferred stock     320,504,200       244,954,400  
      504,209,200       365,034,400  

 

Fair Value

 

Accounting Standards Codification subtopic 825-10, Financial Instruments requires disclosure of the fair value of certain financial instruments. The carrying amount reported in the condensed 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 Accounting Standards Codification subtopic 815, Derivatives and Hedging (“ASC 815”).

  

6

 

  

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 GAAP 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 preferred shares transaction and the effective conversion price embedded in the preferred shares.

 

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

 

Derivative Instruments

 

The Company’s derivative financial instruments consist of embedded derivatives related to the convertible debt and conversion features embedded within our convertible debt. The accounting treatment of derivative financial instruments requires that we record the derivatives at their fair values as of the inception date of the debt agreements and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, we recorded non-operating, non-cash income.

 

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.

 

Intangible Assets

 

Intangible assets consist of the License and related software, website and iPhone App development costs. These costs will be amortized over their estimated economic lives once placed in service. The assets have not been placed in service as of December 31, 2018.

 

Recently Issued Accounting Pronouncements

 

With the exception of those discussed below, there have not been any recent changes in accounting pronouncements and Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) during the nine months ended December 31, 2018 that are of significance or potential significance to the Company.

 

In June 2018, the FASB issued ASU 2018-07, “Compensation—Stock Compensation (Topic 718)—Improvements to Nonemployee Share-based Payment Accounting”, as a simplification for the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation. This standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are evaluating the impact that ASU 2018-07 may have on our consolidated financial statements.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”, (“Topic 718”) which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. If an award is not probable of vesting at the time a change is made, the new guidance clarifies that no new measurement date will be required if there is no change to the fair value, vesting conditions, and classification. Topic 718 will be applied prospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The adoption of this standard did not have a material impact on the consolidated financial statements.  

 

7

 

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“Topic 842”) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this update supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, which would be the Company’s fiscal year ending March 31, 2020. The Company does not expect the adoption of Topic 842 to have a material effect on its business, its financial position, results of operations or cash flows.

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“Topic 740”), to improve and simplify the accounting for the income tax consequences of intra-entity transfers of assets other than inventory, requiring companies to recognize income tax consequences upon the transfer of the asset to a third party. Topic 740 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, which would be the Company’s fiscal year ending March 31, 2019. While the Company does not expect the adoption of Topic 740 to have a material effect on its business, the Company is still evaluating any potential impact that adoption of Topic 740 may have on its financial position, results of operations or cash flows.

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”) which amended the existing accounting standards for revenue recognition. Topic 606 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company adopted Topic 606 in the first quarter of Fiscal 2019 and applied the full retrospective approach. The adoption of Topic 606 did not have a material effect on our business, financial position, results of operations or cash flows.

 

NOTE 2 — GOING CONCERN

 

The Company’s management has evaluated whether there is substantial doubt about the Company’s ability to continue as a going concern and has determined that substantial doubt existed as of the date of the end of the period covered by this Quarterly Report on Form 10-Q (the “Form 10-Q”). This determination was based on the following factors: (i) the Company’s available cash as of the date of this filing will not be sufficient to fund its anticipated level of operations for the next 12 months; (ii) the Company will require additional financing for the remainder of Fiscal 2019 to continue at its expected level of operations; and (iii) if the Company fails to obtain the needed capital, it will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations. In the opinion of management, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern as of the date of the end of the period covered by this Form 10-Q and for one year from the issuance of the unaudited condensed consolidated financial statements. 

 

The Company recently completed rounds of funding in the first, third and fourth quarters of Fiscal 2019. However, there is no assurance that the Company will be successful in any other capital-raising efforts that it may undertake to fund operations during the next 12 months. The Company anticipates that it will issue equity and/or debt securities as a source of liquidity, until it begins to generate positive cash flow to support its operations. Any future sales of securities to finance operations will dilute existing stockholders’ ownership. The Company cannot guarantee when or if it will generate positive cash flow.

 

The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

  

NOTE 3 — INTANGIBLE ASSETS

 

Intangible assets consist of the License with Recruiter to use certain of Recruiter’s proprietary software and related intellectual property. In consideration for the License, the Company issued to Recruiter 125,000,000 shares of common stock. We have valued the License at $625,000. Recruiter will receive 625,000 shares of Series B upon the launch of a functional software platform and receipt of $10,000 in sales revenue. Recruiter is entitled to receive up to an additional 1,250,000 shares of Series B following the achievement of certain milestones as provided for in the License. Recruiter shall provide VocaWorks with support services free of charge, which shall include (i) a total of 2,400 hours of technology and development services to be provided by Recruiter personnel during the two year period following the effective date, with a total value of $200,000; and (ii) marketing and advertising services, which are available to Recruiter’s general customers, and strategic marketing services, to be provided by Recruiter each year during the four year period following the effective date, with a total value of $500,000. Assuming we close our merger with Recruiter, it will cancel the Series B, distribute the common stock to its shareholders, and receive shares of the New Preferred convertible into 775 million shares of the Company’s common stock.

 

We also have capitalized software costs of $101,520 related to the development of our website and iPhone app, both to be used in conjunction with the License acquired from Recruiter.

 

These assets have not been placed in service as of December 31, 2018.

 

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NOTE 4 — STOCKHOLDERS’ EQUITY

 

Preferred stock

 

The Company is authorized to issue 10,000,000 shares of $0.0001 par value preferred stock. As of December 31, 2018 and March 31, 2018, the Company has 1,009,539 and 716,939 shares of preferred stock issued and outstanding, respectively.

 

Series A Convertible Redeemable Preferred Stock

 

On October 24, 2017, the Company filed a Certificate of Designations (a “COD”) with the Delaware Secretary of State designating 700,000 shares of the Company’s authorized preferred stock as Series A Convertible Preferred Stock (the “Series A”), which converts into 200 shares of common stock per share of Series A, subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing conversion price of the Series A. During the year ended March 31, 2018, the Company entered into Securities Purchase Agreements (each a “SPA”) with the two Investors who converted their Notes into Series C Convertible Preferred Stock (the “Series C”) and Series C-1 Convertible Preferred Stock (the “Series C-1”). Pursuant to the SPAs, the Investors paid the Company a total of $600,000 and purchased in the aggregate 600,000 of shares of Series A and Warrants to purchase 120,000,000 shares of the Company’s common stock.

  

Dividends accrue on the Series A at a rate of 10% per annum. Holders of Series A are entitled to vote together with holders of the common stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99%. The Series A is redeemable in the same manner as the Series C and C-1, defined below. The Series A is senior to all other preferred stock, except the Company’s Series A-1 Convertible Preferred Stock (the “Series A-1”) and the common stock upon liquidation of the Company. The Warrants have a five year term and an exercise price of $0.01 per share, subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing exercise price of the Warrants.

 

Series A-1 Convertible Redeemable Preferred Stock

 

On May 25, 2018, the Company filed a COD authorizing 600,000 shares of the Company’s preferred stock as the Series A-1. The Series A-1 converts into 200 shares of common stock per share of Series A-1, subject to adjustment in the event of stock splits, stock dividends or reverse splits, and issuances of securities at prices below the prevailing conversion price of the Series A-1. Dividends accrue on the Series A-1 at a rate of 10% per annum. Holders of Series A-1 are entitled to vote together with holders of the common stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99%. The Series A-1 is redeemable upon the occurrence of certain triggering events.

 

On June 1, 2018, the Company entered into SPAs with the Investors. Pursuant to the SPA, the Investors purchased a total of 300,000 of shares of Series A-1 and Warrants to purchase 60,000,000 shares of the Company’s common stock in exchange for a total of $300,000.

 

The Investors agreed to waive the Series A, Series C and Series C-1 conversion price adjustments as they relate to the sale of the Series A-1 preferred stock.

 

The Warrants have a five year term and an exercise price of $0.01 per share, subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing exercise price of the Warrants.

 

Series B Convertible Preferred Stock

 

On October 24, 2017, the Company filed a COD with the Delaware Secretary of State designating 1,875,000 shares of the Company’s authorized preferred stock as Series B which converts into 200 shares of common stock per share of Series B, subject to adjustments in the event of stock splits, stock dividends and reverse splits. Recruiter will receive 625,000 shares of Series B upon the launch of a functional software platform and receipt of $10,000 in sales revenue. Recruiter is entitled to receive up to an additional 1,250,000 shares of Series B following the achievement of certain milestones as provided for in the License.

 

Series C and Series C-1 Convertible Redeemable Preferred Stock

  

On October 24, 2017, the Company filed a COD with the Delaware Secretary of State designating 102,100 shares of the Company’s authorized preferred stock as Series C which converts into 1,000 shares of common stock per share of Series C, subject to adjustments in the event of stock splits, stock dividends and reverse splits and issuances of securities at prices below the prevailing conversion price of the Series C. In accordance with the terms of the License, on October 30, 2017 holders of the Company’s outstanding 4% Convertible Notes converted their 4% Convertible Notes and accrued interest into 102,099,752 shares of Series C.

 

Also on October 24, 2017, the Company filed a COD with the Delaware Secretary of State designating 18,839 shares of the Company’s authorized preferred stock as Series C-1 which converts into 1,000 shares of common stock per share of Series C-1, subject to adjustments in the event of stock splits, stock dividends and reverse splits and issuances of securities at prices below the prevailing conversion price of the Series C-1. In accordance with the terms of the License, on October 30, 2017 holders of the Company’s 10% Convertible Notes converted their 10% Convertible Notes and accrued interest into 18,839 shares of Series C-1. 

 

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Holders of shares of Series C and Series C-1 may cause the Company to redeem in cash the outstanding shares of Series C and C-1 beginning on October 30, 2019, and earlier than that date upon the occurrence of certain triggering events contained in the COD for the Series C and Series C-1, at a redemption price based upon a formula contained in the COD for each series. Subject to the prior conversion, the total redemption price if redeemed after two years from issuance is equal to the amount of the principal and accrued interest on the 4% Convertible Notes and 10% Convertible Notes due as of the closing date plus potential additional amounts.

 

During February 2018, the Company filed an amendment to the Certificates of Designations for the Series C and Series C-1 extending the redemption date to October 2022 and reducing the redemption amount of the preferred shares then outstanding at a redemption price equal to one-half of the Conversion Amount (as defined) of such preferred shares. During the three and nine months ended December 31, 2018 we recorded a credit to additional paid in capital of $23,854 and $74,333, respectively, as a result of the reduction in the redemption amount. During the year ended March 31, 2018 we recorded a credit to additional paid in capital of $1,071,932 as a result of the reduction in the redemption amount.

 

On February 1, 2018, the Company issued 4,000,000 shares of common stock upon the conversion of 4,000 shares of Series C.

 

During the nine months ended December 31, 2018, the Company issued 7,400,000 shares of common stock upon the conversion of 7,400 shares of Series C.

 

Common stock

 

The Company is authorized to issue 250,000,000 shares of common stock, par value $0.0001 per share. As of December 31, 2018 and March 31, 2018 the Company had 138,954,197 and 131,554,197 shares of common stock outstanding, respectively. 

 

On June 21, 2018, pursuant to shareholder approval, the shareholders approved a reverse stock split in the range of one-for-50 to one-for-100 or any amount in between and a reduction of its authorized common stock in order to save annual fees in Delaware. The reverse stock split has not yet been implemented.

  

Common stock options

 

During the nine months ended December 31, 2018 the Company granted to various advisors an aggregate of 1,200,000 options to purchase common stock, exercisable at $0.06 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options vest on various dates in the three months ending March 31, 2019.

 

Common stock warrants

 

In connection with the sale of our Series A-1 preferred stock, we issued an aggregate of 60,000,000 common stock purchase warrants to the Investors. The warrants are exercisable any time on or after 90 days after the issuance date at an exercise price of $0.01 and expire, if unexercised, on September 1, 2023. The exercise price and number of warrants are subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing conversion price of the warrants.

 

NOTE 5 — STOCK OPTIONS AND WARRANTS

 

Stock options

 

The Company granted to six nonemployee advisors an aggregate of 1,200,000 options to purchase common stock, exercisable at $0.06 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options vest upon the first anniversary of their grant. We have recorded compensation expense of $12,228 and $44,478 related to the options during the three and nine months ended December 31, 2018, respectively. We valued the options at December 31, 2018 using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 2.73% - 2.94%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of our common stock of 381% - 398%; and (4) an expected life of 4.5 – 5 years.  

 

We recorded compensation expense of $37,618 and $112,852 during the three and nine months ended December 31, 2018, respectively, related to options granted to an officer and directors during the previous fiscal year.

 

Warrants

 

In connection with the sale of our Series A-1 preferred stock, we issued an aggregate of 60,000,000 common stock purchase warrants to the purchasers of the preferred stock. The warrants are exercisable any time on or after 90 days after the issuance date at an exercise price of $0.01 and expire, if unexercised, on September 1, 2023. The exercise price and number of warrants are subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing conversion price of the warrants.

 

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NOTE 6 — REDEEMABLE CONVERTIBLE PREFERRED STOCK

 

As described in Note 4, we have issued shares of Series A, Series A-1, Series C, and Series C-1 convertible preferred stock. Since the convertible preferred stock may ultimately be redeemable at the option of the holder, the carrying value of the preferred stock has been classified as temporary equity on the balance sheet at December 31, 2018 and March 31, 2018.

 

A portion of the proceeds from the sale of our Series A-1 were allocated to the warrants based on their relative fair value, which totaled $288,000 using the Black Scholes option pricing model. Further, we attributed a beneficial conversion feature of $7,188,000 to the Series A-1 based upon the difference between the effective conversion price of those shares and the closing price of our common shares on the date of issuance. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 380%, (3) risk-free interest rate of 2.74%, (4) expected term of 5 years. The amount attributable to the warrants and beneficial conversion feature, aggregating $7,476,000, has been recorded as a deemed dividend to the preferred shareholders and as a charge to additional paid-in capital (since there is a deficit in retained earnings).

  

For the three months ended December 31, 2018, we have accrued dividends in the amount of $70,205. The accrued dividends have been charged to additional paid-in capital (since there is a deficit in retained earnings) and the net unpaid accrued dividends have been added to the carrying value of the preferred stock. Further, we attributed a beneficial conversion feature of $536,407 to the preferred dividends based upon the difference between the effective conversion price of those dividends and the quarterly average closing price of our common shares. The amount attributable to the beneficial conversion feature has been recorded as a deemed dividend to the preferred shareholders and as a charge to additional paid-in capital (since there is a deficit in retained earnings).

 

For the nine months ended December 31, 2018, we have accrued dividends in the amount of $211,165. The accrued dividends have been charged to additional paid-in capital (since there is a deficit in retained earnings) and the net unpaid accrued dividends have been added to the carrying value of the preferred stock. Further, we attributed a beneficial conversion feature of $1,433,503 to the preferred dividends based upon the difference between the effective conversion price of those dividends and the quarterly average closing price of our common shares. The amount attributable to the beneficial conversion feature has been recorded as a deemed dividend to the preferred shareholders and as a charge to additional paid-in capital (since there is a deficit in retained earnings).

 

NOTE 7 — ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

As of December 31, 2018 and March 31, 2018, accounts payable and accrued liabilities for the period ending are comprised of the following:

 

    December 31,     March 31,  
    2018     2018  
Legal and professional fees payable   $ 129,431     $ 60,363  
Other payables     105,599       33,522  
    $ 235,030     $ 93,885  

 

NOTE 8 — 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. 

 

Recruiter will receive 625,000 shares of Series B upon the launch of a functional software platform and receipt of $10,000 in sales revenue. Recruiter is entitled to receive up to an additional 1,250,000 shares of Series B following the achievement of certain milestones as provided for in the License. If the Company completes the acquisition of Recruiter, the Series B will be cancelled.

 

NOTE 9 — NOTE PAYABLE

 

On November 27, 2018 the Company entered into a $55,000 10% Original Issue Discount Promissory Note, and received proceeds of $50,000. The note matures on or before the earlier of (i) the 90th day subsequent to the issuance date of the note, and (ii) the Company’s receipt of a minimum of $1,000,000 as a result of the Company closing the sale of any equity or debt securities of the Company (either a “Maturity Date”). At the Company’s option, upon the Maturity Date the Company may convert all principal and interest owed to the Payee pursuant to this note into securities of the Company identical to those offered and on the same terms as those offered to the investors in the financing. Interest shall accrue on the outstanding principal balance of this note at the rate of 5% per year. Discount of $5,000 is being amortized over 90 days.

 

NOTE 10 — SUBSEQUENT EVENTS

  

In February 8, 2019, the Company borrowed $50,000 from an institutional investor and issued the investor a $60,000 Original Issue Discount Promissory Note (the “February Note”). The February Note bears interest at 5% per annum and matures on the earlier of (i) 90 days after issuance, or (ii) the Company’s receipt of a minimum of $1,000,000 as a result of the Company closing the sale of any equity or debt securities. The Company may cause the holder to convert all principal and interest owed under the February Note into securities of the Company identical to those offered to investors in the $1,000,000 financing. Further, the holder of the February Note has the option to use all principal and interest owed to the Investor under the Note as consideration to purchase securities in any future Company financing at any time.

 

As additional consideration for the February Note, the Company issued the holder Warrants to purchase 6,000,000 shares of the Company’s common stock, exercisable for a period of five years from the date of issuance at an initial exercise price of $0.02 per share subject to adjustment upon the occurrence of certain events including the Company’s issuance of future securities. If the Company’s common stock becomes listed on a national securities exchange exercise price of the Warrants is reduced the lesser of (i) a 20% discount to the closing bid price of the Company’s common stock quoted on day prior to such listing and (ii) a 20% discount to the exercise price in effect on the date of such listing. The Warrants may also be exercised cashlessly in accordance with the cashless exercise provision of the Warrants.

 

On February 11, 2019, the Company issued Evan Sohn 876,109 shares of restricted common stock for services rendered to the Company in connection with the Recruiter transaction. If the Recruiter Merger closes Mr. Sohn has agreed to become the Company’s Executive Chairman.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2018 as filed with the SEC.

  

Overview

 

As described in Note 1 to the Unaudited Condensed Consolidated Financial Statements, on October 30, 2017 the Company entered into the License under which Recruiter granted the Company’s wholly-owned subsidiary, VocaWorks, the License to use Recruiter’s proprietary software and related intellectual property. In consideration for the License, the Company issued Recruiter 125,000,000 shares of its common stock. In addition, the Company created the Series B preferred stock and agreed to issue Recruiter 625,000 shares of the Series B upon the launch of a functional software platform and receipt of $10,000 in sales revenue. Recruiter is entitled to receive an additional 1,250,000 shares of Series B on the achievement of certain milestones as provided in the License. The Chief Executive Officer of Recruiter, Miles Jennings, was appointed Chief Executive Officer and a director of the Company in conjunction with entry into the License.

 

Business of the Company

 

The Company has been developing a software platform under the VocaWorks brand name, the first version of which has been completed, and is currently in preparation for public use. In September 2018, the Company announced that it has signed a letter of intent to acquire Recruiter in exchange for issuing Recruiter shares of a new series of Truli’s preferred stock (the “New Preferred”) which will be convertible into 775 million shares of Truli’s common stock. In exchange for receiving the New Preferred, Recruiter will give up the right to acquire shares of Truli’s Series B.

 

In October 2018 the Company entered into a letter of intent with Genesys to acquire certain assets and license certain services from Genesys in exchange for the Company issuing Genesys a new series of the Company’s preferred stock, convertible into 200 million shares of the Company’s common stock.

 

In connection with the Recruiter and Genesys transactions the Company is seeking to raise up to $1 million in a private placement offering of the Company’s Series D at an offering price of $0.02 per share. The parties who are considering investing in the private placement have requested reviewed financials from Genesys prior to making an investment in the Company and may or may not invest in the private placement based on the Genesys financials.

 

During the three months ended December 31, 2018, the Company’s Chief Executive Officer was focused primarily on trying to complete the Recruiter and Genesys transactions.

 

There can be no assurances that the Recruiter and Genesys transactions will close or that the Company will be able to raise additional capital to continue operations in the short term.

 

Results of Operations

 

The results of operations include TMC through October 30, 2017 and VocaWorks from that date forward.

 

Three Months Ended December 31, 2018 Compared to Three Months Ended December 31, 2017:

 

The Company had no revenue for the three-month periods ended December 31, 2018 or 2017. VocaWorks has been implementing its new business plan commencing with the execution of the License agreement with Recruiter.    

 

Operating expenses totaled $307,836 and $64,867 during the three-month periods ended December 31, 2018 and 2017, respectively. The increase in operating expenses is the result of the following factors.

 

The Company incurred marketing, general and administrative expenses of $307,836 and $64,867 for the three-month periods ended December 31, 2018 and 2017, respectively, principally comprised of marketing, employee compensation, website development costs, and professional, legal, administrative, and consulting fees. The increase of 375% in 2018 compared to 2017 was primarily attributable to increased compensation (including stock based compensation). During the 2017 period we recorded a reversal of accounts payable and accrued expenses of $98,593. There were no reversals in the current period.

 

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Other Income (Expense)

 

    Three Months Ended
December 31,
 
    2018     2017  
Interest expense   $ (2,212 )   $ (14,714 )
Loss on change in fair value of derivative liability     -       (532,788 )
Gain on extinguishment of debt     -       634,435  
Total other (expense) income   $ (2,212 )   $ 86,933  

 

Other income (expense) is comprised of interest and financing costs, expense related to the change in fair value of our derivative liabilities, and gain on extinguishment of debt. The decrease in interest expense in the 2018 three month period compared to the 2017 three month period results from the settlement of debt in the 2017 period, with new debt incurred in the 2018 period. The change in the fair value of our derivative liabilities results primarily from the changes in our stock price and the volatility of our common stock during the reported periods. We had no derivative liabilities in the 2018 period. The gain on extinguishment of debt results from the settlement of debt in the 2017 period. 

 

Preferred Stock Dividends

 

We have recorded dividends and deemed dividends on our preferred stock in the amount of $606,612 and $35,573,626 during the three month periods ended December 31, 2018 and 2017, respectively, consisting of accrued dividends and the beneficial conversion feature of the preferred stock. Please see Note 6 to the accompanying unaudited condensed consolidated financial statements for more information.

 

Nine Months Ended December 31, 2018 Compared to Nine Months Ended December 31, 2017:

 

The Company had no revenue for the nine-month periods ended December 31, 2018 or 2017. Net loss (before dividends on preferred stock) of $825,778 and $317,251 for the nine-month periods ended December 31, 2018 and 2017, respectively, resulted from the operational activities described below.

 

Operating expenses totaled $823,566 and $284,875 during the nine-month periods ended December 31, 2018 and 2017, respectively. The increase in operating expenses is the result of the following factors.

 

The Company incurred marketing, general and administrative expenses of $823,566 and $284,875 for the nine-month periods ended December 31, 2018 and 2017, respectively, principally comprised of marketing, employee compensation, website development costs, and professional, legal, administrative, and consulting fees. The increase of 189% in 2018 compared to 2017 was primarily attributable to increased compensation (including stock based compensation), professional fees and other fees. During the 2017 period we recorded a reversal of accounts payable and accrued expenses of $98,593. There were no reversals in the current period.

 

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Other Income (Expense)

 

   

Nine Months Ended

December 31,

 
    2018     2017  
Interest expense   $ (2,212 )   $ (84,386 )
Loss on change in fair value of derivative liability     -       (582,425 )
Gain on extinguishment of debt     -       634,435  
Total other expense   $ (2,212 )   $ (32,376 )

 

Other income (expense) is comprised of interest and financing costs, expense related to the change in fair value of our derivative liabilities, and gain on extinguishment of debt. The decrease in interest expense in the 2018 nine month period compared to the 2017 nine month period results from the settlement of debt in the 2017 period, with new debt incurred in the 2018 period. The change in the fair value of our derivative liabilities results primarily from the changes in our stock price and the volatility of our common stock during the reported periods. We had no derivative liabilities in the 2018 period. The gain on extinguishment of debt results from the settlement of debt in the 2017 period. 

 

Preferred Stock Dividends

 

We have recorded dividends and deemed dividends on our preferred stock in the amount of $9,120,668 and $35,573,626 during the nine month periods ended December 31, 2018 and 2017, respectively, consisting of accrued dividends and the beneficial conversion feature of the preferred stock. Please see Note 6 to the accompanying unaudited condensed consolidated financial statements for more information.  

 

Liquidity and Capital Resources

 

We expect to continue to incur operating losses for the foreseeable future. As of December 31, 2018, we had an accumulated deficit of $7,056,985 compared to $6,231,207 as of March 31, 2018. The increase is attributable to the net loss for the nine months ended December 31, 2018.

 

Our net cash used in operating activities was $518,596 and $236,554 for the nine months ended December 31, 2018 and 2017, respectively. The increase in cash used is primarily attributable to an increase in loss (after adjusting for non-cash items) of approximately $261,000 and a decrease in accounts payable and accrued liabilities of approximately $28,000. Cash used in investing activities during the nine months ended December 31, 2018 consisted of expenditures for software development of approximately $44,000. Cash used in investing activities during the nine months ended December 31, 2017 consisted of expenditures for software development of approximately $29,000 and a transfer of approximately $9,000 upon the exercise of an option to purchase our TMC subsidiary. Net cash provided by financing activities was $350,000 for the nine months ended December 31, 2018, from the sale of preferred stock and a note. Net cash provided by financing activities was approximately $636,000 for the nine months ended December 31, 2017, derived primarily from the proceeds from the sale of preferred stock of approximately $471,000, sale of convertible notes of $40,000 and funds advanced by the Founder of approximately $115,000.

 

The audit report prepared by our independent registered public accounting firm relating to the Company’s consolidated financial statements for the year ended March 31, 2018 included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

 

The Company’s management has evaluated whether there is substantial doubt about the Company’s ability to continue as a going concern and has determined that substantial doubt existed as of the date of the end of the period covered by this Report. This determination was based on the following factors: (i) the Company’s available cash as of the date of this filing will not be sufficient to fund its anticipated level of operations for the next 12 months; (ii) the Company will require additional financing for Fiscal 2019 to continue at its expected level of operations; and (iii) if the Company fails to obtain the needed capital, it will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations. In the opinion of management, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern as of the date of the end of the period covered by this Report.

 

The Company does not have sufficient cash resources to meet its working capital needs for the next 12 months. We have been actively seeking to obtain such financing but as of the date of this Report, we have not entered into any binding agreements. Accordingly, it needs to raise capital to remain operational. As a condition of the closing of the pending acquisitions, we must raise new equity financing. The total amount of funds continue to change with negotiation; it is management’s expectation that the new funds will total approximately $1 million.

 

Any future sales of securities to finance operations will dilute existing stockholders’ ownership. The Company cannot guarantee when or if it will generate positive cash flow. If we are unable to acquire Recruiter and complete a financing, it is likely that we will cease operations.

 

Cautionary Note Regarding Forward-Looking Statements

 

This report includes forward-looking statements including statements regarding the closing of the Recruiter and Genesys acquisitions and obtaining new financing.

 

The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

 

14

 

 

The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include delays affecting the development and functionality of the Recruiter software, our competition, our management’s ability to deal with conflicts of interest and events affecting capital markets in general and microcap companies in particular, and our ability to complete a private placement in connection with the Recruiter and Genesys transactions. Further information on our risk factors is contained in our filings with the SEC, including the Form 10-K for the year ended March 31, 2018. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

 

Off-Balance Sheet Arrangements

 

None

 

Critical Accounting Estimates and Recent Accounting Pronouncements

 

Critical Accounting Estimates

 

The preparation of financial statements in conformity with GAAP 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. Included in these estimates are assumptions about inputs used to estimate useful lives of intangible assets, calculate beneficial conversion of convertible notes payable and convertible preferred stock, deferred income tax asset valuation allowances, and valuation of derivative liabilities.

 

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 provide 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 GAAP 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 preferred shares transaction and the effective conversion price embedded in the preferred shares.

 

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

 

Derivative Instruments

 

The Company’s derivative financial instruments consist of embedded derivatives related to the convertible debt and conversion features embedded within our convertible debt. The accounting treatment of derivative financial instruments requires that we record the derivatives at their fair values as of the inception date of the debt agreements and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, we recorded non-operating, non-cash income.

 

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.

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Recently Issued Accounting Pronouncements

 

With the exception of those discussed below, there have not been any recent changes in accounting pronouncements and Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) during the nine months ended December 31, 2018 that are of significance or potential significance to the Company.

  

In June 2018, the FASB issued ASU 2018-07, “Compensation—Stock Compensation (Topic 718)—Improvements to Nonemployee Share-based Payment Accounting”, as a simplification for the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation. This standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are evaluating the impact that ASU 2018-07 may have on our consolidated financial statements.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”, (“Topic 718”) which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. If an award is not probable of vesting at the time a change is made, the new guidance clarifies that no new measurement date will be required if there is no change to the fair value, vesting conditions, and classification. Topic 718 will be applied prospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The adoption of this standard did not have a material impact on the consolidated financial statements. 

  

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“Topic 842”) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this update supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, which would be the Company’s fiscal year ending March 31, 2020. The Company does not expect the adoption of Topic 842 to have a material effect on its business, its financial position, results of operations or cash flows.

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“Topic 740”), to improve and simplify the accounting for the income tax consequences of intra-entity transfers of assets other than inventory, requiring companies to recognize income tax consequences upon the transfer of the asset to a third party. Topic 740 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, which would be the Company’s fiscal year ending March 31, 2019. While the Company does not expect the adoption of Topic 740 to have a material effect on its business, the Company is still evaluating any potential impact that adoption of Topic 740 may have on its financial position, results of operations or cash flows.

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”) which amended the existing accounting standards for revenue recognition. Topic 606 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods). Early adoption is permitted to the original effective date for annual reporting periods beginning after December 15, 2016 (including interim reporting periods within those periods). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). The Company adopted Topic 606 in the first quarter of Fiscal 2019 and applied the full retrospective approach. The adoption of Topic 606 did not have a material effect on our business, financial position, results of operations or cash flows.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable as we are a smaller reporting company as defined by Rule 229.10(f) (1).

 

ITEM 4. 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 an evaluation as of the end of the period covered by this Report on Form 10-Q, 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 SEC 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 to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal control over financial reporting.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15f of the Exchange Act) that occurred during the three months ended December 31, 2018 that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

16

 

 

PART II: OTHER INFORMATION

 

ITEM 1 - LEGAL PROCEEDINGS

 

As of the date of this 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 1A. - RISK FACTORS

 

Not required for smaller reporting companies.

 

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On February 8, 2019, the Company borrowed $50,000 from an institutional investor and issued the investor the $60,000 February Note which is convertible into securities of the Company identical to those offered to investors in a future financing.

 

As additional consideration for the February Note, the Company issued the investor Warrants to purchase 6,000,000 shares of the Company’s common stock at an initial exercise price of $0.02 per share subject to adjustment upon the occurrence of certain events including the Company becoming listed on a national securities exchange. The Warrants may also be exercised cashlessly in accordance with the cashless exercise provision of the Warrants.

 

On February 11, 2019, the Company issued Evan Sohn 876,109 shares of restricted common stock for services rendered to the Company.

 

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4 - MINE SAFETY DISCLOSURES

 

Not applicable

 

ITEM 5 - OTHER INFORMATION

 

None.

 

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ITEM 6 - EXHIBITS

 

The following exhibits are filed as part of this quarterly report on Form 10-Q:

 

      Incorporated by Reference   Filed or
Furnished
Exhibit No.   Exhibit Description   Form   Date   Number   Herewith
                     
3.1   Certificate of Incorporation, as amended   10-K   6/29/18   3.1    
3.2   Bylaws, as amended  

8-K

 

2/8/19

 

3.2

   
3.3   Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock   8-K   10/31/17   3.1    
3.4   Certificate of Designation, Preferences and Rights of the Series B Convertible Preferred Stock   8-K   10/31/17   3.2    
3.5   Certificate of Designation, Preferences and Rights of the Series C Convertible Preferred Stock   8-K   10/31/17   3.3    
3.6   Certificate of Designation, Preferences and Rights of the Series C-1 Convertible Preferred Stock   8-K   10/31/17   3.4    
3.7   Certificate of Amendment of Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock   10-Q   2/20/18   3.7    
3.8   Certificate of Amendment of Certificate of Designations, Preferences and Rights of the Series C-1 Convertible Preferred Stock   10-Q   2/20/18   3.8    
3.9   Certificate of Designation, Preferences and Rights of the Series A-1 Convertible Preferred Stock   8-K   6/1/18   4.1    
3.10   Series A Amendment   8-K   6/11/18   4.1    
3.11   Series C Amendment   8-K   6/11/18   4.2    
3.12   Series C-1 Amendment   8-K   6/11/18   4.3    
10.1   Independent Consultant Agreement  

10-Q

 

 11/14/18

 

10.1

 

10.2

  Form of Note  

8-K

 

11/27/18

 

10.1

   

10.3

  Form of Note              

Filed

10.4

  Form of Warrant               Filed
31.1   Certification of Principal Executive (302)               Filed
31.2   Certification of Principal Financial Officer (302)               Filed
32.1   Certification of Principal Executive and Principal Financial Officer (906)               Furnished**
101.INS   XBRL Instance Document               Filed
101.SCH   XBRL Taxonomy Extension Schema Document               Filed
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document               Filed
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document               Filed
101.LAB   XBRL Taxonomy Extension Label Linkbase Document               Filed
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document               Filed

 

* Management contract or compensatory plan or arrangement.

 

** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

 

+ Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplemental to the Securities and Exchange Commission staff upon request.

 

Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to Truli Technologies, Inc., at the address on the cover page of this report, Attention: Corporate Secretary.

 

18

 

 

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: February 14, 2019 TRULI TECHNOLOGIES, INC.
   
  By: /s/ Miles Jennings
    Miles Jennings
    Chief Executive Officer
(Principal Executive Officer)

 

19

 

Exhibit 10.3

 

ORIGINAL ISSUE DISCOUNT PROMISSORY NOTE

 

$60,000 Issuance Date: February ___, 2019

In exchange for receipt of $50,000 (the “Loan” ) the receipt of which is hereby acknowledged and intending to be legally bound, Truli Technologies Inc. (the “ Company ”) located at 344 Grove St #2 #4018 Jersey City, NJ 07302, hereby unconditionally and irrevocably promises to pay to the order of ______________ with an address at ____________________________________ (the “ Payee ”), the sum of $60,000 on or before the earlier of (i) the 90 th day subsequent to the Issuance Date of this OID Promissory Note (the “ Note ”), and (ii) the Company’s receipt of a minimum of $1,000,000 as a result of the Company closing the sale of any equity or debt securities of the Company (either a “ Maturity Date ”). At the Company’s option, upon the Maturity Date the Company may convert all principal and interest owed to the Payee pursuant to this Note into securities of the Company identical to those offered and on the same terms as those offered to the investors in the financing. At any time the Payee shall have the option to use all principal and interest owed to the Payee pursuant to this Note as consideration to purchase securities in any future Company financing. As additional consideration for the Loan the Company hereby issues the Payee warrants to purchase up to 6,000,000 shares of the Company’s common stock at a purchase price of $0.02 per share in the form attached as Exhibit A .

 

Interest shall accrue on the outstanding principal balance of this Note on the basis of a 360-day year from the date hereof until paid in full at the rate of five percent (5%) per annum, and shall be due and payable upon the earlier of the Maturity Date, the prepayment date, if any, or upon an Event of Default as provided below. This Note may be prepaid, at the option of the Company, without premium or penalty, in whole or in part at any time or from time to time prior to the Maturity Date.

 

For purposes of this Note, an “Event of Default” shall occur if the Company shall: (i) fail to pay the entire principal amount of this Note when due and payable, (ii) admit in writing its inability to pay any of its monetary obligations under this Note, (iii) make a general assignment of its assets for the benefit of creditors, (iv) allow any proceeding to be instituted by or against it seeking relief from or by creditors, including, without limitation, any bankruptcy proceedings, or (v) fail to pay any other indebtedness when due, excluding related party indebtedness provided, however , if any action is brought to collect on any related party indebtedness it shall constitute an Event of Default.

 

In the event that an Event of Default has occurred, the Payee or any other holder of this Note may, by notice to the Company, declare this entire Note to be forthwith immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company. In the event that an Event of Default consisting of a voluntary or involuntary bankruptcy filing has occurred, then this entire Note shall automatically become due and payable without any notice or other action by Payee.

 

The nonexercise or delay by the Payee or any other holder of this Note of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. No waiver of any right shall be effective unless in writing signed by the Payee, and no waiver on one or more occasions shall be conclusive as a bar to or waiver of any right on any other occasion.

 

Upon the failure to pay this Note when due, if the Payee, or any other holder, retains an attorney, the Payee or any other holder of this Note shall, recover from the Company all reasonable costs of collection, including, without limitation, attorneys’ fees. In the event suit is brought, the prevailing party shall be entitled to recover reasonable attorney’s fees and costs.

1  

 

 

All notices and other communications must be in writing to the address of the party set forth in the first paragraph hereof and shall be deemed to have been received when delivered personally (which shall include via an overnight courier service) or emailed. The parties may designate by notice to each other any new address for the purpose of this Note.

 

Company hereby forever waives presentment, demand, presentment for payment, protest, notice of protest, and notice of dishonor of this Note and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note.

 

This Note shall be binding upon the successors and assigns of the Company, and shall be binding upon, and inure to the benefit of, the successors and assigns of the Payee.

 

This Note shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York without regard to the conflict of laws principles thereof. The parties hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in New York County, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waive, and agree not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

 

In no event shall the rate of interest charged under this Note exceed the rate that may legally be charged to the Company for obligations of this nature under the laws of the State of New York, and any interest that may be paid in excess of the legal limit shall, at the option of the Payee, be refunded to the Company or shall be applied towards payment of the principal obligation under this Note.

 

[Signature Page Follows]

 

2  

 

 

IN WITNESS WHEREOF, the undersigned Company has executed this Note as of February __, 2019.

 

  Truli Technologies Inc.
   
  By: 
 

Name:

Its:

Miles Jennings
CEO

3  

 

 

Exhibit A

Warrant

 

 

4

Exhibit 10.4

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

TRULI TECHNOLOGIES, INC.

 

Warrant Shares: 6,000,000 Initial Exercise Date: February ___, 2019

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received, _________________, or its assigns (the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “ Initial Exercise Date ”) and on or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from Truli Technologies, Inc., a Delaware corporation (the “ Company ”), up to 6,000,000 shares of Common Stock (subject to adjustment hereunder, the “ Warrant Shares ”). The purchase price of one Warrant Share shall be equal to the Exercise Price (defined below).

Section 1 . Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Original Issue Discount Promissory Note (the “ Note ”), dated February ___, 2019, among the Company and the Holder.

Section 2 . Exercise .

(a)                Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the “Notice of Exercise Form” annexed hereto. Within two (2) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant from, the Company), the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Trading Day of delivery of such notice. The Holder by acceptance of this Warrant, acknowledges and agrees that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

(b)               Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be equal to $0.02 per share, subject to adjustment under Section 3 (the “ Exercise Price ”).

1  

 

(c)                Cashless Exercise . If at any time after the Initial Exercise Date, there is no effective registration statement covering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at the Holder’s election, in whole or in part and in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A x B) – (A x C)] by (D), where:

(A) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise;

 

(B) = the greater of (i) the arithmetic average of the VWAPs (as defined below) for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election;
     
  (C) = the Exercise Price of this Warrant, as adjusted hereunder, at the time of such exercise; and
     
  (D) = the lesser of (i) the arithmetic average of the VWAPs for the five (5) consecutive Trading Days ending on the date immediately preceding the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless exercise” election.

 

VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the national securities exchange or trading market including the OTCQB, OTCQX, or OTC Pink Open Market if any, upon which the Common Stock is then or on which it becomes listed (subject to official notice of issuance) or quoted (such primary exchange or trading market, the “ Principal Market ”) is a trading market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Principal Market as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the Principal Market upon which the Common Stock is then listed or quoted is not a trading market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on such Principal Market as applicable, (c) if the Common Stock is not then listed or quoted on the Principal Market, and if prices for the Common Stock are then reported in the OTC Pink Marketplace of OTC Markets Group, Inc., the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act of 1933 (the “ 1933 Act ”), the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 2(c) .

 

Notwithstanding anything herein to the contrary, if on the Termination Date (unless the Holder notifies the Company otherwise) if there is no effective registration statement covering the resale of the Warrant Shares by the Holder, then this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c) .

 

(d)               Mechanics of Exercise .

(i)                 Delivery of Certificates Upon Exercise . Certificates for shares purchased hereunder shall be transmitted to the Holder by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“ DWAC ”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise and Rule 144 is available, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise and (B) payment of the aggregate Exercise Price as set forth above (unless by cashless exercise, if permitted) (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $5 per Trading Day (increasing to $10 per Trading Day after the fifth (5 th ) Trading Day) after the Warrant Share Delivery Date for each $1,000 of Exercise Price of Warrant Shares for which this Warrant is exercised which are not timely delivered. In no event shall liquidated damages for any one transaction exceed $1,000.00 for the first ten Trading Days. The Company shall pay any payments incurred under this Section 2(d)(i) in immediately available funds upon demand. Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

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(ii)               Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

(iii)             Rescission Rights . If the Company fails to deliver the Warrant Shares by crediting the account of the Holder’s prime broker via DWAC and causes the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right, at any time prior to issuance of such Warrant Shares, to rescind such exercise.

(iv)             Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise . In addition to any other rights available to the Holder, if the Company fails to deliver the Warrant Shares, or cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

(v)               No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

(vi)             Charges, Taxes and Expenses . Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate including any charges of any clearing firm, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

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(vii)           Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

(e)                Holder’s Exercise Limitations . The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(e) , beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934 (the “1934 Act”) and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the 1934 Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e) , in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Securities and Exchange Commission (the “Commission”), as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions of this Section 2(e) solely with respect to the Holder’s Warrant, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase will not be effective until the 61 st day after such notice is delivered to the Company. The Holder may also decrease the Beneficial Ownership Limitation provisions of this Section 2(e) solely with respect to the Holder’s Warrant at any time, which decrease shall be effectively immediately upon delivery of notice to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. For purposes of this Warrant, “ Person ” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

Section 3 . Certain Adjustments .

(a)                Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant or the Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

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(1)               Adjustments for Issuance of Additional Securities. For a period of two (2) years from the Initial Exercise Date, in the event that the Company shall, at any time, effect a Subsequent Placement (in a transaction other than in connection with the issuance of any Excluded Securities), at a price per share less than the Exercise Price then in effect or without consideration (a “ Dilutive Issuance ” based on a “ Dilutive Issuance Price ”), then the Exercise Price upon each such issuance shall be reduced to the Dilutive Issuance Price, and the number of Warrant Shares (excluding Warrant Shares previously exercised) shall be increased on a full ratchet basis to the number of shares of Common Stock determined by multiplying the Exercise Price then in effect immediately prior to such adjustment by the number of Warrant Shares (excluding Warrant Shares previously exercised) acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. By way of example, if E is the total number of Warrant Shares in effect immediately prior to such Dilutive Issuance, F is the Exercise Price in effect immediately prior to such Dilutive Issuance, and G is the Dilutive Issuance Price, the adjustment to the number of Warrant Shares can be expressed in the following formula: Total number of Warrant Shares after such Dilutive Issuance = the quotient obtained from dividing [E x F] by G. P rovided , however , that if the Company’s Common Stock (including the Warrant shares) is listed on any of the New York Stock exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, this Section 3(b) shall not apply following such listing, subject to Section 3(c) . “ Subsequent Placement ” means any direct or indirect offer, sale, grant of any option to purchase, or other disposition of (or announcement of any offer, sale, grant or any option to purchase or other disposition of) any of the Company’s or its subsidiaries’ equity, debt or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents. A Subsequent Placement shall not include (A) any additional closings of the offering contemplated by this Agreement, (B) a public offering for net proceeds to the Company in excess of $5,000,000 pursuant to a firm commitment underwriting agreement, provided that the Company has been unable to raise sufficient funds through a Subsequent Placement on reasonable terms or (C) the issuance of securities in connection with a merger with Recruiter.com, Inc. and asset purchase of Genesys Talent LLC.

(b)               Adjustment of Conversion Price upon Exchange Listing . If the Company’s Common Stock becomes listed on any of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, or any successor of the foregoing, then (accounting for any stock split or prior adjustment to the Exercise Price) the Exercise Price shall be reduced to the lesser of (i) a 20% discount to the closing bid price quoted on the Principal Market on the Trading Day prior to such listing and (ii) a 20% discount to the Exercise Price in effect on the date of such listing.

(c)                Change in Option Price or Rate of Conversion . If the price per share for which shares of Common Stock may be issuable pursuant to any options and convertible securities (collectively “Common Stock Equivalents”), is less than the applicable Exercise Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the applicable Exercise Price in effect at the time of such amendment or adjustment, then the applicable Exercise Price and number of Warrant Shares shall be adjusted upon each such issuance or amendment as provided in this Section 3(d) .

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(d)               Calculation of Consideration Received . In case any Common Stock Equivalent is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Common Stock Equivalents will be deemed to have been issued for the Option Value of such Common Stock Equivalents and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for cash, the amount of such consideration received by the Company will be deemed to be the net amount received by the Company therefore. If any shares of Common Stock or Common Stock Equivalents are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the VWAP of such public traded securities on the date of receipt. If any shares of Common Stock or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.

Option Value ” means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the "OV" function on Bloomberg L.P. determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable Common Stock Equivalent, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Common Stock Equivalent as of the applicable date of determination, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of (A) the Trading Day immediately following the public announcement of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iii) the underlying price per share used in such calculation shall be the highest VWAP of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive documentation relating to the issuance of the applicable Common Stock Equivalent and ending on (A) the Trading Day immediately following the public announcement of such issuance, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.

The provisions of this Section 3(e) shall apply each time the Company, at any time after the Initial Exercise Date and prior to the date that is eighteen (18) months from the Initial Exercise Date, shall issue any securities with a Dilutive Issuance Price.

(e)                Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above and any rights contained in the Note, for a period of two (2) years from the Initial Exercise Date, if the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). Notwithstanding the foregoing, no Purchase Rights will be made under this Section 3(f) in respect of Excluded Securities.

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(f)                Pro Rata Distributions . If the Company, for a period of two (2) years from the Initial Exercise Date, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(d) ), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

(g)               Fundamental Transaction . For a period of two (2) years from the Initial Exercise Date, if (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), at the option of the Holder the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to (i) the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction or (ii) the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Exercise Price. “Black Scholes Value” means the value of the unexercised portion of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Warrant and the Note in accordance with the provisions of this Section 3(h) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior to such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the Note referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the Note with the same effect as if such Successor Entity had been named as the Company herein.

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(h)               Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3 , the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

(i)                 Notice to Holder .

(i)                 Adjustment to Exercise Price . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3 , the Company shall promptly email to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. The Holder may supply an email address to the Company and change such address.

(ii)               Notice to Allow Exercise by Holder . For a period of two (2) years from the Initial Exercise Date, if (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall deliver to the Holder at its last address as it shall appear upon the Warrant Register (as defined below) of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to email such notice or any defect therein or in the emailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries (as determined in good faith by the Company), the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4 . Transfer of Warrant .

(a)                Transferability . Subject to compliance with any applicable securities laws and the provisions of the Note, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)               New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a) , as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

(c)                Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

(d)               Representation of the Holder . The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the 1933 Act or any applicable state securities law, except pursuant to sales registered or exempted under the 1933 Act.

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Section 5 . Miscellaneous .

(a)                No Rights as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof other than as explicitly set forth in Section 3 .

(b)               Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

(c)                Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

(d)               Authorized Shares .

The Company covenants that from 30 days following the Initial Exercise Date, any time during the period the Warrant is outstanding, it will maintain a reserve of 6,000,000 shares of Common Stock for issuance of the Warrant Shares (the “Required Reserve Amount”). The Required Reserve Amount shall be proportionally adjusted upon an increase or decrease in the total number of Warrant Shares issuable to the Holder upon exercise of this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

(e)                Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Note.

(f)                Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered or if not exercised on a cashless basis when Rule 144 is available, may have restrictions upon resale imposed by state and federal securities laws.

(g)               Non-waiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Note, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

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(h)               Notices . Whenever notice is required to be given under this Warrant such notice, consent, waiver or other communication required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by e-mail (provided confirmation of transmission is electronically generated and kept on file by the sending party); or (iii) one Trading Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and email addresses for such communications shall be:

If to the Company:

 

Truli Technologies, Inc.

344 GROVE ST #2 #4018

JERSEY CITY, NJ 07302

Email: miles@vocaworks.com

Attention: Miles Jennings, Chief Executive Officer

 

With a copy (for informational purposes only) to:

 

Nason, Yeager, Gerson, Harris & Fumero, P.A.

3001 PGA Boulevard

Suite 305

Palm Beach Gardens, FL 33410

Telephone: 561.471.3507

Email: mharris@nasonyeager.com

Attention: Michael D. Harris, Esq.

 

If to the Holder: _______________________

_______________________

_______________________

Attn: ___________________

E-mail: _________________

 

or to such other address and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s email containing the time, date, recipient e-mail and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

(i)                 Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(j)                 Remedies . The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate or that there is no irreparable harm and not to require the posting of a bond or other security.

(k)               Successors and Assigns . Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or Holders of Warrant Shares.

(l)                 Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and Holders of 100% of the outstanding Warrants issued pursuant to the Note.

(m)             Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(n)               Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  TRULI TECHNOLOGIES, INC.
   
  By:        
    Name: Miles Jennings

 

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NOTICE OF EXERCISE

 

To: TRULI TECHNOLOGIES, INC.

 

(1)               The undersigned hereby elects to purchase ___________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)               Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 2(c) , to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 2(c) .

(3)               Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

 

(4)               After giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

_______________________________

 

_______________________________

 

_______________________________

 

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ______________________________________________________________________

Signature of Authorized Signatory of Investing Entity : ________________________________________________

Name of Authorized Signatory: __________________________________________________________________

Title of Authorized Signatory: ___________________________________________________________________

Date: _______________________________________________________________________________________

 

 

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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

 

TRULI TECHNOLOGIES, INC.

 

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________

 

 

 

_______________________________________________________________

 

Dated: ______________, _______

 

 

Holder’s Signature: _____________________________

 

Holder’s Address: _____________________________

 

                               _____________________________

 

 

 

Signature Guaranteed: ___________________________________________

 

 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

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Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

 

I, Miles Jennings, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Truli Technologies, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 14, 2019

 

/s/ Miles Jennings  

Miles Jennings

Chief Executive Officer

(Principal Executive Officer)

 

 

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

 

I, Miles Jennings, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Truli Technologies, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: February 14, 2019

 

/s/ Miles Jennings  

Miles Jennings

Chief Financial Officer

(Principal Financial Officer)

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Truli Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2018, as filed with the Securities and Exchange Commission on the date hereof, I, Miles Jennings, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1. The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

 

  2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Miles Jennings  

Miles Jennings

Chief Executive Officer

(Principal Executive Officer)

 

 

Dated: February 14, 2019

 

In connection with the quarterly report of Truli Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2018, as filed with the Securities and Exchange Commission on the date hereof, I, Miles Jennings, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

  1. The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

 

  2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Miles Jennings  

Miles Jennings

Chief Financial Officer

(Principal Financial Officer)

 

 

Dated: February 14, 2019