Edgar Filing: TRULI TECHNOLOGIES, INC.

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

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.

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.

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.

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.

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.

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”).

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.

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.

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.

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.

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.

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.

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.

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.

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”.

Derivative Instruments

Stock-Based Compensation

Recently Issued Accounting Pronouncements

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.

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.

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.

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)