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TRLI > SEC Filings for TRLI > Form 10-Q on 14-Aug-2014All Recent SEC Filings

Show all filings for TRULI MEDIA GROUP, INC.



Quarterly Report


The following discussion of our financial condition and results of operations for the three month periods ended June 30, 2014 and 2013 should be read in conjunction with the unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Item 1A, Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in our Annual Report on Form 10-K for the year ended March 31, 2014, this report, and our other filings with the Securities and Exchange Commission. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could," and similar expressions to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this report.

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

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

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

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

? Results of Operations - Analysis of our financial results comparing the three month period ended June 30, 2014 to the three month period ended June 30, 2013.

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

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



Truli serves as a collaborative digital platform for members of the faith and family community worldwide, allowing them to share and deepen their faith and family values together. Truli invites ministries from various religious denominations to upload their messages to the Truli platform, at no cost. These sermons are categorized into different subject matters and sub-topics for user search. Our goal is to have an ever expanding library from these participating ministries, centralizing, serving and extending the Christian and family values message to a greater audience than previously done before. This platform delivers all types of media content to Internet accessible devices such as TVs, computers and an assortment of digital mobile devices such as tablets and smart phones. The Truli website allows its users to access a library of religious and family-friendly programs, including television, sermons, concerts, movies, e-books, educational seminars, music and music videos. Currently, there are roughly 8,000 items in its library, with Christian content currently representing roughly 30% of the Truli Platform with roughly 70% of the platform representing family entertainment such as feature films "G" and "PG" rated, music videos focusing on family values, children's programming, sports, education, etc. The Truli platform is also available in the Spanish language on its website where there are roughly 2,000 items in its library.


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

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

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

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

Plan of Operation

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


To date, we have devoted a substantial portion of our efforts and financial resources to creating and marketing our online platform. As a result, since our inception in 2011, we have generated no revenue and have funded our operations principally through private sales of debt and equity securities. We have never been profitable and, as of June 30, 2014, we had an accumulated deficit of $5,292,986. We expect to continue to incur operating losses for the foreseeable future and expect to generate no revenue for the foreseeable future.

Our cash and cash equivalents balance at June 30, 2014 was $3,010, representing 100% of total assets. Based on our current expected level of operating expenditures, we are currently uncertain if we will be able to fund our operations until our next year end. This period could be shortened if there are any significant increases in spending that were not anticipated or other unforeseen events. Currently we are dependent upon working capital advances provided by our Chief Operating Officer. We need to raise additional cash through the private or public sales of equity or debt securities, collaborative arrangements, or a combination thereof, to continue to fund operations and the development of our website and digital platform. There is no assurance that such financing will be available to us when needed to allow us to continue our operations or if available, on terms acceptable to us. If we do not raise sufficient funds in a timely manner, we may be forced to curtail operations, delay or stop developing or marketing our products, or cease operations altogether, or file for bankruptcy. We currently do not have commitments for future funding of cash from any source.

We have incurred indebtedness aggregating $1,781,796 in principal and interest as of June 30, 2014, which includes $421,337 principal of our 12% debentures, which are currently in default. As a result of the default, we recorded (i) an increase in the principal of 150%, or $250,669, and (ii) an increase of the interest rate to 18%. Unless we are able to restructure some or all of this debt, and raise sufficient capital to fund our continued development, our current operations do not generate any revenue to pay these obligations. Accordingly, there can be no assurances that we will be able to pay these or other obligations which we may incur in the future and it is unlikely we will be able to continue as a going concern.

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

The independent registered public accounting firm's report on our March 31, 2014 consolidated financial statements included in our Annual Report states that our difficulty in generating sufficient cash flow to meet our obligations and sustain operations raise substantial doubts about our ability to continue as a going concern. The consolidated financial statements do not include any adjustment that might result should the Company be unable to continue as a going concern.


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

Use of Estimates

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

Convertible Instruments

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

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

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

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

Stock-Based Compensation

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


The Company had no revenue for the three month periods ended June 30, 2014 or 2013. Truli officially launched its website on July 10, 2012 but, has not yet generated significant revenue. Prior to such time, the Company was principally involved in website development and research and development activities. Net income of $820,971 and net loss of $120,515 for the three month periods ended June 30, 2014 and 2013, respectively, resulted from the operational activities described below.

Operating Expenses

Operating expenses totaled $42,706 and $114,354 during the three month periods ended June 30, 2014 and 2013, respectively. The increase in operating expenses is the result of the following factors.

The Company incurred selling, general and administrative expenses of $42,706 for the three month period ended June 30, 2014, principally comprised of website development costs, professional fees and consulting fees. The decrease of 63% for 2014 compared to 2013 was primarily attributable to decreased spending on marketing, investor relations, professional and consulting fees, due to limited capital resources. The Company does not anticipate that the reported expenses represent a reliable indicator of future performance because we are still in the pre-revenue stage of development. Future costs are expected to be more heavily weighted towards marketing and promotion as our website potentially gains traffic and sales.

Other Income (Expense)

                                                        Three Months Ended
                                                             June 30,
                                                        2014          2013         Change

Interest expense                                     $ (68,617 )   $  (6,161 )   $ (62,456 )
Gain on change in fair value of warrant derivative
liability                                              933,415            -        933,415
Loss on debt conversion                                 (1,121 )          -         (1,121 )
Total other income (expense)                         $ 863,677     $  (6,161 )   $ 869,838

The Company charged to operations interest expense of $68,617 and $6,161 for the three month periods ended June 30, 2014 and 2013, respectively. The increase was primarily related to the Company's derivative debt. Additionally, the Company had a gain of $933,415 and $0 for the three month periods ended June 30, 2014 and 2013, respectively as a result of the change in fair value of the Company's derivative instruments. The Company also had a loss on debt conversion of $1,121 compared to $0 for the three month periods ended June 30, 2014 and 2013, respectively. For more information on our convertible notes and derivative liabilities, please refer to Notes 3 and 4 to the accompanying unaudited condensed consolidated financial statements.


                                              Three Months Ended
                                                Ended June 30,
                                              2014          2013

Cash at beginning of period                 $   4,249     $   1,296
Net cash used in operating activities         (55,239 )     (30,462 )
Net cash provided by financing activities      54,000        30,000
Cash at end of period                       $   3,010     $     834

The Company had cash and cash equivalents of $3,010 and $4,249 as of June 30, 2014 and March 31, 2014, respectively. The Company's capital requirements arose principally from costs associated with website development, marketing and general administrative costs for both fiscal periods ended June 30, 2014 and 2013. The Company has liabilities of $3,094,655 and $3,972,855 as of June 30, 2014 and March 31, 2014, respectively. The decrease in liability is primarily attributable to the decrease in fair value of derivative liabilities related to convertible debt and common stock purchase warrants with price reset provisions.

The Company owes principal and interest of $823,938 pursuant to a 4% unsecured term note representing advances made by its Chief Executive Officer. The Company received advances of $94,000 and $30,000 during the three month periods ended June 30, 2014 and 2013, respectively.

The Company additionally has an unsecured line of credit with $82,975 outstanding as of June 30, 2014 and March 31, 2014.

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

The Company owes $666,006 in principal of our 12% senior convertible debentures issued on September 10, 2013. As a result of certain statements and omissions, we defaulted on these debentures resulting in the debentures increasing to 150% of face value, the interest rate increasing to 18% and the amounts due under the debentures became immediately due. We have repaid $40,000 in principal to the note holders during April and May 2014.

The Company spent in operating activities, $55,239 and $30,462 respectively for the three month periods ended June 30, 2014 and 2013, respectively. The increase is primarily attributable to an increase in loss (after adjusting for non-cash items) of approximately $18,000.

Financing activities provided $54,000 and $30,000 to the Company during the three month periods ended June 30, 2014 and 2013, respectively. The increase is attributable to an increase in advances from stockholders, net of payments of $40,000 of principal on our convertible notes.

As of June 30, 2014, we had an accumulated deficit of $5,292,986 compared to $6,113,957 as of March 31, 2014. The decrease is attributable to the net income for the three month period ended June 30, 2014.

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

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

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

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