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Notes Payable
12 Months Ended
Mar. 31, 2017
Notes Payable [Abstract]  
NOTES PAYABLE

NOTE 2 — NOTES PAYABLE

 

Note Payable – Related Party 

 

The Company’s founder and former Chief Executive Officer (the “Founder”) has advanced funds to Truli Media Corp, evidenced by an unsecured term note (the “Note”), with an outstanding principal amount of $457,801 and $105,000 on March 31, 2017 and 2016, respectively. The Note is without recourse to Truli Media Group, Inc. The Note bears interest at 4% per annum. The Company recorded interest expense of $11,979 and $42,210 for the years ended March 31, 2017 and 2016, respectively. Accrued interest payable is $12,677 and $698 at March 31, 2017 and 2016, respectively. As discussed below, the Founder has agreed to pay this Note.

 

Convertible Notes Payable – Related Party and Other 

 

On December 1, 2015, the Company issued an unsecured, convertible promissory note (the “Convertible Note”) to the Founder with a principal amount of $1,955,934, as satisfaction of $1,822,109 of principal and $133,825 of accrued interest outstanding under the Note described above. The Convertible Note, which carries interest at the rate of 4% per annum, matures on December 1, 2020. The Convertible Note and related accrued interest is convertible into shares of the Company’s common stock at the rate of $0.02 per share, subject to certain restrictions of beneficial ownership. The Company recorded interest expense of $78,238 and $26,150 for the years ended March 31, 2017 and 2016, respectively. Accrued interest payable is $104,388 and $26,150 at March 31, 2017 and 2016, respectively.

 

Effective September 21, 2016, the Company, the Founder and two institutional investors entered into a Note Purchase Agreement (the “NPA”) pursuant to which the Founder sold the Convertible Note with a principal amount of $1,955,934 previously issued by the Company to the Founder to the institutional investors in equal amounts in exchange for $102,500 from each investor, each of whom acquired a convertible note for one-half of the principal (together the “Convertible Notes”). The NPA included a provision under which the Founder has an option to purchase all of the Company’s current operating assets for $5,000. The option is exercisable through March 23, 2017 with the consent of one of the investors, and thereafter through September 23, 2017 without the consent of the investors. Subsequent to September 30, 2016, Truli transferred the Company’s operating assets to its newly-formed, wholly-owned subsidiary, TMC. Under the NPA, the Company agreed with the Founder that it will be an Event of Default under the Convertible Notes if the Founder does not pay all operating costs of the Company, which essentially are the operating expenses of TMC. The NPA clearly indicates that public company compliance costs, including accounting, auditing and legal fees relating to securities matters are not operating costs. In addition, the Founder agreed to assume and pay all of the Company’s liabilities arising prior to the date of the NPA, except for the Convertible Notes and pay operating liabilities thereafter. The Purchasers of the Convertible Note agreed to pay all of the public company costs for a period of one year following the date of the NPA. The Founder remains Chairman of the Board of Directors and no changes were made to the Board of Directors prior to or following the execution of the NPA.

 

On November 8, 2016, the Company sold an aggregate of $50,000 principal amount of its convertible promissory notes (the “November 2016 Notes”, and each, a “Note”) to certain accredited investors and received $50,000 in gross proceeds. The Notes are convertible, at the option of the holder, into shares of the Company’s common stock, par value $0.001 per share, at a per share price of $0.02, subject to adjustment as provided in the Notes and subject to a total beneficial ownership limitation of 9.99% of the Company’s issued and outstanding common stock. Each Note has a maturity date that is five months from the issue date. The maturity dates of each note have been extended to October 8, 2017. The Maturity Date may be accelerated, at the option of the holder, upon the occurrence of a Fundamental Transaction (as defined in the Note). The Company recorded interest expense of $2,000 for the year ended March 31, 2017. Accrued interest payable is $2,000 and $0 at March 31, 2017 and 2016, respectively.

 

2013 Convertible Notes Payable

 

The Company entered into three convertible notes in August, October and November 2013. These notes had an outstanding balance of $92,500 as of March 31, 2015. On August 31, 2015 the Company and the note holders reached an agreement to settle the outstanding balance of the notes and all related accrued and unpaid interest and penalties for a payment of $70,000. At the time of settlement, accrued interest and penalties aggregated $93,481. The Company has recorded a gain on extinguishment of debt of $115,981 during the year ended March 31, 2016.

 

As a result of the extinguishment of debt, the related derivatives described in Note 3 were also extinguished. An aggregate of $320,011 has been reclassified from derivative liability to additional paid in capital during the year ended March 31, 2016.