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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Live Current Media Inc (CE) | USOTC:LIVC | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 F
or the fiscal year ended December 31, 2018
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
COMMISSION FILE NUMBER 000-29929
LIVE CURRENT MEDIA, INC.
(Exact name of registrant as specified in its charter)
NEVADA | 88-0346310 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
50 West Liberty Street, Suite 880 | |
Reno, Nevada | 89501 |
(Address of principal executive offices) | (Zip Code) |
(604) 648-0515 | |
(Registrant's telephone number, including area code) | |
Securities registered pursuant to Section 12(b) of the Act: | NONE. |
Securities registered pursuant to Section 12(g) of the Act: | Common Stock, $0.001 Par Value Per Share. |
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined by Rule 405 of the Securities Act.
[_] Yes [X]
No
Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act.
[_] Yes [X]
No
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the 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.
[X] Yes [_] No
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
[X] Yes [_] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting 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 [X] |
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 [X] No
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently
completed second fiscal quarter:
$669,380 based on the closing price
of $0.04 on June 29, 2018 as quoted by the OTCQB Marketplace on that date.
Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable
date.
As of March 28, 2019, the Registrant had 34,837,625 shares of
common stock outstanding.
Page 2 of 5
EXPLANATORY NOTE
Live Current Media Inc. (the Company) is filing this Amendment No. 1 on form 10-K/A (the Amendment) to its Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission (the SEC) on April 1, 2019 (the Original Filing) to include the signed audit report of its principal independent accountants Dale, Matheson, Carr-Hilton, Labonte LLP (DMCL) included with the Companys financial statements for the year ended December 31, 2018. DMCLs audit report for included with the Original Filing was inadvertently unsigned. With the exception of the inclusion of DMCLs signed audit report, the Companys financial statements included with the Original Filing are unchanged.
Pursuant to Rule 12b-15 under Securities Exchange Act of 1934, as amended, this Amendment also contains new Rule 13a-14(a)/15d-14(a) Certifications.
The Amendment speaks as of the date of the Original Filing, and does not amend, update or change any other items or disclosures in the Original Filing, and does not purport to reflect any information or events subsequent to the Original Filing.
Page 3 of 5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Audited financial statements for the fiscal years ended December 31, 2018, including:
(a) |
Report of Independent Registered Accounting Firm; |
(b) |
Consolidated Balance Sheet for the years ended December 31, 2017 and 2018; |
(c) |
Consolidated Statements of Operations for the years ended December 31, 2017 and 2018; |
(d) |
Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2018; |
(e) |
Consolidated Statements of Stockholders Equity; and |
(f) |
Notes to the Financial Statements. |
Page 4 of 5
LIVE CURRENT MEDIA INC.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018
(Expressed in US Dollars)
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Live Current Media Inc.
Opinion on the Consolidated Financial Statements
We
have audited the accompanying consolidated balance sheets of Live Current Media
Inc. (the "Company") as of December 31, 2018 and 2017, the related consolidated
statements of operations, stockholders equity
and cash flows for the
years then ended, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of
December 31, 2018 and 2017, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
Going Concern
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, the Company has not achieved
profitable operations with further losses anticipated and has an accumulated
deficit of $17,985,406. The Company requires additional funds to meet its
obligations and the costs of its operations. These factors raise substantial
doubt about the Companys ability to continue as a going concern. Managements
plans in this regard are described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion in accordance with the standards of the PCAOB.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ DALE MATHESON CARR-HILTON LABONTE LLP |
DALE MATHESON CARR-HILTON LABONTE LLP |
CHARTERED PROFESSIONAL ACCOUNTANTS |
We have served as the Companys auditor since 2017 |
Vancouver, Canada |
April 1, 2019 |
F-2
LIVE CURRENT MEDIA INC . |
CONSOLIDATED BALANCE SHEETS |
(expressed in US dollars) |
December 31, | December 31, | |||||
2018 | 2017 | |||||
ASSETS | ||||||
Current assets | ||||||
Cash | $ | 388,906 | $ | 956,549 | ||
Receivable | - | 5,435 | ||||
Domain proceeds receivable | 22,500 | 82,500 | ||||
411,406 | 1,044,484 | |||||
Non-current assets | ||||||
Domain proceeds receivable | - | 30,000 | ||||
Intangible assets | 111,951 | 206,150 | ||||
$ | 523,357 | $ | 1,280,634 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Accounts payable | $ | 85,585 | $ | 185,550 | ||
Other payable | 17,441 | 17,236 | ||||
103,026 | 202,786 | |||||
Stockholders' equity | ||||||
Capital stock | ||||||
Authorized:
500,000,000 common shares, par value $0.001 per share Issued and outstanding: 34,837,625 common shares (34,837,625 at December 31, 2017) |
34,838 | 34,838 | ||||
Additional paid in capital | 18,370,899 | 18,257,563 | ||||
Deficit | (17,985,406 | ) | (17,214,553 | ) | ||
420,331 | 1,077,848 | |||||
$ | 523,357 | $ | 1,280,634 |
The accompanying notes are an integral part of these consolidated financial statements
F-3
LIVE CURRENT MEDIA INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(expressed in US dollars) |
For the years ended | ||||||
December 31, | December 31, | |||||
2018 | 2017 | |||||
General and administrative expenses | ||||||
Consulting | $ | 113,336 | $ | - | ||
Domain content and registration | 16,340 | 16,160 | ||||
Distribution rights | 250,000 | - | ||||
General and administration | 27,881 | 44,482 | ||||
Gain on sale of domain names | - | (222,265 | ) | |||
Impairment of assets | 94,199 | 37,500 | ||||
Management fees | 140,000 | 126,774 | ||||
Professional fees | 104,313 | 52,202 | ||||
Transfer agent and regulatory | 31,014 | 48,204 | ||||
Travel | 5,080 | 11,206 | ||||
Loss from operations | (782,163 | ) | (114,263 | ) | ||
Gain on debt retirement | - | 185,198 | ||||
Interest expense | (205 | ) | (207 | ) | ||
Other income | - | 120 | ||||
Foreign exchange | - | 192 | ||||
(205 | ) | 185,303 | ||||
Net income (loss) for the year before provision for taxes | $ | (782,368 | ) | $ | 71,040 | |
Provision for taxes | ||||||
Current taxes recovered | 11,515 | - | ||||
Net income (loss) for the year | $ | (770,853 | ) | $ | 71,040 | |
Basic and diluted loss per share | $ | (0.02 | ) | $ | 0.00 | |
Weighted average number of basic common shares outstanding | 34,837,625 | 34,837,625 |
The accompanying notes are an integral part of these consolidated financial statements
F-4
LIVE CURRENT MEDIA INC. |
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY |
(expressed in US dollars) |
Common Stock | Additional | Total | |||||||||||||
Number | Paid In | Accumulated | Stockholders' | ||||||||||||
of Shares | Amount | Capital | Deficit | Deficit | |||||||||||
Balance, December 31, 2016 | 34,837,625 | $ | 34,838 | $ | 18,257,563 | $ | (17,285,593 | ) | $ | 1,006,808 | |||||
Net income for the year | - | - | - | 71,040 | 71,040 | ||||||||||
Balance, December 31, 2017 | 34,837,625 | 34,838 | 18,257,563 | (17,214,553 | ) | 1,077,848 | |||||||||
Stock-based compensation | - | - | 113,336 | - | 113,336 | ||||||||||
Net loss for the year | - | - | - | (770,853 | ) | (770,853 | ) | ||||||||
Balance, December 31, 2018 | 34,837,625 | $ | 34,838 | $ | 18,370,899 | $ | (17,985,406 | ) | $ | 420,331 |
The accompanying notes are an integral part of these consolidated financial statements
F-5
LIVE CURRENT MEDIA INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(expressed in US dollars) |
For the years ended | ||||||
December 31, | December 31, | |||||
2018 | 2017 | |||||
Cash flows used in operating activities | ||||||
Net income (loss) for the year | $ | (770,853 | ) | $ | 71,040 | |
Non-cash items | ||||||
Impairment of intangible assets | 94,199 | 37,500 | ||||
Gain on sale of domain names | - | (222,265 | ) | |||
Bad debt expense | 5,435 | - | ||||
Stock-based compensation | 113,336 | - | ||||
Gain on debt retirement | - | (185,198 | ) | |||
Accrued interest | 205 | 207 | ||||
Income taxes recovered | (11,515 | ) | - | |||
Changes in non-cash working capital item | ||||||
Accounts payable and accrued liabilities | (88,450 | ) | (65,290 | ) | ||
Cash used in operating activities | (657,643 | ) | (364,006 | ) | ||
Cash flows used in investing activities | ||||||
Proceeds received for sale of domain name | 90,000 | 171,000 | ||||
Cash provided by investing activities | 90,000 | 171,000 | ||||
Change in cash | (567,643 | ) | (193,006 | ) | ||
Cash, beginning of year | 956,549 | 1,149,555 | ||||
Cash, end of year | $ | 388,906 | $ | 956,549 | ||
Supplemental cash flow information: | ||||||
Interest paid | $ | - | $ | - | ||
Income taxes paid | $ | - | $ | - |
The accompanying notes are an integral part of these consolidated financial statements
F-6
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2018 |
1. NATURE AND CONTINUANCE OF OPERATIONS
Live Current Media Inc. (the Company or Live Current) was incorporated under the laws of the State of Nevada on October 10, 1995. The Companys wholly owned principal operating subsidiary, Domain Holdings Inc. (DHI), was incorporated under the laws of British Columbia on July 4, 1994.
On March 13, 2008, the Company incorporated a wholly owned subsidiary in the state of Delaware, Perfume.com Inc. (Perfume Inc.) which is a dormant and inactive company.
Through DHI, the Company builds consumer Internet experiences around its portfolio of domain names. DHIs current business strategy is to develop, or to seek partners to develop, its domain names to include content, commerce and community applications. On June 4, 2014, a judge in Reno, Nevada ordered a receiver to take charge of the Companys business. On May 4, 2017, the Company was discharged from receivership (Note 8).
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2018, the Company has not achieved profitable operations, has incurred recurring operating losses and further losses are possible. The Company has an accumulated deficit of $17,985,406. The Companys ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to further develop its business. To date, the Company has funded operations through the issuance of capital stock and debt. Management plans to continue raising additional funds through equity or debt financings and loans from directors. There is no certainty that further funding will be available as needed. These factors raise substantial doubt about the ability of the Company to continue operating as a going concern. The ability of the Company to continue its operations as a going concern is dependent upon its ability to raise sufficient new capital to fund its operating commitments and ongoing losses and ultimately on generating profitable operations. The financial statements do not include any adjustments to be recorded to assets or liabilities that might be necessary should the Company be unable to continue as a going concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (US GAAP), and are expressed in United States dollars.
Basis of Presentation
These consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances have been eliminated on consolidation.
Use of Estimates
The preparation of financial statements in conformity with US 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 revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
F-7
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2018 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and cash equivalents
All highly liquid investments, with an original term to maturity of three months or less are classified as cash and cash equivalents. Cash and cash equivalents are stated at cost which approximates market value.
Intangible Assets not subject to amortization
Intangible assets not subject to amortization consist of direct navigation domain names. While the domain names are renewed annually, through payment of a renewal fee to the applicable registry, the Company has the exclusive right to renew these names at its option. The Company has determined that there are currently no legal, regulatory, contractual, economic or other factors that limit the useful life of these domain names on an aggregate basis and accordingly treat the portfolio of domain names as indefinite life intangible assets.
The Company reviews individual domain names in the portfolio for potential impairment throughout the fiscal year in determining whether a particular URL should be renewed. Impairment is recognized for names that are not renewed. The Company performs an annual assessment of individual domain names in its portfolio to determine whether it is more likely than not that the fair market value of a domain name is less than its carrying amount. When it is determined that the fair value of a domain name is less than its carrying amount, impairment is recognized.
As at December 31, 2018, the weighted remaining average period before the next renewal with the applicable registry is 1.11 years (December 31, 2017: 3.06 years).
Foreign Currency Translation
The Companys functional currency is the US dollar and reporting currency is the United States dollar. The Company translates assets and liabilities to US dollars using year-end exchange rates, stockholders deficit accounts are translated at historical exchange rates, and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the Statement of Operations.
Income taxes
The Company follows the liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Deferred income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes. Deferred income tax assets and liabilities are measured using tax rates and laws expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is more likely-than-not that a deferred tax asset will not be realized. Deferred tax assets and deferred tax liabilities, along with any associated valuation allowance, are offset and shown in the financial statements as a single noncurrent amount when these items arise within the same tax jurisdiction.
The Company and its subsidiaries are subject to U.S. federal income tax and Canadian income tax, as well as income tax of multiple state and local jurisdictions. Based on the Companys evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the Companys financial statements.
F-8
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2018 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Share Based Payments
The Company accounts for all stock-based payments and awards under the fair value based method. The Company accounts for the granting of stock options to employees using the fair value method whereby all awards to employees will be measured at fair value on the date of the grant. The fair value of all stock options are expensed over their vesting period with a corresponding increase to additional paid-in capital. Upon exercise of stock options, the consideration paid by the option holder, together with the amount previously recognized in additional paid-in capital is recorded as an increase to share capital. Stock options granted to employees are accounted for as liabilities when they contain conditions or other features that are indexed to other than a market, performance or service condition. Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if the Company had paid cash instead of paying with or using equity based instruments. The fair value of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date are measured and recognized at that date.
The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. Changes in these assumptions can materially affect the fair value estimate.
Fair Value of Financial Instruments
The estimated fair values for financial instruments are determined based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, receivable, accounts payable and amounts due to shareholders of Auctomatic approximate their carrying value due to the short-term nature of those instruments.
ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 Quoted prices in active markets for identical assets or liabilities;
Level 2 Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level 3 Unobservable inputs that are supported by little or no market activity, there for requiring an entity to develop its own assumptions about the assumption that market participants would use in pricing.
The Company had no Level 3 assets or liabilities required to be recorded at fair value on a recurring basis in accordance with US GAAP as at December 31, 2018 and 2017.
F-9
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2018 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic and Diluted Income (Loss) per Share
Earnings or loss per share (EPS) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of the common stock that were outstanding during the years presented. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants, would be used to purchase common shares at the average market price for the period.
Adoption of New Accounting Pronouncement
On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which amended the existing accounting standards for revenue recognition. ASU 2014-09 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. The Company adopted ASU 2014-09 effective January 1, 2018 and applied the modified retrospective approach. There was no impact to the Companys recognition of revenue as a consequence of adopting this new standard.
3. SHARE CAPITAL
Authorized
The authorized capital of the Company consists of 500,000,000 shares of common stock with a par value of $0.001 per share. No other shares have been authorized
4. STOCK OPTIONS
The Companys 2018 Stock Option Plan (the Plan) was approved by the Board of Directors on November 28, 2018. The Plan will provide for the grant of 5,000,000 shares of common stock of the Corporation, subject to increase after March 31, 2019, upon approval by the Corporations directors, provided that the total number of shares that may be optioned and sold under the Plan shall at no time be greater than 15% of total number of shares of common stock outstanding, less any options still outstanding under any previous stock option plan.
The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. Changes in these assumptions can materially affect the fair value estimates
On November 30, 2018, the board of directors of the Company granted option to purchase up to 1,000,000 shares of the Company to it CEO, up to 400,000 shares of the Company to its directors and up to 400,000 shares of the Company to its Consultants.
The total fair value of the options granted to the CEO, directors and consultants was calculated to be $107,482.
F-10
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2018 |
4. STOCK OPTIONS continued
At November 30, 2018 | |
Expected Life of Options | 2 years |
Risk-Free Interest Rate | 1.63% |
Expected Dividend Yield | Nil |
Expected Stock Price Volatility | 409% |
On November 39, 2018, the board of directors of the Company granted a Non-Plan option to purchase up to 100,000 shares of the Company to a non-related party.
At November 30, 2018 | |
Expected Life of Options | 1 ½ years |
Risk-Free Interest Rate | 1.63% |
Expected Dividend Yield | Nil |
Expected Stock Price Volatility | 382% |
The fair value of the options granted to the non-related party were $5,854.
5. DOMAIN PROCEEDS RECEIVABLE
On October 6, 2017, the Company sold a domain name for total consideration of $150,000 less a brokerage fee of $15,000. The domain purchase and transfer agreement included terms that allowed the purchaser to make monthly instalment payments of $7,500, net of the brokerage fee, over a period of 18 months. The domain is being held by an independent escrow agent during the period the remaining balance in respect of this sale is outstanding. The purchaser is entitled to control the domain name while being held in escrow but, in the event of a default that is not successfully remedied, all rights to the domain name will be transferred back to the Company and all payments made by the purchaser will be forfeited. As at December 31, 2018, the balance remaining on this receivable totaled $22,500. .
6. DEPOSIT
On September 10, 2018, Live Current entered into a non-binding letter of intent (the LOI) with Cell MedX Corp. (Cell MedX) for worldwide distribution rights of the e-Balance device for home-based usage. The e-Balance device is a micro-current therapy device designed to target complications arising from diabetes but has yet to receive approval from the Food and Drug Administration (FDA). Pursuant to the LOI, the Company agreed to enter into negotiations aimed at obtaining a definitive agreement within a 90-day period (Note 10). The Company advanced US$250,000 as a deposit for exclusive worldwide distribution rights. The probability of success and length of time to obtain Federal Drug Administration approval of the e-Balance device is difficult to determine and there are uncertainties associated with the timely completion of the devices commercial success. Due to the uncertainties associated with the successful commercialization of the e-Balance device, it has been determined that the payment of this deposit does not meet the definition of an asset and is thus expensed within general and administrative expenses.
7. INTANGIBLE ASSETS
December 31, | December 31, | |||||
2018 | 2017 | |||||
Domain names | $ | 111,951 | $ | 201,496 | ||
Trademarks | - | 4,654 | ||||
$ | 111,951 | $ | 206,150 |
F-11
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2018 |
The Companys portfolio of domain names are considered by management to be indefinite life intangible assets not subject to amortization. Management performs an annual impairment assessment of its domain names; during the year ended December 31, 2018, the Company recorded an impairment charge of $89,545 (2017: $37,500).
The Company recorded an impairment charge in 2018 of $4,654 for Trademarks (2017 $nil)
8. DEBT RETIREMENT
On May 4, 2017, in conjunction with the termination of the Company’s receivership, the Company realized a gain on debt retirement of $185,198.
9. INCOME TAXES
Effective January 1, 2018, the enacted statutory tax rate is 21%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:
December 31, | December 31, | |||||
2018 | 2017 | |||||
Net income (loss) for the year | $ | (770,853 | ) | $ | 71,040 | |
Statutory rate | 21% | 35% | ||||
Expected income tax expense (recovery) | (162,000 | ) | 25,000 | |||
Impact of statutory tax rate on earnings of subsidiary | (26,000 | ) | (8,000 | ) | ||
Non-taxable earnings | 24,000 | (23,000 | ) | |||
Effect of change of future enacted tax rate | - | 998,000 | ||||
Effect of foreign exchange on tax assets | - | 13,000 | ||||
Adjustment to prior year tax provision | 1,000 | (59,000 | ) | |||
Change in valuation allowance | 151,000 | (946,000 | ) | |||
$ | (12,000 | ) | $ | - |
The significant components of deferred income tax assets at December 31, 2018 and December 31, 2017 are as follows:
December 31, | December 31, | |||||
2018 | 2017 | |||||
Net operating losses | $ | 1,706,000 | $ | 1,567,000 | ||
Intangible assets | 67,000 | 55,000 | ||||
1,773,000 | 1,622,000 | |||||
Valuation allowance | (1,773,000 | ) | (1,622,000 | ) | ||
$ | - | $ | - |
At December 31, 2018, the Company had accumulated non-capital loss carry-forwards of approximately $7,400,000 that expire from 2025 through 2037. The potential future tax benefits of these expenses and losses carried-forward have not been reflected in these financial statements due to the uncertainty regarding their ultimate realization. Tax attributes are subject to review, and potential adjustment by tax authorities.
F-12
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2018 |
10. SUBSEQUENT EVENTS
On March 21, 2019, the Company executed the Distribution Agreement with Cell MedX, pursuant to which Cell MedX has granted to the Company an exclusive worldwide license to distribute its e-Balance microcurrent device to households and individual users. To acquire these rights, the Company paid to Cell MedX the sum of $250,000, the full amount of which was paid to Cell MedX upon signing of the letter of intent between the Company and Cell MedX in September 2018. Under the terms of the Distribution Agreement, the Company has agreed to pay to Cell MedX a fee (the License Fee) for each e-Balance device sold. In addition, the users of the e-Balance device will be charged a periodic user fee (the User Fee) that will be split between the Company and Cell MedX. To maintain its exclusive distribution rights, the Company is subject to minimum sales and, after a period of time, minimum User Fee, requirements. If the Company fails to meet the minimum sales requirements, the Company will maintain its distribution rights, however those rights will cease to be exclusive. (Note 6)
F-13
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Live Current Media, Inc. | ||||
Date: | May 14, 2019 | By: | /s/ David M. Jeffs | |
DAVID M. JEFFS | ||||
Chief Executive Officer, President, Secretary and Treasurer | ||||
(Principal Executive Officer and Principal Financial Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: | May 14, 2019 | By: | /s/ David M. Jeffs | |
DAVID M. JEFFS | ||||
Chief Executive Officer, President, Secretary and Treasurer | ||||
(Principal Executive Officer and Principal Financial Officer) |
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