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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 | |
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0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-12G/A
(Amendment No. 1)
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of
1934
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.) |
1130 Pender Street Suite 820 | |
Vancouver, BC Canada | V6E 4A4 |
(Address of principal executive offices) | (Zip Code) |
(604) 648-0500
Registrants telephone number
Securities to be registered under Section 12(b) of the Exchange Act:
Title of each class to be so registered | Name of exchange on which each class is to be registered. |
NONE. | N/A |
Securities to be registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
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 [ ] | Smaller reporting company [X] |
(Do not check if a smaller reporting company) |
EXPLANATORY NOTE
This Amendment No. 1 to Live Current Media Inc.s (the Company) Registration Statement on Form 10 filed on February 1, 2018 (the Registration Statement) is being filed for the purpose of including the Companys audited financial statements for the years ended December 31, 2016 and December 31, 2015 and the Companys unaudited financial statements for the interim periods ended September 30, 2017 and September 30, 2016. Other than as set forth in this Amendment No. 1, the information contained in the Registration Statement filed on February 1, 2018 remains unchanged.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
1. | Audited financial statements for the fiscal years ended December 31, 2016, including: |
(a) | Report of Independent Registered Accounting Firm; |
(b) | Consolidated Balance Sheet for the years ended December 31, 2015 and 2016; |
(c) | Consolidated Statements of Operations for the years ended December 31, 2015 and 2016; |
(d) | Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2016; |
(e) | Consolidated Statements of Stockholders Equity; and |
(f) | Notes to the Financial Statements. |
2. | Unaudited financial statements for the Nine Month Period Ended September 30, 2017, including: |
(a) | Consolidated Balance Sheet for the Nine Month Period Ended September 30, 2017; |
(b) | Consolidated Statements of Operations for the Nine Month Period Ended September 30, 2017 and 2016; |
(c) | Consolidated Statements of Cash Flows for the Nine Month Period Ended September 30, 2017 and 2016; |
(d) | Consolidated Statements of Stockholders Equity; and |
(e) | Notes to the financial Statements |
LIVE CURRENT MEDIA INC.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Live Current Media Inc.
We have audited the accompanying consolidated balance sheets of Live Current Media Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, cash flows and stockholders equity for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these financial statements present fairly, in all material respects, the financial position of Live Current Media Inc. as of December 31, 2016 and 2015, 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.
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 incurred recurring losses and further losses are anticipated. 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.
/s/ DMCL LLP
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED PROFESSIONAL
ACCOUNTANTS
Vancouver, Canada
November 29, 2017
F-2
LIVE CURRENT MEDIA INC . |
`CONSOLIDATED BALANCE SHEETS |
(expressed in US dollars) |
December 31, | December 31, | |||||
2016 | 2015 | |||||
ASSETS | ||||||
Current assets | ||||||
Cash | $ | 1,149,555 | $ | 1,650,303 | ||
Receivable | 5,435 | 5,322 | ||||
Prepaid expenses | - | 18,799 | ||||
1,154,990 | 1,674,424 | |||||
Non-current assets | ||||||
Intangible assets | 304,885 | 335,083 | ||||
$ | 1,459,875 | $ | 2,009,507 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Accounts payable | $ | 436,038 | $ | 566,103 | ||
Due to shareholders of Auctomatic | 17,029 | 16,822 | ||||
453,067 | 582,925 | |||||
Stockholders' equity | ||||||
Capital stock | ||||||
Authorized:
500,000,000 common shares, par value $0.001 per share Issued and outstanding: 34,837,625 common shares (37,860,500 at December 31, 2015) |
34,838 | 37,861 | ||||
Additional paid in capital | 18,257,563 | 18,254,540 | ||||
Accumulated deficit | (17,285,593 | ) | (16,865,819 | ) | ||
1,006,808 | 1,426,582 | |||||
$ | 1,459,875 | $ | 2,009,507 |
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, | |||||
2016 | 2015 | |||||
General and administrative expenses | ||||||
General and administrative | $ | 76,956 | $ | 43,024 | ||
Professional fees | 325,065 | 320,532 | ||||
Loss from operations | (402,021 | ) | (363,556 | ) | ||
Gain on sale of domain names | 206,764 | 5,000 | ||||
Litigation settlement | (225,000 | ) | - | |||
Interest Income | 1,396 | 1,779 | ||||
Interest expense | (207 | ) | (207 | ) | ||
Other income | 112 | 10,438 | ||||
Foreign exchange | (818 | ) | 5,402 | |||
(17,753 | ) | (22,412 | ) | |||
Net loss for the year | $ | (419,774 | ) | $ | (341,144 | ) |
Basic and diluted loss per share | $ | (0.01 | ) | $ | (0.01 | ) |
Weighted average number of basic common shares outstanding | 37,164,825 | 37,860,500 |
The accompanying notes are an integral part of these consolidated financial statements
F-4
LIVE CURRENT MEDIA INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(expressed in US dollars) |
For the years ended | ||||||
December 31, 2016 | December 31, 2015 | |||||
Cash flows used in operating activities | ||||||
Net loss for the year | $ | (419,774 | ) | $ | (341,144 | ) |
Non-cash items | ||||||
Gain on sale of domain names | (206,764 | ) | (5,000 | ) | ||
Accrued interest | 207 | 207 | ||||
Changes in non-cash working capital items | ||||||
Receivable | (113 | ) | (1,985 | ) | ||
Prepaid expenses | 18,799 | 2,271 | ||||
Accounts payable and accrued liabilities | (130,065 | ) | 84,830 | |||
Cash used in operating activities | (737,710 | ) | (260,821 | ) | ||
Cash flows used in investing activities | ||||||
Proceeds from the disposition of domain names | 236,962 | 5,000 | ||||
Cash provided by investing activities | 236,962 | 5,000 | ||||
Change in cash | (500,748 | ) | (255,821 | ) | ||
Cash, beginning of year | 1,650,303 | 1,906,124 | ||||
Cash, end of year | $ | 1,149,555 | $ | 1,650,303 |
The accompanying notes are an integral part of these consolidated financial statements
F-5
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 | Equity | |||||||||||
Balance, December 31, 2014 | 37,860,500 | $ | 37,861 | $ | 18,254,540 | $ | (16,524,675 | ) | $ | 1,767,726 | |||||
Net loss for the year |
-
|
-
|
- | (341,144 | ) | (341,144 | ) | ||||||||
Balance, December 31, 2015 | 37,860,500 | 37,861 | 18,254,540 | (16,865,819 | ) | 1,426,582 | |||||||||
Cancellation of common shares | (3,022,875 | ) | (3,023 | ) | 3,023 | - | - | ||||||||
Net loss for the year |
-
|
-
|
-
|
(419,774 | ) | (419,774 | ) | ||||||||
Balance, December 31, 2016 | 34,837,625 | $ | 34,838 | $ | 18,257,563 | $ | (17,285,593 | ) | $ | 1,006,808 |
The accompanying notes are an integral part of these consolidated financial statements
F-6
LIVE CURREN T MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2016 |
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 under the name Troyden Corporation and changed its name on August 21, 2000 from Troyden Corporation to Communicate.com Inc.. On May 30, 2008, the Company changed its name from Communicate.com Inc. to Live Current Media Inc. after obtaining the shareholders approval to do so at the annual general meeting in May 2008.
The Companys wholly owned principal operating subsidiary, Domain Holdings Inc. (DHI), was incorporated under the laws of British Columbia on July 4, 1994 under the name IMEDIAT Digital Creations Inc.. On April 14, 1999, IMEDIAT Digital Creations, Inc. changed its name to Communicate.com Inc. and was re-domiciled from British Columbia to the jurisdiction of Alberta. On April 5, 2002, Communicate.com Inc. changed its name to Domain Holdings Inc.
On March 13, 2008, the Company incorporated a wholly owned subsidiary in the state of Delaware, Communicate.com Delaware, Inc. On April 21, 2010, the Company changed the name of Communicate.com Delaware, Inc. to Perfume.com Inc. (Perfume Inc.).
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 court in Washoe County Nevada discharged the company from receivership.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2016, the Company has not achieved profitable operations, has incurred recurring losses in developing its business, and further losses are anticipated. The Company has an accumulated deficit of $17,285,593. 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.
F-7
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2016 |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
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.
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 the portfolio of domain names on an aggregate basis to determine whether it is more likely than not that the fair market value of the portfolio of domain names was less than the carrying amount. When it is determined that the fair value of the portfolio is less than the carrying amount, impairment is recognized
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.
F-8
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2016 |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
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.
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.
Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company assesses forfeiture rates for each class of grantees; executive management and directors, corporate directors, and general staff members. Executive management and directors are relatively few in number and turnover is considered remote, therefore the Company estimates forfeitures for this class of grantees to be 10%. Corporate directors are high level senior staff members with a forfeiture rate of 25% and general staff members have a higher forfeiture rate due to higher average turnover rates at 35%. Estimate of forfeitures is reviewed on an annual basis. Stock-based compensation is expensed on a straight-line basis over the requisite service period.
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.
F-9
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2016 |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
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, 2016 and 2015.
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.
Recent Accounting Pronouncements
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern , which is intended to define managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and to provide related footnote disclosures. The ASU provides guidance to an organizations management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The ASU is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016, which for the Company is April 1, 2017. Early adoption is permitted. The adoption of this standard did not have a material impact on the Companys financial position or results of operations.
F-10
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2016 |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
Recent Accounting Pronouncements (continued)
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. ASU No 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The adoption of this standard will not have a material impact on the Companys financial position or results of operations.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.
3. |
DUE TO SHAREHOLDERS OF AUCTOMATIC |
The Company acquired Entity, Inc., commonly referred to as Auctomatic, on May 22, 2008, through an agreement and plan of merger dated March 25, 2008. The consideration for the acquisition was $2 million cash (minus assumed liabilities of $152,305) and 1,000,007 shares of the Companys common stock at a deemed price of $3 per share, all payable pro rata to the eighteen Auctomatic shareholders in stages:
|
$1,046,695 on closing (paid) |
|
|
340,001 shares on closing (issued) |
|
|
$800,000 on May 22, 2009 |
|
|
246,402 shares, issued at closing but distributable one-third at a time on each of May 22, 2009, 2010 and 2011 (issued) |
|
|
413,604 shares issuable pro rata to the three Auctomatic founders one-third at a time on each of May 22, 2009, 2010 and 2011 subject to their being employed on the payment date |
There were 91,912 shares were issued pro rata to the two founders who were employed on May 22, 2009. One of the Auctomatic founders resigned during the first quarter of 2009 and forfeited his right to 137,868 founders shares. The remaining two founders terminated their employment by agreement in August 2009 and forfeited their rights to the total of 183,824 shares of the Companys common stock that were due to be issued to them in each of May 2010 and 2011.
The payment terms for the cash consideration payable on May 22, 2009, were renegotiated in 2009 and again in 2010 resulting in promissory notes being issued to twelve of the eighteen Auctomatic shareholders: five of the notes (Convertible Notes to Shareholders of Auctomatic) were convertible to shares of the Companys common stock and bore interest at the rate of 10% per annum; seven of the notes (Non-Convertible Notes to Shareholders of Auctomatic) were not convertible and bore interest at the rate of 8% per annum. The six Auctomatic shareholders who opted not to participate in the Non-Convertible and Convertible share offer continued to hold debt in the Company payable on May 22, 2009 with no interest accruing (see Due to Shareholders of Auctomatic below).
During the first quarter of 2013 the Company and most of the Auctomatic note and debt holders agreed to settle the outstanding debt. The Company paid $172,844 to settle debt of $508,006, which included principal and interest, resulting in a gain on the settlement of debt in the amount of $335,162.
F-11
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2016 |
3. |
DUE TO SHAREHOLDERS OF AUCTOMATIC (continued) |
The breakdown of the amounts due to the Shareholders of Auctomatic at December 31, 2016 follows below:
Due to shareholders of Auctomatic, December 31, 2016 and 2015 | $ | 13,193 | |
Non-convertible notes payable to shareholders of Auctomatic: | |||
Balance, December 31, 2014 | 3,422 | ||
Accrued interest | 207 | ||
Balance, December 31, 2015 | 3,629 | ||
Accrued interest | 207 | ||
Balance, December 31, 2016 | 3,836 | ||
$ | 17,029 |
4. |
CONTINGENCIES |
The Company was involved in a number of law suits involving its former CEO, C. Geoffrey Hampson as described below:
|
On May 14, 2010, David Jeffs and Richard Jeffs (plaintiffs) filed a complaint in the Circuit Court of Cook County, Illinois, County Department, Chancery Division in which they, derivatively on behalf of the Company, sued C. Geoffrey Hampson, James Taylor, Mark Benham and Boris Wertz (defendants) and Live Current (nominal defendant). On October 22, 2010, the Company took over as plaintiff in the complaint. The Company alleges, among other matters, that (i) the defendant members of the board of directors breached their fiduciary duties of loyalty, trust, good faith and due care by failing to properly supervise Mr. Hampson, and (ii) that Mr. Hampson breached his fiduciary duties and his employment agreement and defrauded the Company by failing to devote the time necessary to manage the Companys business and failing to disclose to the board of directors his activities relating to other businesses. The Company sought compensatory damages of no less than $50,000,000, punitive damages, and attorneys fees and other costs of bringing the action. The complaint against Messrs. Hampson, Taylor, Benham and Wertz was stayed in Illinois pending the outcome of arbitration, detailed below, commenced by C. Geoffrey Hampson against the Company on January 28, 2011 in British Columbia. The May 14, 2010 complaint filed in Illinois was stayed pending the conclusion of the arbitration. |
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On January 26, 2011, C. Geoffrey Hampson, the Companys former CEO, filed a third-party complaint in the Circuit Court of Cook County, Illinois, against Live Current. The claim sought indemnification to cover the costs for the former CEO for his costs of defending a defamation suit filed against him during his time as CEO of the Company. |
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On January 28, 2011, C. Geoffrey Hampson initiated arbitration in British Columbia seeking severance pay and expenses of $300,698. The claim is subject to arbitration as set out in his employment agreement. |
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On June 18, 2013, , the Company, David Jeffs, Messrs. Geoffrey and Christopher Hampson and Hampson Equities agreed to a global binding arbitration to take place in Las Vegas, Nevada to resolve all of the outstanding lawsuits and arbitration involved in the dispute. The arbitration took place in October of 2013. |
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On June 4, 2014, the arbitrator delivered his findings. As a result of the arbitration, C. Geoffrey Hampson was ordered to repay the Company $297,747 and the arbitrator ordered a receiver to be put in charge of the assets of the Company to determine whether or not the Company should be dissolved |
F-12
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2016 |
4. | CONTINGENCIES (continued) |
|
On February 16, 2016, the appointed receiver of the Company negotiated a final settlement and mutual release with C. Geoffrey Hampson in which the Company agreed to pay a sum of $225,000 in full and final settlement of the disputes between C. Geoffrey Hampson and the Company. The release absolutely and unconditionally releases, acquits and forever discharges the Company, from any and all claims for relief, actions, suits, damages, debts, liabilities, judgments, executions and other claims of every kind and nature whatsoever. |
On March 9, 2000, a former chief executive officer of DHI commenced a legal action against DHI for wrongful dismissal and breach of contract. He is seeking, at a minimum, 18.39% of the outstanding shares of DHI, specific performance of his contract, special damages of approximately $30,000, aggravated and punitive damages, interest and costs. On June 1, 2000, DHI filed a defense and counterclaim claiming damages and special damages for breach of fiduciary duty and breach of his employment contract. The plaintiff has taken no further action.
5. |
SHARE CAPITAL |
On August 10, 2016, in connection with the settlement reached with the Companys former CEO (Note 4), there were 3,022,875 common shares returned to treasury and subsequently cancelled.
The Company used the par value method to record this share cancellation whereby the par value of the shares cancelled totaling $3,023 was deducted from share capital with a corresponding increase in additional paid-up capital.
Stock options
The board of directors and stockholders approved the 2007 Stock Incentive Plan and adopted it on August 21, 2007 (the Plan). The Company has reserved 5,000,000 shares of its common stock for issuance to directors, employees and consultants under the Plan. The Plan is administered by the board of directors. Vesting terms of the options range from the date on which the options are granted to five years from the date of grant; and no options can be exercisable for a period of more than ten years.
At December 31, 2016, no options are outstanding (December 31, 2015 no options outstanding).
6. |
INCOME TAXES |
The Company is subject to United States federal income taxes at an approximate rate of 35%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Companys income tax expense as reported is as follows :
December | December | ||||||
31, 2016 | 31, 2015 | ||||||
$ | $ | ||||||
Loss before income taxes | (419,774 | ) | (341,144 | ) | |||
Statutory tax rate | 35% | 35% | |||||
Expected recovery of income taxes computed at statutory rates | (147,000 | ) | (119,000 | ) | |||
Reconciliation of tax rates and other | (19,000 | ) | |||||
Change in valuation allowance | 166,000 | 119,000 | |||||
Provision for income taxes | - | - |
F-13
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
December 31, 2016 |
6. |
INCOME TAXES (continued) |
The significant components of deferred income tax assets at December 31, 2016 and December 31, 2015 are as follows:
December | December | ||||||
31, 2016 | 31, 2015 | ||||||
Deferred income tax assets: | |||||||
Net operating losses | 2,647,000 | 2,481,000 | |||||
Intangible assets | (79,000 | ) | (79,000 | ) | |||
2,568,000 | 2,402,000 | ||||||
Valuation allowance | (2,568,000 | ) | (2,402,000 | ) | |||
Deferred income tax assets, net | - | - |
At December 31, 2016, the Company had accumulated non-capital loss carry-forwards of approximately $7,700,000 that expire from 2025 through 2036.
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.
7. |
SUBSEQUENT EVENTS |
On January 11, 2017, the court in Washoe County Nevada entered an order terminating the receivers possession of assets of the Company resulting in the operations of the Company being returned to the directors of the company.
F-14
LIVE CURRENT MEDIA INC.
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)
F-15
LIVE
CURRENT
MEDIA
INC.
CONSOLIDATED
BALANCE
SHEETS
Expressed
In
U.S.
Dollars
September 30, 2017 | ||||||
(unaudited) | December 31, 2016 | |||||
ASSETS | ||||||
Current | ||||||
Cash and cash equivalents | $ | 861,279 | $ | 1,149,555 | ||
Accounts receivable | 5,435 | 5,435 | ||||
Total current assets | 866,714 | 1,154,990 | ||||
Intangible assets | 267,385 | 304,885 | ||||
Total Assets | $ | 1,134,099 | $ | 1,459,875 | ||
LIABILITIES | ||||||
Current | ||||||
Accounts payable and accrued liabilities | $ | 185,550 | $ | 436,038 | ||
Due to shareholders of Auctomatic | 17,184 | 17,029 | ||||
Total current liabilities | 202,734 | 453,067 | ||||
STOCKHOLDERS' EQUITY | ||||||
Common stock | ||||||
Authorized:
500,000,000 common shares, $0.001 par
value
Issued and outstanding: 34,837,625 common shares (December 31, 201634,837,625) |
34,838 | 34,838 | ||||
Additional paidin-capital | 18,257,563 | 18,257,563 | ||||
Accumulated deficit | (17,361,036 | ) | (17,285,593 | ) | ||
931,365 | 1,006,808 | |||||
Total Liabilities and Stockholders' Equity | $ | 1,134,099 | $ | 1,459,875 |
See accompanying notes to consolidated financial statements
F-16
LIVE
CURRENT
MEDIA
INC.
CONSOLIDATED
STATEMENTS
OF
OPERATIONS
Expressed
In
U.S.
Dollars
(Unaudited)
Three months ended | Nine months ended | |||||||||||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||
General and administrative expenses | ||||||||||||
General and administrative | $ | 17,813 | $ | 15,108 | $ | 70,816 | $ | 29,539 | ||||
Management fees | 30,000 | | 86,773 | | ||||||||
Professional fees | 16,971 | 96,287 | 63,082 | 227,905 | ||||||||
Loss from Operations for the period | (64,784 | ) | (111,395 | ) | (220,671 | ) | (257,444 | ) | ||||
Gain on sale of domain names | | 86,962 | | 206,764 | ||||||||
Litigation Settlement | | | | (225,000 | ) | |||||||
Impairment of intangible assets | (37,500 | ) | | (37,500 | ) | | ||||||
Gain on debt retirement | | | 182,236 | | ||||||||
Interest income | | | | |||||||||
Interest expense | (104 | ) | | (155 | ) | | ||||||
Other Income | 120 | | 120 | 7,252 | ||||||||
Foreign exchange | 533 | | 527 | | ||||||||
(36,951 | ) | 86,962 | 145,228 | (10,984 | ) | |||||||
Net loss for the period | $ | (101,735 | ) | $ | (24,433 | ) | $ | (75,443 | ) | $ | (268,428 | ) |
Basic and diluted net Income (loss) per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) |
Number of common shares outstandingbasic and diluted | 34,837,625 | 37,860,500 | 34,837,625 | 37,860,500 |
See accompanying notes to consolidated financial statements
F-17
LIVE
CURRENT
MEDIA
INC.
CONSOLIDATED
STATEMENTS
OF
CASH
FLOWS
Expressed
In
U.S.
Dollars
(Unaudited)
Nine Months Ended | Nine Months Ended | |||||
September 30, 2017 | September 30, 2016 | |||||
OPERATING ACTIVITIES | ||||||
Net loss for the period | $ | (75,443 | ) | $ | (268,428 | ) |
Noncash items included in net loss: | ||||||
Impairment of intangible assets | 37,500 | | ||||
Gain from sale of domain names | | (206,764 | ) | |||
Accrued interest expense | 155 | | ||||
Change in operating assets and liabilities: | ||||||
Accounts payable and accrued liabilities | (250,488 | ) | (262,518 | ) | ||
Cash flows used in operating activities | (288,276 | ) | (737,710 | ) | ||
INVESTING ACTIVITIES | ||||||
Proceeds from sale of domain names | | 236,962 | ||||
Cash flows from investing activities | | 236,962 | ||||
Net increase (decrease) in cash and cash equivalents | (288,276 | ) | (500,748 | ) | ||
Cash, beginning of period | 1,149,555 | 1,650,303 | ||||
Cash, end of period | $ | 861,279 | $ | 1,149,555 |
See accompanying notes to consolidated financial statements
F-18
LIVE CURRENT MEDIA INC.
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
Expressed In U.S. Dollars
(Unaudited)
Total | |||||||||||||||
Additional Paid | Accumulated | Stockholders' | |||||||||||||
Common stock | in Capital | Deficit | Equity | ||||||||||||
Balance, December 31, 2015 | 37,860,500 | $ | 37,861 | $ | 18,254,540 | $ | (16,865,819 | ) | $ | 1,426,582 | |||||
Settlement Share Return | (3,022,875 | ) | (3,023 | ) | 3,023 | | | ||||||||
Net loss for the year | | | | (419,774 | ) | (419,774 | ) | ||||||||
Balance, December31, 2016 | 34,837,625 | 34,838 | 18,257,563 | (17,285,593 | ) | 1,006,808 | |||||||||
Net loss for the period | | | | (75,443 | ) | (75,443 | ) | ||||||||
Balance, September 30, 2017 | 34,837,625 | $ | 34,838 | $ | 18,257,563 | $ | (17,361,036 | ) | $ | 931,365 |
See accompanying notes to consolidated financial statements
F-19
LIVE CURRENT MEDIA INC. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
September 30, 2017 |
Expressed in U.S. Dollars |
(unaudited) |
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 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.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2017, the Company has not achieved profitable operations, has incurred recurring losses in developing its business, and further losses are anticipated. The Company has an accumulated deficit of $17,361,036. 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
The accompanying unaudited interim consolidated balance sheets, and the related consolidated statements of operations, stockholders equity and cash flows reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of the financial position of the Company and its subsidiaries as at September 30, 2017 and the results of operations and cash flows for the interim periods ended September 30, 2017 and 2016. The results of operations presented in these consolidated financial statements are not necessarily indicative of the results of operations that may be expected for future periods.
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in the Company's annual audited consolidated financial statements and accompanying notes have been condensed or omitted. These interim consolidated financial statements and accompanying notes follow the same accounting policies and methods of application used in the annual financial statements and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2016. There have been no material changes to the significant accounting policies and estimates during the nine months ended September 30, 2017 as compared to the significant accounting policies and estimates described in the consolidated financial statements for the fiscal year ended December 31, 2016.
F-20
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
Recent Accounting Pronouncements
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern , which is intended to define managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and to provide related footnote disclosures. The ASU provides guidance to an organizations management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The ASU is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016, which for the Company is April 1, 2017. The adoption of this standard did not have a material impact on the Companys financial position or results of operations.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. ASU No 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The adoption of this standard will not have a material impact on the Companys financial position or results of operations.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.
3. |
DUE TO SHAREHOLDERS OF AUCTOMATIC |
The Company acquired Entity, Inc., commonly referred to as Auctomatic, on May 22, 2008, through an agreement and plan of merger dated March 25, 2008. The consideration for the acquisition was $2 million cash (minus assumed liabilities of $152,305) and 1,000,007 shares of the Companys common stock at a deemed price of $3 per share, all payable pro rata to the eighteen Auctomatic shareholders in stages:
|
$1,046,695 on closing (paid) |
|
|
340,001 shares on closing (issued) |
|
|
$800,000 on May 22, 2009 |
|
|
246,402 shares, issued at closing but distributable one-third at a time on each of May 22, 2009, 2010 and 2011 (issued) |
|
|
413,604 shares issuable pro rata to the three Auctomatic founders one-third at a time on each of May 22, 2009, 2010 and 2011 subject to their being employed on the payment date |
There were 91,912 shares issued pro rata to the two founders who were employed on May 22, 2009. One of the Auctomatic founders resigned during the first quarter of 2009 and forfeited his right to 137,868 founders shares. The remaining two founders terminated their employment by agreement in August 2009 and forfeited their rights to the total of 183,824 shares of the Companys common stock that were due to be issued to them in each of May 2010 and 2011.
F-21
3. |
DUE TO SHAREHOLDERS OF AUCTOMATIC (continued) |
The payment terms for the cash consideration payable on May 22, 2009, were renegotiated in 2009 and again in 2010 resulting in promissory notes being issued to twelve of the eighteen Auctomatic shareholders: five of the notes (Convertible Notes to Shareholders of Auctomatic) were convertible to shares of the Companys common stock and bore interest at the rate of 10% per annum; seven of the notes (Non-Convertible Notes to Shareholders of Auctomatic) were not convertible and bore interest at the rate of 8% per annum. The six Auctomatic shareholders who opted not to participate in the Non-Convertible and Convertible share offer continued to hold debt in the Company payable on May 22, 2009 with no interest accruing (see Due to Shareholders of Auctomatic below).
During the first quarter of 2013 the Company and most of the Auctomatic note and debt holders agreed to settle the outstanding debt. The Company paid $172,844 to settle debt of $508,006, which included principal and interest, resulting in a gain on the settlement of debt in the amount of $335,162.
The breakdown of the amounts due to the Shareholders of Auctomatic at September 30, 2017 follows below:
Due to shareholders of Auctomatic, December 31, 2016 and 2015 | $ | 13,193 | |
Non-convertible notes payable to shareholders of Auctomatic: | |||
Balance, December 31, 2015 | 3,629 | ||
Accrued interest | 207 | ||
Balance, December 31, 2016 | 3,836 | ||
Accrued interest | 155 | ||
Balance, September 30, 2017 | 3,991 | ||
$ | 17,184 |
4. |
GAIN ON RETIREMENT OF DEBT |
On May 4, 2017, in conjunction with the termination of the Companys receivership, the Company realized a gain on debt retirement of $182,236 related to the discharge of creditor obligations.
F-22
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: | February 6, 2018 | By: | /s/ David M. Jeffs | |
DAVID M. JEFFS | ||||
Chief Executive Officer, President, Chief Financial Officer | ||||
and Secretary | ||||
(Principal Executive Officer and Principal Financial Officer) |
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