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
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88-0346310
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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1130 Pender Street Suite 820
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Vancouver, BC Canada
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V6E 4A4
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(Address of principal executive offices)
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(Zip Code)
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(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
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Name of exchange on which each class is to be
registered.
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NONE.
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N/A
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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 [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [X]
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(Do not check if a smaller reporting company)
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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.
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Audited financial statements for the fiscal
years ended December 31, 2016, including:
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(a)
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Report of Independent Registered Accounting
Firm;
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(b)
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Consolidated Balance Sheet for the years ended
December 31, 2015 and 2016;
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(c)
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Consolidated Statements of Operations for the
years ended December 31, 2015 and 2016;
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(d)
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Consolidated Statements of Cash Flows for the
years ended December 31, 2015 and 2016;
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(e)
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Consolidated Statements of Stockholders
Equity; and
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(f)
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Notes to the Financial Statements.
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2.
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Unaudited financial statements for the Nine
Month Period Ended September 30, 2017, including:
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(a)
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Consolidated Balance Sheet for the Nine Month
Period Ended September 30, 2017;
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(b)
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Consolidated Statements of Operations for the
Nine Month Period Ended September 30, 2017 and 2016;
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(c)
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Consolidated Statements of Cash Flows for the
Nine Month Period Ended September 30, 2017 and 2016;
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(d)
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Consolidated Statements of Stockholders
Equity; and
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(e)
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Notes to the financial Statements
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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
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`CONSOLIDATED BALANCE SHEETS
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(expressed in
US dollars)
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December 31,
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December
31,
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2016
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2015
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ASSETS
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Current assets
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Cash
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$
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1,149,555
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$
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1,650,303
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Receivable
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5,435
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5,322
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Prepaid expenses
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-
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18,799
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1,154,990
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1,674,424
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Non-current assets
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Intangible
assets
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304,885
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335,083
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$
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1,459,875
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$
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2,009,507
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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Accounts payable
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$
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436,038
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$
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566,103
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Due to
shareholders of Auctomatic
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17,029
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16,822
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453,067
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582,925
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Stockholders' equity
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Capital stock
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Authorized:
500,000,000 common shares, par value $0.001 per
share
Issued
and
outstanding:
34,837,625 common shares (37,860,500 at December 31, 2015)
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34,838
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37,861
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Additional paid in capital
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18,257,563
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18,254,540
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Accumulated
deficit
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(17,285,593
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)
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(16,865,819
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)
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1,006,808
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1,426,582
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$
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1,459,875
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$
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2,009,507
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The accompanying notes are an integral part of these
consolidated financial statements
F-3
LIVE CURRENT MEDIA INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(expressed in
US dollars)
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For the years ended
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December
31,
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December 31,
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2016
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2015
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General and administrative
expenses
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General and
administrative
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$
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76,956
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$
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43,024
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Professional fees
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325,065
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320,532
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Loss from operations
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(402,021
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(363,556
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Gain on sale of domain names
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206,764
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5,000
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Litigation
settlement
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(225,000
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-
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Interest Income
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1,396
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1,779
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Interest expense
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(207
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(207
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Other income
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112
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10,438
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Foreign exchange
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(818
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5,402
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(17,753
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(22,412
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Net loss for the year
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$
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(419,774
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$
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(341,144
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Basic and diluted loss per share
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$
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(0.01
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$
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(0.01
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Weighted average number of basic common
shares outstanding
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37,164,825
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37,860,500
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The accompanying notes are an integral part of these
consolidated financial statements
F-4
LIVE CURRENT MEDIA INC.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(expressed in
US dollars)
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For the years ended
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December 31, 2016
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December 31, 2015
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Cash flows used in operating
activities
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Net loss for the year
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$
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(419,774
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$
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(341,144
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Non-cash
items
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Gain on
sale of domain names
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(206,764
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(5,000
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Accrued interest
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207
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207
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Changes in non-cash working capital items
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Receivable
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(113
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(1,985
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Prepaid
expenses
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18,799
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2,271
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Accounts payable and accrued liabilities
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(130,065
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84,830
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Cash used in operating activities
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(737,710
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(260,821
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Cash flows used in investing activities
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Proceeds
from the disposition of domain names
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236,962
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5,000
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Cash provided by investing activities
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236,962
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5,000
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Change in cash
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(500,748
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(255,821
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Cash, beginning of year
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1,650,303
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1,906,124
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Cash, end of year
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$
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1,149,555
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$
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1,650,303
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The accompanying notes are an integral part of these
consolidated financial statements
F-5
LIVE CURRENT MEDIA INC.
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CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
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(expressed in
US dollars)
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Common Stock
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Additional
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Total
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Number
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Paid In
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Accumulated
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Stockholders'
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of Shares
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Amount
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Capital
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Deficit
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Equity
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Balance, December 31, 2014
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37,860,500
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$
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37,861
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$
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18,254,540
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$
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(16,524,675
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)
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$
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1,767,726
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Net loss for the year
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-
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-
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-
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(341,144
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(341,144
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Balance, December 31, 2015
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37,860,500
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37,861
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18,254,540
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(16,865,819
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1,426,582
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Cancellation of common shares
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(3,022,875
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)
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(3,023
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3,023
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-
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-
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Net loss for the year
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-
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-
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-
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(419,774
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)
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(419,774
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)
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Balance, December 31, 2016
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34,837,625
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$
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34,838
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$
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18,257,563
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$
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(17,285,593
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)
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$
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1,006,808
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The
accompanying
notes are an
integral
part of these
consolidated
financial
statements
F-6
LIVE
CURREN T
MEDIA
INC.
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NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
|
December
31,
2016
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1.
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NATURE AND CONTINUANCE OF
OPERATIONS
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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.
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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
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2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
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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
|
|
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.
|
|
|
|
|
|
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.
|
|
|
|
|
|
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.
|
|
|
|
|
|
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.
|
|
|
|
|
|
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.
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).
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.
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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