- Amended Annual Report (10-K/A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1

x	ANNUAL REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

o	TRANSITION REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number 000-29929

	LIVE CURRENT MEDIA INC.
	(Name of Small Business Issuer in its charter)

Nevada		88-0346310
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


375 Water Street, Suite 645, Vancouver, British Columbia		V6B 5C6
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number (604) 453-4870

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

None		N/A

Securities registered pursuant to Section 12(g) of the Act:

	Common Stock - $0.001 par value
	(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes T No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o Yes T No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

T Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer £	Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes T No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. As of June 30, 2008, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $59,143,933.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of March 20, 2009 the registrant had 23,906,445 shares of common stock outstanding.

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

EXPLANATORY NOTE

On June 18, 2009 we were advised by Ernst & Young, our independent registered public accounting firm, that the audit opinion dated March 24, 2009 on our December 31, 2008 and 2007 consolidated financial statements (the “Original Financial Statements”) could no longer be relied upon. We were further advised by Ernst & Young that there were errors in the Original Financial Statements. Based on the foregoing, C. Geoffrey Hampson, our Chief Executive Officer and Chief Financial Officer, concluded that the Original Financial Statements should no longer be relied upon. The primary purpose of this Amendment to our Annual Report on Form 10-K (the “Original Report”) is to disclose the restatement of our Original Financial Statements.

The errors in the Original Financial Statements affected opening balances as at December 31, 2007 and the financial position, results of operations and cash flows for the years ended December 31, 2007 and 2008. A complete discussion of the restatement is included in the section of this Amendment titled “Management’s Discussion and Analysis of Financial Condition and Plan of Operation” and in Notes 2 and 21 to our restated consolidated financial statements for the fiscal years ended December 31, 2008 and December 31, 2007. We have also revised Item 1A, “Risk Factors”, by correcting the first risk factor to reflect the results of the restatement and to add two new risk factors specifically related to the restatement, and we have revised Item 9A “Controls and Procedures”. Finally, we have included amended certifications signed by our Chief Executive Officer and our Principal Financial Officer.

This Amendment includes information contained in the Original Report, and we have made no attempt in the Amendment to modify or update the disclosures presented in the Original Report, except as identified above. The disclosures in this Amendment continue to speak as of the date of the Original Report, and do not reflect events occurring after the filing of the Original Report. The Company has not amended and does not intend to amend any of its previously filed Annual Reports on Form 10-K for the periods affected by the restatement other than in this Amendment. Accordingly, this Amendment should be read in conjunction with our other filings made with the Securities and Exchange Commission subsequent to the filing of the Original Report, including any amendments to those filings. The filing of this Amendment shall not be deemed to be an admission that the Original Report, when made, included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.

CONTENTS

		Page

	Forward-Looking Statements	5

	Part I

Item 1A	Risk Factors	6
	Part II

Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

	Part III

Item 9A	Controls and Procedures	42
	Part IV

Item 15	Exhibits, Financial Statement Schedules	43

	Signatures and Certifications	43

	Financial Statements	F-1

Forward Looking Statements

This Amendment to the Annual Report on Form 10-K of Live Current Media Inc. (“Live Current”, “the Company”, “we”, “us”, and “our”) for the year ended December 31, 2008 (the “Amendment”) contains “forward-looking” statements. Certain information contained or incorporated by reference in this Amendment, including the information set forth as to the future financial or operating performance of Live Current, constitutes “forward-looking statements”. These statements may be identified by their use of words like “plans”, “expect”, “aim”, “believe”, “projects”, “anticipate”, “intend”, “estimate”, “will”, “should”, “could”, “contemplate”, “target”, “continue”, “budget”, “may” and other similar expressions that indicate future events and trends. All statements, other than historical statements of fact, that address expectations or projections about the future, including statements about Live Current’s strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements.

Forward-looking statements in this Amendment include but are not limited to statements regarding (1) expectation that revenue will increase during fiscal 2009; (2) expectation that our participant base will increase; (3) expectation of an increase in future operating expenses; (4) expectation that the expansion of our participant base will cause wages, marketing and promotional costs to increase; (5) expectation that working capital needs for fiscal 2009 will be funded through the equity capital markets and private financings; (6) expectation that an increase in our participant base will lead to hiring of additional employees or independent contractors; (7) expectation relating to the future developments of content, features, and services to be provided on the website; (8) uncertainty of utilizing deferred tax assets; and (9) expectation that inflation will not have a material impact on future operations.

These forward-looking statements involve a number of risks and uncertainties, including, but not limited to, the following: general economic conditions particularly as they relate to demand for Live Current’s products and services; changes in business strategy; competitive factors (including the introduction or enhancement of competitive services); pricing pressures; changes in operating expenses; fluctuation in foreign currency exchange rates; inability to attract or retain consulting, sales and/or development talent; changes in customer requirements; evolving industry standards; and other factors described in Live Current’s filings with the Securities and Exchange Commission. The results that Live Current achieves may differ materially from any forward-looking statements due to these risks and uncertainties. The forward-looking statements in this Amendment are subject to risks and uncertainties that could cause actual results to differ materially from the results expressed in or implied by the statements contained in this report.

The identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives requires the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements are accurate. All forward-looking statements are made as of the date of filing of this Amendment and Live Current disclaims any duty to update any such forward-looking statements.

The following discussion should be read in conjunction with our consolidated financial statements and their explanatory notes, which are included in this Amendment.

PART I

Item 1A. Risk Factors

In addition to the factors discussed elsewhere in this Amendment, the following risks and uncertainties could materially adversely affect our business, financial condition and results of operations. The current global economic downturn amplifies many of these risks. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and financial condition.

Risks Relating to Our Business

WE MAY BE UNABLE TO CONTINUE AS A GOING CONCERN.

Our consolidated financial statements have been prepared on a going concern basis which assumes that we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. We have generated a consolidated net loss of $9,987,270 and realized a negative cash flow from operating activities of $4,854,260 for the year ended December 31, 2008. At this date, we had a working capital deficiency of $3,199,931, as compared to positive working capital of $5,902,740 at December 31, 2007. At December 31, 2008 we had an accumulated deficit of $12,777,195, as compared to an accumulated deficit of $2,789,925 at December 31, 2007. Stockholders equity was $1,995,592 at December 31, 2008, as compared to stockholders equity of $7,392,535 at December 31, 2007.

Our ability to continue as a going-concern is in substantial doubt as it is dependent on a number of factors including, but not limited to, the receipt of continued financial support from our investors, our ability to market and sell domain name assets for cash, our ability to raise equity or debt financing as we need it, and whether we will be able to use our securities to meet certain of our liabilities as they become payable, including our commitments for the Global Cricket Venture as disclosed in Note 6 of our consolidated financial statements. The outcome of these matters is dependent on factors outside of our control and cannot be predicted at this time.

FAILURE TO MAINTAIN EFFECTIVE INTERNAL CONTROL OVER FINANCIAL REPORTING IN ACCORDANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002 MAY RESULT IN ACTION FILED AGAINST US BY REGULATORY AGENCIES OR MAY RESULT IN A REDUCTION IN THE PRICE OF OUR COMMON SHARES.

We are required to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002 and related regulations. Any material weakness in our internal control over financial reporting that needs to be addressed, or disclosure of a material weakness in management’s assessment of internal control over financial reporting, may reduce the price of our common shares because investors may lose confidence in our financial reporting. Our failure to maintain effective internal control over financial reporting could also lead to actions being filed against us by regulatory agencies.

In connection with the audit of our consolidated financial statements for the year ended December 31, 2008, we identified weaknesses in internal control over financial reporting that were material weaknesses as defined by standards established by the Public Company Accounting Oversight Board. We have restated our financial statements for the years ended December 31, 2008 and 2007 to correct the accounting treatment for these errors. While we intend to attempt to remediate the weaknesses in our internal control over financial reporting, we cannot provide assurance that we will be successful in these remediation attempts or that we will not be subject to material weaknesses in the future.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness in our internal control over financial reporting as of December 31, 2008 resulted from our failure to maintain effective processes and controls over the accounting for and reporting of complex and non-routine transactions. Specifically, we did not have an appropriate level of technical knowledge, experience and training in the accounting for business combinations, stock-based compensation, deferred income taxes, and financial statement presentation. This control deficiency resulted in the restatement.

THE RESTATEMENT OF OUR CONSOLIDATED FINANCIAL STATEMENTS MAY RESULT IN LITIGATION OR GOVERNMENT ENFORCEMENT ACTIONS.

We have restated our consolidated financial statements and other financial information for the years ended December 31, 2008 and 2007 within this Amendment. The restatement of our prior financial statements may expose us to risks associated with litigation, regulatory proceedings and government enforcement actions, including the risk that the SEC may disagree with the manner in which we have accounted for and reported the financial impact of the restatement which could result in the Company having to further restate its prior financial statements, amend prior filings with the SEC, or take other actions not currently contemplated.

In addition, securities class action litigation has often been brought against companies who have been unable to provide current public information or who have restated previously filed financial statements. Such litigation is complex and could result in substantial costs, divert management’s attention and resources, and harm our business, financial condition and results of operations.

THE EFFECTS OF THE RECENT ECONOMIC DOWNTURN MAY IMPACT OUR BUSINESS, OPERATING RESULTS, OR FINANCIAL CONDITION. WE ARE NOT CERTAIN WHEN THIS DOWNTURN WILL END.

The recent economic downturn has caused disruptions and extreme volatility in global financial markets, has increased rates of default and bankruptcy, and has impacted consumer and business spending. These developments may negatively affect our business, operating results, or financial condition in a number of ways. For example, the downturn in consumer spending, especially in the United States, may result in decreased sales of our Health and Beauty products, since most of these products are not necessities but are purchased with discretionary funds. Furthermore, the tightening credit market may make it impossible for us to obtain financing if it is required. We are not sure when this economic downturn will end.

WE MAY NOT BE ABLE TO PROTECT OUR DOMAIN NAMES, WHICH WOULD ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

We seek to develop a portfolio of operating businesses either by ourselves or by entering into arrangements with businesses that operate in the product or service categories that are described by the domain name assets owned by our subsidiary, Domain Holdings Inc. (“DHI”). We may not be able to prevent third parties from acquiring domain names that are confusingly similar to our domain names, which could adversely affect our business. Governmental agencies and their designees generally regulate the acquisition and maintenance of internet addresses. However, the regulation of internet addresses in the United States and in foreign countries is subject to change. As a result, we may not be able to acquire or maintain relevant internet addresses in all countries where we conduct business. All of our online businesses and web sites are copyrighted upon loading. “Livecurrent.com” is a registered domain name of DHI. While we will consider seeking further protection for our intellectual property, we may be unable to avail ourselves of protection under United States laws because, among other things, our domain names are generic and intuitive. Consequently, we will seek protection of our intellectual property only where we determine that the cost of obtaining protection and the scope of protection provided result in a meaningful benefit to us.

WE MAY BE UNABLE TO MAKE THE PAYMENTS REQUIRED UNDER OUR MEMORANDUM OF UNDERSTANDING WITH THE BCCI OR THE IPL. IN THAT CASE, WE MAY HAVE TO FORFEIT SOME OR ALL OF OUR RIGHTS UNDER THE MEMORANDUM OF UNDERSTANDING AND WE MAY BE LIABLE FOR DAMAGES TO THE BCCI OR THE IPL.

On or about October 1, 2008, the Company was scheduled to make a payment to the BCCI in the amount of $625,000 and a payment to the IPL in the amount of $375,000, in connection with the Global Cricket Venture Memorandum of Understanding (“MOU”). Although no formal amendment to the MOU had been executed at December 31, 2008, the parties had agreed to decrease the amount owing to the BCCI to $125,000, and to eliminate entirely the payment of $750,000 that will be due to the BCCI on October 1, 2009. The payments due to the BCCI and the IPL for the October 1, 2008 commitment, although negotiated to a lesser amount, have not been made to date, nor have we made other payments required by the MOUs. The parties discussed possible changes to the timing of the payments, and reached formal agreement on March 31, 2009. Such payments may be subject to certain withholding or other taxes which the Company may be required to gross up pursuant to the terms of the MOU.

If at any time we are unable to make the required payments to the BCCI or the IPL, and no extension or renegotiation of the payment terms can be arranged, we may have to forfeit some or all of our rights to the cricket-related digital content and may be exposed to potential liability for defaulting on our payment. We cannot determine at this time the actual value of such rights, only that the loss of such rights would impact negatively upon the potential revenues from the Global Cricket Venture. In addition, if we are unable to make the required payments, we face potential claims for breach of contract, lack of performance and other damages which other parties to the MOU may seek to recover. We do not concede that such claims would be enforceable or result in a recovery against us. If these events were to occur, such events would have a negative effect on our overall anticipated results of operations and performance.

OUR EXPANSION INTO NEW GEOGRAPHIC AREAS AND INTERNATIONAL OPERATIONS IN CONNECTION WITH OUR CRICKET BUSINESS CREATES ADDITIONAL RISKS WHICH COULD HARM OUR BUSINESS, OPERATING RESULTS, AND FINANCIAL CONDITION.

By virtue of the MOUs we have entered with NLB, the BCCI and the IPL, our cricket business is expanding into new geographic areas where our partners and the cricket leagues are located, such as Dubai, South Africa, India, and the UK. We have limited experience with operations outside North America, and our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to a number of risks, including the following:

·	local economic conditions;

·	geopolitical events, including war and terrorism;

·	challenges caused by distance, language and cultural differences and by doing business with foreign agencies and governments;

·	longer payment cycles in some countries;

·	uncertainty regarding liability for services and content;

·	currency exchange rate fluctuations;

·	potentially adverse tax consequences;

·	higher costs associated with doing business internationally;

·	different employee/employer relationships and the existence of workers’ councils and labor unions.

Our cricket business is centered in an area of the world that has recently experienced significant geopolitical events, including the November 2008 terrorist attacks in Mumbai, India and the February 2009 attacks against the Sri Lankan cricket team in Pakistan. These events have adversely affected our cricket business. For example, the Champions League cricket tournament was cancelled following the terrorist attacks in Mumbai, which resulted in lost revenue generating opportunities in December 2008. In addition, on March 24, 2009, the IPL announced that its second season will be relocated from India to South Africa. Future geopolitical activity may negatively impact our business prospects and affect our ability to maximize revenues and profits.

WE COMPETE WITH COMPANIES POSSESSING SUBSTANTIALLY GREATER RESOURCES WHICH MAY ADVERSELY AFFECT OUR ABILITY TO ATTRACT QUALIFIED PERSONNEL OR TO GROW OUR BUSINESS.

We compete with many companies in the B2B2C (business-to-business-to-consumer) market that possess greater financial resources and technical facilities than we have, which likely makes them more successful in attracting and retaining qualified personnel. In addition, while we hold title to a wide variety of generic names that may prove valuable, currently almost all of our revenues are earned through our Perfume.com website. Many of our competitors, however, have a very diverse portfolio of names and have not confined their market to one industry, product or service, but offer a wide array of multi-layered businesses consisting of many different customer and industry partners. Some of these competitors may also be more successful than we are because they have been in business longer than us and may have established more strategic partnerships and relationships than we have. We do not represent a significant presence in the B2B2C market.

OUR PERFUME.COM ECOMMERCE BUSINESS FACES SIGNIFICANT COMPETITION.

The fragrance eCommerce business is extremely competitive. The internet facilitates competitive entry and comparison shopping and renders eCommerce inherently more competitive than other retail. Perfume.com has many current and potential competitors including specialized online fragrance retailers, other eCommerce retailers selling a wide variety of products including fragrances, and traditional brick and mortar retailers with a high degree of brand awareness among consumers that have expanded into online sales such as department stores and specialty health and beauty stores. Many of our current competitors have greater resources, more customers, longer operating histories and greater brand recognition. They may secure better terms from suppliers, have more efficient distribution capability, and devote more resources to technology, fulfillment and marketing. Increased competition may reduce our sales and profits.

NEW ROOT DOMAIN NAMES MAY HAVE THE EFFECT OF ALLOWING THE ENTRANCE OF NEW COMPETITORS AT LIMITED COST, WHICH MAY REDUCE THE VALUE OF OUR DOMAIN NAME ASSETS.

The Internet Corporation for Assigned Names and Numbers (“ICANN”) has introduced, and has proposed the introduction of, additional new domain name suffixes, which may be as or more attractive than the “.com” domain name suffix. New root domain names may have the effect of allowing the entrance of new competitors at limited cost, which may further reduce the value of our domain name assets. We do not presently intend to acquire domain names using newly authorized root domain names to match our existing domain names, although we have certain .cn (China) root domain names to complement our growth strategy. ICANN regularly develops new domain name suffixes that will have the result of making a number of domain names available in different formats, many of which may be more attractive than the formats held by us.

FAILURE TO MANAGE GROWTH EFFECTIVELY COULD ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

We seek to develop a portfolio of operating businesses either by ourselves or by entering into arrangements with businesses that operate in the product or service categories that are described by our domain name assets. The success of our future operating activities will depend upon our ability to expand our support system to meet the demands of our growing business. Any failure by our management to effectively anticipate, implement, and manage changes required to sustain our growth would have a material adverse effect on our business, financial condition, and results of operations. We cannot assure you that we will be able to successfully operate acquired businesses, become profitable in the future, or effectively manage any other change.

THE LOSS OF CERTAIN KEY PERSONNEL COULD SIGNIFICANTLY HARM OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITON.

Our performance is substantially dependent upon the services of our executive officers and other key employees, as well as on our ability to recruit, retain, and motivate other officers and key employees. Competition for qualified personnel is intense and there are a limited number of people with knowledge of and experience in the ownership, development, and management of websites and internet domain names. The loss of services of any of our officers or key employees, or our inability to hire and retain a sufficient number of qualified employees, will harm our business. Specifically, the loss of Mr. Hampson, our Chief Executive Officer and Chairman, Mr. Melville, our President and Chief Corporate Development Officer, and Chantal Iorio, our Vice President Finance, would be detrimental. We have employment agreements with Mr. Hampson, Mr. Melville and Ms. Iorio that provide for their continued service to us until June 1, 2012, January 1, 2013 and January 7, 2013 respectively.

WE MAY BE UNABLE TO REALIZE VALUE FROM THE ACQUISITIONS WE HAVE MADE OR OTHERS WHICH WE MAY POSSIBLY UNDERTAKE WHICH COULD INCREASE OUR COSTS OR LIABILITIES OR BE DISRUPTIVE. SUCH ACQUISITIONS COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

We entered into an Agreement and Plan of Merger to acquire Entity, Inc. (known as “Auctomatic”) for the primary purpose of employing its founders who we believe will enable us to execute on our strategy of building successful websites in various commerce segments. Other than that acquisition, we do not currently have any commitments, agreements or understandings to acquire any specific businesses or other material operations but we will consider acquisitions in the future. We may not be able to locate suitable acquisition candidates at prices that we consider appropriate or to finance acquisitions on terms that are satisfactory to us. We may not be able to successfully integrate the work of the Auctomatic development team into our existing personnel groups over time. If we do identify other appropriate acquisition candidates, we may not be able to successfully negotiate the terms of an acquisition, finance the acquisition or, if the acquisition occurs, integrate the acquired business into our existing business. Negotiations of potential acquisitions and the integration of acquired business operations could disrupt our business by diverting management away from day-to-day operations. Acquisitions of businesses or other material operations may require additional debt or equity financing, resulting in additional leverage or dilution of ownership. The difficulties of integration may be increased by the necessity of coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. We also may not realize expected cost efficiencies or synergies. In addition, we may need to record write-downs from future impairments of intangible assets or goodwill, which could reduce our future reported earnings. If any such acquisition occurs, there can be no assurance as to the effect thereof on our business, results of operations, and financial condition.

WE ANTICIPATE RAISING ADDITIONAL CAPITAL IN THE FUTURE AND FAILURE TO RAISE SUFFICIENT CAPITAL WILL LIMIT OUR ABILITY TO OPERATE AND EXPAND OUR BUSINESS.

We will be required to raise additional funds for operations in 2009 and intend to do so primarily through the sales or leases of a few of our non-core domain names. It is possible that if we are unable to raise adequate funds from the sale of these domain names, we would have to raise additional funds through public or private financing, strategic relationships or other arrangements to carry out our business strategy and seize opportunities to make business acquisitions. We cannot be certain that any financing will be available on acceptable terms, or at all, and our failure to raise capital when needed could limit our ability to expand our business. Additional equity financing may be dilutive to the holders of our common stock, and debt financing, if available, may involve restrictive covenants. Moreover, strategic relationships, if necessary to raise additional funds, may require that we relinquish valuable rights.

OUR EXECUTIVE OFFICERS, DIRECTORS AND MAJOR SHAREHOLDERS HAVE SIGNIFICANT SHAREHOLDINGS, WHICH MAY LEAD TO CONFLICTS WITH OTHER SHAREHOLDERS OVER CORPORATE GOVERNANCE MATTERS.

Our current directors, officers and more than 5% shareholders, as a group, beneficially own approximately 21.7% of our outstanding common stock. Acting together, these shareholders would be able to significantly influence all matters that our shareholders vote upon, including the election of directors and mergers or other business combinations.

WE MAY BE SUBJECT TO RECENTLY ENACTED PRIVACY LEGISLATION AND REGULATION WHICH COULD REDUCE OUR POTENTIAL REVENUES AND PROFITABILITY.

Entities engaged in operations over the internet, particularly relating to the collection of user information, are subject to limitations on their ability to utilize such information under federal and state legislation and regulation. In 2000, the Gramm-Leach-Bliley Act required that the collection of identifiable information regarding users of financial services be subject to stringent disclosure and “opt-out” provisions. While this law and the regulations enacted by the Federal Trade Commission and others relates primarily to information relating to financial transactions and financial institutions, the broad definitions of those terms may make the businesses entered into by the Company and its strategic partners subject to the provisions of the Act, which may, in turn, increase the cost of doing business and reduce our revenues. Similarly, the Children On-line Privacy and Protection Act (“COPPA”) imposes strict limitations on the ability of internet ventures to collect information from minors. The impact of COPPA may be to increase the cost of doing business on the internet and reduce potential revenue sources. We may also be impacted by the USA Patriot Act, which requires certain companies to collect and provide information to United States governmental authorities. A number of state governments have also proposed or enacted privacy legislation that reflects or, in some cases, extends the limitations imposed by the Gramm-Leach-Bliley Act and COPPA. These laws may further impact the cost of doing business on the internet.

ANY ATTEMPT OF FEDERAL OR STATE GOVERNMENT TO TAX INTERNET TRANSACTIONS COULD CREATE UNCERTAINTY IN OUR ABILITY TO COMPLY WITH VARYING, AND POTENTIALLY CONTRADICTORY, REQUIREMENTS WHICH COULD NEGATIVELY IMPACT OUR BUSINESS, RESULTS OF OPERATIONS, AND FINANCIAL CONDITION.

Currently, the sale of goods and services on the internet is not subject to a uniform system of taxation. A number of states, as well as the federal government, have considered enacting legislation that would subject internet transactions to sales, use or other taxes. Because there are a variety of jurisdictions considering such actions, any attempt to tax internet transactions could create uncertainty in the ability of internet-based companies to comply with varying, and potentially contradictory, requirements. We cannot predict whether any of the presently proposed schemes will be adopted. We cannot predict the effect, if any, that the adoption of such proposed schemes would have on our business with certainty; however, they are likely to have a negative impact on our business, results of operations or financial condition.

LAWS MAY BE ADOPTED IN THE FUTURE REGULATING COMMUNICATIONS AND COMMERCE ON THE INTERNET WHICH COULD HAVE A NEGATIVE IMPACT UPON OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

There are currently few laws or regulations that specifically regulate communications, access to, or commerce on the internet. Governing bodies have, and may continue to, adopt laws and regulations in the future that address issues such as user privacy, pricing and the characteristics and quality of products and services offered over the Internet. For example, the Telecommunications Act of 1996 sought to prohibit transmitting various types of information and content over the internet. Several telecommunications companies have petitioned the Federal Communications Commission to regulate internet service providers and on-line service providers in a manner similar to long distance telephone carriers and to impose access fees on those companies. This could increase the cost of transmitting data over the internet. Moreover, it may take years to determine the extent to which existing laws relating to issues such as intellectual property ownership, libel and personal privacy are applicable to the internet. Any new laws or regulations relating to the internet or any new interpretations of existing laws could have a negative impact on our business and add additional costs to doing business on the internet. Currently we have no significant expenses associated with legal or regulatory compliance.

WE MAY BE EXPOSED TO LIABILITY FOR INFRINGING INTELLECTUAL PROPERTY RIGHTS OF OTHER COMPANIES WHICH COULD RESULT IN SUBSTANIAL COSTS TO US IN THE DEFENSE OF PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT SUITS.

Our success will, in part, depend on our ability to operate without infringing on the proprietary rights of others. Although we have conducted searches and are not aware of any patents, trademarks or copyrights upon which our domain names or their use might infringe, and the majority of our portfolio of domain names is generic in nature, we cannot be certain that infringement has not or will not occur. We could incur substantial costs, in addition to the great amount of time lost, in defending any patent, copyright or trademark infringement suits or in asserting any patent, copyright or trademark rights, in a suit with another party.

Risks Relating to Ownership of Our Securities

OUR COMMON STOCK IS CONSIDERED A “PENNY STOCK”. THE APPLICATION OF THE “PENNY STOCK” RULES TO OUR COMMON STOCK COULD LIMIT THE TRADING AND LIQUIDITY OF THE COMMON STOCK, ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK AND INCREASE THE TRANSACTION COSTS TO SELL THOSE SHARES.

Our common stock is a “low-priced” security or “penny stock” under rules promulgated under the Securities Exchange Act of 1934, as amended. In accordance with these rules, broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document which describes the risks associated with such stocks, the broker-dealer’s duties in selling the stock, the customer’s rights and remedies and certain market and other information. Furthermore, the broker-dealer must make a suitability determination approving the customer for low-priced stock transactions based on the customer’s financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing to the customer, obtain specific written consent from the customer, and provide monthly account statements to the customer. The effect of these restrictions will likely decrease the willingness of broker-dealers to make a market in our common stock, will decrease liquidity of our common stock and will increase transaction costs for sales and purchases of our common stock as compared to other securities.

THE STOCK MARKET IN GENERAL HAS EXPERIENCED VOLATILITY THAT OFTEN HAS BEEN UNRELATED TO THE OPERATING PERFORMANCE OF LISTED COMPANIES. THESE BROAD FLUCTUATIONS MAY BE THE RESULT OF UNSCRUPULOUS PRACTICES THAT MAY ADVERSELY AFFECT THE PRICE OF OUR STOCK, REGARDLESS OF OUR OPERATING PERFORMANCE.

Shareholders should be aware that, according to SEC Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these patterns or practices could increase the volatility of our share price.

WE DO NOT EXPECT TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE, AND WE MAY NEVER PAY DIVIDENDS . INVESTORS SEEKING CASH DIVIDENDS SHOULD NOT PURCHASE OUR COMMON STOCK.

We currently intend to retain any future earnings to support the development of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. In addition, our ability to pay dividends on our common stock may be limited by Nevada state law. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common stock.

LIMITATIONS ON DIRECTOR AND OFFICER LIABILITY AND OUR INDEMNIFICATION OF OFFICERS AND DIRECTORS MAY DISCOURAGE SHAREHOLDERS FROM BRINGING SUIT AGAINST A DIRECTOR.

Our Articles of Incorporation and Bylaws provide, with certain exceptions as permitted by governing Nevada law, that a director or officer shall not be personally liable to us or our shareholders for breach of fiduciary duty as a director, except for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or unlawful payments of dividends. These provisions may discourage shareholders from bringing suit against a director for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by shareholders on our behalf against a director. In addition, our Articles of Incorporation and Bylaws provide for mandatory indemnification of directors and officers to the fullest extent permitted by Nevada law.

FUTURE SALES OF OUR COMMON STOCK COULD PUT DOWNWARD SELLING PRESSURE ON OUR COMMON STOCK, AND ADVERSELY AFFECT THE PER SHARE PRICE. THERE IS A RISK THAT THIS DOWNWARD PRESSURE MAY MAKE IT IMPOSSIBLE FOR AN INVESTOR TO SELL SHARE OF COMMON STOCK AT ANY REASONABLE PRICE, IF AT ALL.

Future sales of substantial amounts of our common stock in the public market or the perception that such sales could occur, could put downward selling pressure on our common stock and adversely affect its market price.

THE OVER THE COUNTER BULLETIN BOARD IS A QUOTATION SYSTEM, NOT AN ISSUER LISTING SERVICE, MARKET OR EXCHANGE. THEREFORE, BUYING AND SELLING STOCK ON THE OTC BULLETIN BOARD IS NOT AS EFFICIENT AS BUYING AND SELLING STOCK THROUGH AN EXCHANGE. AS A RESULT, IT MAY BE DIFFICULT FOR YOU TO SELL YOUR COMMON STOCK OR YOU MAY NOT BE ABLE TO SELL YOUR COMMON STOCK FOR AN OPTIMUM TRADING PRICE.

The Over the Counter Bulletin Board (the “OTC BB”) is a regulated quotation service that displays real-time quotes, last sale prices and volume limitations in over-the-counter securities. Because trades and quotations on the OTC Bulletin Board involve a manual process, the market information for such securities cannot be guaranteed. In addition, quote information, or even firm quotes, may not be available. The manual execution process may delay order processing and intervening price fluctuations may result in the failure of a limit order to execute or the execution of a market order at a significantly different price. Execution of trades, execution reporting and the delivery of legal trade confirmations may be delayed significantly. Consequently, one may not be able to sell shares of our common stock at the optimum trading prices.

When fewer shares of a security are being traded on the OTC Bulletin Board, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information. Lower trading volumes in a security may result in a lower likelihood of an individual’s orders being executed, and current prices may differ significantly from the price one was quoted by the OTC Bulletin Board at the time of the order entry. Orders for OTC Bulletin Board securities may be canceled or edited like orders for other securities. All requests to change or cancel an order must be submitted to, received and processed by the OTC Bulletin Board. Due to the manual order processing involved in handling OTC Bulletin Board trades, order processing and reporting may be delayed, and an individual may not be able to cancel or edit his order. Consequently, one may not be able to sell shares of common stock at the optimum trading prices.

The dealer’s spread (the difference between the bid and ask prices) may be large and may result in substantial losses to the seller of securities on the OTC Bulletin Board if the common stock or other security must be sold immediately. Further, purchasers of securities may incur an immediate “paper” loss due to the price spread. Moreover, dealers trading on the OTC Bulletin Board may not have a bid price for securities bought and sold through the OTC Bulletin Board. Due to the foregoing, demand for securities that are traded through the OTC Bulletin Board may be decreased or eliminated.

WE EXPECT VOLATILITY IN THE PRICE OF OUR COMMON STOCK, WHICH MAY SUBJECT US TO SECURITIES LITIGATION RESULTING IN SUBSTANTIAL COSTS AND LIABILITIES AND DIVERTING MANAGEMENT’S ATTENTION AND RESOURCES.

The market for our common stock may be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may in the future be a target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. On an on-going basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

You should read the following discussion of our financial condition and results of operations together with our consolidated financial statements and the notes to our consolidated financial statements included elsewhere in this report.

Restatement of Financial Statements

On June 18, 2009 we were advised by Ernst & Young, our independent registered public accounting firm, that the audit opinion dated March 24, 2009 on our December 31, 2008 consolidated financial statements (the “Original Financial Statements”) could no longer be relied upon. We were further advised by Ernst & Young that there were errors in the Original Financial Statements. Based on the foregoing, C. Geoffrey Hampson, our Chief Executive Officer and Chief Financial Officer, concluded that the Original Financial Statements should no longer be relied upon. These errors, which are described below, affected opening balances as at December 31, 2007 and the financial position, results of operations and cash flows for the years ended December 31, 2007 and 2008. Please also see Note 2 to our restated financial statements for the fiscal year ended December 31, 2008. The effect of the restatement on the Company’s unaudited quarterly financial information for the 2008 quarters is presented in Note 21 to the consolidated financial statements.

A. Deferred income tax liability related to indefinite life intangible assets:

The Company’s intangible assets, comprised of its domain names, have book values in excess of their tax values. The Original Financial Statements considered the taxable temporary differences associated with these indefinite life intangible assets in reducing the valuation allowance associated with loss carryforwards. This was an incorrect application of GAAP. A deferred tax liability should have been recognized for these taxable temporary differences. Correction of this error resulted in the recognition of a deferred tax liability of $206,370, $246,759, and $254,984 as at December 31, 2008, December 31, 2007, and January 1, 2007 respectively, and deferred income tax recoveries of $40,389 and $8,225 in the years ended December 31, 2008 and 2007, respectively.

B. Non-Controlling Interest:

The Company discovered an error in its continuity of non-controlling interest in our subsidiaries as at January 1, 2007, resulting in a $100,676 increase to the opening non-controlling interest liability and deficit.

The Company also determined that it should have recorded $66,692 of goodwill and an increase to non-controlling interest liability associated with our exchange of $3,000,000 of amounts due from our subsidiary for additional common stock in 2008. See Note 5 to our consolidated financial statements.

Prior to recognizing the non-controlling interest liabilities as described in the preceding two paragraphs, the non-controlling interest’s share of subsidiary losses in 2008 and 2007 was limited to the non-controlling interest liability. As a consequence of the above increases to non-controlling interest liabilities, the non-controlling interest’s share in subsidiary losses was increased by $75,748 and $91,890 in the years ended December 31, 2008 and 2007, respectively.

C. Management Compensation:

(i) The December 31, 2007 financial statements did not accrue $91,423 for two CDN$250,000 special bonuses to be paid on October 1, 2008 and October 1, 2009 to our former President and Chief Operating Officer pursuant to his employment agreement. These special bonuses were not discretionary, but would only be paid if he remained employed as an officer of the Company on the dates payable. On February 4, 2009, he resigned as our President and Chief Operating Officer and employee, effective January 31, 2009. There was no effect to the December 31, 2008 financial statements.

(ii) The December 31, 2008 financial statements did not accrue $119,045 for two CDN$100,000 special bonuses to be paid on January 1, 2009 and January 1, 2010 to our current President and Chief Corporate Development Officer pursuant to his employment agreement. These special bonuses are not discretionary, but will only be paid if he remains employed as an officer of the Company on the dates payable.

D. Estimated life of stock options:

The Company originally estimated the life of its stock options as equal to the vesting period for these options, 3 years. The estimated life should have been 3.375 years, resulting in decreases of $118,893 and $18,971 to our stock-based compensation expense in the years ended December 31, 2008 and 2007, respectively.

E. Other

(i) Expense accruals

The Company discovered an accrual and cutoff error in its recorded accounting fees, resulting in an overaccrual of accounts payable and accounting expense (included in Corporate General and Administrative expenses) of $19,521 and $63,750 in the years ended December 31, 2008 and 2007, respectively.

(ii) Gain on sale of domain name

The Company failed to record website development costs attributable to a domain name sold in 2008, reducing website development costs and gain on sale of domain names by $37,408 in the year ended December 31, 2008.

(iii) Miscellaneous Income

The Company discovered an immaterial error in miscellaneous income relating to periods prior to January 1, 2007, resulting in a $35,810 increase to opening deficit at January 1, 2007.

F. Classification of warrants issued in November 2008 private placement:

In November 2008, the Company raised $1,057,775 of cash by selling 1,627,344 units consisting of one share of the Company’s common stock and two warrants, each for the purchase of a half share of common stock. The offering price was $0.65 per unit. The estimated fair value of the warrants was $157,895 and was presented as equity in the Original Financial Statements. The warrants contained provisions which could require their redemption in cash in certain circumstances which may not all be within the Company’s control. The fair value of the warrants therefore should have been recorded as a liability, with future changes to fair value reported as either income or expense in the period in which the change in fair value occurs. There were no changes to the fair value of the warrants between the November 2008 issue date and December 31, 2008.

G. Shares issued in connection with the merger with Auctomatic:

(i) Valuation of shares issued as purchase consideration

The Auctomatic merger closed on May 22, 2008. The original estimate of the fair value of the share purchase consideration attributable to the acquisition was based on the trading value of the shares around March 25, 2008. However, the Merger Agreement had an adjustment provision regarding the number of shares to be issued, such that the shares should have been valued with reference to the May 22, 2008 closing date as opposed to the announcement date on March 25, 2008. Using the average share price around the closing date, an additional $110,746 should have been recorded as additional paid-in capital and goodwill.

(ii) Shares issued to Auctomatic founders

As part of the merger, the Company agreed to distribute 413,604 shares of its common stock payable on the first, second, and third anniversaries of the Closing Date (the “Distribution Date”) to the Auctomatic founders subject to their continuing employment with the Company or a subsidiary on each Distribution Date. These shares which were not accounted for in the Auctomatic purchase, also were not properly accounted for as compensation to the Auctomatic founders for their continued employment with the Company. The related stock-based compensation expense that should have been recorded in 2008 is $170,065.

H. Financial Statement Classification of Amounts Payable to the BCCI and IPL:

In order to provide clarity, we also classified separately on our consolidated balance sheets and consolidated statements of operations the $1,000,000 payable and expensed during the year ended December 31, 2008 to the BCCI and IPL.

I. Tax Impact:

None of the above adjustments gave rise to an increase or decrease in the Company’s tax position.

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated balance sheets as of December 31, 2008:

December 31, 2008	Reference		As previously reported			Restatement adjustment			As restated
ASSETS
Current
Cash and cash equivalents			$	1,832,520		$	-		$	1,832,520
Accounts receivable (net of allowance for doubtful accounts of nil)				93,582			-			93,582
Prepaid expenses and deposits				109,543			-			109,543
Inventory				74,082			-			74,082
Current portion of receivable from sales-type lease				23,423			-			23,423
Total current assets				2,133,150			-			2,133,150

Long-term portion of receivable from sales-type lease				23,423			-			23,423
Deferred acquisition costs				-			-			-
Property & equipment				1,042,851			-			1,042,851
Website development costs	E(ii)			392,799			(37,408	)		355,391
Intangible assets				1,587,463			-			1,587,463
Goodwill	B, G(i)			2,428,602			177,438			2,606,040
Total Assets			$	7,608,288		$	140,030		$	7,748,318

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	E(i), H		$	4,131,264		$	(1,083,271	)	$	3,047,993
Amounts payable to the BCCI and IPL	H			-			1,000,000			1,000,000
Bonuses payable	C(ii)			235,650			119,045			354,695
Due to shareholders of Auctomatic				789,799			-			789,799
Deferred revenue				120,456			-			120,456
Current portion of deferred lease inducements				20,138			-			20,138
Total current liabilities				5,297,307			35,774			5,333,081

Non-controlling interest				-			-			-
Deferred income tax		A		-			206,370			206,370
Warrants		F		-			157,895			157,895
Deferred lease inducements				55,380			-			55,380
Total Liabilities				5,352,687			400,039			5,752,726

STOCKHOLDERS' EQUITY
Common Stock				14,855			-			14,855
Additional paid-in capital				14,772,880			(14,948	)		14,757,932
Accumulated deficit				(12,532,134	)		(245,061	)		(12,777,195	)
Total Stockholders' Equity				2,255,601			(260,009	)		1,995,592
Total Liabilities and Stockholders' Equity			$	7,608,288		$	140,030		$	7,748,318

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of operations as of December 31, 2008:

For the year ended December 31, 2008	Reference	As previously reported			Restatement adjustment			As restated

SALES		$	9,364,833		$	-		$	9,364,833

COSTS OF SALES			7,683,812			-			7,683,812

GROSS PROFIT			1,681,021			-			1,681,021

EXPENSES
Amortization and depreciation			253,141			-			253,141
Amortization of website development costs			58,640			-			58,640
Corporate general and administrative	E(i)		2,537,422			(19,521	)		2,517,901
ECommerce general and administrative			567,980			-			567,980
Management fees and employee salaries	C(i), C(ii), D, G(ii)		4,746,255			78,794			4,825,049
Corporate marketing			42,399			-			42,399
ECommerce marketing			766,393			-			766,393
Other expenses			708,804			-			708,804
Total Expenses			9,681,034			59,273			9,740,307

OTHER INCOME (EXPENSES)
Global Cricket Venture expenses	H		(2,476,255	)		1,000,000			(1,476,255	)
Global Cricket Venture payments	H		-			(1,000,000	)		(1,000,000	)
Gain from sales and sales-type lease of domain names	E(ii)		498,829			(37,408	)		461,421
Accretion interest expense			(96,700	)		-			(96,700	)
Interest and investment income			67,683			-			67,683
Non-controlling interest	B		-			75,478			75,478
Total Other Income (Expenses)			(2,006,443	)		38,070			(1,968,373	)

NET LOSS BEFORE TAXES			(10,006,456	)		(21,203	)		(10,027,659	)

TAX EXPENSE
Deferred tax recovery	A		-			(40,389	)		(40,389	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(10,006,456	)	$	19,186		$	(9,987,270	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.46	)		0.00		$	(0.46	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED			21,937,179						21,937,179

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of cash flows as of December 31, 2008:

For the year Ended December 31, 2008	Reference	As previously reported			Restatement adjustment			As restated
OPERATING ACTIVITIES
Net loss for the period		$	(10,006,456	)	$	19,186		$	(9,987,270	)
Non-cash items included in net loss:
Deferred tax recovery	A		-			(40,389	)		(40,389	)
Non-controlling interest	B		-			(75,478	)		(75,478	)
Gain from sales and sales-type lease of domain names	E(ii)		(498,829	)		37,408			(461,421	)
Accretion interest expense			96,700			-			96,700
Stock-based compensation	D, G(ii)		2,111,354			51,172			2,162,526
Warrants issued			45,500			-			45,500
Issuance of common stock for services			303,859			-			303,859
Extinguishment of debt by issuance of common stock			16,500			-			16,500
Amortization and depreciation			291,643			-			291,643
Change in operating assets and liabilities:
Accounts receivable			45,348			-			45,348
Prepaid expenses and deposits			136,631			-			136,631
Inventory			(74,082	)		-			(74,082	)
Accounts payable and accrued liabilities	E(i), H		2,615,835			(1,019,521	)		1,596,314
Amounts payable to the BCCI and IPL	H		-			1,000,000			1,000,000
Bonuses payable	C(i), C(ii)		(5,640	)		27,622			21,982
Deferred revenue			67,377			-			67,377
Cash flows used in operating activities			(4,854,260	)		-			(4,854,260	)

INVESTING ACTIVITIES
Proceeds from disposal of available for sale securities			-			-			-
Net proceeds from sale of domain name			369,041			-			369,041
Net proceeds from sales-type lease of domain name			140,540			-			140,540
Cash consideration for Auctomatic			(1,530,047	)		-			(1,530,047	)
Purchases of property & equipment			(187,532	)		-			(187,532	)
Website development costs			(451,439	)		-			(451,439	)
Cash flows used in (from) investing activities			(1,659,437	)		-			(1,659,437	)

FINANCING ACTIVITIES
Proceeds from sale of common stock (net of share issue costs)			970,972			-			970,972
Cash flows from financing activities			970,972			-			970,972

Net increase (decrease) in cash and cash equivalents			(5,542,725	)		-			(5,542,725	)

Cash and cash equivalents, beginning of year			7,375,245			-			7,375,245
Cash and cash equivalents, end of year		$	1,832,520		$	-		$	1,832,520

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated balance sheets as of December 31, 2007:

As at December 31, 2007	Reference	As previously reported			Restatement adjustment			As restated
ASSETS
Current
Cash and cash equivalents		$	7,375,245		$	-		$	7,375,245
Accounts receivable (net of allowance for doubtful accounts of nil)			138,930			-			138,930
Prepaid expenses and deposits			246,174			-			246,174
Total current assets			7,760,349			-			7,760,349

Property & equipment			175,797			-			175,797
Intangible assets			1,645,061			-			1,645,061
Total Assets		$	9,581,207		$	-		$	9,581,207

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	E(i)	$	1,515,429		$	(63,750	)	$	1,451,679
Bonuses payable	C(i)		241,290			91,423			332,713
Deferred revenue			53,079			-			53,079
Current portion of deferred lease inducements			20,138			-			20,138
Total current liabilities			1,829,936			27,673			2,113,154
									-
Non-controlling interest	B		-			8,786			8,786
Deferred income tax	A					246,759			246,759
Deferred lease inducements			75,518			-			75,518
Total Liabilities			1,905,454			283,218			2,188,672

STOCKHOLDERS' EQUITY
Common Stock			12,456			-			12,456
Additional paid-in capital			10,188,975			(18,971	)		10,170,004
Accumulated deficit			(2,525,678	)		(264,247	)		(2,789,925	)
Total Stockholders' Equity			7,675,753			(283,218	)		7,392,535
Total Liabilities and Stockholders' Equity		$	9,581,207		$	-		$	9,581,207

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of operations as of December 31, 2007:

Year Ended December 31, 2007	Reference		As previously reported			Restatement adjustment			As restated

SALES
Health and beauty eCommerce			$	8,092,707		$	-		$	8,092,707
Other eCommerce				485,199			-			485,199
Domain name advertising				449,613			-			449,613
Miscellaneous income	E(iii)			35,810			(35,810	)		-
Total Sales				9,063,329			(35,810	)		9,027,519

COSTS OF SALES
Health and Beauty eCommerce				6,512,292			-			6,512,292
Other eCommerce				509,181			-			509,181
Total Costs of Sales				7,021,473			-			7,021,473

GROSS PROFIT				2,041,856			(35,810	)		2,006,046

EXPENSES
Amortization and depreciation				29,169			-			29,169
Corporate general and administrative		E(i)		686,921			(63,750	)		623,171
ECommerce general and administrative				304,212			-			304,212
Management fees and employee salaries		C(i), D		1,981,051			72,452			2,053,503
ECommerce marketing				817,101			-			817,101
Other expenses				637,730			-			637,730
Total Expenses				4,456,184			8,702			4,464,886

OTHER INCOME (EXPENSES)
Interest and investment income				119,574			-			119,574
Gain on disposal of subsidiary of Frequenttraveler.com Inc.				276,805			-			276,805
Non-controlling interest		B		-			91,890			91,890
Total Other Income (Expenses)				396,379			91,890			488,269

NET LOSS AND COMPREHENSIVE LOSS BEFORE TAXES				(2,017,949	)		47,378			(1,970,571	)

TAX EXPENSE
Deferred tax recovery		A		-			(8,225	)		(8,225	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD			$	(2,017,949	)	$	55,603		$	(1,962,346	)

BASIC AND DILUTED LOSS PER SHARE			$	(0.11	)	$	0.00		$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED				19,070,236						19,070,236

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of cash flows as of December 31, 2007:

For the year ended December 31, 2007	Reference	As previously reported			Restatement adjustment			As restated
OPERATING ACTIVITIES
Net loss for the period		$	(2,017,949	)	$	55,603		$	(1,962,346	)
Non-cash items included in net loss:
Deferred tax recovery	A		-			(8,225	)		(8,225	)
Non-controlling interest	B		-			(91,890	)		(91,890	)
Stock-based compensation	D		428,028			(18,971	)		409,057
Amortization and depreciation			24,135			-			24,135
Issuance of common stock for bonuses			59,078			-			59,078
Change in operating assets and liabilities:
Accounts receivable	E(iii)		(117,724	)		35,810			(81,914	)
Prepaid expenses and deposits			(246,174	)		-			(246,174	)
Accounts payable and accrued liabilities	E(i)		523,574			(63,750	)		459,824
Bonuses payable	C(i)		241,290			91,423			332,713
Deferred revenue			53,079			-			53,079
Deferred lease inducements			100,690			-			100,690
Cash flows used in operating activities			(951,973	)		-			(951,973	)

INVESTING ACTIVITIES
Proceeds from disposal of available for sale securities			261,912			-			261,912
Purchases of property & equipment			(159,934	)		-			(159,934	)
Cash flows used in (from) investing activities			101,978			-			101,978

FINANCING ACTIVITIES
Proceeds from restricted cash			20,000			-			20,000
Proceeds from sale of common stock (net of share issue costs)			6,099,900			-			6,099,900
Cash flows from financing activities			6,119,900			-			6,119,900

Net increase (decrease) in cash and cash equivalents			5,269,905			-			5,269,905

Cash and cash equivalents, beginning of year			2,105,340			-			2,105,340
Cash and cash equivalents, end of year		$	7,375,245		$	-		$	7,375,245

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of stockholders’ equity as of December 31, 2008 and December 31, 2007:

		As previously reported
		Common stock					Additional Paid-in Capital			Accumulated Deficit			Total			Restatement Adjustment			As Restated Total
	Reference	Number of Shares			Amount
Balance, December 31, 2006			17,836,339		$	8,846	$	3,605,579		$	(507,729	)	$	3,106,696		$	-		$	3,106,696
Adjustment to opening accumulated deficit	A, B, E(iii)		-			-		-			-			-			(319,850	)		(319,850	)
Balance, December 31, 2006			17,836,339			8,846		3,605,579			(507,729	)		3,106,696			(319,850	)		2,786,846
Issuance of 60,284 common shares at $0.98 per share in lieu of accrued bonuses to officers			60,284			60		59,018						59,078			-			59,078
Issuance of 1,000,000 common shares at $1.00 per share to CEO			1,000,000			1,000		999,000						1,000,000			-			1,000,000
Private Placement of 2,550,000 common shares at $2.00 per share			2,550,000			2,550		5,097,450						5,100,000			-			5,100,000
Share issue costs			-					(100	)					(100	)		-			(100	)
Stock-based compensation	D		-					428,028						428,028			(18,971	)		409,057
Net loss and comprehensive loss	A, B, C(i), D, E(i), E(iii)		-								(2,017,949	)		(2,017,949	)		55,603			(1,962,346	)
Balance, December 31, 2007			21,446,623			12,456		10,188,975			(2,525,678	)		7,675,753			(283,218	)		7,392,535
Stock-based compensation	D, G(ii)		-			-		2,111,354						2,111,354			51,172			2,162,526
Issuance of 586,403 common shares per the merger agreement with Automatic	G(i)		586,403			586		1,137,533						1,138,119			110,746			1,248,865
Issuance of 33,000 common shares to investor relations firm			33,000			33		85,649						85,682			-			85,682
Issuance of 120,000 common shares to investor relations firm			120,000			120		218,057						218,177			-			218,177
Issuance of 50,000 warrants to investor relations firm			-			-		45,500						45,500			-			45,500
Cancellation of 300,000 common shares not distributed			(300,000	)		-		-						-			-			-
Private Placement of 1,627,344 units at $0.65 per share	F		1,627,344			1,627		1,056,148						1,057,775			(157,895	)		899,880
Share issue costs			-			-		(86,803	)					(86,803	)		-			(86,803	)
Extinguishment of accounts payable			33,000			33		16,467						16,500			-			16,500
Net loss and comprehensive loss	A, B, C(i), C(ii), D, E(i), E(ii), G(ii)										(10,006,456	)		(10,006,456	)		19,186			(9,987,270	)
Balance, December 31, 2008			23,546,370		$	14,855	$	14,772,880		$	(12,532,134	)	$	2,255,601		$	(260,009	)	$	1,995,592

Overview

We build consumer internet experiences around our large portfolio of domain names. We have developed content or commerce experiences across our core domain names. In addition, we own hundreds of non-core domain names that we may choose to develop, lease or sell in the future to raise funds in a non-dilutive manner. We generate revenues from this portfolio in two different ways; through the online sales of products (eCommerce) and through the sale of advertising. Almost all of our revenues earned in 2008 were generated from our main Health and Beauty website, Perfume.com. Through this website, we sell discount, brand name fragrances, skin care, and hair care products directly to consumers. We also generate revenues by selling online advertising space to advertisers or in partnership with third party advertising networks. However, in 2008, advertising accounted for less than 1% of total revenues.

In 2008, we began shipping our Perfume.com products to selected international markets. Until then, we shipped only to delivery addresses located in the United States. However, sales of products shipped to non-U.S. locations remain immaterial for the 2008 fiscal year and therefore are not disclosed separately.

The recent downturn in the global economy has significantly impacted the U.S. economy and consumer confidence. It remains a challenge for all retailers, including online retailers, to achieve sales growth with adequate gross margins. As a result of our dependence on the U.S. marketplace for sales, it is likely that the current recession will cause a negative impact to our results for at least the short-term.

We have also experienced significant challenges in raising capital through debt or share issuances. Financing opportunities have become more expensive and difficult to find. The steep decrease in our share price would cause any large financing through share issuance to significantly dilute our current shareholdings. As a result, management has decided to actively pursue the sale of some non-core domain names to raise much needed funds in order to avoid such dilution. We sold one domain name at the 2008 fiscal year end for CDN$500,000, and through March 31, 2009, we sold an additional two domain names for $1.65 million. We believe these sales are a testament to the inherent value of our domain name assets, and together with other cost-cutting measures, the proceeds will help meet our working capital needs and management’s strategy to achieve the goal of cash flow positive operations by the end of 2009.

In 2008, we had a significant net loss and significant cash outflows. As noted above, in late 2008 and early 2009, we instituted cost-cutting measures to better position our business in the coming years. Some of these measures included layoffs of staff, including our former President and COO, and the termination of consulting and investor relations contracts. In addition, our CEO has agreed to defer all of his salary indefinitely.

Annual Financial Data

The following selected financial data was derived from the Company’s audited consolidated financial statements as filed in this report. The information set forth below should be read in conjunction with the Company’s financial statements and related notes included elsewhere in this report.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2008 and 2007, (as restated)

(Expressed in U.S. dollars)

	2008			2007

SALES
Health and beauty eCommerce	$	9,271,237		$	8,092,707
Other eCommerce		455			485,199
Domain name advertising		93,141			449,613
Miscellaneous income		-			-
Total Sales		9,364,833			9,027,519

COSTS OF SALES
Health and Beauty eCommerce		7,683,432			6,512,292
Other eCommerce		380			509,181
Total Costs of Sales		7,683,812			7,021,473

GROSS PROFIT		1,681,021			2,006.046

EXPENSES
Amortization and depreciation		253,141			29,169
Amortization of website development costs		58,640			-
Corporate general and administrative		2,517,901			623,171
ECommerce general and administrative		567,980			304,212
Management fees and employee salaries		4,825,049			2,053,503
Corporate marketing		42,399			-
ECommerce marketing		766,393			817,101
Other expenses		708,804			637,730
Total Expenses		9,740,307			4,464,886

OTHER INCOME (EXPENSES)
Global Cricket Venture expenses		(1,476,255	)		-
Global Cricket Venture payments		(1,000,000	)
Gain from sales and sales-type lease of domain names		461,421			-
Accretion interest expense		(96,700	)		-
Interest and investment income		67,683			119,574
Gain on disposal of subsidiary of Frequenttraveler.com Inc.		-			276,805
Non-controlling interest		75,478			91,890

NET LOSS BEFORE TAXES		(10,027,659	)		(1,970,571	)

TAXES
Deferred tax recovery		(40,389	)		(8,225	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD	$	(9,987,270	)	$	(1,962,346	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.46	)	$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		21,937,179			19,070,236

Results of Operations

Sales and Costs of Sales

Combined gross sales totalled $9,364,833 for the year ended December 31, 2008 as compared to $9,027,519 during the year ended December 31, 2007, a 3.7% overall increase. The 2007 total included $480,591 in sales related to the operations of FT, also referred to as FrequentTraveller, which we disposed of in November 2007. Without these revenues, 2007 total revenues were $8,546,928 and our combined gross sales in 2008 actually grew by over 9.5%. Health and Beauty eCommerce product sales represented 99.0% of total revenues in 2008, compared to 94.7% of total revenues in 2007.

During the year ended December 31, 2008, costs of sales overall increased to $7,683,812 as compared to costs of sales of $7,021,473 for the year ended December 31, 2007. The amounts incurred during the 2007 fiscal year included $506,588 of costs of sales relating to FT’s operations, therefore total costs of sales incurred during the 2007 fiscal year without this amount were $6,514,885. This resulted in an increase in costs of sales of 17.9% which is directly attributable to an increase in costs of sales with respect to the growth of our eCommerce business as discussed below.

For the 2008 fiscal year, gross margin was 18.0% compared to an overall gross margin of 22.2% in 2007. These decreases are due to a material decrease in online advertising revenues which have very high gross margins, as well as an increase in our efforts to generate significant sales growth by providing more aggressive discounts, coupons and promotions such as free shipping to customers.

Total revenues in Q4 of 2008 of $3,622,036 dropped by 7.8% due to a large decrease in our advertising revenues and miscellaneous income in this quarter compared to Q4 of 2007, without amounts relating to FT’s operations. Overall, Health and Beauty eCommerce product sales represented 99.5% of total revenues in Q4 of 2008, compared to 94.4% of total revenues in Q4 of 2007.

Costs of sales were $3,012,434 in Q4 of 2008 compared to $3,087,927 in Q4 of 2007, a decrease of 2.4% without costs of sales relating to FT’s operations. This decrease in costs of sales was primarily due to the slight decrease in sales in the quarter in our eCommerce business, as well as the inclusion of inventory on our balance sheet at the end of the fiscal year to reflect inventories in transit, which had been immaterial at the end of the 2007 fiscal year. Overall gross margin in Q4 of 2008 was 16.8% compared to a gross margin of 20.6% during Q4 of 2007, without taking into account the results from FT’s operations.

Health and Beauty (H&B) eCommerce Sales

Our Health and Beauty eCommerce sales result from the sale of fragrances, designer skin care and hair care products to customers at Perfume.com and Body.com. ECommerce monetization of Body.com ended in early 2008. Perfume.com accounted for nearly all of our eCommerce sales in 2007 and 2008 and we expect that this will continue in the short term.

The second half of 2008 presented great challenges for all retailers including eCommerce, due to the worldwide economic downturn. Despite these challenges, we were able to achieve significant revenue growth in our H&B eCommerce business compared to 2007. In addition to the decrease in overall demand, the holiday shopping season was compressed in 2008. This season begins around the U.S. Thanksgiving holiday, which was later in 2008 than in 2007, resulting in 5 fewer holiday shopping days. We believe that the continued increases in sales we have experienced in each quarter demonstrate the strong potential of this business segment. There is no certainty, however, that such results can be continued into the foreseeable future. Moreover, it is possible that due to the continued decline in economic conditions, there may be a further decrease in consumer spending on discretionary items. Such a decrease will likely adversely affect the revenues from Perfume.com over the short-term. All figures below exclude any results from Frequent Traveler’s operations during the 2007 fiscal year.

In a press release dated January 2, 2009, ComScore, Inc., a marketing research company that measures use of the Internet, indicated that eCommerce sales declined during the 2008 holiday season as compared to the 2007 holiday season, defined as November 1 st to December 24 th of each year. According to their research, online sales of "flowers, greetings and gifts", a category we believe comparable to Perfume.com’s business, declined by 7% over last year's holiday season.

In contrast to the performance of online sales trends as measured by ComScore Inc., we were able to maintain strong sales during the holiday season, resulting in relatively flat eCommerce sales from Perfume.com in Q4 of 2008 compared to Q4 of 2007.

In Q4 of 2008, the combined H&B retail sites generated sales of $3,604,003 compared to $3,705,635 in Q4 of 2007, a decrease of 2.7% year over year. This resulted in average sales of approximately $39,174 per day in Q4 of 2008 compared to $40,279 per day in Q4 of 2007. Cost of purchases and shipping totalled $3,012,606 in Q4 of 2008 compared to $3,085,334 in Q4 of 2007. This produced a gross margin of $591,397 or 16.4% in Q4 of 2008 compared to $620,301 or 16.7% in Q4 of 2007. H&B eCommerce sales in Q4 accounted for 38.9% of total 2008 annual eCommerce sales compared to 45.8% of total 2007 annual eCommerce sales.

During the fiscal year ended December 31, 2008, the combined H&B retail sites generated sales of $9,271,237 compared to $8,092,707 in 2007, or an average of $25,331 per day in 2008 compared to $22,172 per day in 2007. Costs of purchases and shipping in 2008 totalled $7,683,432 compared to $6,512,292 in 2007, resulting in gross margin of $1,587,805 or 17.1% in 2008 compared to $1,580,415 or 19.5% in 2007.

Comparable annual sales have increased by 14.6% while gross margins have decreased to 17.1% from 19.5%. This decrease in gross margin in 2008 was attributed to a significant rise in oil prices leading to increased shipping costs, as well as product discounting and free shipping promotions in 2008 to drive customer and revenue growth due to increasingly competitive market conditions. We continue to monitor our overall product offerings, discounts and promotions to increase, or at least maintain, these profit margins into 2009. While we plan to increase or maintain this profit margin, there is no certainty that such result can be achieved and sustained throughout the year or continue into the foreseeable future. We also intend to explore opportunities to introduce and implement a more robust supply chain capability which, if realized, should increase gross margins by the end of 2010.

Other eCommerce Sales

In Q1 of 2008, we ceased offering goods or services for sale on any of our websites other than Perfume.com and undertook to re-evaluate the business models around which these websites were built. As a result, these websites generated no revenue after the first quarter of the 2008 fiscal year. For the first half of 2009 we will continue to allocate our resources to the development of Perfume.com.

Not including the revenue earned from Perfume.com or from the operations of Frequent Traveler, during the 2008 fiscal year our eCommerce retail sites generated sales of $455 compared to $4,608 in 2007. Costs of sales in the 2008 fiscal year totaled $380 compared to $2,593 in 2007, resulting in gross margin of $75 or 16.5% in 2008 compared to $2,015 or 43.7% in 2007.

Annual results for the 2007 fiscal year included eCommerce service sales earned through our former subsidiary FT of $480,591 and costs of sales of $506,588, resulting in a negative gross margin of 5.4%. Effective November 12, 2007, we terminated our relationship with FT. Up to the termination date in Q4 of 2007, FT‘s operations generated sales of $18,317 and costs of sales of $102,505. This resulted in a negative gross margin in the period of $84,188 or negative 460%. During 2007, there was no requirement to record any non-controlling interest in the share of the loss in FT.

Advertising

In Q4 of 2008, we generated advertising revenues of $18,033 compared to $180,956 in Q4 of 2007, a decrease of 90.0%. We terminated our primary advertising contract in early 2008 because its restrictive conditions limited monetization in the medium and long term. Advertising revenues have decreased every quarter as a result. In Q4 of 2008, advertising accounted for less than 1% of total revenues. This is similar to every other quarter in 2008. However in Q4 of 2007, advertising revenues accounted for 4.6% of total revenues, excluding the results from FT’s operations. Advertising revenues are expected to continue to account for a small percentage of total revenues in 2009 as we investigate new monetization strategies and realign our opportunities to increase advertising options available on our domain properties.

Overall, during the 2008 fiscal year, advertising revenues of $93,141 were generated compared to $449,613 in 2007, a decrease of 79.3%. Advertising revenue had improved in 2007 primarily due to management’s decisions to focus on search engine optimization, restructure existing relationships and pursue new relationships with advertising vendors, and redesign the main operating websites to increase their visibility. However, as a result of the high costs required to maximize the monetization of our domain names, advertising revenues dropped in 2008. Management is now pursuing new opportunities to earn additional advertising revenues, and expects these revenues to increase to approximately 3% of total revenues in the short term.

Domain Name Leases and Sales

In 2008, we entered into one agreement for a sales-type lease of one of our domain names for CDN$200,000 and one agreement for an outright sale of another domain name for CDN$500,000. The net gain on the disposal of these two domain names was USD$461,421 as disclosed in the consolidated financial statements . In 2007, there were no sales or leases of any domain names.

We have announced our intention to sell six of our non-core but highly valuable dot.com domain names from our portfolio in order to provide additional working capital in a non-dilutive manner. We engaged the services of brokers to assist us with sales of our domain names. As a result of actively marketing some of our non-core domain name assets for sale, we successfully sold one domain name in December 2008, as well as two additional domain names through March 31, 2009. We continue to evaluate any interest we receive from domain name buyers, and continue to consider acquiring certain other domain names that would complement either our advertising or eCommerce businesses.

General and Administrative (G&A) Expenses

General and administrative expenses consist of costs for general and corporate functions, including facility fees, travel, telecommunications, investor relations, insurance, merchant charges, and professional fees.

Overall, during 2008, G&A expenses of $3,085,881, or 33.0% of total revenues, were incurred compared to $927,383, or 10.3% of total revenues, in 2007, an increase of 232.8%. This total includes corporate and eCommerce related general and administrative costs. We expect these expenses to decrease as a percentage of revenue in 2009 as the eCommerce business grows and as a result of our cost cutting measures.

Corporate general and administrative expenses of $2,517,901 have increased over the 2007 expenses of $623,171 by $1,894,730, or over 300%. This was primarily due to expenses incurred for investor relations services of approximately $347,000 in cash and common stock valued at approximately $366,000, costs of $381,143 related to our M&A activities that were expensed during the year, and $283,414 in increased rent and overhead due to our new offices, increased telecommunications for new staff and website related hosting costs, and increased travel and office expenses due to increased growth and strategic initiatives. The remainder of the increase in corporate general and administrative expenses was due to increases in legal fees of $267,160 and audit and accounting fees of $208,475 due to increased corporate activity and SEC filings, as well as the purchase of additional insurance policies and increased premium costs which combined was $40,165. In total, these expenses accounted for 26.9% of total revenues in 2008 and 6.9% of total revenues in 2007. We are implementing strategies in 2009 to decrease corporate G&A costs as a percentage of revenue in the future, however there is no certainty that our attempts will be successful.

As disclosed in Item V, we anticipate that we may incur additional legal expenses to comply with new disclosure and reporting requirements mandated by the British Columbia Securities Commission for companies listed on the OTC Bulletin Board with a presence in British Columbia. These regulations were effective as of September 15, 2008.

ECommerce general and administrative costs of $567,980 have increased over the 2007 expense of $304,212 by $263,768, or 86.7%. This was primarily a result of human resources costs of approximately $105,271 relating to our Perfume.com team which have been eliminated for 2009. In 2008, there were also increased travel expenses of $57,202, internet traffic and telecommunication charges of $18,814, IT consulting of $54,337 as well as $21,704 in increased merchant fees generated on increased sales. These expenses represented 6.1% of eCommerce sales in 2008 compared to 3.8% of eCommerce sales in 2007. We believe that these expense ratios are reasonable given the increasingly competitive environment for eCommerce sales and our continued focus on growing the eCommerce business throughout 2009. We expect to maintain eCommerce general and administrative costs below 10% of eCommerce sales.

Management Fees and Employee Salaries

In 2008, we incurred $4,825,049 in management fees and staff salaries compared to $2,053,503 in 2007. However, these amounts include items such as stock based compensation expense of $2,162,526 in 2008 and $409,057 in 2007, and bonuses accrued but unpaid of $354,695 in 2008 and $332,713 in 2007. Excluding these amounts, normalized management fees were $2,307,828 in 2008, representing an increase of 75.9% over normalized management fees of $1,311,733 in 2007. The addition of a new executive management team in late 2007 and early 2008, acquiring new senior employees through the Auctomatic merger, an expansion of the IT department, and the use of various consultants in our eCommerce business to help scale revenues, all contributed to a larger expense in 2008. Normalized management fees and salaries represented 25.6% of total revenues in 2008 and 14.5% in 2007. Subsequent to the end of the 2008 fiscal year, our staffing requirements were restructured and a number of employees were laid off, including our former President and COO. After severance payments have been fully paid out, the reduced number of staff will contribute to a decrease in management fees and salaries as a percentage of revenue. We anticipate maintaining salary expense at approximately 20% of revenues.

Executive compensation in 2008 of $3,256,838 (2007 of $1,453,775) accounted for 67.5% (2007 – 70.1%) of the total management fees and employee salary expense. Excluding executive compensation, employee salaries increased by 161.5% due to the addition of personnel resources in both the H&B business and administrative support, as well as stock option grants which resulted in stock based compensation expense.

Marketing

We generate internet traffic through paid search, email and affiliate marketing. We pay marketing costs related to search and email in order to drive traffic to our various websites. We pay our affiliates sales commissions if they deliver traffic to Perfume.com that result in a successful sale. In the year ended December 31, 2008, total marketing expenses were $808,792, or 8.6% of total revenues, compared to $817,101, or 9.1% of total revenues, in 2007, a 1.0% decrease year over year.

Expenses related to corporate activity, which we classify as corporate marketing expenditures, totalled $42,399 for 2008. These expenses consisted entirely of costs related to public relations. There were no such costs in 2007.

ECommerce marketing expenses relate entirely to advertising costs incurred in our eCommerce business, particularly email advertising, search engine marketing, and affiliate marketing programs. In 2008, eCommerce marketing expenses of $766,393 decreased by 6.2% compared to $817,101 in 2007. These expenses decreased steadily during 2008 due to management’s decision to move key marketing efforts in-house, thereby eliminating agency expenses, as well as to take steps to increase the effectiveness of our search engine and email marketing campaigns for Perfume.com. We believe that customer acquisition is the key to accelerated growth, and deploying direct, measurable marketing vehicles like search, email, and affiliate marketing account for the largest part of these marketing expenditures.

In 2008 eCommerce marketing expenses were 8.3% of eCommerce sales, compared to 10.1% of eCommerce sales in 2007. This was largely due to expenses related to television advertising and internet search positioning during the 2007 holiday season, which we did not incur in 2008.

Organic search rankings for Perfume.com currently perform adequately. However, we believe when these results are complemented with targeted, paid keyword advertising at opportune times, it brings additional traffic to Perfume.com. We believe that the more strategic and measurable advertising expenditures implemented during the year were a contributing factor to increased revenues in 2008.

Marketing costs coincide with revenue growth and are expected to be in the range of 10% of gross product revenue. We have been able to maintain marketing costs below 10% of revenues while aggressively marketing our products and services.

Other Expenses

In 2008, we incurred various restructuring costs of $708,804. These included approximately $168,400 in severance payments and $25,700 in consulting fees for assistance with the transition of the new management team, both of which were paid to our former Chief Financial Officer, $317,100 in signing bonuses which were paid to our new Chief Corporate Development Officer and our new Vice President Finance, additional severance of $53,600 paid to one of our full time employees, $39,800 in costs related to changing the Company name and rebranding, $31,700 in valuation costs relating to the issuance of DHI common stock to the Company for the conversion of $3,000,000 in intercompany debt, and $27,300 in some final windup costs related to the disposition of Frequent Traveler in late 2007. This total also included $45,000 in financing costs related to our discussions with investment bankers to raise capital. Financing costs that were directly identifiable with the raising of our round of capital during the fourth quarter were charged to equity. However, the amounts included in “other expenses” are costs relating to transactions that are no longer being pursued, and therefore are no longer directly identifiable with the raising of capital and expensed during the quarter.

In 2007, we incurred costs relating to restructuring and the recruiting and relocating costs associated with attracting the new management team. These costs included a $205,183 severance payment to our former Chief Executive Officer, $30,558 in consulting fees to our former Chief Executive Officer, a $205,183 signing bonus to our President and Chief Operating Officer, and $196,806 of general legal costs associated with the preparation of employment agreements, severance agreements and stock option agreements.

Non-Controlling Interest

As a result of the restatement of the Company’s financial statements, the effect of the non-controlling interest (“NCI”) carried forward from prior years resulted in a net effect to the NCI liability at the December 31, 2007 year end of $8,786. There was a $91,890 credit relating to the non-controlling interest on the consolidated statements of operations in 2007 and $75,478 in 2008. This credit was related to the benefit received by the minority shareholders due to conversion of debt owed to the parent company by the operating subsidiary DHI, into shares of DHI common stock that occurred in the first quarter of 2008. The continued losses of DHI have decreased the NCI liability to NIL at the end of the 2008 fiscal year end.

Global Cricket Venture Expenses

The Company has incurred costs of approximately $1.47 million relating to initial performance of its obligations under the MOUs with each of the BCCI and the IPL, and establishing Global Cricket Venture with NLB. These costs are related to, but are not limited to, expenditures for business development, product development, travel, consulting, and salaries. The Company incurred no such costs during the 2007 fiscal year. An additional $1 million owing in aggregate to the BCCI and IPL for the October 1, 2008 minimum payments under the initial MOUs have also been accrued and expensed in 2008, therefore the total costs expensed for the year related to this venture are $2.47 million.

On or about October 1, 2008, the Company was scheduled to make payments to the BCCI and the IPL in the amounts of $625,000 and $375,000, respectively, in connection with Global Cricket Venture. The payments owed to the BCCI were renegotiated, although a formal amendment to the MOU had not been signed at December 31, 2008. The parties agreed that the October 1, 2008 payment would be decreased by $500,000, to $125,000, and that the payment of $750,000 that was due to be made on October 1, 2009 would be eliminated entirely. The amounts due to the IPL were not changed. Given that these renegotiated amounts had not yet been memorialized in writing, on October 1, 2008 we accrued and expensed the initial amounts owing to the BCCI of $625,000 and to the IPL of $375,000. All $2.47 million in costs were expensed during the year ended December 31, 2008 due to uncertainty regarding reimbursement of these costs by GCV.

On March 31, 2009, the Company and the BCCI jointly entered into a Termination Agreement, pursuant to which the BCCI Memorandum was terminated. On that same date, the Company, Global Cricket Venture and the BCCI, on behalf of the IPL, entered into a Novation Agreement (the “Novation”) with respect to the IPL Memorandum. Pursuant to the Novation, Global Cricket Venture was granted all of our rights, and assumed all of our obligations, under the IPL Memorandum. Global Cricket Venture also assumed the payments due to the BCCI through March 31, 2009 under the BCCI Memorandum, as they were modified.

As a result of the Novation,

Global Cricket Venture, a 50.05% owned subsidiary, rather than Live Current, is the party to the IPL Memorandum;

the term of the IPL Memorandum was modified, so that it began on April 1, 2008 and will end on December 31, 2017;

the minimum payment due on October 1, 2008 to the BCCI of $125,000, reduced from $625,000, and any other payments owed to the BCCI through March 31, 2009 were assumed by Global Cricket Venture and are to be paid on July 1, 2009. We will be fully released from these liabilities once Global Cricket Venture makes these payments;

the minimum payment due on October 1, 2008 to the IPL of $375,000, and any other payments owed to the IPL through March 31, 2009 were assumed by Global Cricket Venture and are to be paid on July 1, 2009. We have been fully released from these liabilities;

a right to terminate the IPL Memorandum due to a material breach or on the insolvency of either party was added; and

the “Minimum Annual Fee Payment Schedule” (Schedule 2 to the IPL Memorandum) was revised. The first payment of $2,250,000 is due on July 1, 2009.

In August 2009, GCV transferred and assigned to an unrelated third party (“CricketCo”) all of its rights, title, and interest in and to the original MOU with the IPL, as the original MOU was amended by the Novation Agreement that was signed on March 31, 2009. Pursuant to this agreement, CricketCo also agreed to assume and be liable for all past and future obligations and liabilities of GCV arising from the original MOU, as it was amended by the Novation. We have also agreed to sell the domain name cricket.com to a company related to CricketCo whereby we will sell the cricket.com domain name, along with the website, content, copyrights, trademarks, etc., for consideration of 4 equal payments of $250,000. The cricket.com domain name shall remain our property until all payments have been made. These two agreements will result in our full exit out of the Cricket business, pending any obligation we may have to pay to the BCCI and IPL if CricketCo fails to make the assumed payments, and with the exception of interim support services which we have agreed to provide for a period of six months. The Company cannot determine the financial impact of this transaction at this time.

Liquidity and Capital Resources

We generate revenues from (i) the sale of third-party products over the Internet; (2) "pay-per-click" advertising; (3) selling advertising on media rich websites with relevant content; and (4) the sale or lease of domain name assets. However, during the 2008 fiscal year our revenues were not adequate to support our operations. In order to conserve cash, we paid certain service providers with shares of our common stock during the year, and we continue to explore opportunities to do so in 2009 as well.

In November 2008, we also raised $1,057,775 of cash by selling 1,627,344 units consisting of one share of our common stock and two warrants, each for the purchase of a half share of common stock. The offering price was $0.65 per unit.

As at December 31, 2008, current liabilities were in excess of current assets resulting in a working capital deficiency of $3,199,931 as compared to positive working capital of $5,902,740 at the fiscal year ending December 31, 2007. During the year ended December 31, 2008, we incurred a loss of $9,987,270 and a decrease in cash of $5,542,725, compared to net loss of $1,962,346 and an increase in cash of $5,269,905 for the year ended December 31, 2007. The net loss for 2008 included incorporation and start up expenses for the Global Cricket Venture of $1,476,255, which have been expensed in the year due to uncertainty regarding reimbursement of these costs by the GCV, and another $1,000,000 in payments due to the IPL and BCCI in the period. During 2008, we increased our accumulated deficit to $12,777,195 from $2,789,925 in 2007 and have stockholders’ equity of $1,995,592, primarily due to the net loss for the year, as well as various issuances of common shares.

The decrease in cash during the 2008 fiscal year includes cash outlays that are either unusual or non-operational in nature. During the year, cash outlays included amounts paid in connection with the acquisition of Auctomatic of $1.29 million, payments relating to Global Cricket Venture expenses incurred to perform under the MOUs with BCCI, IPL and NLB of $1.1 million, and other expenditures of $709,000 relating to changing the company’s name, rebranding and restructuring the management team. Without these expenditures, cash decreased due to operations by approximately $204,000 per month.

Operating Activities

Operating activities in 2008 resulted in cash outflows of $4,854,260 after adjustments for non-cash items, the most significant of which are the stock-based compensation expensed during the year of $2,162,526, the increase in accounts payable of $1,596,314 partially due to large accruals and unpaid invoices for goods and services at the end of 2008, and $1,000,000 in amounts due to the BCCI and IPL at year end.

Operating activities in 2007 resulted in cash outflows of $951,973 after adjustments for non-cash items, the most significant of which were the stock-based compensation expensed during the year of $409,057 and the increase in accounts payable of $459,824 partially due to increased legal and audit fees that did not exist at the 2006 year end, as well as accrued bonuses of $332,713.

Investing Activities

Investing activities in 2008 generated cash outflows of $1,659,437, primarily due to cash consideration and related acquisition costs of $1,530,047 related to the Auctomatic merger. We also invested $187,532 in the purchase of property and equipment, as well as approximately $451,000 in website development as we worked towards our pre-holiday launch of Perfume.com.

Investing activities in 2007 generated cash inflows of $101,978, due to the sale of all “available for sale” securities and the purchase of approximately $160,000 of property and equipment, mostly consisting of leasehold improvements for our new office location.

Financing Activities

Financing activities in 2008 generated $970,972 of cash inflows due to the issuance of 1.6 million shares of common stock in connection with our November private placement.

Financing activities in 2007 generated $6,119,900 of cash inflows due primarily to the issuance of 1,000,000 shares of common stock to the new CEO in June 2007 and the issuance of common stock in the private offering that we undertook in September and October 2007, which raised approximately $5,100,000.

Future Operations

At the 2008 year end, we had a working capital deficiency, and for the past two fiscal years we have experienced substantial losses. We expect to continue to incur losses in the coming quarters even though costs have been reduced through lay-offs and restructuring. We may also seek to explore new business opportunities, including the partnering, building or acquisition of a distribution center or warehouse in the United States to enhance our fragrance fulfillment capability and improve gross margins. These acquisitions may require additional cash beyond what is currently available and such funds may be raised by future equity and/or debt financings, and through the sale of non-core domain name assets.

We are pursuing opportunities to increase cash flows, however there is no certainty that these opportunities will generate sufficient cash flows to support our activities in the future in view of changing market conditions. During the 2009 fiscal year, we expect to expend significant funds toward additional marketing costs, which we believe will translate into higher revenue growth, as well as to fund costs related to the Global Cricket Venture. There is no certainty that the profit margins we may generate going forward, as well as any successful raising of working capital, will be sufficient to offset the anticipated marketing costs, Global Cricket Venture costs, and other expenditures and may result in net cash outflow for the 2009 fiscal year.

We have actively curtailed some operations and growth activities in an effort to reduce costs and preserve cash on hand. We are also continuing to seek opportunities to sell selected domain names in order to address short term liquidity needs. As a result, we have entered into agreements with brokers to sell several of our non-core but highly valuable dot-com domain names from our portfolio of more than 800 domain names. One domain name was successfully sold on December 31, 2008 for CDN$500,000. Through to March 31, 2009, we sold an additional two domain names for proceeds of $1.65 million. We anticipate that further strategic sales of these domain names, if successful, will provide us with the required cash to meet our working capital needs, to fund cricket related expenditures, and to provide for general operating capital needs over the next 12 to 18 months. There can be no assurances that any future sales of domain names on terms acceptable to us will occur.

The consolidated financial statements have been prepared on a going concern basis which assumes that we will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. Our ability to continue as a going-concern is in substantial doubt as it is dependent on continued financial support from our investors, our ability to sell additional non-core domain names, our ability to raise future debt or equity financings, and the attainment of profitable operations to meet our liabilities as they become payable. The outcome of our operations and fundraising efforts is dependent in part on factors and sources beyond our direct control that cannot be predicted with certainty. Access to future debt or equity financing is not assured and we may not be able to enter into arrangements with financing sources on acceptable terms, if at all. The financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts or classification of liabilities that might be necessary should we be unable to continue as a going concern.

On or about October 1, 2008, we were scheduled to make a payment to the BCCI in the amount of $625,000 and a payment to the IPL in the amount of $375,000, in connection with the Global Cricket Venture MOUs. The payments owed to the BCCI were renegotiated, although a formal amendment to the MOU had not been signed at December 31, 2008. The parties agreed that the October 1, 2008 amount owing to the BCCI would be decreased to $125,000. In addition, the parties also agreed that the payment of $750,000 that will be due to the BCCI on October 1, 2009 would be eliminated entirely. Given that these renegotiated amounts had not yet been memorialized in writing, the original payments due to the BCCI and the IPL for the October 1, 2008 commitment have been accrued and expensed as Global Cricket Venture expenses. On March 31, 2009, the BCCI MOU was terminated and Global Cricket Venture assumed the obligations to make the payments owed to the BCCI and the IPL. These payments have not yet been made. Such payments may be subject to certain withholding or other taxes which we may be required to gross up pursuant to the terms of the MOU.

If at any time we are unable to make the required payments to the BCCI or the IPL, and no extension or renegotiation of the payment terms can be arranged, we may have to forfeit some or all of its rights to the cricket-related digital content and may be exposed to potential liability for defaulting on its payment. We cannot determine at this time the actual value of such rights, only that the loss of such rights would impact negatively upon the potential revenues from the Global Cricket Venture. In addition, if we are unable to make the required payments, we face potential claims for breach of contract, lack of performance and other damages which other parties to the MOU may seek to enforce against the Company. We do not concede that such claims would be enforceable or result in a recovery against the Company. If these events were to occur, such events would have a negative effect on our overall anticipated results of operations and performance. As noted above, in August 2009 GCV assigned the rights to the IPL MOU to CricketCo, which also assumed the liabilities owed to the BCCI and the IPL as set forth in the IPL MOU, as amended by the Novation that was signed on March 31, 2009.

We have no current plans to purchase any significant property and equipment.

Restated Quarterly Financial Data (unaudited)

As a result of the restatement of our financial statements for the fiscal year ended December 31, 2008, our quarterly results have been adjusted as disclosed in the tables below. Detailed explanations for the adjusted items in each table are included following each table.

As at March 31, 2008	Reference	As previously reported			Restatement adjustment			As restated
ASSETS
Current assets		$	5,353,567		$	-		$	5,353,567
Other assets	(i)		2,232,194			66,692			2,298,886
Total Assets		$	7,585,761		$	66,692		$	7,652,453

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	(ii), (iii)		1,351,599			215,025			1,566,624
Other Liabilities	(i), (v)		70,483			270,731			341,214
Total Liabilities			1,422,082			485,756			1,907,838

STOCKHOLDERS' EQUITY
Common Stock			12,456			-			12,456
Additional paid-in capital	(iv)		10,671,119			(57,394	)		10,613,725
Accumulated deficit	(i) to (vi)		(4,519,896	)		(361,670	)		(4,881,566	)
Total Stockholders' Equity			6,163,679			(419,064	)		5,744,615
Total Liabilities and Stockholders' Equity		$	7,585,761		$	66,692		$	7,652,453

For the three months ended March 31, 2008

Gross Profit		$	362,417		$	-		$	362,417
Total Expenses	(ii), (iii), (iv), (vi)		2,512,022			148,929			2,660,951
Total Other Income (Expenses)	(i)		155,387			51,506			206,893

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(1,994,218	)	$	(97,423	)	$	(2,091,641	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.10	)		(0.00	)	$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED			19,970,334			-			19,970,334

(i) We recorded goodwill of $66,692 in relation to the debt conversion between our subsidiary, Domain Holdings Inc., and our parent company, Live Current Media Inc. as disclosed in Note 5. There was an increase to the NCI liability during the quarter of $15,186 and a gain to the minority interest included in Other Income and Expenses of $51,506. The carry forward effect of the NCI liability from December 31, 2007 was an increase of $8,786.

(ii) We recorded as an additional liability and compensation expense during the March 31, 2008 quarter $35,315 for bonuses of CDN $100,000 each that are to be paid to our President and Chief Corporate Development Officer on January 1, 2009 and on January 1, 2010.

(iii) We recorded as an additional liability and compensation expense during the March 31, 2008 quarter $88,287 for bonuses of CDN $250,000 each that were to be paid to our former President on October 1, 2008 and on October 1, 2009. There was also a carry forward effect to bonuses payable of an increase of $91,423 from December 31, 2007.

(iv) We revised our assumptions relating to the estimated life of stock options we have granted. The revised estimated life of 3.375 years resulted in a decrease to our stock based compensation expense of $38,423 and a corresponding decrease to Additional paid-in capital during the quarter. There was also a carry forward effect to Additional paid-in capital from December 31, 2007 of a decrease of $18,971.

(v) We accrued and expensed deferred taxes relating to an estimated potential future tax liability on future gains on sales of our domain name intangible assets. The carry forward effect to Current Liabilities was an increase of $246,759, with a corresponding increase in Opening Accumulated Deficit.

(vi) We recorded additional Corporate General and Administrative expenses of $63,750 during the quarter for the accrual of audit fees that were reversed out of the year ended December 31, 2007 and recorded in the first quarter of 2008.

As at June 30, 2008		As previously reported			Restatement adjustment			As restated
ASSETS
Current assets		$	3,172,481		$	-		$	3,172,481
Other assets	(i), (ii), (iii)		5,568,070			177,438			5,745,508
Total Assets		$	8,740,551		$	177,438		$	8,917,989

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	(i), (ii), (v), (vi)		2,668,706			340,276			3,008,982
Other Liabilities	(i)		65,449			246,759			312,208
Total Liabilities			2,734,155			587,035			3,321,190

STOCKHOLDERS' EQUITY
Common Stock			13,087			-			13,087
Additional paid-in capital	(i), (iii), (iv), (vii)		12,483,794			52,765			12,536,559
Accumulated deficit	(i) to (vii)		(6,490,485	)		(462,362	)		(6,952,847	)
Total Stockholders' Equity			6,006,396			(409,597	)		5,596,799
Total Liabilities and Stockholders' Equity		$	8,740,551		$	177,438		$	8,917,989

For the three months ended June 30, 2008

Gross Profit		$	356,568		$	-		$	356,568
Total Expenses	(iv), (v), (vi), (vii)		2,399,153			124,664			2,523,817
Total Other Income (Expenses)	(i), (ii)		16,680			23,972			40,652

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(2,025,905	)	$	(100,692	)	$	(2,126,597	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.10	)		(0.00	)	$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED			20,832,026			-			20,832,026

For the six months ended June 30, 2008

Gross Profit		$	718,985		$	-		$	718,985
Total Expenses	(iv), (v), (vi), (vii)		4,911,176			273,593			5,184,769
Total Other Income (Expenses)	(i), (ii)		227,384			75,478			302,862

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(3,964,807	)	$	(198,115	)	$	(4,162,922	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.19	)		(0.01	)	$	(0.20	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED			20,832,026			-			20,832,026

(i) Refer to carry forward effects of the prior quarter.

(ii) We recorded goodwill of $66,692 in relation to the debt conversion between our subsidiary, Domain Holdings Inc., and our parent company, Live Current Media Inc., as disclosed in Note 5. There was a decrease to the NCI liability during the quarter of $8,786 resulting in a balance at quarter end of the NCI liability of NIL. There was also a gain to the minority interest included in Other Income and Expenses in the quarter of $23,972.

(iii) Related to the acquisition of Auctomatic, we adjusted our purchase price allocation to reflect an additional $110,746 of goodwill acquired in the acquisition. The corresponding increase was recorded to Additional paid-in capital.

(iv) Also related to the acquisition of Auctomatic, we recorded as an expense the portion of the fair value of 413,604 shares of our common stock which were to be issued to the founders of Entity Inc. (“Auctomatic”) based on the period of service these individuals provided to us, computed in relation to the period of service required for the individuals to become entitled to the shares under FAS 123(R). The related stock based compensation expense in the June 30, 2008 quarter is $45,326, and the corresponding amount increased Additional paid-in capital during the quarter.

(v) We recorded as an additional liability and compensation expense during the June 30, 2008 quarter $35,786 for bonuses of CDN $100,000 each that are to be paid to our President and Chief Corporate Development Officer on January 1, 2009 and on January 1, 2010.

(vi) We recorded as an additional liability and compensation expense during the June 30, 2008 quarter $89,465 for bonuses of CDN $250,000 each that were to be paid to our former President on October 1, 2008 and on October 1, 2009.

(vii) We revised our assumptions relating to the estimated life of stock options that we have granted. The revised estimated life of 3.375 years resulted in a decrease to our stock based compensation expense of $45,913 and a corresponding decrease to Additional paid-in capital during the quarter.

As at September 30, 2008		As previously reported			Restatement adjustment			As restated
ASSETS
Current assets		$	994,786		$	-		$	994,786
Other assets	(i)		5,990,554			177,438			6,167,992
Total Assets		$	6,985,340		$	177,438		$	7,162,778

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	(i), (iii), (iv)		3,276,584			449,096			3,725,680
Other Liabilities	(i)		60,414			246,759			307,173
Total Liabilities			3,336,998			695,855			4,032,853

STOCKHOLDERS' EQUITY
Common Stock			13,150			-			13,150
Additional paid-in capital	(i), (ii), (v)		13,175,885			150,502			13,326,387
Accumulated deficit	(i) to (v)		(9,540,693	)		(668,919	)		(10,209,612	)
Total Stockholders' Equity			3,648,342			(518,417	)		3,129,925
Total Liabilities and Stockholders' Equity		$	6,985,340		$	177,438		$	7,162,778

For the three months ended September 30, 2008

Gross Profit		$	352,435		$	-		$	352,435
Total Expenses	(ii), (iii), (iv), (v)		2,343,285			206,557			2,549,842
Total Other Income (Expenses)			(1,059,357	)		-			(1,059,357	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(3,050,207	)	$	(206,557	)	$	(3,256,764	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.14	)		(0.01	)	$	(0.15	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED			21,625,005			-			21,625,005

For the nine months ended September 30, 2008

Gross Profit		$	1,071,419		$	-		$	1,071,419
Total Expenses	(ii), (iii), (iv), (v)		7,254,461			480,150			7,734,611
Total Other Income (Expenses)	(i)		(831,973	)		75,478			(756,495	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(7,015,015	)	$	(404,672	)	$	(7,419,687	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.32	)		(0.02	)	$	(0.34	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED			21,625,005			-			21,625,005

(i) Refer to carry forward effects of the prior quarter.

(ii) Also related to the acquisition of Auctomatic, we recorded as an expense the portion of the fair value of 413,604 shares of our common stock which were to be issued to the founders of Entity Inc. (“Auctomatic”) based on the period of service these individuals provided to us, computed in relation to the period of service required for the individuals to become entitled to the shares under FAS 123(R). The related stock based compensation expense in the September 30, 2008 quarter is $104,251, and the corresponding amount increased Additional paid-in capital during the quarter.

(iii) We recorded as an additional liability and compensation expense during the September 30, 2008 quarter $31,091 for bonuses of CDN $100,000 each that are to be paid to our President and Chief Corporate Development Officer on January 1, 2009 and on January 1, 2010.

(iv) We recorded as an additional liability and compensation expense during the September 30, 2008 quarter $77,729 for bonuses of CDN $250,000 each that were to be paid to our former President on October 1, 2008 and on October 1, 2009.

(v) We revised our assumptions relating to the estimated life of stock options that we have granted. The revised estimated life of 3.375 years resulted in a decrease to our stock based compensation expense of $6,514 and a corresponding decrease to Additional paid-in capital during the quarter.

Off-Balance Sheet Arrangements

As of December 31, 2008, we did not have any off-balance sheet arrangements, including any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do have off-balance sheet commitments as disclosed in the notes to our consolidated financial statements. We do not engage in trading activities involving non-exchange traded contracts.

Application of Critical Accounting Policies

Our consolidated financial statements and accompanying notes are prepared in accordance with United States generally accepted accounting principles. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our operating results and financial position.

Going Concern

Our ability to continue as a going-concern is in substantial doubt as it is dependent on a number of factors including, but not limited to, the receipt of continued financial support from our investors, our ability to sell additional non-core domain names, our ability to raise equity or debt financing as we need it, and whether we will be able to use our securities to meet certain of our liabilities as they become payable. The outcome of these matters is dependant on factors outside of our control and cannot be predicted at this time.

Our financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts or classification of liabilities that might be necessary if we were unable to continue as a going concern.

Principles of Consolidation

Our consolidated financial statements include our accounts as well as those of our subsidiaries. The comparative figures for the 2007 fiscal year include our 50.4% interest in Frequent Traveler (from January 1, 2007 until the sale of our controlling interest in Frequent Traveler on November 12, 2007). All significant intercompany balances and transactions are eliminated on consolidation.

Business Combinations

On the acquisition of a subsidiary, the purchase method of accounting is used whereby the purchase consideration is allocated to the identifiable assets and liabilities on the basis of fair value at the date of acquisition. We consider critical estimates involved in determining any amount of goodwill, and test for impairment of such goodwill as disclosed in our Goodwill accounting policy below.

Revenue Recognition

Revenues and associated costs of goods sold, from the on-line sales of products, which currently consist primarily of fragrances and other beauty products, are recorded upon delivery of products and determination that collection is reasonably assured. We record inventory as an asset for items in transit as title does not pass until received by the customer. All associated shipping and handling costs are recorded as cost of goods sold upon delivery of products.

Web advertising revenue consists primarily of commissions earned from the referral of visitors from our sites to other parties. The amount and collectibility of these referral commissions is subject to uncertainty; accordingly, revenues are recognized when the amount can be determined and collectibility can be reasonably assured. In accordance with Emerging Issues Task Force (“EITF”) 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent we record web advertising revenue on a gross basis.

Until the disposal of our shares in FrequentTraveler.com Inc. on November 12, 2007, revenues from the sales of travel products, including tours, airfares and hotel reservations, where we acted as the merchant of record and had inventory risk, were recorded on a gross basis. Customer deposits received prior to ticket issuance or 30-days prior to travel were recorded as deferred revenue. Where we did not act as the merchant of record and had no inventory risk, revenues were recorded at the net amounts, without any associated cost of revenue in accordance with EITF 99-19. See also Note 5 to our consolidated financial statements.

Gains from the sale of domain names, whose carrying values are recorded as intangible assets, consists primarily of funds earned for the transfer of rights to domain names that are currently in our control. Revenues have been recognized when the sale agreement is signed and the collectibility of the proceeds is reasonably assured. In 2008, there was a sale of a geo-domain name for net proceeds of $369,041. Collectibility of the amounts owing on this sale are reasonably assured and therefore accounted for as a sale in the period the transaction occurred. There were no sales of domain names during 2007.

Gains from the sales-type leases of domain names, whose carrying values are recorded as intangible assets, consists primarily of funds earned over a period of time for the transfer of rights to domain names that are currently in our control. Collectibility of these revenues is reasonably assured and therefore accounted for as a sales-type lease in the period the transaction occurs. See also Note 12 to our consolidated financial statements.

Stock-Based Compensation

During the third quarter of 2007, the Company implemented the following new critical accounting policy related to our stock-based compensation. Beginning July 1, 2007, we began accounting for stock options under the provisions of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (“FAS 123(R)”), which requires the recognition of the fair value of stock-based compensation. Under the fair value recognition provisions for FAS 123(R),stock-based compensation cost is estimated at the grant date based on the fair value of the awards expected to vest and is recognized as expense ratably over the requisite service period of the award. We have used the Black-Scholes valuation model to estimate fair value of our stock-based awards which require various assumptions including estimating price volatility and expected life. Our computation of expected volatility is based on a combination of historic and market-based implied volatility. In addition, we consider many factors when estimating expected life, including types of awards and historical experience. If any of these assumptions used in the Black-Scholes valuation model change significantly, stock-based compensation expense may differ materially in the future from what is recorded in the current period.

In August 2007, our Board of Directors approved an Incentive Stock Incentive Plan to make available 5,000,000 shares of common stock for the grant of stock options, including incentive stock options. Incentive stock options may be granted to our employees, officers, directors, consultants, independent contractors and advisors, provided such consultants, independent contractors and advisors render bona-fide services not in connection with the offer and sale of securities in a capital-raising transaction or promotion of our securities. See also Note 11 to our consolidated financial statements.

We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FAS No. 123(R) and the conclusions reached by the EITF in Issue No. 96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.

Inventory

Inventory is recorded at the lower of cost or market using the first-in first-out (FIFO) method. We maintain little or no inventory of perfume which is shipped from the supplier directly to the customer. The inventory on hand as at December 31, 2008 is recorded at cost of $74,082 and represents inventory in transit from the supplier to the customer.

Website development costs

We have adopted the provisions of EITF No. 00-2, Accounting for Web Site Development Costs , whereby costs incurred in the preliminary project phase are expensed as incurred; costs incurred in the application development phase are capitalized; and costs incurred in the post-implementation operating phase are expensed as incurred. Website development costs are stated at cost less accumulated amortization and are amortized using the straight-line method over its estimated useful life. Upgrades and enhancements are capitalized if they result in added functionality which enables the software to perform tasks it was previously incapable of performing.

Intangible Assets

We have adopted the provision of the FAS No. 142, Goodwill and Intangible Assets , which revises the accounting for purchased goodwill and intangible assets. Under FAS No. 142, intangible assets with indefinite lives are no longer amortized and are tested for impairment annually. The determination of any impairment would include a comparison of estimated future operating cash flows anticipated during the remaining life with the net carrying value of the asset as well as a comparison of the fair value to its book value.

Our intangible assets, which consist of our portfolio of generic domain names, have been determined to have an indefinite life and as a result are not amortized. Management has determined that there is no impairment of the carrying value of intangible assets at December 31, 2008.

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of the net assets of acquired entities. In accordance with FAS No. 142, Accounting for Goodwill and Other Intangible Assets . we are required to assess the carrying value of goodwill annually or whenever circumstances indicate that a decline in value may have occurred, utilizing a fair value approach at the reporting unit level. A reporting unit is the operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management.

The goodwill impairment test is a two-step impairment test. In the first step, we compared the fair value of each reporting unit to its carrying value. We determine the fair value of our reporting units using a discounted cash flow approach. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. The activities in the second step include valuing the tangible and intangible assets and liabilities of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit’s goodwill based upon the residual of the summed identified tangible and intangible assets and liabilities.

The fair value of the Perfume.com reporting unit exceeded the carrying value of the assigned net assets, therefore no further testing was required and an impairment charge was not required.

Non-Controlling Interest

Our consolidated financial statements include the accounts of DHI (and its subsidiaries). All intercompany accounts and transactions have been eliminated upon consolidation. We record non-controlling interest which reflects the 1.8% portion of the earnings of DHI and its subsidiaries allocable to the holders of the minority interest.

Income Taxes

During the first quarter of 2007, we adopted the following new critical accounting policy related to income tax. Beginning on January 1, 2007, we began accounting for income tax under the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement 109, Accounting for Income Taxes , and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We and our 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 our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our evaluation was performed for the tax years ended December 31, 2002, 2003, 2004, 2005, 2006, 2007 and 2008, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2008. We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. We classified these assessments in our financial statements as selling, general and administrative expense.

Recent Accounting Pronouncements

FAS 162

In May, 2008, the FASB issued FAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We do not expect that this Statement will result in a change in current practice.

FAS 161

In March 2008, the FASB issued FAS No. 161, Disclosures about Derivative Instruments and Hedging Activities , an amendment of FAS No. 133 . FAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance and cash flows. Entities are required to provide enhanced disclosures about: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for under FAS No. 133 and its related interpretations; and how derivative instruments and related hedged items affect an entity's financial position, financial performance and cash flows. FAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, which, for us, would be the fiscal year beginning January 1, 2009. We are currently assessing the impact of FAS No. 161 on our financial position and results of operations.

FSP FAS 142-3

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, which, for us, would be the fiscal year beginning January 1, 2009. We are currently assessing the impact of FSP FAS 142-3 on our financial position and results of operations.

FAS 141R

In December 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations ("141R"). FAS No. 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under FAS No. 141R, changes in an acquired entity's deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. This standard will change accounting treatment for business combinations on a prospective basis. FAS No. 141R is effective for fiscal years beginning after December 15, 2008, which, for us, would be the fiscal year beginning January 1, 2009. We are currently assessing the impact of FAS No. 141R on our financial position and results of operations.

FAS 160

In December 2007, the FASB issued FAS No. 160 Noncontrolling Interests in Consolidated Financial Statements , and simultaneously revised FAS 141 Business Combinations . This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, which, for us, would be the fiscal year beginning January 1, 2009. An entity may not adopt the policy before the transitional date. We are currently assessing the impact of FAS No. 160 and the revision of FAS 141 on our financial position and results of operations.

FAS 159

In February 2007, the FASB issued FAS 159, “Fair Value Option for Financial Assets and Financial Liabilities,” which allows an irrevocable option, the Fair Value Option, to carry eligible financial assets and liabilities at fair value. The election is made on an instrument-by-instrument basis. Changes in fair value for these instruments are recorded in earnings. The objective of FAS 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.

We adopted FAS 159 in 2008. The adoption did not have a material effect on our financial results.

FAS 157

In September 2006, the FASB issued FAS No. 157, Fair Value Measurements . This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This standard does not require any new fair value measurements.

In February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2, which delays the effective date of FAS No. 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets and nonfinancial liabilities, except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis, which for us would be the fiscal year beginning January 1, 2009.

In 2008, we adopted FAS 157 for financial assets and liabilities recognized at fair value on a recurring basis. The adoption did not have a material effect on our financial results. The disclosures required by FAS 157 for financial assets and liabilities measured at fair value on a recurring basis as at December 31, 2008 are included in Note 4.

We will apply the requirements of FAS 157 for fair value measurements of financial and nonfinancial assets and liabilities not valued on a recurring basis in 2009. We are currently evaluating the effect of this application on our financial reporting and disclosures.

In October 2008, the FASB issued FSP No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for that Asset is Not Active , which clarifies the application of FAS 157 in determining the fair value of a financial asset when the market for that asset is not active. FSP FAS 157-3 is effective as of the issuance date and has not affected the valuation of our financial assets.

Item 9A(T). Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of December 31, 2008, we carried out an evaluation, under the supervision of and with the participation of our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on the evaluation, as of December 31, 2008, our Chief Executive Officer and Principal Financial Officer originally concluded that our disclosure controls and procedures were effective. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the restatement of our financial statements for the fiscal years ended December 31, 2008 and 2007 (the “Restatement”), our management, with the participation of our Chief Executive Officer and Principal Financial Officer, has re-evaluated the effectiveness of our disclosure controls and procedures. Based on this re-assessment, our Chief Executive Officer and Principal Financial Officer concluded that, as of December 31, 2008, our disclosure controls and procedures were not effective because of the material weakness in our internal control over financial reporting described below.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles generally accepted in the United States.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has re-assessed the effectiveness of our internal control over financial reporting at December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework .

In the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, we concluded that the Company’s internal control over financial reporting as of December 31, 2008 was effective. However, in June 2009 the Company determined that the Restatement was necessary. As a result of this determination, we reassessed our internal control over financial reporting and determined that a material weakness existed at December 31, 2008.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness in our internal control over financial reporting as of December 31, 2008 resulted from our failure to maintain effective processes and controls over the accounting for and reporting of complex and non-routine transactions. Specifically, we did not have an appropriate level of technical knowledge, experience and training in the accounting for business combinations, stock-based compensation, deferred income taxes and financial statement disclosure. This control deficiency resulted in the Restatement.

As a result of the aforementioned material weaknesses as of December 31, 2008, we have revised our previously reported assessment of the effectiveness of internal control over financial reporting and have concluded that, as of December 31, 2008, the Company’s internal control over financial reporting was not effective.

This Amendment does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15 (f) under the Exchange Act) during the fourth quarter of 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 15. Exhibits

EXHIBIT INDEX

Number

Description

31.1	Amended Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Chief Executive Officer and Principal Financial Officer

31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002 — Chief Executive Officer and Principal Financial Officer

32.1	Amended Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 — Chief Executive Officer and Principal Financial Officer

32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 — Chief Executive Officer and Principal Financial Officer

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LIVE CURRENT MEDIA INC.

Dated: September 11, 2009	By:	/s/ C. Geoffrey Hampson
		C. Geoffrey Hampson
		Chief Executive Officer, Principal Financial Officer and Chairman

LIVE CURRENT MEDIA INC.

(formerly COMMUNICATE.COM INC.)

AMENDED AND RESTATED

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008 AND 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2

AMENDED AND RESTATED CONSOLIDATED BALANCE SHEETS	F-3

AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF OPERATIONS	F-4

AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	F-5

AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF CASH FLOWS	F-6

NOTES TO THE AMENDED AND RESTATED CONSOLIDATED FINANCIAL STATEMENTS	F-7

F-1

Report of Independent Registered Accounting Firm

We have audited the accompanying amended and restated consolidated balance sheets of Live Current Media Inc. as of December 31, 2008 and 2007, and the related amended and restated consolidated statements of operations, stockholder’s equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit includes 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 Company's 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Live Current Media Inc. at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows of the years then ended in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the financial statements, the Company's recurring net losses raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 2 to the consolidated financial statements, the December 31, 2008 and 2007 consolidated financial statements have been restated to correct errors in accounting for business combinations and consolidations, compensation, warrants issued, deferred taxes and accrued expenses.

Vancouver, Canada

September 10, 2009

/s/ Ernst & Young LLP

Chartered Accountants

F-2

LIVE CURRENT MEDIA INC.

(formerly COMMUNICATE.COM INC.)

AMENDED AND RESTATED CONSOLIDATED BALANCE SHEETS

Expressed In U.S. Dollars

(Going Concern - See Note 1)

As restated - Note 2

As at December 31	2008			2007
ASSETS
Current
Cash and cash equivalents	$	1,832,520		$	7,375,245
Accounts receivable (net of allowance for doubtful accounts of nil)		93,582			138,930
Prepaid expenses and deposits		109,543			246,174
Inventory		74,082			-
Current portion of receivable from sales-type lease (Note 12)		23,423			-
Total current assets		2,133,150			7,760,349

Long-term portion of receivable from sales-type lease (Note 12)		23,423			-
Property & equipment (Note 8)		1,042,851			175,797
Website development costs (Note 9)		355,391			-
Intangible assets		1,587,463			1,645,061
Goodwill (Note 7)		2,606,040			-
Total Assets	$	7,748,318		$	9,581,207

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	$	3,047,993		$	1,451,679
Amounts payable to the BCCI and IPL (Note 6)		1,000,000			-
Bonuses payable		354,695			332,713
Due to shareholders of Auctomatic (Note 7)		789,799			-
Deferred revenue		120,456			53,079
Current portion of deferred lease inducements (Note 10)		20,138			20,138
Total current liabilities		5,333,081			1,857,609

Non-controlling interest (Note 5)		-			8,786
Deferred income tax (Note 14)		206,370			246,759
Warrants (Note 11e)		157,895			-
Deferred lease inducements (Note 10)		55,380			75,518
Total Liabilities		5,752,726			2,188,672

STOCKHOLDERS' EQUITY
Common Stock (Note 11)
Authorized: 50,000,000 common shares, $0.001 par value
Issued and outstanding:
23,546,370 common shares (December 31, 2007 - 21,446,623)		14,855			12,456
Additional paid-in capital		14,757,932			10,170,004
Accumulated deficit		(12,777,195	)		(2,789,925	)
Total Stockholders' Equity		1,995,592			7,392,535
Total Liabilities and Stockholders' Equity	$	7,748,318		$	9,581,207

See accompanying notes to consolidated financial statements

/s/ James P. Taylor		/s/ Mark Benham
James P. Taylor, Director		Mark Benham, Director

F-3

LIVE CURRENT MEDIA INC.

(formerly COMMUNICATE.COM INC)

AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF OPERATIONS

Expressed In U.S. Dollars

As restated - Note 2

Years Ended December 31	2008			2007

SALES
Health and beauty eCommerce	$	9,271,237		$	8,092,707
Other eCommerce		455			485,199
Domain name advertising		93,141			449,613
Total Sales		9,364,833			9,027,519

COSTS OF SALES
Health and Beauty eCommerce		7,683,432			6,512,292
Other eCommerce		380			509,181
Total Costs of Sales		7,683,812			7,021,473

GROSS PROFIT		1,681,021			2,006,046

EXPENSES
Amortization and depreciation		253,141			29,169
Amortization of website development costs (Note 9)		58,640			-
Corporate general and administrative		2,517,901			623,171
ECommerce general and administrative		567,980			304,212
Management fees and employee salaries		4,825,049			2,053,503
Corporate marketing		42,399			-
ECommerce marketing		766,393			817,101
Other expenses (Note 13)		708,804			637,730
Total Expenses		9,740,307			4,464,886

OTHER INCOME (EXPENSES)
Global Cricket Venture expenses (Note 6)		(1,476,255	)		-
Global Cricket Venture payments (Note 6)		(1,000,000	)		-
Gain from sales and sales-type lease of domain names (Note 12)		461,421			-
Accretion interest expense (Note 7)		(96,700	)		-
Interest and investment income		67,683			119,574
Gain on disposal of Frequenttraveler.com Inc. (Note 5)		-			276,805
Non-controlling interest (Note 5)		75,478			91,890
Total Other Income (Expenses)		(1,968,373	)		488,269

NET LOSS BEFORE TAXES		(10,027,659	)		(1,970,571	)

TAXES
Deferred tax recovery (Note 14)		(40,389	)		(8,225	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD	$	(9,987,270	)	$	(1,962,346	)


BASIC AND DILUTED LOSS PER SHARE	$	(0.46	)	$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED		21,937,179			19,070,236

See accompanying notes to consolidated financial statements

F-4

LIVE CURRENT MEDIA INC.

(formerly COMMUNICATE.COM INC)

AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Expressed In U.S. Dollars

As restated - Note 2

	Common stock					Additional Paid-in Capital			Accumulated Deficit			Total
	Number of Shares			Amount
Balance, December 31, 2006, as originally stated		17,836,339		$	8,846	$	3,605,579		$	(507,729	)	$	3,106,696
Adjustment to opening accumulated deficit (Note 2)		-			-		-			(319,850	)		(319,850	)
Balance, December 31, 2006 as restated		17,836,339			8,846		3,605,579			(827,579	)		2,786,846
Issuance of 60,284 common shares at $0.98 per share		-
in lieu of accrued bonuses to officers		60,284			60		59,018						59,078
Issuance of 1,000,000 common shares at $1.00 per share to CEO		1,000,000			1,000		999,000						1,000,000
Private Placement of 2,550,000 common shares at $2.00 per share		2,550,000			2,550		5,097,450						5,100,000
Share issue costs		-					(100	)					(100	)
Stock-based compensation (Note 11d)		-					409,057						409,057
Net loss and comprehensive loss		-								(1,962,346	)		(1,962,346	)
Balance, December 31, 2007		21,446,623			12,456		10,170,004			(2,789,925	)		7,392,535
Stock-based compensation (Note 11d)		-			-		2,162,526						2,162,526
Issuance of 586,403 common shares per the merger
agreement with Auctomatic (Note 7)		586,403			586		1,248,279						1,248,865
Issuance of 33,000 common shares to investor relations firm (Note 11b)		33,000			33		85,649						85,682
Issuance of 120,000 common shares to investor relations firm (Note 11b)		120,000			120		218,057						218,177
Issuance of 50,000 warrants to investor relations firm (Note 11e)		-			-		45,500						45,500
Cancellation of 300,000 common shares not distributed (Note 11b)		(300,000	)		-		-						-
Private Placement of 1,627,344 units at $0.65 per share (Note 11b)		1,627,344			1,627		898,253						899,880
Share issue costs (Note 11b)		-			-		(86,803	)					(86,803	)
Extinguishment of accounts payable (Note 11b)		33,000			33		16,467						16,500
Net loss and comprehensive loss										(9,987,270	)		(9,987,270	)
Balance, December 31, 2008		23,546,370		$	14,855	$	14,757,932		$	(12,777,195	)	$	1,995,592

See accompanying notes to consolidated financial statements

F-5

LIVE CURRENT MEDIA INC.

(formerly COMMUNICATE.COM INC)

AMENDED AND RESTATED CONSOLIDATED STATEMENTS OF CASH FLOWS

Expressed In U.S. Dollars

As restated - Note 2

Years Ended December 31	2008			2007
OPERATING ACTIVITIES
Net loss for the period	$	(9,987,270	)	$	(1,962,346	)
Non-cash items included in net loss:
Deferred tax recovery		(40,389	)		(8,225	)
Non-controlling interest		(75,478	)		(91,890	)
Gain from sales and sales-type lease of domain names		(461,421	)		-
Accretion interest expense		96,700			-
Stock-based compensation		2,162,526			409,057
Warrants issued		45,500			-
Issuance of common stock for services (Note 11b)		303,859			-
Extinguishment of debt by issuance of common stock (Note 11b)		16,500			-
Amortization and depreciation		291,643			24,135
Issuance of common stock for bonuses (Note 11b)		-			59,078
Change in operating assets and liabilities:
Accounts receivable		45,348			(81,914	)
Prepaid expenses and deposits		136,631			(246,174	)
Inventory		(74,082	)		-
Accounts payable and accrued liabilities		1,596,314			459,824
Amounts payable to the BCCI and IPL		1,000,000			-
Bonuses payable		21,982			332,713
Deferred revenue		67,377			53,079
Deferred lease inducements		-			100,690
Cash flows used in operating activities		(4,854,260	)		(951,973	)

INVESTING ACTIVITIES
Proceeds from disposal of available for sale securities		-			261,912
Net proceeds from sale of domain name		369,041			-
Net proceeds from sales-type lease of domain name		140,540			-
Cash consideration for Auctomatic (Note 7)		(1,530,047	)		-
Purchases of property & equipment		(187,532	)		(159,934	)
Website development costs (Note 9)		(451,439	)		-
Cash flows used in (from) investing activities		(1,659,437	)		101,978

FINANCING ACTIVITIES
Proceeds from restricted cash		-			20,000
Proceeds from sale of common stock (net of share issue costs)		970,972			6,099,900
Cash flows from financing activities		970,972			6,119,900

Net increase (decrease) in cash and cash equivalents		(5,542,725	)		5,269,905

Cash and cash equivalents, beginning of year		7,375,245			2,105,340
Cash and cash equivalents, end of year	$	1,832,520		$	7,375,245

See accompanying notes to consolidated financial statements

SUPPLEMENTAL INFORMATION

	2008		2007
Cash paid during the year for:
Interest	$	-	$	-
Income taxes	$	6,944	$	-

F-6

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION

Nature of business

Live Current Media Inc. (the “Company”) 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 formal shareholder approval to do so at the Annual General Meeting in May 2008.

The Company’s 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 redomiciled from British Columbia to the jurisdiction of Alberta. On April 5, 2002, Communicate.com Inc. changed its name to Domain Holdings Inc. DHI has 62,635,383 shares of common stock currently issued and outstanding. 61,478,225 shares, or approximately 98.2% of the outstanding shares, are held by Live Current.

Through its majority-owned subsidiary, Domain Holdings, Inc. (“DHI”), the Company builds consumer Internet experiences around its large portfolio of domain names. DHI’s current business strategy is to develop or to seek partners to develop its domain names to include content, commerce and community applications. At December 31, 2008, DHI was actively developing websites on two domain names; one that provides e-commerce for fragrance and other health and beauty products, and another that will be a media rich consumer experience on a sports related website where the revenue model is based on paid advertising and sales of digital content and merchandise. DHI develops content and sells advertising services on other domains held for future development. Refer to Note 19.

On March 13, 2008, the Company incorporated a wholly owned subsidiary in the state of Delaware, Communicate.com Delaware, Inc. (“Delaware”). The new subsidiary has been incorporated in relation to the Auctomatic transaction. Refer to Note 7.

The Company’s other subsidiary, DHI, owns 100% of 0778229 B.C. Ltd. (“Importers”), Acadia Management Corp. (“Acadia”), and a dormant company 612793 B.C. Ltd. (“612793”). Acadia’s assets and liabilities were assigned to DHI in October 2008, and that company was dissolved and struck from the registrar of British Columbia on January 21, 2009.

On August 8, 2008, the Company also formed a wholly-owned subsidiary in Singapore, LCM Cricket Ventures Pte. Ltd. (“LCM Cricket Ventures”). This company holds 50.05% of Global Cricket Venture Pte. Ltd. (“Global Cricket Venture” or “GCV”).

As at December 31, 2006, the Company owned 50.4% of the outstanding shares in FrequentTraveller.com Inc. (“FT”), a Nevada private company incorporated on October 29, 2002. FT was a full service travel agency that catered to Internet-based customers seeking tours and other travel services. On November 12, 2007, the Company disposed of its controlling interest in FT and at the end of 2007 no longer had any ownership in FT. Refer to Note 5.

Basis of presentation

The consolidated financial statements are presented in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States.

Going Concern

The consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. The Company has generated a consolidated net loss of $9,987,270 and realized a negative cash flow from operating activities of $4,854,260 for the year ended December 31, 2008. There is an accumulated deficit of $12,777,195 (December 31, 2007 - $2,789,925) and a working capital deficiency of $3,199,931 at December 31, 2008.

The Company's ability to continue as a going-concern is in substantial doubt as it is dependent on the continued financial support from its investors, the ability of the Company to raise equity financing and the attainment of profitable operations and further share issuances to meet the Company's liabilities as they become payable. The outcome of these matters is dependant on factors outside of the Company’s control and cannot be predicted at this time. Refer to Note 19.

F-7

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION (continued)

Going Concern (continued)

The accompanying consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. These financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts or classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has established a plan to continue its current business operations and overcome its financial difficulties. The Company expects to achieve an improved financial position and enhanced liquidity by establishing and carrying out a plan of recovery as follows:

1.	Auctomatic payment deferrals: Under the terms of the acquisition agreement to purchase Entity Inc. (also referred to as Auctomatic), the Company was obligated to make $800,000 in cash payments in May 2009. Refer to Note 7. The Company has negotiated an agreement with the majority of the Entity shareholders to convert more than half of this payable into a convertible interest bearing note with a nine month term. The payment due date is May 2010.

2.	Payment of Obligations with Common Stock: The Company intends to continue to ask certain vendors if they will agree to accept the Company’s common stock in lieu of cash as payment for outstanding obligations. During the first nine months of 2009, the Company has succeeded in reaching four such agreements as payment of approximately $396,000.

3.	Global Cricket Venture: In August 2009, the Company reached an agreement with an unrelated third party (“CricketCo”), whereby CricketCo agreed to assume and be liable for all past and future obligations and liabilities of GCV arising from the original MOU, as it was amended by the Novation. The Company has also agreed to sell the domain name cricket.com to CricketCo, along with the website, content, copyrights, trademarks, etc., for consideration of four equal payments of $250,000. The cricket.com domain name shall remain the property of the Company until all payments have been made. Refer to Note 19.

4.	Reduction in employees and 100% deferral of CEO salary: Since December 31, 2008, the Company has reduced the number of its employees by 50%. This included termination of the Company’s former President. All severance payments will be paid by June 2010.

	In addition, members of senior management agreed to forgo 2008 bonuses, staff bonuses were not granted for 2008, and effective January 30 th 2009, the Company’s CEO has agreed to defer 100% of his salary and bonus for an indefinite period of time and to convert such deferred salary into shares of the Company’s common stock at the end of 2009.

5.	Management Focus: Management has decided to focus on the business that is currently producing divisional profits: Perfume.com. This business continues to have the potential to grow dramatically and to produce profits in the short term with minimal investment.

6.	Supply Chain Management: In spring 2010, the Company plans to begin a process of transitioning from the legacy supply chain process which involved using multiple third party drop shippers where gross margins were 19-21% to a Third Party Logistics (“3PL”) process whereby the Company purchases the inventory and has a 3PL provider store, pick and pack the perfume that has been ordered by Perfume.com customers. This change in supply chain management will require a minimal investment in inventory but should result in a much healthier margin for those SKU’s shipped directly.

7.	Domain Name sales: Management entered into arrangements to sell or lease eight of the Company’s non-core domain name assets, including Cricket.com, as a non-dilutive way to raise working capital. These transactions have raised nearly $4 million since the fourth quarter of 2008. See Note 19.

F-8

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

The Company determined that its original consolidated financial statements for the years ended December 31, 2008 and 2007, filed on March 31, 2009 (the “Original Financial Statements”) contained errors. These errors, which are described below, affected opening balances as at December 31, 2007 and the financial position, results of operations and cash flows for the years ended December 31, 2007 and 2008.

A. Deferred income tax liability related to indefinite life intangible assets:

The Company’s intangible assets, comprised of its domain names, have book values in excess of their tax values. The Original Financial Statements considered the taxable temporary differences associated with these indefinite life intangible assets in reducing the valuation allowance associated with its loss carryforwards. This was an incorrect application of GAAP. A deferred tax liability should have been recognized for these taxable temporary differences. Correction of this error resulted in the recognition of a deferred tax liability of $206,370, $246,759, and $254,984 as at December 31, 2008, December 31, 2007, and January 1, 2007 respectively, and deferred income tax recoveries of $40,389 and $8,225 in the years ended December 31, 2008 and 2007, respectively.

B. Non-Controlling Interest:

The Company discovered an error in its continuity of non-controlling interest in its subsidiaries as at January 1, 2007, resulting in a $100,676 increase to the opening non-controlling interest liability and deficit.

The Company also determined that it should have recorded $66,692 of goodwill and an increase to non-controlling interest liability associated with the exchange of $3,000,000 of amounts due from a subsidiary for additional common stock in 2008. See Note 5.

Prior to recognizing the non-controlling interest liabilities described in the preceding two paragraphs, the non-controlling interest’s share of subsidiary losses in 2008 and 2007 was limited to the non-controlling interest liability. As a consequence of the above increases to non-controlling interest liabilities, the non-controlling interest’s share in subsidiary losses was increased by $75,748 and $91,890 in the years ended December 31, 2008 and 2007, respectively.

C. Management Compensation:

(i) The December 31, 2007 financial statements did not accrue $91,423 for two CDN$250,000 special bonuses to be paid on October 1, 2008 and October 1, 2009 to the Company’s former President and Chief Operating Officer pursuant to his employment agreement. These special bonuses were not discretionary, but would only be paid if he remained employed as an officer of the Company on the dates payable. On February 4, 2009, he resigned as the Company’s President and Chief Operating Officer and employee, effective January 31, 2009. There was no effect to the December 31, 2008 financial statements.

(ii) The December 31, 2008 financial statements did not accrue for $119,045 for two CDN$100,000 special bonuses to be paid on January 1, 2009 and January 1, 2010 to the Company’s current President and Chief Corporate Development Officer pursuant to his employment agreement. These special bonuses are not discretionary, but will only be paid if he remained employed as an officer of the Company on the dates payable.

D. Estimated life of stock options:

The Company originally estimated the life of its stock options as equal to the vesting period for these options, 3 years. The estimated life should have been 3.375 years, resulting in decreases of $118,893 and $18,971 to the Company’s stock-based compensation expense in the years ended December 31, 2008 and 2007, respectively.

F-9

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

E. Other

(i)	Expense accruals

(ii)	Gain on sale of domain name

(iii)

Miscellaneous Income

The Company discovered an immaterial error in miscellaneous income relating to periods prior to January 1, 2007, resulting in a $35,810 increase to opening deficit at January 1, 2007.

F. Classification of warrants issued in November 2008 private placement:

G. Shares issued in connection with the merger with Auctomatic:

(i)	Valuation of shares issued as purchase consideration

(ii)	Shares issued to Auctomatic founders

H. Financial Statement Classification of Amounts Payable to the BCCI and IPL:

In order to provide clarity, the Company also classified separately on its consolidated balance sheets and consolidated statements of operations the $1,000,000 payable and expensed during the year ended December 31, 2008 to the BCCI and IPL.

F-10

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

I. Tax Impact:

None of the above adjustments gave rise to an increase or decrease in the Company’s tax position.

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated balance sheets as of December 31, 2008:

December 31, 2008	Reference	As previously reported			Restatement adjustment			As restated
ASSETS
Current
Cash and cash equivalents		$	1,832,520		$	-		$	1,832,520
Accounts receivable (net of allowance for doubtful accounts of nil)			93,582			-			93,582
Prepaid expenses and deposits			109,543			-			109,543
Inventory			74,082			-			74,082
Current portion of receivable from sales-type lease			23,423			-			23,423
Total current assets			2,133,150			-			2,133,150

Long-term portion of receivable from sales-type lease			23,423			-			23,423
Deferred acquisition costs			-			-			-
Property & equipment			1,042,851			-			1,042,851
Website development costs	E(ii)		392,799			(37,408	)		355,391
Intangible assets			1,587,463			-			1,587,463
Goodwill	B, G(i)		2,428,602			177,438			2,606,040
Total Assets		$	7,608,288		$	140,030		$	7,748,318

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	E(i), H	$	4,131,264		$	(1,083,271	)	$	3,047,993
Amounts payable to the BCCI and IPL	H		-			1,000,000			1,000,000
Bonuses payable	C(ii)		235,650			119,045			354,695
Due to shareholders of Auctomatic			789,799			-			789,799
Deferred revenue			120,456			-			120,456
Current portion of deferred lease inducements			20,138			-			20,138
Total current liabilities			5,297,307			35,774			5,333,081

Non-controlling interest			-			-			-
Deferred income tax	A		-			206,370			206,370
Warrants	F		-			157,895			157,895
Deferred lease inducements			55,380			-			55,380
Total Liabilities			5,352,687			400,039			5,752,726

STOCKHOLDERS' EQUITY
Common Stock			14,855			-			14,855
Additional paid-in capital			14,772,880			(14,948	)		14,757,932
Accumulated deficit			(12,532,134	)		(245,061	)		(12,777,195	)
Total Stockholders' Equity			2,255,601			(260,009	)		1,995,592
Total Liabilities and Stockholders' Equity		$	7,608,288		$	140,030		$	7,748,318

F-11

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of operations as of December 31, 2008:

For the year ended December 31, 2008	Reference	As previously reported			Restatement adjustment			As restated

SALES		$	9,364,833		$	-		$	9,364,833

COSTS OF SALES			7,683,812			-			7,683,812

GROSS PROFIT			1,681,021			-			1,681,021

EXPENSES
Amortization and depreciation			253,141			-			253,141
Amortization of website development costs			58,640			-			58,640
Corporate general and administrative	E(i)		2,537,422			(19,521	)		2,517,901
ECommerce general and administrative			567,980			-			567,980
Management fees and employee salaries	C(i), C(ii), D, G(ii)		4,746,255			78,794			4,825,049
Corporate marketing			42,399			-			42,399
ECommerce marketing			766,393			-			766,393
Other expenses			708,804			-			708,804
Total Expenses			9,681,034			59,273			9,740,307

OTHER INCOME (EXPENSES)
Global Cricket Venture expenses	H		(2,476,255	)		1,000,000			(1,476,255	)
Global Cricket Venture payments	H		-			(1,000,000	)		(1,000,000	)
Gain from sales and sales-type lease of domain names	E(ii)		498,829			(37,408	)		461,421
Accretion interest expense			(96,700	)		-			(96,700	)
Interest and investment income			67,683			-			67,683
Non-controlling interest	B		-			75,478			75,478
Total Other Income (Expenses)			(2,006,443	)		38,070			(1,968,373	)

NET LOSS BEFORE TAXES			(10,006,456	)		(21,203	)		(10,027,659	)

TAX EXPENSE
Deferred tax recovery	A		-			(40,389	)		(40,389	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(10,006,456	)	$	19,186		$	(9,987,270	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.46	)		0.00		$	(0.46	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED			21,937,179			-			21,937,179

F-12

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of cash flows as of December 31, 2008:

For the year Ended December 31, 2008	Reference	As previously reported			Restatement adjustment			As restated
OPERATING ACTIVITIES
Net loss for the period1		$	(10,006,456	)	$	19,186		$	(9,987,270	)
Non-cash items included in net loss:
Deferred tax recovery	A		-			(40,389	)		(40,389	)
Non-controlling interest	B		-			(75,478	)		(75,478	)
Gain from sales and sales-type lease of domain names	E(ii)		(498,829	)		37,408			(461,421	)
Accretion interest expense			96,700			-			96,700
Stock-based compensation	D, G(ii)		2,111,354			51,172			2,162,526
Warrants issued			45,500			-			45,500
Issuance of common stock for services			303,859			-			303,859
Extinguishment of debt by issuance of common stock			16,500			-			16,500
Amortization and depreciation			291,643			-			291,643
Change in operating assets and liabilities:
Accounts receivable			45,348			-			45,348
Prepaid expenses and deposits			136,631			-			136,631
Inventory			(74,082	)		-			(74,082	)
Accounts payable and accrued liabilities	E(i), H		2,615,835			(1,019,521	)		1,596,314
Amounts payable to the BCCI and IPL	H		-			1,000,000			1,000,000
Bonuses payable	C(i), C(ii)		(5,640	)		27,622			21,982
Deferred revenue			67,377			-			67,377
Cash flows used in operating activities			(4,854,260	)		-			(4,854,260	)

INVESTING ACTIVITIES
Proceeds from disposal of available for sale securities			-			-			-
Net proceeds from sale of domain name			369,041			-			369,041
Net proceeds from sales-type lease of domain name			140,540			-			140,540
Cash consideration for Auctomatic			(1,530,047	)		-			(1,530,047	)
Purchases of property & equipment			(187,532	)		-			(187,532	)
Website development costs			(451,439	)		-			(451,439	)
Cash flows used in (from) investing activities			(1,659,437	)		-			(1,659,437	)

FINANCING ACTIVITIES
Proceeds from sale of common stock (net of share issue costs)			970,972			-			970,972
Cash flows from financing activities			970,972			-			970,972

Net increase (decrease) in cash and cash equivalents			(5,542,725	)		-			(5,542,725	)

Cash and cash equivalents, beginning of year			7,375,245			-			7,375,245
Cash and cash equivalents, end of year		$	1,832,520		$	-		$	1,832,520

F-13

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated balance sheets as of December 31, 2007:

As at December 31, 2007	Reference		As previously reported			Restatement adjustment			As restated
ASSETS
Current
Cash and cash equivalents			$	7,375,245		$	-		$	7,375,245
Accounts receivable (net of allowance for doubtful accounts of nil)				138,930			-			138,930
Prepaid expenses and deposits				246,174			-			246,174
Total current assets				7,760,349			-			7,760,349

Property & equipment				175,797			-			175,797
Intangible assets				1,645,061			-			1,645,061
Total Assets			$	9,581,207		$	-		$	9,581,207

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities		E(i)	$	1,515,429		$	(63,750	)	$	1,451,679
Bonuses payable		C(i)		241,290			91,423			332,713
Deferred revenue				53,079			-			53,079
Current portion of deferred lease inducements				20,138			-			20,138
Total current liabilities				1,829,936			27,673			2,113,154
										-
Non-controlling interest		B		-			8,786			8,786
Deferred income tax		A					246,759			246,759
Deferred lease inducements				75,518			-			75,518
Total Liabilities				1,905,454			283,218			2,188,672

STOCKHOLDERS' EQUITY
Common Stock				12,456			-			12,456
Additional paid-in capital				10,188,975			(18,971	)		10,170,004
Accumulated deficit				(2,525,678	)		(264,247	)		(2,789,925	)
Total Stockholders' Equity				7,675,753			(283,218	)		7,392,535
Total Liabilities and Stockholders' Equity			$	9,581,207		$	-		$	9,581,207

F-14

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of operations as of December 31, 2007:

Year Ended December 31, 2007	Reference	As previously reported			Restatement adjustment			As restated

SALES
Health and beauty eCommerce		$	8,092,707		$	-		$	8,092,707
Other eCommerce			485,199			-			485,199
Domain name advertising			449,613			-			449,613
Miscellaneous income	E(iii)		35,810			(35,810	)		-
Total Sales			9,063,329			(35,810	)		9,027,519

COSTS OF SALES
Health and Beauty eCommerce			6,512,292			-			6,512,292
Other eCommerce			509,181			-			509,181
Total Costs of Sales			7,021,473			-			7,021,473

GROSS PROFIT			2,041,856			(35,810	)		2,006,046

EXPENSES
Amortization and depreciation			29,169			-			29,169
Corporate general and administrative	E(i)		686,921			(63,750	)		623,171
ECommerce general and administrative			304,212			-			304,212
Management fees and employee salaries	C(i), D		1,981,051			72,452			2,053,503
ECommerce marketing			817,101			-			817,101
Other expenses			637,730			-			637,730
Total Expenses			4,456,184			8,702			4,464,886

OTHER INCOME (EXPENSES)
Interest and investment income			119,574			-			119,574
Gain on disposal of subsidiary of Frequenttraveler.com Inc.			276,805			-			276,805
Non-controlling interest	B		-			91,890			91,890
Total Other Income (Expenses)			396,379			91,890			488,269

NET LOSS AND COMPREHENSIVE LOSS BEFORE TAXES			(2,017,949	)		47,378			(1,970,571	)

TAX EXPENSE
Deferred tax recovery	A		-			(8,225	)		(8,225	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(2,017,949	)	$	55,603		$	(1,962,346	)


BASIC AND DILUTED LOSS PER SHARE		$	(0.11	)	$	0.00		$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED			19,070,236			-			19,070,236

F-15

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table illustrates the effect of the adjustments by financial statement line item in the Company’s consolidated statements of cash flows as of December 31, 2007:

For the year ended December 31, 2007	Reference		As previously reported			Restatement adjustment			As restated
OPERATING ACTIVITIES
Net loss for the period			$	(2,017,949	)	$	55,603		$	(1,962,346	)
Non-cash items included in net loss:
Deferred tax recovery		A		-			(8,225	)		(8,225	)
Non-controlling interest		B		-			(91,890	)		(91,890	)
Stock-based compensation		D		428,028			(18,971	)		409,057
Amortization and depreciation				24,135			-			24,135
Issuance of common stock for bonuses				59,078			-			59,078
Change in operating assets and liabilities:
Accounts receivable	E(iii)			(117,724	)		35,810			(81,914	)
Prepaid expenses and deposits				(246,174	)		-			(246,174	)
Accounts payable and accrued liabilities		E(i)		523,574			(63,750	)		459,824
Bonuses payable		C(i)		241,290			91,423			332,713
Deferred revenue				53,079			-			53,079
Deferred lease inducements				100,690			-			100,690
Cash flows used in operating activities				(951,973	)		-			(951,973	)

INVESTING ACTIVITIES
Proceeds from disposal of available for sale securities				261,912			-			261,912
Purchases of property & equipment				(159,934	)		-			(159,934	)
Cash flows used in (from) investing activities				101,978			-			101,978

FINANCING ACTIVITIES
Proceeds from restricted cash				20,000			-			20,000
Proceeds from sale of common stock (net of share issue costs)				6,099,900			-			6,099,900
Cash flows from financing activities				6,119,900			-			6,119,900

Net increase (decrease) in cash and cash equivalents				5,269,905			-			5,269,905

Cash and cash equivalents, beginning of year				2,105,340			-			2,105,340
Cash and cash equivalents, end of year			$	7,375,245		$	-		$	7,375,245

F-16

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

		As previously reported
		Common stock					Additional Paid-in Capital			Accumulated Deficit			Total			Restatement Adjustment			As Restated Total
	Reference	Number of Shares			Amount
Balance, December 31, 2006			17,836,339		$	8,846	$	3,605,579		$	(507,729	)	$	3,106,696		$	-		$	3,106,696
Adjustment to opening accumulated deficit	A, B, E(iii)		-			-		-			-			-			(319,850	)		(319,850	)
Balance, December 31, 2006			17,836,339			8,846		3,605,579			(507,729	)		3,106,696			(319,850	)		2,786,846
Issuance of 60,284 common shares at $0.98 per share in lieu of accrued bonuses to officers			60,284			60		59,018						59,078			-			59,078
Issuance of 1,000,000 common shares at $1.00 per share to CEO			1,000,000			1,000		999,000						1,000,000			-			1,000,000
Private Placement of 2,550,000 common shares at $2.00 per share			2,550,000			2,550		5,097,450						5,100,000			-			5,100,000
Share issue costs			-					(100	)					(100	)		-			(100	)
Stock-based compensation	D		-					428,028						428,028			(18,971	)		409,057
Net loss and comprehensive loss	A, B, C(i), D, E(i), E(iii)		-								(2,017,949	)		(2,017,949	)		55,603			(1,962,346	)
Balance, December 31, 2007			21,446,623			12,456		10,188,975			(2,525,678	)		7,675,753			(283,218	)		7,392,535
Stock-based compensation	D, G(ii)		-			-		2,111,354						2,111,354			51,172			2,162,526
Issuance of 586,403 common shares per the merger agreement with Automatic	G(i)		586,403			586		1,137,533						1,138,119			110,746			1,248,865
Issuance of 33,000 common shares to investor relations firm			33,000			33		85,649						85,682			-			85,682
Issuance of 120,000 common shares to investor relations firm			120,000			120		218,057						218,177			-			218,177
Issuance of 50,000 warrants to investor relations firm			-			-		45,500						45,500			-			45,500
Cancellation of 300,000 common shares not distributed			(300,000	)		-		-						-			-			-
Private Placement of 1,627,344 units at $0.65 per share	F		1,627,344			1,627		1,056,148						1,057,775			(157,895	)		899,880
Share issue costs			-			-		(86,803	)					(86,803	)		-			(86,803	)
Extinguishment of accounts payable			33,000			33		16,467						16,500			-			16,500
Net loss and comprehensive loss	A, B, C(i), C(ii), D, E(i), E(ii), G(ii)										(10,006,456	)		(10,006,456	)		19,186			(9,987,270	)
Balance, December 31, 2008			23,546,370		$	14,855	$	14,772,880		$	(12,532,134	)	$	2,255,601		$	(260,009	)	$	1,995,592

F-17

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies used in preparation of these consolidated financial statements:

Principles of consolidation

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiary Delaware, its wholly-owned subsidiary LCM Cricket Ventures, its 98.2% (December 31, 2007 - 94.9%) interest in its subsidiary DHI, DHI’s wholly owned subsidiaries Importers, Acadia, and 612793, and LCM Cricket Ventures’ 50.05% interest in Global Cricket Venture. The comparative figures in 2007 include its 50.4% interest in FT (from January 1, 2007 until the sale of the Company’s controlling interest in FT on November 12, 2007). All significant intercompany balances and transactions are eliminated on consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of intangible assets, fair value measurement, related party transactions, stock based compensation, determination and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and for the periods that the consolidated financial statements are prepared. Actual results could differ from these estimates.

Business Combinations

On the acquisition of a subsidiary, the purchase method of accounting is used whereby the purchase consideration is allocated to the identifiable assets and liabilities on the basis of fair value at the date of acquisition. The Company considers critical estimates involved in determining any amount of goodwill, and tests for impairment of such goodwill as disclosed in its Goodwill accounting policy below.

Revenue recognition

Revenues and associated costs of goods sold from the on-line sales of products, currently consisting primarily of fragrances and other beauty products, are recorded upon delivery of products and determination that collection is reasonably assured. The Company records inventory as an asset for items in transit as title does not pass until received by the customer. All associated shipping and handling costs are recorded as cost of goods sold upon delivery of products.

Web advertising revenue consists primarily of commissions earned from the referral of visitors from the Company’s sites to other parties. The amount and collectibility of these referral commissions is subject to uncertainty; accordingly, revenues are recognized when the amount can be determined and collectibility can be reasonably assured. In accordance with Emerging Issues Task Force (“EITF”) 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, the Company records web advertising revenues on a gross basis.

Until the disposal of the Company’s shares in FrequentTraveller.com Inc. on November 12, 2007, revenues from the sales of travel products, including tours, airfares and hotel reservations, where the Company acted as the merchant of record and had inventory risk, were recorded on a gross basis. Customer deposits received prior to ticket issuance or 30-days prior to travel were recorded as deferred revenue. Where the Company did not act as the merchant of record and had no inventory risk, revenues were recorded at the net amounts, without any associated cost of revenue in accordance with EITF 99-19. See also Note 5.

Gains from the sale of domain names, whose carrying values are recorded as intangible assets, consists primarily of funds earned for the transfer of rights to domain names that are currently in the Company’s control. Revenues have been recognized when the sale agreement is signed and the collectibility of the proceeds is reasonably assured. In 2008, there was a sale of a geo-domain name for net proceeds of $369,041. Collectibility of the amounts owing on this sale are reasonably assured and therefore accounted for as a sale in the period the transaction occurred. There were no sales of domain names during 2007.

Gains from the sales-type leases of domain names, whose carrying values are recorded as intangible assets, consists primarily of funds earned over a period of time for the transfer of rights to domain names that are currently in the Company’s control. Collectibility of these revenues generated are reasonably assured and therefore accounted for as a sales-type lease in the period the transaction occurs. See also Note 12.

F-18

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currency transactions

The consolidated financial statements are presented in United States dollars. The functional currency of the Company is United States dollars. In accordance with FAS No. 52, Foreign Currency Translation , the foreign currency financial statements of the Company’s subsidiaries are translated into U.S. dollars. Monetary assets and liabilities are translated using the foreign exchange rate that prevailed at the balance sheet date. Revenue and expenses are translated at weighted average rates of exchange during the year and stockholders’ equity accounts and certain other historical cost balances are translated by using historical exchange rates. Any resulting exchange gains and losses are presented as cumulative foreign currency translation gains (losses) within other accumulated comprehensive income (loss). There was no effect to comprehensive income (loss) related to the share conversion with DHI.

Transactions denominated in foreign currencies are remeasured at the exchange rate in effect on the respective transaction dates and gains and losses are reflected in the consolidated statements of operations.

Comprehensive loss

Comprehensive loss includes all changes in equity of the Company during a period except those resulting from investments by shareholders and distributions to shareholders. Comprehensive income (loss) includes net income (loss) and other comprehensive income (loss) (“OCI”). The major components included in OCI are cumulative translation adjustments arising on the translation of the financial statements of self-sustaining foreign operations and unrealized gains and losses on financial assets classified as available-for-sale. The Company has no self-sustaining foreign operations or unrealized gains or losses on financial assets classified as available-for-sale.

Loss per share

Basic loss per share is computed by dividing losses for the period by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities by including other potential common stock in the weighted average number of common shares outstanding for a period and is not presented where the effect is anti-dilutive.

Cash and cash equivalents

The Company considers all highly liquid instruments, with original maturity dates of three months or less at the time of issuance, to be cash equivalents.

Accounts receivable and allowance for doubtful accounts

The Company’s accounts receivable balance consists primarily of goods and services taxes (GST) receivable, advertising revenues receivable and the balance receivable relating to its December 31, 2008 sale of a domain name as disclosed in Note 12. Per the Company’s review of open accounts and collection history, the accounts receivable balances are reasonably collectible and therefore no allowance for doubtful accounts has been reflected at year end.

Inventory

Inventory is recorded at the lower of cost or market using the first-in first-out (FIFO) method. The Company maintains little or no inventory of perfume which is shipped from the supplier directly to the customer. The inventory on hand as at December 31, 2008 is recorded at cost of $74,082 and represents inventory in transit from the supplier to the customer.

Deferred Financing Costs

Costs directly identifiable with the raising of capital are charged against the related capital stock. Costs incurred to obtain debt financing are deferred and amortized by a charge to interest expense over the term of the related debt. Debt financing fees are amortized and included as part of interest expense. During the period, financing costs were charged against the capital stock issued during the period in a private placement. As there were no debt financings, no financing costs were amortized to interest expense.

Deferred Acquisition Costs

Deferred acquisition costs are direct or incremental costs directly related to acquisitions, and are deferred and added to the cost of the purchase. Only costs that are directly related to proposed transactions, where completion is considered more likely than not, are deferred. Once the Company ceases to be engaged on a regular ongoing basis and it is not likely that activities will resume, the costs are expensed. During the period, deferred acquisition costs were expensed in full as it is not possible to predict whether the related acquisition activities will resume.

F-19

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property & Equipment

These assets are stated at cost. Minor additions and improvements are charged to operations, and major additions are capitalized. Upon retirement, sale or other disposition, the cost and accumulated depreciation are eliminated from the accounts, and a gain or loss is included in operations.

Amortization for equipment is computed using declining balance method at the following annual rates:

	Office Furniture and Equipment	20%
	Computer Equipment	30%
	Computer Software	100%
	Auction Software	3 years straight-line

Amortization for leasehold improvements is based on a straight-line method calculated over the term of the lease. Auction software is amortized straight line over the life of the asset. Other additions are amortized on a half-year basis in the year of acquisition.

Website development costs

The Company has adopted the provisions of EITF No. 00-2, Accounting for Web Site Development Costs , whereby costs incurred in the preliminary project phase are expensed as incurred; costs incurred in the application development phase are capitalized; and costs incurred in the post-implementation operating phase are expensed as incurred. Website development costs are stated at cost less accumulated amortization and are amortized using the straight-line method over its estimated useful life. Upgrades and enhancements are capitalized if they result in added functionality which enables the software to perform tasks it was previously incapable of performing. See also Note 9.

Intangible assets

The Company has adopted the provisions of FAS No. 142, Goodwill and Intangible Assets , which revises the accounting for purchased goodwill and intangible assets. Under FAS No. 142, intangible assets with indefinite lives are no longer amortized and are tested for impairment annually. The determination of any impairment would include a comparison of estimated future operating cash flows anticipated during the remaining life with the net carrying value of the asset as well as a comparison of the fair value to book value of the Company.

The Company’s intangible assets, which consist of its portfolio of generic domain names, have been determined to have an indefinite life and as a result are not amortized. Management has determined that there is no impairment of the carrying value of intangible assets at December 31, 2008.

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of the net assets of acquired entities. In accordance with FAS No. 142, Accounting for Goodwill and Other Intangible Assets . the Company is required to assess the carrying value of goodwill annually or whenever circumstances indicate that a decline in value may have occurred, utilizing a fair value approach at the reporting unit level. A reporting unit is the operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management.

The goodwill impairment test is a two-step impairment test. In the first step, the Company compares the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using a discounted cash flow approach. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. The activities in the second step include valuing the tangible and intangible assets and liabilities of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit’s goodwill based upon the residual of the summed identified tangible and intangible assets and liabilities.

The fair value of the Perfume.com reporting unit exceeded the carrying value of the assigned net assets, therefore no further testing was required and an impairment charge was not required.

F-20

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred Revenue

Revenue that has been received but does not yet qualify for recognition under the Company's policies is reflected as either deferred revenue or long-term deferred revenue.

Deferred Lease Inducements

Lease inducements, including rent free periods, are deferred and accounted for as a reduction of rent expense over the term of the related lease on a straight-line basis.

Advertising Costs

The Company recognizes advertising expenses in accordance with SOP 93-7, Reporting on Advertising Costs . As such, the Company expenses the costs of producing advertisements at the time production occurs or the first time the advertising takes place and expenses the cost of communicating advertising in the period during which the advertising space or airtime is used. Internet advertising expenses are recognized as incurred based on the terms of the individual agreements, which are generally: 1) a commission for traffic driven to the Website that generates a sale or 2) a referral fee based on the number of clicks on keywords or links to its Website generated during a given period. Total advertising expense in 2008 of $808,792 (2007 - $817,101) were reported in “Corporate Marketing” and “eCommerce Marketing” on the Company’s consolidated statements of operations.

Stock-based compensation

During the third quarter of 2007, the Company implemented the following new critical accounting policy related to its stock-based compensation. Beginning on July 1, 2007, the Company began accounting for stock options under the provisions of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS 123(R)), which requires the recognition of the fair value of stock-based compensation. Under the fair value recognition provisions for FAS 123(R), stock-based compensation cost is estimated at the grant date based on the fair value of the awards expected to vest and recognized as expense ratably over the requisite service period of the award. The Company has used the Black-Scholes valuation model to estimate fair value of its stock-based awards which requires various judgmental assumptions including estimating stock price volatility and expected life. The Company’s computation of expected volatility is based on a combination of historical and market-based volatility. In addition, the Company considers many factors when estimating expected life, including types of awards and historical experience. If any of the assumptions used in the Black-Scholes valuation model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period.

In August 2007, the Company’s Board of Directors approved an Incentive Stock Option Plan to make available 5,000,000 shares of common stock for the grant of stock options, including incentive stock options. Incentive stock options may be granted to employees of the Company, while non-qualified stock options may be granted to employees, officers, directors, consultants, independent contractors and advisors of the Company, provided such consultants, independent contractors and advisors render bona-fide services not in connection with the offer and sale of securities in a capital-raising transaction or promotion of the Company’s securities. See also Note 11.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FAS No. 123R and the conclusions reached by the EITF in Issue No. 96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.

Non-Controlling Interest

The consolidated financial statements include the accounts of DHI (and its subsidiaries). All intercompany accounts and transactions have been eliminated upon consolidation. The Company records non-controlling interest which reflects the 1.8% portion of the earnings of DHI and its subsidiaries allocable to the holders of the minority interest.

F-21

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income taxes

During the first quarter of 2007, the Company adopted the following new critical accounting policy related to income tax. Beginning on January 1, 2007, the Company began accounting for income tax under the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement 109, Accounting for Income Taxes , and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. 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 Company’s evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company’s evaluation was performed for the tax years ended December 31, 2002, 2003, 2004, 2005, 2006, 2007 and 2008, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2008. The Company may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to the Company’s financial results. In the event the Company has received an assessment for interest and/or penalties, it has been classified in the financial statements as selling, general and administrative expense.

Recent Accounting Pronouncements

FAS 168

In June, 2009, the FASB issued FAS No. 168, The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles – A Replacement of FASB Statement No. 162. The FASB Accounting Standards Codification TM (Codification) will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. This statement is effective for financial statements issued for fiscal years and interim periods beginning after September 15, 2009, which, for the Company, would be the fiscal year beginning January 1, 2010. The Company is currently assessing the impact of FAS No. 168 on its financial position and results of operations.

FAS 166

In June, 2009, the FASB issued FAS No. 166, Accounting for Transfer of Financial Assets – An Amendment of FASB Statement No. 140. The new standard is intended to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets: the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2009, which, for the Company, would be the fiscal year beginning January 1, 2010. The Company is currently assessing the impact of FAS No. 166 on its financial position and results of operations.

FAS 165

In May, 2009, the FASB issued FAS No. 165, Subsequent Events. The new standard is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This statement is effective for financial statements issued for interim or annual financial periods ending after June 15, 2009, which, for the Company, would be the interim period ending June 30, 2009. The Company does not expect that this Statement will result in a change in current practice.

F-22

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

FAS 162

In May, 2008, the FASB issued FAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles . The Company does not expect that this Statement will result in a change in current practice.

FAS 161

In March 2008, the FASB issued FAS No. 161, Disclosures about Derivative Instruments and Hedging Activities , an amendment of FAS No. 133 . FAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance and cash flows. Entities are required to provide enhanced disclosures about: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for under FAS No. 133 and its related interpretations; and how derivative instruments and related hedged items affect an entity's financial position, financial performance and cash flows. FAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, which, for the Company, would be the fiscal year beginning January 1, 2009. The Company is currently assessing the impact of FAS No. 161 on its financial position and results of operations.

FSP FAS 142-3

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, which for the Company, would be the fiscal year beginning January 1, 2009. The Company is currently assessing the impact of FSP FAS 142-3 on its financial position and results of operations.

FAS 141R

In December 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations ("141R"). FAS No. 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, preacquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under FAS No. 141R, changes in an acquired entity's deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. This standard will change accounting treatment for business combinations on a prospective basis. FAS No. 141R is effective for fiscal years beginning after December 15, 2008, which, for the Company, would be the fiscal year beginning January 1, 2009. The Company is currently assessing the impact of FAS No. 141R on its financial position and results of operations.

FAS 160

In December 2007, the FASB issued FAS No. 160 Noncontrolling Interests in Consolidated Financial Statements , and simultaneously revised FAS 141 Business Combinations . This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, which, for the Company, would be the fiscal year beginning January 1, 2009. An entity may not adopt the policy before the transitional date. The Company is currently assessing the impact of FAS No. 160 and the revision of FAS 141 on its financial position and results of operations.

F-23

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

FAS 159

The Company adopted FAS 159 in 2008. The adoption did not have a material effect on its financial results.

FAS 157

In February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2, which delays the effective date of FAS No. 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets and nonfinancial liabilities, except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis, which for the Company would be the fiscal year beginning January 1, 2009.

In 2008, the Company adopted FAS 157 for financial assets and liabilities recognized at fair value on a recurring basis. The adoption did not have a material effect on its financial results. The disclosures required by FAS 157 for financial assets and liabilities measured at fair value on a recurring basis as at December 31, 2008 are included in Note 4.

The Company will apply the requirements of FAS 157 for fair value measurements of financial and nonfinancial assets and liabilities not valued on a recurring basis in 2009. The Company is currently evaluating the effect of this application on its financial reporting and disclosures.

NOTE 4 – FINANCIAL INSTRUMENTS

Interest rate risk exposure

The Company currently has limited exposure to any fluctuation in interest rates.

Foreign exchange risk

The Company is subject to foreign exchange risk for sales and purchases denominated in foreign currencies. Foreign currency risk arises from the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the United States dollar. The Company does not actively manage this risk.

Concentration of credit risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, and trade accounts receivable. The Company limits its exposure to credit loss by placing its cash and cash equivalents on deposit with high credit quality financial institutions. Receivables arising from sales to customers are generally immaterial and are not collateralized. Management regularly monitors the financial condition of its customers to reduce the risk of loss.

F-24

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 4 – FINANCIAL INSTRUMENTS (continued)

Fair values of Financial Instruments

As described in Note 3, the Company adopted the provisions of FAS 157 as of January 1, 2008. FAS 157 defines fair value, establishes a consistent framework for measuring fair value, and expands disclosures for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. FAS 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, FAS 157 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1 - observable inputs such as quoted prices in active markets for identical assets and liabilities;

Level 2 - observable inputs such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other inputs that are observable, or can be corroborated by observable market data; and

Level 3 - unobservable inputs for which there are little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, investment in sales-type lease, accounts payable, amounts payable to the BCCI and IPL, bonuses payable, amounts due to shareholders of Auctomatic and warrants. The Company did not elect to value its financial assets or liabilities in accordance with FAS 159. The Company believes that the recorded values of all of its financial instruments approximate their fair values because of their nature and respective durations.

NOTE 5 – NON-CONTROLLING INTEREST

The Company currently holds 98.2% (December 31, 2007 – 94.9%) of the issued and outstanding shares of its principal operating subsidiary, DHI. During Q1 2008, DHI issued 40,086,645 shares to Live Current Media Inc. at fair value in exchange for a conversion of intercompany debt of $3,000,000, therefore diluting the non-controlling interest by 3.3%. This conversion was accounted for using the purchase method, resulting in an increase to goodwill of $66,692, and a credit against the non-controlling interest of $75,478 charged to income in the year.

Until November 12, 2007, the Company owned a 50.4% controlling interest in FrequentTraveller.com Inc. (“FT”), a private Nevada corporation incorporated on October 29, 2002. FT commenced operations in November 2003, providing travel services to customers online and by telephone. Since inception, FT had incurred expenses in excess of revenues and Live Current’s share of the net liabilities was $276,805 as at November 12, 2007. On this date, the Company sold its 50.4% shareholdings in FT to the other FT shareholder for no additional consideration, resulting in a gain equal to FT’s net liabilities. The following table summarizes the assets and liabilities foregone in exchange for the Company’s shareholding.

Assets
Cash	$	46,974
Accounts Receivable		7,570

Liabilities
Accounts payable and accrued liabilities		(176,312	)
Deferred Revenue		(111,857	)
Loan		(43,180	)

Net Liabilities	$	276,805

F-25

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 6 – GLOBAL CRICKET VENTURE

Memoranda of Understanding

On April 17, 2008, the Company signed a Memorandum of Understanding (“MOU” or “Original MOU”) with the Board of Control for Cricket in India (“BCCI”) and the DLF Indian Premier League (“IPL”). The MOU, which would be preliminary to a final agreement, starts the Company’s planned exploitation of its cricket.com domain name.

Certain other subsidiaries and ventures have been incorporated or formed to further this business opportunity, however none of them have significant assets or operations to date, nor have any material binding contracts been signed.

During 2008, the Company incurred $1.47 million in furtherance of this plan. There were no such costs in any period of 2007. The Company also incurred $1 million of liabilities in aggregate to the BCCI and IPL in respect of exclusive online content rights agreements.

As the plan to exploit cricket.com was in its early stages, all expenditures were charged to operations.

In August 2009, the Company transferred and assigned all its interests in the project, including its ownership of the cricket.com domain name, for cash and assumption by the third party of all past and future liabilities due to the BCCI and IPL. Refer to Note 19.

NOTE 7 – MERGER AGREEMENT

On March 25, 2008, the Company and its wholly owned subsidiary, Communicate.com Delaware, Inc. (“Delaware”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Entity, Inc., a Delaware corporation, (“Auctomatic”). The Company believed that Auctomatic’s technology framework and toolset will strengthen its commerce platform and Auctomatic’s team will dramatically enhance the Company’s product and technology capability.

The Merger Agreement closed on May 22, 2008 (the “Closing Date”). In connection with the Merger Agreement, the stockholders of Auctomatic received in total (i) $2,000,000 cash minus $152,939 in certain assumed liabilities and (ii) 1,000,007 shares of common stock of the Company (equal to $3,000,000 divided by $3.00 per share, the closing price of the Company’s common stock on the business day immediately preceding the Closing Date) in exchange for all the issued and outstanding shares of Auctomatic.

The consideration was payable on the Closing Date as follows: (i) 340,001 shares, or 34%, of the common stock and (ii) $1,200,000 less $152,939 in assumed liabilities. An additional 246,402 shares of common stock were issued and shall be distributed in equal amounts to the Auctomatic shareholders on each of the first, second and third anniversary of the Closing Date. The remaining $800,000 of the total Cash Consideration shall be distributed on the first anniversary of the Closing Date. All amounts of cash and common stock shall be distributed pro rata among the Auctomatic Stockholders.

The distribution of the remaining 413,604 shares of the common stock payable on the first, second and third anniversary of the Closing Date to the Auctomatic founders is subject to their continuing employment with the Company or a subsidiary on each Distribution Date. As these shares are contingent on future employment, they are considered contingent consideration and are required to be accounted for under FAS 123(R) as stock-based compensation. Subsequent to year end, one of the founders resigned from Live Current, and therefore the distribution of 137,868 shares of the common stock on the first, second and third anniversary will no longer be payable. The remaining 275,736 shares of the common stock owing to the other founders remain payable on the anniversary dates as noted above. See also Note 11.

At May 22, 2008, the present value of the amounts payable in cash to shareholders of Auctomatic on the first anniversary of the closing date was $640,000. At year end, the present value discount was accreted by $96,700, leaving a present value remaining at December 31, 2008 of $736,700.

Also at year end, $53,099 of cash owing at closing has yet to be paid to one of the Auctomatic shareholders. As a result, at year end, amounts payable to shareholders of Auctomatic totaled $789,799.

F-26

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 7 – MERGER AGREEMENT (continued)

The purchase price to affect the merger was allocated as following on the closing date:

Purchase Price Paid

Cash (net of assumed liabilities)	$	1,046,695
Transaction Costs		387,358

Cash consideration for Auctomatic		1,434,053

Present value of shares of common stock paid and payable to shareholders of Auctomatic		1,248,865
Present value of amounts payable to shareholders of Auctomatic		640,000

Total	$	3,322,918

Net Assets Acquired

Assets
Cash	$	3,066
Share subscriptions receivable		780
Computer hardware		7,663
Auction software		925,000
Goodwill		2,539,348

Less Liabilities
Accounts payable and accrued liabilities		(85,622	)
Loan payable		(67,317	)

Net Assets Acquired	$	3,322,918

To show effect to the merger of Auctomatic and Delaware as if the merger had occurred on January 1, 2008, the pro forma information for the nine months ended December 31, 2008 would have resulted in revenues that remain unchanged from those reported in the consolidated financial statements, no cumulative effect of accounting changes, and income before extraordinary items and net income which both would have decreased by $106,035. To show effect to the merger of Auctomatic and Delaware as if the merger had occurred on January 1, 2007, the comparative pro forma information for the year ended December 31, 2007 would have no effect to reported revenues, cumulative effect of accounting changes, income before extraordinary items or net income. See Note 19.

F-27

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 8 – PROPERTY & EQUIPMENT

2008	Cost		Accumulated Amortization		Net Book Value
Office Furniture and Equipment	$	165,868	$	30,778	$	135,090
Computer Equipment		100,789		51,554		49,235
Computer Software		27,276		13,638		13,638
Auction Software		925,000		179,861		745,139
Leasehold Improvements		142,498		42,749		99,749
	$	1,361,431	$	318,580	$	1,042,851

2007	Cost		Accumulated Amortization		Net Book Value
Office Furniture and Equipment	$	28.644	$	14,159	$	14,485
Computer Equipment		70,095		37,031		33,064
Leasehold Improvements		142,498		14,250		128,248
	$	241,237	$	65,440	$	175,797

NOTE 9 – WEBSITE DEVELOPMENT COSTS

Website development costs are related to infrastructure development of various websites that the Company operates. In previous years, costs qualifying for capitalization were immaterial and therefore were expensed as incurred. Website maintenance, training, data conversion and business process reengineering costs are expensed in the period in which they are incurred. Costs incurred in the application development phase are capitalized, and when the related websites reach the post-implementation operating phase, the Company begins amortizing these costs on a straight-line basis over 36 months beginning in the month following the implementation of the related websites.

	2008			2007
Website Development Costs	$	405,001		$	-
Less: Amortization		( 49,610	)		-
	$	355,391		$	-

During the year, the Company capitalized website development costs of $451,439. The Company expensed website development costs of $46,438 and corresponding accumulated amortization of $9,030 related to a domain name that was sold on December 31, 2008. The net effect of these amounts was offset against the gain from sales of domain names.

NOTE 10 – DEFERRED LEASE INDUCEMENTS

	2008			2007
Deferred Lease Inducements	$	75,518		$	95,656
Less: Current Portion		(20,138	)		(20,138	)
	$	55,380		$	75,518

F-28

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 11 – COMMON STOCK

a) Authorized

The authorized capital of the Company consists of 50,000,000 common shares with a par value of $0.001 per share. No other shares have been authorized.

b) Issued

At December 31, 2008, there were 23,546,370 (2007 – 21,446,683) shares issued and outstanding.

2008

In June 2008, the Company issued 586,403 shares of common stock in relation to the May 22, 2008 merger with Auctomatic. Of those total issued shares, 340,001 shares were distributed to the shareholders and an additional 246,402 shares are being held for future distribution in three equal installments on the next three anniversary dates of the merger pursuant to the terms of the merger agreement. The value of the stock consideration was added to the cash consideration in the Company’s determination of the purchase price. See also Note 7. The remaining 413,604 shares of common stock are reserved for future issuance to the Auctomatic founders and are being accounted for as stock-based compensation pursuant to FAS 123(R). See also Note 11c and Note 11d.

In May and June 2008, the Company issued 45,000 shares to an investor relations firm that had been engaged to provide investor relations services to the Company. Of the 45,000 shares, 30,000 shares with a value of $85,350 were issued as partial consideration for services rendered, while the remaining 15,000 shares with an estimated value of $42,300 were recorded as a prepaid expense in June 2008 for services to be rendered in July 2008. In July 2008, this amount was revalued to $36,573 based on the July average stock price and expensed with the difference between the estimated and actual values adjusted to Additional Paid-In Capital.

The Company also issued 50,000 warrants to the investor relations firm in May 2008, and expensed $45,500 in relation to the value of the warrants. See also Note 11(e).

In August 2008, the Company issued 33,000 shares to an investor relations firm that had previously been engaged to provide investor relations services to the Company. The contract with this former investor relations firm terminated August 1, 2008. The 33,000 shares owing to the firm had a value of $85,682 and were issued as full consideration for services rendered.

In August and September 2008, the Company issued 30,000 shares to an investor relations firm that had been engaged to provide investor relations services to the Company. These shares, which were valued at $57,254, were issued as partial consideration for services rendered during the year.

In October 2008, the Company cancelled 300,000 shares of common stock that had been pre-maturely issued in a prior year in anticipation of a transaction that was never consummated.

During November 2008, the Company accepted subscriptions from 11 accredited investors pursuant to which the Company issued and sold 1,627,344 units consisting of one share of the Company’s common stock and two warrants, each for the purchase of one-half a share of common stock. The price per unit was $0.65. The Company raised gross proceeds of $1,057,775 (the “Offering”). The private placement closed on November 19, 2008. One warrant is exercisable at $0.78 (a 20% premium) and expires November 19, 2010. The other warrant is exercisable at $0.91 (a 40% premium) and expires November 19, 2011. The Company incurred $86,803 in share issuance costs related to the private placement. The Company is required to use its reasonable best efforts to file an S-1 Registration Statement with the SEC to register for resale the common stock and the common stock underlying the warrants. The securities were offered and sold by the Company to accredited investors in reliance on Section 506 of Regulation D of the Securities Act of 1933, as amended. Refer to Note 11e.

In December 2008, the Company extinguished $16,500 of accounts payable by issuing 33,000 shares to the investor relations firm that had previously been engaged to provide investor relations services to the Company.

F-29

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 11 – COMMON STOCK (continued)

b) Issued (continued)

2008 (continued)

In October, November and December 2008, the Company issued 45,000 shares to an investor relations firm that had been engaged to provide investor relations services to the Company. These shares, which were valued at $39,000, were issued as partial consideration for services rendered.

2007

On May 24, 2007 the Company issued 60,284 shares of common stock to management in lieu of $59,078 of bonuses payable.

On June 11, 2007, the Company issued 1,000,000 shares of common stock and 1,000,000 common stock share purchase warrants to a company owned and controlled by the Company’s Chief Executive Officer (“CEO”) in exchange for $1,000,000 cash. See also Note 11(e). The warrants expire on June 10, 2009.

During September and October 2007 the Company accepted subscriptions from 11 accredited investors pursuant to which the Company issued and sold 2,550,000 of the Company’s shares of common stock at a price of $2.00 per share for total gross proceeds of $5,100,000 (the “Offering”). The shares were issued pursuant to the subscriptions as follows: 1,000,000 shares for $1,999,956 net cash proceeds were issued before September 30, 2007, and the balance of 1,550,000 shares for net cash proceeds of $3,099,944, were issued in October 2007. Pursuant to the terms of the Offering, the Company filed a registration statement on Form SB-2 with the Securities and Exchange Commission (the “Registration Statement”) before December 31, 2007 covering the resale of the common stock (the “Registerable Securities”) sold. The Company is further required to use its reasonable best efforts to maintain the Registration Statement effective for a period of (i) two years or (ii) until such time as all the Registerable Securities are eligible for sale under Rule 144 of the Securities Act of 1933, as amended. The securities were offered and sold by the Company to accredited investors in reliance on Section 506 of Regulation D of the Securities Act of 1933, as amended.

c) Reserved

2008

At the year end, the Company reserved 413,604 shares of common stock for future issuance and distribution in relation to the May 22, 2008 merger with Auctomatic. These shares were to be issued to the Auctomatic founders in three equal instalments on the next three anniversary dates of the merger contingent on their continued employment with the Company pursuant to the terms of the merger agreement. Subsequent to year end, one of the Auctomatic founders resigned from the Company. As a result, 137,868 shares reserved for distribution to this individual have been released subsequent to year end and are no longer payable. Pursuant to the release, the balance of reserved shares of common stock for future issuance and distribution is 275,736. See also Note 7 and Note 11d.

d) Stock Options

The Board of Directors and stockholders approved the 2007 Stock Incentive Plan and adopted it 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 immediately to five years and no options will be exercisable for a period of more than ten years.

All stock options noted herein vest over three years and are exercisable for a period of five years based on the date of grant. The Company values the options granted to employees and directors using the Black Scholes option pricing model at the date of grant. The Company values the options to consultants at each reporting period under FAS 123(R) for non-employees using the Black Scholes option pricing model.

F-30

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 11 – COMMON STOCK (continued)

d) Stock Options

The assumptions used in the pricing model include:

	2008	2007
Dividend yield	0%	0%
Expected volatility	64.86%-75.68%	118.02%
Risk free interest rate	1.62% - 3.07%	3.97% - 4.05%
Expected lives	3.375 years	3.375 years

(i)	On September 11, 2007, the Company granted a total of 1,200,000 stock options at an exercise price of $2.50 per share. 1,000,000 options were granted to the Company’s CEO and 100,000 options were granted to each of two directors. These options have a fair value of $1.50-$1.54 per option granted.

(ii)	On September 11, 2007, the Company granted 50,000 stock options at an exercise price of $2.50 per share to a consultant. These options have a fair value of $0.06 per option granted at December 31, 2008.

(iii)

On October 1, 2007, the Company granted to its Chief Operating Officer (“COO”) 1,500,000 options at an exercise price of $2.04 per share. These options have a fair value of $1.23 per option granted. All of these options were forfeited subsequent to year end.

(iv)	On January 1, 2008, the Company granted to its Chief Corporate Development Officer (“CCDO”) 1,000,000 options at an exercise price of $2.06 per share. These options have a fair value of $1.19 per option granted.

(v)	On January 7, 2008, the Company granted to its Vice President, Finance (“VP Finance”) 150,000 options at an exercise price of $1.98 per share. These options have a fair value of $1.14 per option granted.

(vi)	On March 14, 2008, the Company granted to a director 100,000 options at an exercise price of $2.49 per share. These options have a fair value of $1.32 per option granted.

(vii)

On May 27, 2008, the Company granted to its Vice President, General Counsel (“VP GC”) 125,000 options at an exercise price of $3.10 per share. These options have a fair value of $1.63 per option granted.

(viii)

Between January 1, 2008 and December 31, 2008, the Company granted to its full-time corporate directors a total of 425,000 options at a range of exercise prices between $2.06 and $3.30 per share. These options have a fair value of between $1.19 and $1.58 per option granted. 25,000 of these options were forfeited during 2008, and an additional 100,000 options were forfeited subsequent to year end.

(ix)

Between January 1, 2008 and December 31, 2008, the Company granted to its full-time employees a total of 290,000 options at a range of exercise prices between $0.65 and $3.10 per share. These options have a fair value of between $0.32 and $1.58 per option granted. 17,500 of these options have been forfeited during 2008, and an additional 92,500 options were forfeited subsequent to year end.

(x)	Between January 1, 2008 and December 31, 2008, the Company granted to consultants a total of 70,000 options at exercise prices ranging from $2.06 to $2.49 per share. All of these options were forfeited during 2008.

F-31

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 11 – COMMON STOCK (continued)

d) Stock Options (continued)

The Company recognizes stock-based compensation expense over the requisite service period of the individual grants, which generally equals the vesting period. FAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Due to recent economic developments, the Company has experienced a high level of forfeitures during the fourth quarter of 2008 and subsequent to year end. 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 slightly 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 fair value of these options at December 31, 2008 of $5,824,833 (2007 - $3,716,714) will be recognized on a straight-line basis over a vesting term of 3 years and accordingly an expense has been recognized in the year ended December 31, 2008 of $1,992,461 (2007 - $409,057) and included in management fees and employee salaries expense.

On May 22, 2008, the Company reserved 413,604 shares of common stock for future issuance and distribution in relation to the merger with Auctomatic. These shares were to be issued to the Auctomatic founders in three equal instalments on the next three anniversary dates of the merger contingent on their continued employment with the Company pursuant to the terms of the merger agreement. As these shares are contingent on future employment, they are considered contingent consideration and are required to be accounted for under FAS 123(R) as stock-based compensation. Subsequent to year end, 137,868 of these shares were forfeited. See also Note 7. All such shares have been valued using the Black Scholes option pricing model at the date of grant using a 3 year term and a 33% forfeiture rate. The Company assesses forfeiture rates for these shares consistent to its analysis of granted options. The Auctomatic founders are considered corporate directors, along with some other employees. The forfeiture rate of 33% among Auctomatic founders alone is consistent with a 25% forfeiture rate for the whole class of corporate directors.

The fair value of these shares at December 31, 2008 of $1,157,049 (2007 - $Nil) will be recognized on a straight-line basis over a vesting term of 3 years and accordingly, an expense has been recognized in the year ended December 31, 2008 of $170,065 (2007 - $Nil) and included in management fees and employee salaries expense.

A summary of the option activity under the 2007 Plan during 2007 and 2008 is presented below:

Options	Shares		Weighted Average Exercise Price $		Fair Value $
Options outstanding, January 1, 2007		-		-		-
Granted		2,750,000		2.25		0.06 – 1.54
Exercised		-		-		-
Cancelled or expired		-		-		-
Options outstanding, December 31, 2007		2,750,000		2.25		0.06 – 1.54
Granted		2,160,000		2.34		0.32 – 1.63
Exercised		-		-		-
Cancelled or expired		112,500		2.29		1.19
Options outstanding, December 31, 2008		4,797,500		2.29		0.06 – 1.63

Options vested at December 31, 2008		2,750,000		2.25		0.06 – 1.63
Weighted average remaining life	3.90 Years

F-32

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 11 – COMMON STOCK (continued)

e) Common Stock Purchase Warrants

2008

On May 1, 2008, the Company issued 50,000 common stock share purchase warrants with an exercise price of $2.33 to its investor relations firm in connection with a services agreement. The warrants expire May 1, 2010. The Company valued these options using the Black Scholes option pricing model using the following assumptions: no dividend yield; expected volatility rate of 69.27%; risk free interest rate of 2.37% and an expected life of 2 years resulting in a fair value of $0.91 per warrant granted, and a total fair value of $45,500.

In connection with the private placement in November 2008, the Company issued 1,627,344 warrants for the purchase of one-half share of the Company’s common stock with an exercise price of $0.78 expiring November 19, 2010 and 1,627,344 warrants for the purchase of one-half share of the Company’s common stock with an exercise price of $0.91 expiring November 19, 2011. The Company valued the warrants expiring November 19, 2010 using the Black Scholes option pricing model using the following assumptions: no dividend yield; expected volatility rate of 75.24%; risk free interest rate of 1.09% and an expected life of 1 year. This resulted in a fair value of $0.09 per warrant. The Company valued the warrants expiring November 19, 2011 also using the Black Scholes option pricing model using the following assumptions: no dividend yield; expected volatility rate of 70.53%, risk free interest rate of 1.36% and an expected life of 2 years. This resulted in a fair value of $0.10 per warrant. The total fair value of both warrants at November 19, 2008 and December 31, 2008 was $157,895. The warrants issued are contingently redeemable in cash in certain circumstances which may not all be within the Company’s control. As a result, the accounting treatment for the warrants falls under EITF 00-19, and their fair value of $157,895 is recorded as a liability. Any future changes to the fair value of the warrants will be adjusted to the statement of operations in the period in which the change in fair value occurs.

2007

On June 11, 2007, in connection with the issuance of 1,000,000 common shares to a company owned and controlled by the Company’s Chief Executive Officer (“CEO”), the Company also issued 1,000,000 common stock share purchase warrants with an exercise price of $1.25. The warrants expired June 10, 2009.

As of December 31, 2008, 4,304,688 warrants to purchase the Company’s common stock remain outstanding as follows:

			Weighted
	Outstanding		Average Exercise		Date of
	Warrants		Price		Expiry
Warrants outstanding, January 1, 2007		-	$	-
Granted June 11, 2007		1,000,000		1.25	June 10, 2009
Cancelled or expired		-		-
Warrants outstanding, December 31, 2007		1,000,000		1.25
Granted May 1, 2008		50,000		2.33	May 1, 2010
Granted November 19, 2008		1,627,344		0.78	November 19, 2010
Granted November 19, 2008		1,627,344		0.91	November 19, 2011
Cancelled or expired		-		-
Warrants exercisable December 31, 2008		4,304,688	$	0.96

Weighted average remaining life	1.92 Years

F-33

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 12 – DOMAIN NAME LEASES AND SALES

On January 17, 2008, the Company entered into an agreement to lease one domain name to an unrelated third party for CDN$200,000. The terms of the agreement provide for the receipt of this amount in five irregular lease payments over a two-year term. The first payment of CDN$25,000 was due on January 17, 2008 (the “Effective Date”), CDN$45,000 was due 3 months after the Effective Date, CDN$80,000 was due 6 months after the Effective Date, CDN$25,000 is due 1 year after the Effective Date, and CDN$25,000 is due 2 years after the Effective Date. The Company will lease the domain name to the third party exclusively during the term of the agreement. Title and rights to the domain name will be transferred to the purchaser only when full payment is received at the end of the lease term. If the third party defaults on any payments, the agreement terminates, funds received to date are forfeited by the lessee, and rights to the domain name return to the Company. This transaction was recorded as a sales-type lease in 2008. The investment in a sales-type lease of $163,963 was recorded on the balance sheet on a net basis after the lease payments received to date. The gain of $168,206 was recorded at the present value of the lease payments over the term, net of the cost of the domain name, at an implicit rate of 6%. Payments have been collected to date according to the terms of the agreement.

On December 31, 2008, the Company entered into an agreement to sell one domain name to an unrelated third party for CDN$500,000. The terms of the agreement provided for the receipt of CDN$476,190 on December 31, 2008 and the balance of CDN$23,810 by March 31, 2009. The title of the domain name transferred to the buyer at December 31, 2008 and collection of the balance is reasonably assured, therefore the disposal and resulting gain of USD$293,215 was recorded on December 31, 2008.

There were no sales of domain names in the 2007 fiscal year.

NOTE 13 – OTHER EXPENSES

In 2008, the Company incurred various restructuring costs of $708,804. These included approximately $168,400 in severance payments to the former Chief Financial Officer (“CFO”), $25,700 in consulting fees to the former CFO to aid with transition of the new management team, $317,100 in signing bonuses to the new Chief Corporate Development Officer and the new Vice President Finance, additional severance of $53,600 paid to full time employees, $39,800 in costs related to changing the Company name and rebranding, $31,700 in valuation costs relating to the first quarter share issuance of DHI shares to the Company, $45,000 in financing costs relating to transactions with investment bankers that are no longer being pursued, and $27,300 in some final windup costs related to the FT disposition in late 2007.

In 2007, the Company incurred costs relating to restructuring, recruiting and relocating expenses associated with attracting the new management team totaling $637,730. Such costs included a $205,183 severance payment to the former Chief Executive Officer, $30,558 in consulting fees to the former Chief Executive Officer, a $205,183 signing bonus to the new President and Chief Operating Officer, $196,806 of general legal costs associated with the preparation of employment agreements, severance agreements and stock option agreements.

NOTE 14 – INCOME TAXES

The Company’s subsidiaries, DHI, Acadia, Importers, and 612793 are subject to federal and provincial taxes in Canada. The Company, its subsidiaries Delaware and FT (until the date of disposition of FT on November 12, 2007) are subject to United States federal and state taxes.

As at December 31, 2008, the Company and its US subsidiaries have net operating loss carryforwards of approximately $4,138,000 and capital loss carryforwards of $120,000 that result in deferred tax assets. The Company’s Canadian subsidiaries have non capital loss carryforwards of approximately $6,187,000 that result in deferred tax assets. These loss carryforwards will expire, if not utilized, through 2028. The Company’s subsidiary DHI also has approximately $896,300 in undepreciated capital costs relating to property and equipment that have not been amortized for tax purposes. The costs may be amortized in future years as necessary to reduce taxable income. Management believes that the realization of the benefits from these deferred tax assets is uncertain and accordingly, a full deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded.

F-34

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 14 – INCOME TAXES (continued)

The Company’s actual income tax provisions differ from the expected amounts determined by applying the appropriate combined effective tax rate to the Company’s net income before taxes. The significant components of these differences are as follows:


	2008			2007
Income (Loss) before income taxes	$	(10,027,659	)	$	(1,970,571	)
Combined corporate tax rate		35.0	%		34.1	%

Expected corporate tax recovery (expense)		3,509,681			672,359

Effective foreign tax rate adjustment		(158,651	)		-

Increase (decrease) resulting from:
Non-taxable gain on disposal		-			146,937
Effect of tax rate changes		(129,720	)		(195,193	)
Reduction in future tax benefits related to Auctomatic		(219,980	)		-
Reduction in future tax benefits related to intangible assets		(91,309	)		-
Non-taxable portion of domain name sales		143,041			-
Stock based compensation		(701,983	)		(139,570	)
Non-deductible items and other		(176,776	)		7,735
Exchange adjustment to foreign denominated future tax assets		(71,806	)		199,870
Change in valuation allowance due to disposal of subsidiary		-			(271,460	)
Change in valuation allowance		(2,102,497	)		(420,678	)

Provision for income taxes	$	-		$	-

The tax effects of temporary differences that give rise to significant components of future income tax assets and liabilities are as follows:

	2008			2007

Deferred income tax assets:
Operating losses available for future periods	$	3,056,863		$	752,303
Property and equipment in excess of net book value		-			477,792
Other differences		24,134			-

		3,080,997			1,230,095
Deferred income tax liabilities
Property and equipment in excess of net book value		(28,325	)		-
Indefinite life intangible assets		(206,370	)		(246,759	)
Other differences		-			(279,920	)

		2,846,302			703,416
Valuation allowance		(3,052,672	)		(950,175	)

Net deferred income tax liability	$	(206,370	)	$	(246,759	)

The Company has a deferred tax liability related to potential taxes owing on potential gains on disposal of its domain name intangible assets. GAAP does not permit taxable temporary differences associated with indefinite life intangible assets to be considered as evidence to otherwise reduce a valuation allowance associated with deductible timing differences in the same entity. The Company has recorded a related deferred tax liability and recovery in its consolidated financial statements at December 31, 2008 and December 31, 2007.

F-35

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 15 – SEGMENTED INFORMATION

The Company’s eCommerce operations have historically been conducted in three business segments, Domain Advertising, eCommerce Products, and eCommerce Services. The business segment of eCommerce services ended upon the termination of the Company’s relationship with FT on November 12, 2007.

During 2008, the Company began offering international shipping on its Perfume.com website. The operations from Perfume.com are included as the eCommerce Products business segment. The sales generated from regions other than North America have been immaterial during the year, and therefore no geographic segment reporting is required for 2008.

Revenues, operating profits and net identifiable assets by business segments are as follows:

For the year ended December 31, 2008

				eCommerce			eCommerce		Total
	Advertising			Products			Services
		$			$			$		$
Revenue		93,140			9,271,693			-		9,364,833
Segment Loss		(2,838,178	)		(5,221,108	)		-		(8,059,286	)

As at December 31, 2008		$			$			$		$
Total Assets		1,665,723			6,082,595			-		7,748,318
Intangible Assets		1,398,417			189,046			-		1,587,463

For the year ended December 31, 2007

				eCommerce			eCommerce			Total
	Advertising			Products			Services
		$			$			$			$
Revenue		449,613			8,097,315			480,591			9,027,519
Segment Loss		(644,647	)		(1,644,685	)		(169,508	)		(2,458,840	)

As at December 31, 2007		$			$			$			$
Total Assets		1,384,718			8,196,489			-			9,581,207
Intangible Assets		1,384,718			260,343			-			1,645,061

The reconciliation of the segment profit to net loss before taxes as reported in the consolidated financial statements is as follows:

	2008			2007

Segment Loss	$	(8,059,286	)	$	(2,458,840	)
Other (Income) and Expenses
Global Cricket Venture expenses		(1,476,255	)		-
Global Cricket Venture minimum lease payments		(1,000,000	)
Gains from sales and sales-type lease of domain names		461,421			-
Accretion expense		(96,700	)		-
Interest and investment income		67,683			119,574
Minority Interest		75,478			91,890
Gain on Disposal of Investment of FrequentTraveler.com Inc.					276,805
Net loss and comprehensive loss before taxes for the year	$	(10,027,659	)	$	(1,970,571	)

Substantially all property and equipment and intangible assets are located in Canada.

F-36

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 16 – COMMITMENTS

Premise Lease

Effective October 1, 2007 the Company leased its office in Vancouver, Canada from an unrelated party for a 5-year period from October 1, 2007 to September 30, 2012. Pursuant to the terms of the lease agreement, the Company is committed to basic rent payments expiring September 30, 2012 as follows.

	CDN $
2009	116,188
2010	121,531
2011	126,873
2012	98,159

The Company will also be responsible for common costs currently estimated to be equal to approximately 75% of basic rent.

Cricket Venture

The MOU with the BCCI and the IPL requires the Company to pay both the BCCI and the IPL minimum payments over the next ten years, beginning on October 1, 2008. See also Note 6. Pursuant to the terms of the MOU, the future minimum payments are listed in the table below.

	BCCI USD$	IPL USD$	TOTAL USD $
2009	2,625,000	1,625,000	4,275,000
2010	3,000,000	2,000,000	5,000,000
2011	3,750,000	2,500,000	6,250,000
2012	3,000,000	2,000,000	5,000,000
2013	3,000,000	2,000,000	5,000,000
2014	3,000,000	2,000,000	5,000,000
2015	3,000,000	2,000,000	5,000,000
2016	3,000,000	2,000,000	5,000,000
2017	3,250,000	2,250,000	5,500,000
2018	1,750,000	1,250,000	3,000,000

On or about October 1, 2008, the Company was scheduled to make payments to the BCCI and the IPL in the amounts of $625,000 and $375,000, respectively, in connection with Global Cricket Venture. The payments owed to the BCCI were renegotiated, although a formal amendment to the MOU had not been signed at December 31, 2008. The parties agreed that the October 1, 2008 payment would be decreased by $500,000, to $125,000, and that the payment of $750,000 that was due to be made on October 1, 2009 would be eliminated entirely. The amounts due to the IPL were not changed. Given that these renegotiated amounts had not yet been memorialized in writing, on October 1, 2008 the Company accrued and expensed the initial amounts owing to the BCCI of $625,000 and to the IPL of $375,000.

The commitment schedule above reflects the original commitments according to the MOUs, not including any of the parties’ renegotiations. Such payments may be subject to certain withholding or other taxes which the Company may be required to gross up pursuant to the terms of the MOU. These terms were further renegotiated in March 2009. In August 2009, an unrelated third party agreed to assume and be liable for all past and future obligations and liabilities of GCV. See Note 19.

F-37

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 17 – CONTINGENCY

A former Chief Executive Officer of DHI commenced a legal action against DHI on March 9, 2000 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 in an approximate amount of $30,000, aggravated and punitive damages, interest and costs. On June 1, 2000, DHI filed a Defense and Counterclaim against this individual claiming damages and special damages for breach of fiduciary duty and breach of his employment contract. The outcome of these legal actions is currently not determinable and as such the amount of loss, if any, resulting from this litigation is presently not determinable. To date, there has been no further action taken by the plaintiff since the filing of the initial legal action on March 9, 2000.

NOTE 18 – RELATED PARTY TRANSACTIONS

The Company issued shares of common stock to related parties pursuant to private placements in 2007 and 2008 as follows:

2008

On November 19, 2008, the Company closed a private placement financing in which Mr. Hampson invested $126,750. Mr. Hampson received 195,000 restricted shares of common stock, two-year warrants to purchase 97,500 common shares at an exercise price of $0.78, and three-year warrants to purchase 97,500 common shares at an exercise price of $0.91.

On November 19, 2008, the Company closed a private placement financing in which Jonathan Ehrlich, its then President and Chief Operating Officer, invested $25,000. Mr. Ehrlich received 38,461 restricted shares of common stock, two-year warrants to purchase 19,230 common shares at an exercise price of $0.78, and three-year warrants to purchase 19,230 common shares at an exercise price of $0.91.

On November 19, 2008, the Company closed a private placement financing in which Mark Melville, its Chief Corporate Development Officer, invested $35,000. Mr. Melville received 53,846 restricted shares of common stock, two-year warrants to purchase 26,923 common shares at an exercise price of $0.78, and three-year warrants to purchase 26,923 common shares at an exercise price of $0.91.

2007

On September 24, 2007, the Company closed a $5,100,000 private placement financing in which Mr. Hampson invested $110,000. Mr. Hampson received 55,000 restricted shares of the Company’s common stock.

On June 11, 2007, the Board of Directors of Live Current issued 1,000,000 shares of common stock and warrants to purchase up to 1,000,000 additional shares of restricted common stock at the price of $1.25 effective until June 10, 2009 to Hampson Equities Ltd., a company owned and controlled by C. Geoffrey Hampson, the Company’s Chief Executive Officer, pursuant to a subscription agreement dated June 1, 2007. The amount of the subscription was $1,000,000.

The Company has not entered into any other significant related party transactions with individuals or companies either owned or subject to significant influence by management, directors, and principal shareholders.

F-38

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 19 – SUBSEQUENT EVENTS

Global Cricket Venture

On March 31, 2009, the Company, its recently formed subsidiary GCV, the BCCI and the IPL amended the MOUs. The Company and the BCCI jointly entered into a Termination Agreement, pursuant to which the BCCI Memorandum was terminated. The Company, Global Cricket Venture and the BCCI, on behalf of the IPL, entered into a Novation Agreement with respect to the IPL Memorandum. Under the Novation Agreement, the $1 million owing at December 31, 2008 was reduced to $500,000. The responsibility for this payment and the benefits associated with the MOU formerly held by the Company were transferred to GCV.

In August 2009, GCV transferred and assigned to an unrelated third party (“CricketCo”) all of its rights, title, and interest in and to the original MOU with the IPL, as the original MOU was amended by the Novation Agreement that was signed on March 31, 2009. Pursuant to this agreement, CricketCo also agreed to assume and be liable for all past and future obligations and liabilities of GCV arising from the original MOU, as it was amended by the Novation. The Company has also agreed to sell the domain name cricket.com to a company related to CricketCo whereby the Company will sell the cricket.com domain name, along with the website, content, copyrights, trademarks, etc., for consideration of four equal payments of $250,000. The cricket.com domain name shall remain the property of the Company until all payments have been made. The Company cannot determine the financial impact of this transaction at this time.

Auctomatic

In August 2009, the Company reached an agreement with twelve of the eighteen Auctomatic shareholders to convert $424,934 of the $800,000 payable into a convertible interest bearing note with a one year term. The payment due date is May 22, 2010.

Also in August 2009, the Company reached an agreement with the remaining two founders of Auctomatic which terminates their employment. Under their severance agreements, the Company will repay the amounts owed under the Merger Agreement at a 10% discount to face value, and will record an additional $60,000 in severance costs due to them under their employment agreements. In consideration of these payments, these individuals have each agreed to forfeit their rights to 91,912 shares of Live Current common stock that were due to be issued to each of them in May 2010 and May 2011 under the Merger Agreement.

The Company no longer has any intention of using the software as a platform for the development of any of its domain names. It has now adapted a different platform for Perfume.com, and will use platforms developed by the Company’s partners for Karate.com and likely any future partnerships. The Company believes that any resale value of the software without the individuals who built it is minimal. In Q1 of 2009, one founder of Auctomatic left the Company, and subsequent to Q2 of 2009, the other two founders of Auctomatic were terminated. The auction software that was acquired pursuant to the Merger Agreement was developed by these three founders. As all founders of Auctomatic are no longer employed, the Company no longer has any individuals who can understand or modify the technology. As a result, the Company believes that the auction software is impaired and will write off its net book value of $590,973 at the end of the second quarter of 2009.

Employment Severance Agreement

Pursuant to the terms and conditions of an employment severance agreement dated February 4, 2009 (the “COO Severance Agreement”) between the Company and its former President and Chief Operating Officer (“COO”), the COO resigned as the Company’s President and Chief Operating Officer and as an officer of the Company’s subsidiaries effective January 31, 2009. The Company has agreed to pay the COO CDN$600,000, which consists of a severance allowance in the amount of CDN$298,000 and an accrued special bonus in the amount of CDN$250,000, less any and all applicable government withholdings and deductions, as well as other benefits in the amount of CDN$52,000. The severance allowance and other benefits will be paid over a period of 12 months. The accrued special bonus was expensed in 2008 when it became due and is included in bonuses payable at the year end. The other benefits were owing to the COO before his resignation. The payment of the net amount of the accrued special bonus is to be converted to equity and paid in restricted shares of the Company’s common stock over a period of 12 months. The number of shares of common stock to be issued for each payment will be computed using the closing price of the common stock on the 15 th day of each month or, in the event that the 15 th day is not a trading day, on the trading day immediately before the 15 th day of the month. The Company has expensed the severance allowance in the first quarter of 2009.

F-39

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 19 – SUBSEQUENT EVENTS (continued)

Employment Severance Agreement (continued)

In June 2009, the Company and the COO renegotiated the payment terms of the amounts under the COO Severance Agreement. As of September 1, 2009, the remaining severance allowance and additional benefits to be paid shall be paid in equal semi-monthly instalments over a remaining period of ten months instead of five months, and therefore will continue through June 30, 2010. In addition, the COO deferred the net monthly equity payments that the Company was obligated to pay him during the 2009 calendar year to December 31, 2009.

Stock Issuances

On January 2, 2009, the Company issued 15,000 shares to the investor relations firm that was engaged to provide investor relations services to the Company. This was the Company’s final share issuance to this investor relations firm. The agreement has been terminated.

On January 8, 2009, the Company entered into an agreement whereby $120,776 of its accounts payable were extinguished in exchange for the issuance of 345,075 shares of its common stock. As a result of this agreement, 172,538 shares were issued on January 22, 2009 and 172,537 shares were issued on February 20, 2009.

On April 9, 2009, the Company entered into an agreement whereby $8,625 of its accounts payable were extinguished in exchange for the issuance of 27,823 shares of its common stock, which were issued on April 14, 2009.

On June 17, 2009, the Company issued 45,956 shares of its common stock to each of the two Auctomatic founders remaining employed with the Company as required under the Merger Agreement (Note 7), for a total of 91,912 shares.

Stock Option Plan

In January 2009, 1,692,500 stock options were forfeited.

On March 25, 2009, a total of 115,000 stock options were granted to five of its full-time employees at an exercise price of $0.30 per share.

On March 25, 2009, the Company’s Board of Directors reduced the exercise price of all outstanding stock options granted pursuant to the Live Current Media Inc. Stock Incentive Plan to $0.65. These options are held by its officers, directors, employees, consultants and agents. The incremental value of $213,895 relating to the fair values at the date of the reduction in price has been included in the period expense during the first quarter of 2009.

In April and May 2009, a total of 10,000 stock options were granted to two of the Company’s full-time employees at exercise prices between $0.30 and $0.35.

F-40

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 19 – SUBSEQUENT EVENTS (continued)

Sales of Domain Names

In February 2009, the Company sold a domain name for $1.25 million, to be paid in irregular instalments between February 2009 and February 2010. Due to the uncertainty regarding the collectibility of the funds in the future, amounts received were recorded as a gain on sale of a domain name. This agreement was breached by the buyer in May 2009, and the buyer forfeited a total of $355,000 that had already been paid to the Company in February, March, April and May 2009. Under the terms of the agreement, the Company retained the receipted payments and ownership of the domain name. The Company retained the rights to renegotiate payment terms with the original buyer or enter into a new arrangement with a new buyer. In August 2009, the Company sold this domain name for net proceeds of $990,000 to an unrelated buyer, the payment of which was received in full upon execution of the agreement. See Note 12.

In February 2009, the Company sold a domain name for net $360,000, to be paid in one full instalment.

In April 2009, the Company sold a domain name for net proceeds of $360,000, which was paid in full upon execution of the agreement.

In July 2009, the Company sold three domain names for net proceeds of $652,500, the payments of which were received in full shortly after execution of the agreements.

In August 2009, the Company sold the domain name www.cricket.com as disclosed above.

NOTE 20 – COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the basis of presentation adopted in the current period.

F-41

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 21 – RESTATED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables illustrate selected unaudited consolidated statement of operations data for each restated quarter of fiscal 2008 as described in Note 2.

As at March 31, 2008	Reference	As previously reported			Restatement adjustment			As restated
ASSETS
Current assets		$	5,353,567		$	-		$	5,353,567
Other assets	(i)		2,232,194			66,692			2,298,886
Total Assets		$	7,585,761		$	66,692		$	7,652,453

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	(ii), (iii)		1,351,599			215,025			1,566,624
Other Liabilities	(i), (v)		70,483			270,731			341,214
Total Liabilities			1,422,082			485,756			1,907,838

STOCKHOLDERS' EQUITY
Common Stock			12,456			-			12,456
Additional paid-in capital	(iv)		10,671,119			(57,394	)		10,613,725
Accumulated deficit	(i) to (vi)		(4,519,896	)		(361,670	)		(4,881,566	)
Total Stockholders' Equity			6,163,679			(419,064	)		5,744,615
Total Liabilities and Stockholders' Equity		$	7,585,761		$	66,692		$	7,652,453

For the three months ended March 31, 2008

Gross Profit		$	362,417		$	-		$	362,417
Total Expenses	(ii), (iii), (iv), (vi)		2,512,022			148,929			2,660,951
Total Other Income (Expenses)	(i)		155,387			51,506			206,893

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(1,994,218	)	$	(97,423	)	$	(2,091,641	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.10	)		(0.00	)	$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED			19,970,334						19,970,334

(i)

The Company recorded goodwill of $66,692 in relation to the debt conversion between a subsidiary, Domain Holdings Inc., and the parent company, Live Current Media Inc. as disclosed in Note 5. There was an increase to the non-controlling interest during the quarter of $15,186 and a credit to the non-controlling interest included in Other Income and Expenses of $51,506. The carry forward effect of the non-controlling interest from December 31, 2007 was an increase of $8,786.

(ii)	The Company recorded as an additional liability and compensation expense $35,315 for bonuses of CDN $100,000 each that are to be paid to its President and Chief Corporate Development Officer on January 1, 2009 and on January 1, 2010.

(iii)

The Company recorded as an additional liability and compensation expense $88,287 for bonuses of CDN $250,000 each that were to be paid to its former President on October 1, 2008 and on October 1, 2009. The carry forward effect to these bonuses payable (current liabilities) from December 31, 2007 amounted to $91,423.

F-42

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 21 – QUARTERLY FINANCIAL DATA (UNAUDITED) (continued)

(iv)

The Company revised its estimate relating to the estimated life of its granted stock options. The revised estimated life of 3.375 years resulted in a decrease to its stock based compensation expense of $38,423 and a corresponding decrease to Additional paid-in capital. There was also a corresponding carry forward effect to Additional paid-in capital from December 31, 2007 resulting in a decrease of $18,971.

(v)

The Company accrued and expensed deferred taxes relating to an estimated potential future tax liability on future gains on sales of its domain name intangible assets. The carry forward effect from December 31, 2007 to liabilities was an increase of $246,759, with a corresponding increase in Opening Accumulated Deficit.

(vi)	The Company recorded additional Corporate General and Administrative expenses of $63,750 during the quarter for the accrual of audit fees that were reversed from the accounts for the year ended December 31, 2007 and recorded in the first quarter of 2008.

As at June 30, 2008		As previously reported			Restatement adjustment			As restated
ASSETS
Current assets		$	3,172,481		$	-		$	3,172,481
Other assets	(i), (ii), (iii)		5,568,070			177,438			5,745,508
Total Assets		$	8,740,551		$	177,438		$	8,917,989

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	(i), (ii), (v), (vi)		2,668,706			340,276			3,008,982
Other Liabilities	(i)		65,449			246,759			312,208
Total Liabilities			2,734,155			587,035			3,321,190

STOCKHOLDERS' EQUITY
Common Stock			13,087			-			13,087
Additional paid-in capital	(i), (iii), (iv), (vii)		12,483,794			52,765			12,536,559
Accumulated deficit	(i) to (vii)		(6,490,485	)		(462,362	)		(6,952,847	)
Total Stockholders' Equity			6,006,396			(409,597	)		5,596,799
Total Liabilities and Stockholders' Equity		$	8,740,551		$	177,438		$	8,917,989

For the three months ended June 30, 2008

Gross Profit		$	356,568		$	-		$	356,568
Total Expenses	(iv), (v), (vi), (vii)		2,399,153			124,664			2,523,817
Total Other Income (Expenses)	(i), (ii)		16,680			23,972			40,652

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(2,025,905	)	$	(100,692	)	$	(2,126,597	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.10	)		(0.00	)	$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED			20,832,026			-			20,832,026

F-43

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 21 – QUARTERLY FINANCIAL DATA (UNAUDITED) (continued)

For the six months ended June 30, 2008

Gross Profit		$	718,985		$	-		$	718,985
Total Expenses	(iv), (v), (vi), (vii)		4,911,176			273,593			5,184,769
Total Other Income (Expenses)	(i), (ii)		227,384			75,478			302,862

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(3,964,807	)	$	(198,115	)	$	(4,162,922	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.19	)	$	(0.01	)	$	(0.20	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED			20,832,026			-			20,832,026

(i)	Refer to carry forward effects of the prior quarter.

(ii)

The Company recorded goodwill of $66,692 in relation to the debt conversion between a subsidiary, Domain Holdings Inc., and the parent company, Live Current Media Inc., as disclosed in Note 5. There was a decrease to the non-controlling interest during the quarter of $8,786 resulting in a balance at quarter end of the non-controlling interest of NIL. There was also a credit to the non-controlling interest included in Other Income and Expenses in the quarter of $23,972.

(iii)

Related to the acquisition of Auctomatic, the Company adjusted its purchase price allocation to reflect an additional $110,746 of goodwill acquired in the acquisition. The corresponding increase was recorded to Additional paid-in capital.

(iv)

Also related to the acquisition of Auctomatic, the Company recorded as an expense the portion of the fair value of 413,604 shares of its common stock which were to be issued to the founders of Entity Inc. (“Auctomatic”) based on the period of service these founders provided to the Company, computed in relation to the period of service required for the founders to become entitled to the shares under FAS 123(R). The related stock based compensation expense in the June 30, 2008 quarter is $45,326, and the corresponding amount increased Additional paid-in capital during the quarter.

(v)	The Company recorded as an additional liability and compensation expense $35,786 for bonuses of CDN $100,000 each that are to be paid to its President and Chief Corporate Development Officer on January 1, 2009 and on January 1, 2010.

(vi)	The Company recorded as an additional liability and compensation expense $89,465 for bonuses of CDN $250,000 each that were to be paid to its former President on October 1, 2008 and on October 1, 2009.

(vii)

F-44

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 21 – QUARTERLY FINANCIAL DATA (UNAUDITED) (continued)

As at September 30, 2008		As previously reported			Restatement adjustment			As restated
ASSETS
Current assets		$	994,786		$	-		$	994,786
Other assets	(i)		5,990,554			177,438			6,167,992
Total Assets		$	6,985,340		$	177,438		$	7,162,778

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities	(i), (iii), (iv)		3,276,584			449,096			3,725,680
Other Liabilities	(i)		60,414			246,759			307,173
Total Liabilities			3,336,998			695,855			4,032,853

STOCKHOLDERS' EQUITY
Common Stock			13,150			-			13,150
Additional paid-in capital	(i), (ii), (v)		13,175,885			150,502			13,326,387
Accumulated deficit	(i) to (v)		(9,540,693	)		(668,919	)		(10,209,612	)
Total Stockholders' Equity			3,648,342			(518,417	)		3,129,925
Total Liabilities and Stockholders' Equity		$	6,985,340		$	177,438		$	7,162,778

For the three months ended September 30, 2008

Gross Profit		$	352,435		$	-		$	352,435
Total Expenses	(ii), (iii), (iv), (v)		2,343,285			206,557			2,549,842
Total Other Income (Expenses)			(1,059,357	)		-			(1,059,357	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(3,050,207	)	$	(206,557	)	$	(3,256,764	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.14	)	$	(0.01	)	$	(0.15	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED			21,625,005			-			21,625,005

For the nine months ended September 30, 2008

Gross Profit		$	1,071,419		$	-		$	1,071,419
Total Expenses	(ii), (iii), (iv), (v)		7,254,461			480,150			7,734,611
Total Other Income (Expenses)	(i)		(831,973	)		75,478			(756,495	)

NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD		$	(7,015,015	)	$	(404,672	)	$	(7,419,687	)

BASIC AND DILUTED LOSS PER SHARE		$	(0.32	)	$	(0.02	)	$	(0.34	)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED			21,625,005			-			21,625,005

F-45

Live Current Media Inc.

(formerly Communicate.com Inc.)

Notes to the Amended and Restated Consolidated Financial Statements

For the year ended December 31, 2008

As restated – Note 2

NOTE 21 – QUARTERLY FINANCIAL DATA (UNAUDITED) (continued)

(i)	Refer to carry forward effects of the prior quarter.

(ii)

Also related to the acquisition of Auctomatic, the Company recorded as an expense the portion of the fair value of 413,604 shares of its common stock which were to be issued to the founders of Entity Inc. (“Auctomatic”) based on the period of service these founders provided to the Company, computed in relation to the period of service required for the founders to become entitled to the shares under FAS 123(R). The related stock based compensation expense in the September 30, 2008 quarter is $104,251, and the corresponding amount increased Additional paid-in capital during the quarter.

(iii)

The Company recorded as an additional liability and compensation expense $31,091 for bonuses of CDN $100,000 each that are to be paid to its President and Chief Corporate Development Officer on January 1, 2009 and on January 1, 2010.

(iv)	The Company recorded as an additional liability and compensation expense $77,729 for bonuses of CDN $250,000 each that were to be paid to its former President on October 1, 2008 and on October 1, 2009.

(v)	The Company revised its estimates relating to the estimated life of its granted stock options. The revised estimated life of 3.375 years resulted in a decrease to its stock based compensation expense of $6,514 and a corresponding decrease to Additional paid-in capital.

F-46

Live Current Media (CE) (USOTC:LIVC)
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