ITEM
1.
FINANCIAL STATEMENTS.
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the three months ended March 31, 2018
are not necessarily indicative of the results that can be expected for the year
ending December 31, 2018.
As used in this Quarterly Report, the terms we, us, our,
Live Current, and the Company mean Live Current Media Inc. and its
subsidiaries, unless otherwise indicated. All dollar amounts in this Quarterly
Report are expressed in U.S. dollars, unless otherwise indicated.
2
LIVE CURRENT MEDIA INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
(Expressed in US Dollars)
(Unaudited)
LIVE CURRENT MEDIA
INC
.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(expressed in US dollars)
|
(Unaudited)
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
$
|
929,425
|
|
$
|
956,549
|
|
Receivable
|
|
-
|
|
|
5,435
|
|
Domain proceeds receivable
|
|
90,000
|
|
|
82,500
|
|
|
|
1,019,425
|
|
|
1,044,484
|
|
Non-current assets
|
|
|
|
|
|
|
Domain proceeds receivable
|
|
-
|
|
|
30,000
|
|
Intangible assets
|
|
206,150
|
|
|
206,150
|
|
|
$
|
1,225,575
|
|
$
|
1,280,634
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
$
|
215,523
|
|
$
|
185,550
|
|
Other payable
|
|
17,287
|
|
|
17,236
|
|
|
|
232,810
|
|
|
202,786
|
|
Stockholders' equity
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
Authorized:
500,000,000 common shares, par value $0.001 per
share
Issued and
outstanding:
34,837,625 common shares (34,837,625 at December 31, 2017)
|
|
34,838
|
|
|
34,838
|
|
Additional paid in capital
|
|
18,257,563
|
|
|
18,257,563
|
|
Deficit
|
|
(17,299,636
|
)
|
|
(17,214,553
|
)
|
|
|
992,765
|
|
|
1,077,848
|
|
|
$
|
1,225,575
|
|
$
|
1,280,634
|
|
The accompanying notes are an integral part of these
consolidated financial statements
LIVE CURRENT MEDIA
INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF
|
OPERATIONS
|
(expressed in US dollars)
|
(Unaudited)
|
|
|
For the three months ended
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
General and administrative
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
$
|
48,717
|
|
$
|
40,683
|
|
Professional fees
|
|
35,926
|
|
|
34,244
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
(84,643
|
)
|
|
(74,927
|
)
|
|
|
|
|
|
|
|
Interest expense
|
|
(51
|
)
|
|
(51
|
)
|
Foreign exchange
|
|
(389
|
)
|
|
(98
|
)
|
|
|
|
|
|
|
|
|
|
(440
|
)
|
|
(149
|
)
|
|
|
|
|
|
|
|
Net and comprehensive income (loss) for the period
|
$
|
(85,083
|
)
|
$
|
(75,076
|
)
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
(0.00
|
)
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
Weighted average number of basic common shares outstanding
|
|
34,837,625
|
|
|
34,837,625
|
|
The accompanying notes are an integral part of these
consolidated financial statements
LIVE CURRENT MEDIA
INC.
|
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS
|
EQUITY
|
(expressed in US dollars)
|
(Unaudited)
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Number
|
|
|
|
|
|
Paid In
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
|
|
of Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2016
|
|
34,837,625
|
|
$
|
34,838
|
|
$
|
18,257,563
|
|
$
|
(17,285,593
|
)
|
$
|
1,006,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for the year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
71,040
|
|
|
71,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2017
|
|
34,837,625
|
|
|
34,838
|
|
|
18,257,563
|
|
|
(17,214,553
|
)
|
|
1,077,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(85,083
|
)
|
|
(85,083
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2018
|
|
34,837,625
|
|
$
|
34,838
|
|
$
|
18,257,563
|
|
$
|
(17,299,636
|
)
|
$
|
992,765
|
|
The
accompanying
notes are an
integral
part of these
consolidated
financial
statements
LIVE CURRENT MEDIA
INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
|
FLOWS
|
(expressed in US dollars)
|
(Unaudited)
|
|
|
For the three months ended
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
Cash flows used in operating activities
|
|
|
|
|
|
|
Net income
(loss) for the period
|
$
|
(85,083
|
)
|
$
|
(75,076
|
)
|
Non-cash items
|
|
|
|
|
|
|
Impairment of intangible assets
|
|
-
|
|
|
-
|
|
Gain on
sale of domain names
|
|
-
|
|
|
-
|
|
Gain on debt retirement
|
|
-
|
|
|
-
|
|
Accrued
interest
|
|
51
|
|
|
51
|
|
Changes in non-cash working
capital items
|
|
|
|
|
|
|
Receivable
|
|
27,935
|
|
|
-
|
|
Prepaid expenses
|
|
-
|
|
|
-
|
|
Accounts payable and
accrued liabilities
|
|
29,973
|
|
|
(32,087
|
)
|
Cash used in operating activities
|
|
(27,124
|
)
|
|
(107,112
|
)
|
|
|
|
|
|
|
|
Cash flows used in investing
activities
|
|
|
|
|
|
|
Proceeds from the disposition of domain names
|
|
-
|
|
|
-
|
|
Cash provided by investing activities
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
Change in cash
|
|
(27,124
|
)
|
|
(107,112
|
)
|
Cash, beginning of period
|
|
956,549
|
|
|
1,149,555
|
|
Cash, end of period
|
$
|
929,425
|
|
$
|
1,042,443
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information:
|
|
|
|
|
|
|
Interest paid
|
$
|
-
|
|
$
|
-
|
|
Income taxes paid
|
$
|
-
|
|
$
|
-
|
|
The accompanying notes are an integral part of these
consolidated financial statements
LIVE CURRENT MEDIA INC.
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
|
March 31, 2018
|
(Unaudited)
|
1. NATURE AND CONTINUANCE OF
OPERATIONS
Live Current Media Inc. (the Company or Live Current) was
incorporated under the laws of the State of Nevada on October 10, 1995. The
Companys wholly owned principal operating subsidiary, Domain Holdings Inc.
(DHI), was incorporated under the laws of British Columbia on July 4,
1994.
On March 13, 2008, the Company incorporated a wholly owned
subsidiary in the state of Delaware, Perfume.com Inc. (Perfume Inc.) which is a
dormant and inactive company.
Through DHI, the Company builds consumer Internet experiences
around its portfolio of domain names. DHIs current business strategy is to
develop, or to seek partners to develop, its domain names to include content,
commerce and community applications. On June 4, 2014, a judge in Reno, Nevada
ordered a receiver to take charge of the Companys business. On May 4, 2017, the
Company was discharged from receivership.
Basis of Presentation
The accompanying unaudited interim financial statements have
been prepared in accordance with generally accepted accounting principles in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Regulation S-X. Accordingly, the financial
statements do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments consisting of
normal recurring entries necessary for a fair statement of the periods presented
for: (a) the financial position; (b) the result of operations; and (c) cash
flows, have been made in order to make the financial statements presented not
misleading. The results of operations for such interim periods are not
necessarily indicative of operations for a full year. The accompanying unaudited
interim financial statements should be read in conjunction with the financial
statements and related notes included in the Companys Annual Report in
Amendment 3 of Form 10-12G/A, for the year ended December 31, 2017, as filed
with the SEC on May 9, 2018.
Use of Estimates
The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. The Company regularly
evaluates estimates and assumptions. The Company bases its estimates and
assumptions on current facts, historical experience and various other factors it
believes to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
and the accrual of costs and expenses that are not readily apparent from other
sources. The actual results experienced by the Company may differ materially and
adversely from the Companys estimates. To the extent there are material
differences between the estimates and the actual results, future results of
operations will be affected.
LIVE CURRENT MEDIA INC.
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
|
March 31, 2018
|
(Unaudited)
|
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Adoption of New Accounting Pronouncement
On January 1, 2018, the Company adopted ASU 2014-09, Revenue
from Contracts with Customers (Topic 606) ("ASU 2014-09"), which amended the
existing accounting standards for revenue recognition. ASU 2014-09 establishes
principles for recognizing revenue upon the transfer of promised goods or
services to customers, in an amount that reflects the expected consideration
received in exchange for those goods or services. The Company adopted ASU
2014-09 in the first quarter of 2018 and applied the modified retrospective
approach. There was no impact to the Companys recognition of revenue as a
consequence of adopting this new standard.
3. DOMAIN PROCEEDS RECEIVABLE
On October 6, 2017, the Company sold a domain name for total
consideration of $150,000 less a brokerage fee of $15,000. The domain purchase
and transfer agreement included terms that allowed the purchaser to make monthly
instalment payments of $7,500, net of the brokerage fee, over a period of 18
months. The domain is being held by an independent escrow agent during the
period the remaining balance in respect of this sale is outstanding. The
purchaser is entitled to control the domain name while being held in escrow but,
in the event of a default that is not successfully remedied, all rights to the
domain name will be transferred back to the Company and all payments made by the
purchaser will be forfeited. As at March 31, 2018, the balance remaining on this
receivable totaled $90,000.
4. INTANGIBLE ASSETS
|
|
March
31, 2018
|
|
|
December 31, 2017
|
|
Domain names
|
$
|
201,496
|
|
$
|
201,496
|
|
Trademarks
|
|
4,654
|
|
|
4,654
|
|
|
$
|
206,150
|
|
$
|
206,150
|
|
The Companys portfolio of domain names is considered by
management to consist of indefinite life intangible assets not subject to
amortization.
ITEM
2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this Quarterly Report
constitute "forward-looking statements. These statements, identified by words
such as plan, "anticipate, "believe, "estimate, "should, "expect" and
similar expressions include the Companys expectations and objectives regarding
its future financial position, operating results and business strategy.
Forward-looking statements involve known and unknown risks, uncertainties,
assumptions and other factors that may cause its actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. Such
factors include, general economic conditions particularly related to demand for
the Companys 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, and/or evolving industry
standards, as well as those factors discussed in the section titled Part II,
Item 1A. Risk Factors in this Quarterly Report.
Forward looking statements are based on a number of material
factors and assumptions, including the availability and final receipt of
required government licenses, that sufficient working capital is available to
complete the proposed activities, that contracted parties provide goods and/or
services on the agreed time frames. While the Company considers these
assumptions may be reasonable based on information currently available to it,
they may prove to be incorrect. Actual results may vary from such
forward-looking information for a variety of reasons, including but not limited
to risks and uncertainties disclosed in the section titled Risk Factors in
this Quarterly Report.
The Company intends to discuss in its Quarterly Reports and
Annual Reports any events or circumstances that occurred during the period to
which such documents relate that are reasonably likely to cause actual events or
circumstances to differ materially from those disclosed in this registration
statement. New factors emerge from time to time, and it is not possible for
management to predict all of such factors and to assess in advance the impact of
each such factor on its business or the extent to which any factor, or
combination of such factors, may cause actual results to differ materially from
those contained in any forwarding looking statement. You are advised to
carefully review the reports and documents that the Company files from time to
time with the United States Securities Exchange Commission (the SEC),
particularly its periodic reports filed with the SEC pursuant to the Securities
Exchange Act of 1934 (the Exchange Act).
OVERVIEW
Live Current Media Inc. (the Company) was incorporated under
the laws of the State of Nevada on October 10, 1995. The Company operates its
business through its wholly owned subsidiary, Domain Holdings Inc., originally
formed under the laws of British Columbia, Canada on July 4, 1994 and
re-domiciled to Alberta, Canada on April 14, 1999 (DHI). The Company is also
the majority shareholder of Perfume.com Inc. (95% ownership), formed under the
laws of the State of Delaware on March 13, 2008. Perfume.com Inc. is currently
dormant and does not carry on an active business. References herein to the
Company include DHI and Perfume.com Inc. (collectively, the Subsidiaries)
unless otherwise stated.
The Companys sole business currently is that of managing the
business of DHI. DHI is in the business of utilizing its exclusive ownership of
domain names to develop internet-related business ventures.
PLAN OF OPERATIONS
The Company is in the business of developing and
commercializing its portfolio of domain names, some of which generate meaningful
amounts of Internet traffic, which the Company attributes to, among other
things, their generic descriptive nature of a product or services category.
3
Management believes that it can develop and sustain a business
based on the lease, sale and other exploitation of domain names because, in
part, of its ownership of a number of generic, intuitive domain names which
attract significant numbers of visitors to websites utilizing those names.
Moreover, because there are a limited number of potential domain names, the
Company believes that the value of these names may be significant and may allow
the Company to achieve both strategic relationships with leading participants in
key Internet businesses and businesses that desire to expand using the Internet,
as well as independent operations. Currently the Company owns two websites,
Boxing.com and Number.com, which are operated through a verbal arrangement with
an independent web developer.
The Company acquired a number of .cn domain names through a
lottery-allocation in 2003 which are available to be developed. In 2005, Live
Current also acquired a portfolio of second and third tier .com domain names,
all of which end in the word Bound, such as shoppingbound.com,
pharmacybound.com and vietnambound.com. Management does not believe that these
bound domain names will ever represent a significant part of the Companys
business and will not renew the registration of these URLs as they reach their
expiration dates.
The Company, for the immediate future, does not anticipate
independently developing technologies, processes, products or otherwise engaging
in research, development or similar activities. Instead, such activities will be
engaged in pursuant to arrangements with its strategic partners.
Management of the company believe that the Company currently
has enough cash on hand to manage its operations for the next 12 months
.
CRITICAL ACCOUNTING POLICIES
The Company reviews individual domain names in the portfolio
for potential impairment throughout the fiscal year in determining whether a
particular URL should be renewed. Impairment is recognized for names that are
not renewed. The Company performs a qualitative assessment of the portfolio of
domain names in the fourth quarter of each year, to determine whether it is more
likely than not that the fair market value of a domain name is less than its
carrying amount. As part of the assessment, certain qualitative factors are
considered, including macro-economic conditions, industry and market conditions,
non-renewal of names, as well as other factors. If there are indications of
impairment following the qualitative impairment testing, further quantitative
impairment testing would be necessary. When it is determined that the fair value
of a domain name is less than its carrying amount, impairment is recognized.
RESULTS OF OPERATIONS
The following selected financial data was derived from the
Companys unaudited interim financial statements for the periods ended March 31,
2018 and March 31, 2017. The information set forth below should be read in
conjunction with the Companys financial statements and related notes included
elsewhere in this Quarterly Report. From June 2014 to May 2017 the Company
operated under receivership. During this time, the Company did not engage in any
efforts to develop its business as the receivers primary responsibilities
during this time were to make recommendations to the court as to whether the
Company should be dissolved or otherwise, and to settle and resolve the
Companys ongoing litigation matters. As the Company is no longer operating
under receivership, results for years prior to fiscal 2017 may not be reflective
of the Companys financial results and capital requirements moving forward.
Summary of Results
|
|
For the three month
|
|
|
For the three month
|
|
|
|
period ended March 31,
|
|
|
period ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Loss from operations
|
$
|
(84,643
|
)
|
$
|
(74,927
|
)
|
Interest expense
|
|
(51
|
)
|
|
(51
|
)
|
Foreign exchange
|
|
(389
|
)
|
|
(98
|
)
|
Net loss for the period
|
$
|
(85,083
|
)
|
$
|
(75,076
|
)
|
4
Revenue
The Company did not recognize recurring revenues during the
first quarter of 2018 or the first quarter of 2017. The Company does not
anticipate recognizing recurring revenues in the short term. The Company
continues to market its domain names in its portfolio and considers offers
received for domain names in its portfolio. The Company believes its portfolio
of domain names will continue to maintain its value over time. Although the
Companys arrangement with the web developer for Boxing.com and Number.com calls
for revenues to be split between the Company and the web developer, advertising
revenues for those sites has been minimal. As such, the Company has permitted
the web developer to retain the advertising revenue to offset against the
developers costs of operating those sites. The Company does not anticipate
earning significant advertising revenue from Boxing.com or Number.com in the
near future.
At March 31, 2018, The Company had an accumulated deficit of
$17,299,636. The Company is presently in the development stage of their business
and cannot provide any assurances that they will be able to generate regular or
recurring revenues in the near future
.
Results of Operation
The Company recorded a net loss of $85,083 for the quarter
ended March 31, 2018 compared to a net loss of $75,076 for the quarter ended
March 31, 2017. During the quarter ended March 31, 2018, general and
administrative expenses increased to $48,717 as compared to $40,683 for the
quarter ended March 31, 2017. Professional fees increased to $35,926 for the
quarter ended March 31, 2018 from $34,244 for the quarter ended March 31,
2017.
Liquidity and Capital Resources
At March 31, 2018, the Company had working capital surplus of
$786,615, a decrease from the Companys working capital surplus of $841,698 at
March 31, 2017. During the quarter ended March 2018 the Company had negative
operating cash flow. Due to the fact that the Company has incurred recurring
losses and anticipates incurring further losses in the future, there is
substantial doubt as to the Companys ability to continue as a going concern.
The Company believes it has the necessary cash requirements for
the next 12 months without having to raise additional funds.
The Company does not anticipate purchasing any plant or
significant equipment in the immediate future
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no significant off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on its
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to shareholders.
5
CRITICAL ACCOUNTING POLICIES
The Company reviews individual domain names in the portfolio
for potential impairment throughout the fiscal year in determining whether a
particular URL should be renewed. Impairment is recognized for names that are
not renewed. The Company performs a qualitative assessment of the portfolio of
domain names in the fourth quarter of each year, to determine whether it is more
likely than not that the fair market value of a domain name is less than its
carrying amount. As part of the assessment, certain qualitative factors are
considered, including macro-economic conditions, industry and market conditions,
non-renewal of names, as well as other factors. If there are indications of
impairment following the qualitative impairment testing, further quantitative
impairment testing would be necessary. When it is determined that the fair value
of a domain name is less than its carrying amount, impairment is recognized.
During the year ended December 31, 2017, the Company recorded
an impairment charge of $37,500 in connection with domain names for which
management determined not to renew their registration.
RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, the FASB issued ASU 2014-09, Revenue from
Contracts with Customers (Topic 606) ("ASU 2014-09"), which amended the existing
accounting standards for revenue recognition. ASU 2014-09 establishes principles
for recognizing revenue upon the transfer of promised goods or services to
customers, in an amount that reflects the expected consideration received in
exchange for those goods or services. In July 2015, the FASB deferred the
effective date for annual reporting periods beginning after December 15, 2017
(including interim reporting periods within those periods). The amendments may
be applied retrospectively to each prior period (full retrospective) or
retrospectively with the cumulative effect recognized as of the date of initial
application (modified retrospective).
The Company adopted ASU 2014-09 in the first quarter of 2018
and applied the modified retrospective approach. The Company currently does not
expect any significant impact on its consolidated financial statements related
to the adoption of the new standard.