-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RLzGSB+i2KVvaGkPWSkxQxlNkzQ5JkUgeONLcOzu2TZ5umEatrK/8NaKPfOxJHOg qXxT1I6kK1Kd4aC03ad6wQ== 0001019687-08-003586.txt : 20080813 0001019687-08-003586.hdr.sgml : 20080813 20080813164402 ACCESSION NUMBER: 0001019687-08-003586 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080522 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080813 DATE AS OF CHANGE: 20080813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Live Current Media, Inc. CENTRAL INDEX KEY: 0001108630 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 880346310 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-29929 FILM NUMBER: 081013740 BUSINESS ADDRESS: STREET 1: 375 WATER STREET, SUITE 645 CITY: VANCOUVER BC V6B 5C6 STATE: A1 ZIP: 89502 BUSINESS PHONE: 604-453-4870 MAIL ADDRESS: STREET 1: 375 WATER STREET, SUITE 645 CITY: VANCOUVER BC V6B 5C6 STATE: A1 ZIP: 89502 FORMER COMPANY: FORMER CONFORMED NAME: COMMUNICATE COM INC DATE OF NAME CHANGE: 20020822 FORMER COMPANY: FORMER CONFORMED NAME: TROYDEN CORP DATE OF NAME CHANGE: 20000307 8-K/A 1 livecurrrent_8k-080808.htm LIVE CURRENT MEDIA livecurrrent_8k-080808.htm

 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K/A
 
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 22, 2008
 
LIVE CURRENT MEDIA INC.
(Exact name of Registrant as specified in charter)
 
Nevada
000-29929
88-0346310
(State or other jurisdiction
(Commission File Number)
(IRS Employer
of incorporation)
  
Identification Number)
 
     375 Water Street
Suite 645
Vancouver, British Columbia V6B 5C6
 
 
(Address of principal executive offices)
 
 
Registrant’s telephone number, including area code: (604) 453-4870
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2 below).
 
[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR240.14a - -12)
 
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d - -2(b)).
 
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13(e) -4(c))
 
 
INFORMATION TO BE INCLUDED IN REPORT
 
 


 
This Form 8-K/A and other reports filed by the Company from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain forward looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. When used in the Filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to the Company’s industry, operations and results of operations and any businesses that may be acquired by the Company. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
 
This Current Report on Form 8-K/A amends the Current Report filed on May 23, 2008 to provide the Financial Statements and Pro Forma Historical Financial Statements required  under Item 9.01(a)(4) in connection with the business acquisition disclosed on the Form 8-K filed on May 23, 2008.
 
On May 22, 2008, (the “Closing Date”) Live Current Media Inc. (formerly known as Communicate.com Inc.) (the “Company”) consummated the closing of (the “Closing”) under its previously announced Agreement and Plan of Merger (the “Merger Agreement”), dated March 25, 2008, by and among the Company, Communicate.com Delaware, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (the “Merger Subsidiary”), Entity, Inc., a Delaware corporation, (“Entity”), Harjeet Taggar, Kulveer Taggar and Patrick Collison, the founding members of Entity  and Harjeet Taggar as representative of the shareholders of Entity.

Pursuant to the Merger Agreement, Entity was merged with and into the Merger Subsidiary with the Merger Subsidiary as the surviving corporation (the “Merger”) upon the filing of the certificate of merger in the State of Delaware on the Closing Date, May 22, 2008.  In connection with the Merger, the stockholders of Entity shall receive in total (i) $2,000,000 cash minus $153,305.32 in certain assumed liabilities and (ii) 1,000,000 shares of common stock of the Company, in exchange for 100% of the issued and outstanding shares of Entity. Pursuant to the Merger Agreement, the number of Merger Shares was calculated based on the price of $3.00 per share.

A full description of the terms of the Merger was set forth in the Company’s Current Reports on Form 8-K filed on March 26, 2008 and May 29, 2008, together with the exhibits thereto.

Item 8.01
Other Events
 
The Company hereby incorporates by reference the disclosures made by the Company under Item 8.01 of this Current Report on Form 8-K.
 
Pursuant to Item 2.01 and Item 9.01, the Company has prepared and files herewith the audited financial statements of Entity, Inc. for the period of inception through May 22, 2008 and the unaudited pro forma consolidated financial statements of Entity, Inc. and the Company, therefore the Company's filing is in compliance with Rule 8-04(b) of Regulation S-X and Rule 8-05 of Regulation S-X, respectively.
 
Item 9.01
Financial Statements and Exhibits
 
(a)   Financial Statements of Businesses Acquired
 
The audited financial statements of Entity, Inc. are attached to this Current Report.
 
(b)   Pro Forma Financial Information
 
The unaudited pro forma consolidated financial information of Entity, Inc. and the Company are attached to this Current Report.
 
(c)   Not Applicable
 
 
(d)
Exhibits

       
 
Exhibit #
 
               Item
       
 
23 
 
Consent of Ernst & Young
 
99.1
 
Financial Statements of Entity, Inc. (audited)
 
99.2
 
Pro Forma Consolidated Financial Statements (unaudited)
       
 

 

 

 
 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
LIVE CURRENT MEDIA INC.
 
 
By:  /s/ C. Geoffrey Hampson    
       C. Geoffrey Hampson 
       Chief Executive Officer 
       Dated: August 13, 2008
 



 

EX-23 2 livecurrent_8k-ex2300.htm CONSENT livecurrent_8k-ex2300.htm
EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use of our audit report of Entity Inc. dated June 26, 2008 in the Current Report (Form 8-K No.000-29929) dated August 13, 2008.



 
Vancouver, Canada,
August 13, 2008  
/s/ Ernst & Young
Chartered Accountants 
 
 
 
 

EX-99.1 3 livecurrent_8ka-ex9901.htm ENTITY FINANCIAL STATEMENTS livecurrent_8ka-ex9901.htm



Exhibit 99.1

LIVE CURRENT MEDIA INC.

FINANCIAL STATEMENTS OF ENTITY, INC.
(AUDITED)



 


 





ENTITY, INC.



FINANCIAL STATEMENTS

MAY 22, 2008








  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  BALANCE SHEET

  STATEMENT OF OPERATIONS

  STATEMENT OF STOCKHOLDERS’ EQUITY

  STATEMENT OF CASH FLOWS

  NOTES TO FINANCIAL STATEMENTS
 

 
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM





To the Board of Directors and Stockholders of
Entity, Inc.

We have audited the accompanying balance sheet of Entity, Inc. as of May 22, 2008 and the related statements of operations, stockholders' equity and cash flows for the period from May 21, 2007 (date of inception) to May 22, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the 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.

As discussed in Note 1 to the financial statements, the company’s net loss and stockholders’ deficiency 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.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Entity, Inc. at May 22, 2008, and the results of its operations and its cash flows for the period from May 21, 2007 (date of inception) to May 22, 2008 in conformity with U.S. generally accepted accounting principles.




Vancouver, Canada,
June 26, 2008
/s/ Ernst & Young
Chartered Accountants


 

 
 

 

ENTITY, INC.
BALANCE SHEET
(Basis of Presentation – Note 1)

    (Expressed in U.S. dollars)  
         
         
ASSETS
   
As at May 22, 2008
 
Current
       
Cash
    $ 3,066  
Total current assets
      3,066  
           
Property and equipment (Note 5)
      7,663  
Share subscription receivable
      780  
Total Assets
      11,509  
           
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
       
Current
         
Accounts payable and accrued liabilities
      85,622  
Loan payable (Note 7)
      67,317  
Total liablilites
      152,939  
           
           
STOCKHOLDERS' DEFICIENCY
         
Common stock (Note 6) (Note 8)
         
Authorized:
11,176,000  common shares, $0.0001 par value
       
Issued and outstanding:
8,621,621 common shares
    862  
Preferred stock issued (Note 8)
         
Authorized:
1,176,000 preferred shares, $0.0001 par value
       
Issued and outstanding:
None
    -  
        -  
Additional paid in capital
      154,192  
Accumulated deficit
      (296,484 )
Total Stockholders' Deficiency
      (141,430 )
Total Liabilities and Stockholders' Deficiency
    11,509  



On Behalf of the Board:


   /s/ Harjeet Taggar    /s/ Kulveer Taggar    /s/ Patrick Collison
 
Harjeet Taggar, Director
 
Kulveer Taggar, Director
 
Patrick Collison, Director



See accompanying notes to financial statements

 
 

 

ENTITY, INC.
STATEMENT OF OPERATIONS


  (Expressed in U.S. dollars)  
       
   
For the period May 21, 2007 (date of inception) to May 22, 2008
 
       
EXPENSES
     
Amortization and depreciation (note 5)
    2,078  
General and administrative
    129,405  
Loss on sales of equipment (note 5)
    2,217  
Interest expense (note 6 and 7)
    6,178  
Management fees and consulting
    78,099  
Software development expense
    84,049  
Total Expenses
    302,026  
         
Foreign exchange gain
    342  
Other income
    5,200  
         
NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD
    (296,484 )
         
BASIC AND FULLY DILUTED LOSS PER SHARE
    (0.03 )



See accompanying notes to financial statements




 
 

 

ENTITY, INC.
  STATEMENT OF STOCKHOLDERS’ EQUITY


   
Common Stock
   
Preferred Stock
                   
                                           
   
Number of Shares
   
Amount
   
Number of Shares
   
Amount
   
Additional Paid-in Captial
   
Accumulated Deficit
   
Total
 
Balance, May  21, 2007 (inception)
                                     
                                           
Issuance of Common Shares
    7,804,285       780       -             -       -       780  
                                                       
Issuance of Preferred Shares
    -       -       174,074       33,335       -       -       33,335  
                                                         
Conversion of Preferred Shares
    174,074       17       (174,074 )     (33,335 )     33,318               0  
                                                         
Conversion of Convertible Promissory Notes
    643,262       64                       120,874               120,938  
                                                         
Total Comprehensive Loss
    -       -       -       -       -       (296,484 )     (296,484 )
Balance, May 22, 2008
    8,621,621     $ 862       -       -       154,192       (296,484 )   $ (141,430 )
                                                         



See accompanying notes to financial statements

 
 

 

ENTITY, INC.
  STATEMENT OF CASH FLOWS

 
  (Expressed in U.S. dollars)  
For the period May 21, 2007
     
(date of inception) to May 22, 2008
     
       
       
OPERATING ACTIVITIES
     
Net loss for the period
    (296,484 )
Non-cash items included in net loss:
       
Amortization and depreciation
    2,078  
Loss on displosal of equipment
    2,217  
Interest on convertible promissory notes
    5,939  
Changes in operation assets and liabilities:
       
Accounts payable and accrued liabilities
    85,622  
Cash used in operating activities
    (200,628 )
         
INVESTING ACTIVITIES
       
Purchase of property and equipment
    (13,858 )
Proceeds from sale of equipment
    1,900  
Cash used in investing activities
    (11,958 )
         
FINANCING ACTIVITIES
       
Proceeds from issuance of convertible promissory notes
    115,000  
Proceeds from issuance of common shares
    33,335  
Proceeds from loan payable
    67,317  
         
Cash from financing activites
    215,652  
         
Net increase in cash, being cash end of period
    3,066  

 
 
See accompanying notes to financial statements
 

 
 

 
Entity, Inc.
Notes to Financial Statements
May 22, 2008
 
(Expressed in U.S. dollars)


NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION


Nature of business
Entity, Inc. was incorporated on May 21, 2007. These financial statements reflect the period May 22, 2007 to May 22, 2008. Entity, Inc owns and operates the auctomatic.com product - an online software service that allows businesses to manage the process of selling their inventory on the eBay marketplace. Auctomatic offers various modules including inventory management, photo organization, template creation and auction statistics.

Basis of presentation
The 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 Company’s inability to generate sufficient cash flows may result in it not being able to continue as a going concern.  The Company has incurred a significant loss of $296,484 as at May 22, 2008 and has not generated positive cash flow from operations. The ability of the Company to continue as a going concern is dependant upon its ability to obtain financing, achieving profitable operations or close the merger agreement with Communicate.com.  The company is likely to merge with Communicate.com at this time. The consolidated financial statements for the period ending May 22, 2008 do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue in business.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


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

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

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. As at the balance sheet date, the company had no cash equivalents.

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:
Computer Equipment                                                                           30%

Income Taxes
The company accounts 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 the recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company is  subject to U.S. federal income tax. 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 year ended May 22, 2008.

 
 

 
Entity, Inc.
Notes to Financial Statements
May 22, 2008
 
(Expressed in U.S. dollars)


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Loss per share
Basic losses per share are computed by dividing earnings for the period by the weighted average number of common shares outstanding for the period. Fully diluted losses per share reflects the potential dilution of securities by including other potential common stock, including convertible preferred shares, if any, in the weighted average number of common shares outstanding for a period and is not presented where the effect is anti-dilutive.

Recent Accounting Pronouncements
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities". This Statement permits entities to choose to measure many financial assets, financial liabilities and certain other items at fair value, with the objective of improving financial reporting by mitigating volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex accounting provisions. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. SFAS No. 159 is effective for fiscal year beginning November 15, 2007 which for the Company would be May 23, 2008. The Company is currently assessing the impact of SFAS No, 159 on its financial position and results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures". This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. The effective date of SFAS No. 157 has been deferred on February 12, 2008 to become effective for financial statements issued for fiscal years 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 SFAS No. 157 on its financial position and results of operations.

NOTE 3 – FINANCIAL INSTRUMENTS


Interest rate risk exposure
The Company has limited exposure to any fluctuation in interest rates.

Foreign exchange risk
The Company has limited exposure to any fluctuation in foreign exchange rates.

Concentration of credit risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash. The Company limits its exposure to credit loss by placing its cash and cash equivalents on deposit with high credit quality financial institutions.  Management regularly monitors the financial condition of its customers to reduce the risk of loss.

Fair values of Financial Instruments
The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107. “Disclosures about Fair Value of Financial Instruments.” The Company has determined the estimated fair value amounts by using available market information and appropriate valuation methodologies. The fair value of financial instruments classified as current assets or liabilities, including cash, accounts payable and accrued liabilities, are approximately equal to their carrying value due to the short-term maturity of the instruments.

 
 

 
Entity, Inc.
Notes to Financial Statements
May 22, 2008
 
(Expressed in U.S. dollars)


NOTE 4 – MERGER AGREEMENT


On March 25, 2008, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Communicate.com Inc. and its wholly owned subsidiary, Communicate.com Delaware, Inc. (“Delaware”).

The Merger Agreement is anticipated to close on May 23, 2008 (the “Closing Date”).  In connection with the Merger Agreement, the stockholders of the Company shall receive in total (I) $2,000,000 cash minus certain assumed liabilities and (ii) such number of shares of common stock of Communicate.com Inc equal to $3,000,000 divided by the lower of (a) $3.00 per share or (b) the closing price of the Communicate.com Inc’s share on the Over the Counter Bulletin Board on the business day immediately preceding the Closing Date, provided that the denominator shall not be less than $2.50, in exchange for all the issued and outstanding shares of the Company.

The consideration is payable on the Closing Date as follows: (i) 34% of the common stock and (ii) $1,200,000.  The remaining 66% of the common stock shall be distributed in equal amounts 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 Company’s Stockholders. The distribution of the common stock payable on the first, second and third anniversary of the Closing Date to the Founders is subject to their continuing employment with the Communicate.com Inc or a subsidiary on each Distribution Date.

NOTE 5 – PROPERTY & EQUIPMENT


During the year the company purchased several computer related pieces of equipment.  The company also sold two servers that resulted in a loss on disposal. The original cost of these two servers was $4,843 with accumulated amortization of $726. The two servers were sold for a total of $1,900 resulting in a loss on disposal of $2,217.
 
   
Cost
 
Accumulated Amortization
Net Book Value
   
$
 
$
   
$
Computer Equipment
 
 9,015
 
  1,352
   
7,663


NOTE 6 – CONVERTIBLE PROMISSORY NOTE


On August 10, 2007, the Company entered into a $75,000 convertible promissory note at an interest rate of 8% simple interest.  Principle and interest are payable at either the maturity date of August 10, 2009 or immediately in change in control or circumstance of default.

On January 08, 2008, the Company entered into a $40,000 convertible promissory note at an interest rate of 8% simple interest.  Principle and interest are payable at either the maturity date of January 1, 2009 or immediately in change in control or circumstance of default.

On May 22, 2008, the Company converted the two Convertible Promissory Notes to Common Shares pursuant to the merger agreement (note 4).  Conversion of the promissory notes resulted in 643,262 common shares being issued. Calculation for the issuance of the shares was in accordance with the terms and conditions set out in each of the Convertible Promissory Note agreements.

 
 

 
Entity, Inc.
Notes to Financial Statements
May 22, 2008
 
(Expressed in U.S. dollars)


NOTE 7 – LOAN PAYABLE


On March 25, 2008, the Company signed a $67,093 demand promissory note with Communicate.com Inc, at an interest rate of 2.25% per annum prior to maturity and 8% per annum after maturity. This loan is repayable on demand on and after the later to occur of:
(i)        The termination date of the merger agreement (note 4) or,
(ii)       June 1, 2008.

Upon completion of the Merger Agreement this loan will be allocated against the purchase price as disclosed in Note 4.


NOTE 8 – COMMON STOCK


a) Authorized

The authorized capital of the Company consists of 11,176,100 common shares with a par value of $0.0001 per share, and 1,176,000 preferred shares with a par value of $0.0001 per share, of which 175,000 are designated as “Series AA Preferred Stock” and 1,001,000 are designated “Series A Preferred Stock”.

b) Issued

During August and September 2007 the Company issued 7,804,285 common shares in the amount of $780.

On September 29, 2007 the Company issued 174,074 of Series AA preferred shares for cash consideration of $33,335.

On May 22, 2008 as per the merger agreement the company converted the 174,074 Preferred Shares Series AA issued on September 29, 2007 to 174,074 Common Shares.

On May 22, 2008 as per the merger agreement (Note 4), the company converted the two outstanding Convertible Promissory Notes including interest to Common Shares.  Conversion of the promissory notes resulted in 643,262 common shares being issued with a value of $120,938. The determination of the value of the shares was in accordance with the terms and conditions set out in each of the Convertible Promissory Note agreements.

 
NOTE 9– RELATED PARTY TRANSACTIONS


Two directors of Entity, Inc are also directors of Boso.com. During the year the company invoiced Boso.com Ltd, $4,270 in relation to consulting services provided to Boso.com.

The 3 major stockholders of the company were compensated during the year for consulting services of $44,706.


NOTE 10– SUBSEQUENT EVENTS


Merger Agreement

On May 23, 2008 the company completed the execution of the terms as set out in the Merger Agreement dated March 25, 2008 (note 4).
 
 
 
 


EX-99.2 4 livecurrent_8ka-ex9902.htm PRO FORMA FINANCIALS 03-31-08 livecurrent_8ka-ex9902.htm


Exhibit 99.2

LIVE CURRENT MEDIA INC.

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


 


 
 

LIVE CURRENT MEDIA INC.
AND ENTITY INC.

Pro Forma Consolidated Financial Statements
(stated in US Dollars)
(unaudited)



Contents
   
 
Page
   
   
Pro Forma Consolidated Financial Statements:
 
   
Pro Forma Consolidated Balance Sheet
 
  as of March 31, 2008 (unaudited)
F-2
   
Pro Forma Consolidated Statements of Operations
 
  for the three months ended March 31, 2008 (unaudited)
F-3
   
Pro Forma Consolidated Statements of Operations
 
  for the year ended December 31, 2007 (unaudited)
F-4
   
Notes to Pro Forma Consolidated Financial Statements (unaudited)
F-5







F-1

 

 Live Current Media Inc.
And Entity, Inc.
 Pro Forma Consolidated Balance Sheet
 (unaudited)

   
Historical
Entity, Inc
May 22, 2008
   
Historical
Live Current Media
March 31, 2008
   
Pro Forma
Adjustments
 
Note
Reference
 
Pro Forma
Combined
 
ASSETS
                         
Current
                         
Cash and cash equivalents
    3,066       4,905,745       (1,046,695 )
 3a
    3,607,329  
                      (254,787 )  3i        
Accounts receivable (net)
    -       142,220       -         142,220  
Prepaid expenses and deposits
    -       165,062       (67,093 )  3g     97,969  
Current portion of investment in sales-type lease
    -       140,540       -         140,540  
Total current assets
    3,066       5,353,567       (1,368,575 )       3,988,058  
                                   
Long-term portion of investment in sales-type lease
    -       23,423       -         23,423  
Deferred acquisition costs
    -       121,265       (121,265 )  3i     -  
Property & equipment
    7,663       314,600       925,000    3h     861,847  
                      (385,416 )  3j        
Share subscription receivable
    780       -       -         780  
Web development costs
    -       147,025       -         147,025  
Intangible assets
    -       1,625,881       -         1,625,881  
Goodwill
    -       -       2,417,296    3h     2,417,296  
Total Assets
    11,509       7,585,761       1,467,040         9,064,310  
                                   
                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
                                 
Current
                                 
Accounts payable and accrued liabilities
    85,622       1,311,817                 1,397,439  
Due to shareholders of Auctomatic
    -       -       640,000    3b     1,109,371  
                      160,000    3c        
                      260,211    3e        
                      49,160    3e        
Deferred revenue
    -       19,644       -         19,644  
Current portion of deferred lease inducements
    -       20,138       -         20,138  
Loan payable
    67,317       -       (67,317 )  3g     -  
Total current liabilities
    152,939       1,351,599       1,042,054         2,546,592  
                                   
Deferred lease inducements
    -       70,483       -         70,483  
Total Liabilities
    152,939       1,422,082       1,042,054         2,617,075  
                                   
STOCKHOLDERS' EQUITY
                                 
 Common stock
    862       12,456       586    3d     13,042  
                      (862 )  3f        
Additional paid-in capital
    154,192       10,671,119       1,137,533    3d     11,808,652  
                      (154,192 )  3f        
Accumulated deficit
    (296,484 )     (4,519,896 )     (160,000 )  3c     (5,374,459 )
                      (260,211 )  3e        
                      (49,160 )  3e        
                      296,484    3f        
                      224    3g        
                      (385,416 )  3j        
Total Stockholders' Equity
    (141,430 )     6,163,679       424,986         6,447,235  
Total Liabilities and Stockholders' Equity
    11,509       7,585,761       1,467,040         9,064,310  

See accompanying notes to unaudited pro forma consolidated financial statements
 
F-2

Live Current Media Inc.
And Entity, Inc.
Pro Forma Consolidated Statement of Operations
 (unaudited)



   
Historical
Entity, Inc
February 23 -
May 22, 2008
   
Historical
Live Current Media
January 1 -
March 31, 2008
   
Pro Forma
Adjustments
   
Note
Reference
 
Pro Forma
Combined
 
SALES
                         
Health and Beauty eCommerce
    -       1,824,369       -         1,824,369  
Other eCommerce
    -       455       -         455  
Domain name leasing and advertising
    -       27,836       -         27,836  
Total Sales
    -       1,852,660       -         1,852,660  
                                   
COST OF SALES
                                 
Health and Beauty eCommerce
    -       1,489,691       -         1,489,691  
Other eCommerce
    -       552       -         552  
Total Cost of Sales
    -       1,490,243       -         1,490,243  
                                   
GROSS PROFIT
            362,417                 362,417  
                                   
EXPENSES
                                 
Amortization and depreciation
    1,080       15,266       77,083    3j     93,429  
Corporate general and administrative
    8,892       447,895       -         456,787  
ECommerce general and administrative
    -       169,813       -         169,813  
Management fees and employee salaries
    91,370       1,073,546       65,053    3e     1,229,969  
Corporate marketing
    -       26,459       -         26,459  
ECommerce marketing
    -       149,187       -         149,187  
Expenses related to Cricket.com
    -       55,317       -         55,317  
Other expenses
    -       629,856       -         629,856  
Interest Expense
    2,476               (224 )  3g     42,252  
                      40,000    3c        
Loss on sale of equipment
    2,217               -         2,217  
Total Expenses
    106,035       2,567,339       181,912         2,855,286  
 
                                 
LOSS BEFORE OTHER ITEMS
    (106,035 )     (2,204,922 )     (181,912 )       (2,492,869 )
                                   
Net proceeds from sales-type lease of domain names
    -       168,206       -         168,206  
Interest and investment income
    -       42,498       -         42,498  
NET LOSS FOR THE PERIOD
    (106,035 )     (1,994,218 )     (181,912 )       (2,282,165 )
                                   
                                   
BASIC AND DILUTED LOSS PER SHARE
    (0.01 )     (0.10 )     0.02         (0.11 )
                                   
WEIGHTED AVERAGE NUMBER OF COMMON
                                 
   SHARES OUTSTANDING - BASIC AND DILUTED
    8,621,621       19,970,334       586,403    3d     20,556,737  
                      (8,621,621 )  3f        

See accompanying notes to unaudited pro forma consolidated financial statements
 
F-3

Live Current Media Inc.
And Entity, Inc.
Pro Forma Consolidated Statement of Operations
 (unaudited)



   
Historical
Entity, Inc
May 21, 2007 -
February 22, 2008
   
Historical
Live Current Media
January 1 -
December 31, 2007
   
Pro Forma
Adjustments
   
Note
Reference
 
Pro Forma
Combined
 
SALES
                         
Health and Beauty eCommerce
    -       8,593,811       -         8,593,811  
Other eCommerce
    -       -       -         -  
Domain name leasing and advertising
    -       449,613       -         449,613  
Miscellaneous
    5,200       35,810       -         41,010  
Total Sales
    5,200       9,079,234       -         9,084,434  
                                   
COST OF SALES
                                 
Health and Beauty eCommerce
    -       7,021,473       -         7,021,473  
Other eCommerce
    -       -       -         -  
Total Cost of Sales
    -       7,021,473       -         7,021,473  
                                   
GROSS PROFIT
    5,200       2,057,761       -         2,062,961  
                                   
EXPENSES
                                 
Amortization and depreciation
    998       29,169       308,333    3j     338,500  
Corporate general and administrative
    120,171       1,007,038       -         1,127,209  
ECommerce general and administrative
    -       -       -         -  
Management fees and employee salaries
    70,778       1,981,051       260,211    3e     2,312,040  
Corporate marketing
    -       817,101       -         817,101  
ECommerce marketing
    -       -       -         -  
Expenses related to Cricket.com
    -       -       -         -  
Other expenses
    -       637,730       -         637,730  
Interest Expense
    3,702       -       160,000    3c     163,702  
Loss on sale of equipment
    -       -       -         -  
Total Expenses
    195,649       4,472,089       728,544         5,396,282  
                                   
LOSS BEFORE OTHER ITEMS
    (190,449 )     (2,414,328 )     (728,544 )       (3,333,321 )
                                   
Net proceeds from sales-type lease of domain names
    -       119,574       -         119,574  
Gain on disposal of subsidiary Frequenttraveler.com Inc
    -       276,805       -         276,805  
NET LOSS FOR THE PERIOD
    (190,449 )     (2,017,949 )     (728,544 )       (2,936,942 )
                                   
                                   
BASIC AND DILUTED LOSS PER SHARE
  $ (0.02 )   $ (0.11 )   $ 0.10       $ (0.15 )
                                   
WEIGHTED AVERAGE NUMBER OF COMMON
                                 
   SHARES OUTSTANDING - BASIC AND DILUTED
    7,804,285       19,070,236       586,403  
 3d 
    19,656,639  
                      (7,804,285 )  3f        

See accompanying notes to unaudited pro forma consolidated financial statements
 
F-4

Live Current Media Inc.
And Entity, Inc.

Notes to Unaudited Pro Forma Consolidated Financial Statements


NOTE 1 - BASIS OF PRESENTATION

In May 2008, Communicate.com Delaware Inc. (“Delaware”), a wholly-owned subsidiary of Live Current Media Inc. (“LCM”), merged with Entity Inc. (“Auctomatic”).  The following unaudited pro forma consolidated financial statements are based on the historical consolidated financial statements of LCM for the year ended December 31, 2007 and the three months ended March 31, 2008, and the historical financial statements of Auctomatic for the year ended February 22, 2008 and the three months ended May 22, 2008.  The unaudited pro forma consolidated financial statements should be read in conjunction with LCM’s audited consolidated financial statements and related notes for the year ended December 31, 2007 included in LCM’s Annual Report on Form 10-KSB for the year ended December 31, 2007, LCM’s unaudited consolidated financial statements and related notes for the three months ended March 31, 2008 included in LCM’s Quarterly Report on Form 10-Q for the period ended March 31, 2008, and Auctomatic’s audited consolidated financial statements and related notes for the year ended May 22, 2008 included in this Form 8-K/A.

The accompanying unaudited pro forma consolidated financial statements give effect to the merger of Auctomatic and Delaware as if the merger had occurred on January 1, 2007 in the case of the unaudited pro forma consolidated statement of operations for the year ended December 31, 2007, on January 1, 2008 in the case of the unaudited pro forma consolidated statement of operations for the three months ended March 31, 2008, and on March 31, 2008 in the case of the unaudited pro forma consolidated balance sheet.  The Auctomatic statements of operations included in the separate unaudited pro forma consolidated statements of operations are derived from the first three quarters of the fiscal year ended May 22, 2008 and the fourth quarter of that fiscal year.  The merger has been accounted for as a purchase in conformity with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.”  The total cost of the acquisition has been allocated to the preliminary estimates of assets acquired and liabilities assumed based on their respective estimated fair values as of May 22, 2008.  The excess of purchase price over the preliminary fair values of the net assets acquired has been allocated to goodwill. The preliminary allocation of the purchase price is subject to the final purchase price allocation and the resulting effect on income from operations may differ from the pro forma amounts included in this Current Report on Form 8-K/A.  The unaudited pro forma consolidated financial statements presented below do not reflect any anticipated operating efficiencies or cost savings from the integration of the Auctomatic business into LCMs business.

The unaudited pro forma consolidated financial statements reflect pro forma adjustments that are described in the accompanying notes and are based on available information and certain assumptions LCM’s management believes are reasonable, but may be revised as additional information becomes available.  LCM has made, in the opinion of management, all adjustments that are necessary to present fairly the unaudited pro forma consolidated financial information.  The unaudited pro forma consolidated financial statements should not be considered indicative of actual results that would have been achieved had the merger been completed as of the dates indicated and do not purport to project the financial condition or results of operations for any future date or period.

NOTE 2 - BUSINESS ACQUISITION

In the preparation of these unaudited pro forma consolidated financial statements, the purchase price consideration has been allocated on a preliminary basis to the fair value of the assets acquired and liabilities assumed based on Management’s best estimates and taking into account all relevant information available at the time these unaudited pro forma consolidated financial statements were prepared.  LCM will continue to review information and perform further analysis with respect to the fair values of assets and liabilities acquired prior to finalizing the purchase price allocation.  The actual purchase price allocation will be based on the fair values of assets and liabilities acquired as of the May 22, 2008 closing date and may differ from that presented in these pro forma consolidated financial statements.  The purchase price has been determined by reference to the fair value of the cash and shares of common stock consideration given up by LCM.  The preliminary allocation of the purchase price paid to the fair values of the assets and liabilities acquired is summarized in the table below:

F-5


Live Current Media Inc.
And Entity, Inc.

Notes to Unaudited Pro Forma Consolidated Financial Statements


NOTE 2 - BUSINESS ACQUISITION (continued)


Purchase Price Paid
     
       
Cash (net of assumed liabilities)
  $ 1,046,695  
Present value of shares of common stock paid and payable to Auctomatic shareholders
    1,138,119  
Present value of amounts payable to Auctomatic shareholders
    640,000  
Transaction Costs
    376,052  
         
Total
  $ 3,200,866  
         


Net Assets Acquired
     
       
Assets
     
Cash
  $ 3,066  
Share subscriptions receivable
    780  
Computer hardware
    7,663  
Software
    925,000  
Goodwill
    2,417,296  
         
Less Liabilities
       
Accounts payable and accrued liabilities
    (85,622 )
Loan payable
    (67,317 )
         
Net Assets Acquired
  $ 3,200,866  
         

NOTE 3 - PRO FORMA ASSUMPTIONS AND ADJUSTMENTS

The following assumptions and adjustments have been made to the unaudited pro forma consolidated financial statements of LCM in each of the periods presented to reflect the Transaction:

a) Cash payments totaling $1,046,695 by LCM to the shareholders of Auctomatic upon closing have been recorded in the unaudited pro forma consolidated balance sheet as at March 31, 2008.

b) In addition to the initial cash payment of $1,046,695, amounts payable to the shareholders of Auctomatic $800,000 due on the first anniversary of the closing date were valued at a present value of $640,000 and have been recorded in the unaudited pro forma consolidated balance sheet as at March 31, 2008.

 
F-6


Live Current Media Inc.
And Entity, Inc.

Notes to Unaudited Pro Forma Consolidated Financial Statements


NOTE 3 - PRO FORMA ASSUMPTIONS AND ADJUSTMENTS (continued)

c) The accretion of $160,000, or the difference between the future actual cash payment of $800,000 and the present value of the payment as noted above, has been recorded as interest expense of $160,000 in the unaudited pro forma consolidated statement of operations for the year ended December 31, 2007 and has been recorded in the unaudited pro forma consolidated balance sheet as amounts due to shareholders of Auctomatic.  Three months of the accretion charge, or $40,000, has been recorded as interest expense in the unaudited pro forma consolidated statement of operations for the three months ended March 31, 2008.
 
d) The purchase price included 1,000,007 shares of common stock of LCM.  Of this total, 586,403 shares were issued at closing with a value of $1,138,119 determined based on closing price of LCM shares on May 22, 2008, the closing date of the Transaction.  $586 of this amount has been adjusted to share capital and the balance of $1,137,533 has been adjusted to additional paid-in capital in the unaudited pro forma consolidated balance sheet as at March 31, 2008.

e) The balance of the shares, or 413,604 shares, of the common stock payable on the first, second and third anniversary of the Closing Date to the Auctomatic founders is contingent on their continuing employment with the Company or a subsidiary on each Distribution Date. Future contingent consideration of $260,211 for the first payment of common stock has been recorded as salaries expense in the unaudited pro forma consolidated statement of operations for the year ended December 31, 2007 and has been recorded in the unaudited pro forma consolidated balance sheet as amounts due to shareholders of Auctomatic.  The future contingent consideration of $65,053 for three months of the first annual payment of common stock has been recorded as salaries expense in the unaudited pro forma consolidated statement of operations for the three months ended March 31, 2008.

f) The net equity of Auctomatic has been eliminated in the pro forma consolidated balance sheet as a result of the application of the purchase method of accounting for the combination.

g) The loan payable of $67,093 in Auctomatic was owing to LCM and has been therefore eliminated in the pro forma consolidated balance sheet.  Interest of $224 recorded in Auctomatic as a reduction to interest expense has also been eliminated in the pro forma consolidated statement of operations for the three months ended March 31, 2008.

h) Of the total purchase price, $925,000 has been allocated to computer software and $2,417,296 to goodwill.  Refer to Note 2.

i) LCM incurred due diligence, legal and certain other costs totaling $121,265 associated with the Transaction in the first quarter of 2008, which were deferred pending the closing of the Transaction and have now been included in the purchase price allocated to the net assets acquired. Additional transaction costs of $254,787 are reflected as a reduction from cash in the pro forma consolidated balance sheet.

j) The acquired computer software has been amortized on a straight-line basis over an estimated useful life of 3 years.  Amortization of $308,333 for one year has been recorded in the unaudited pro forma consolidated statement of operations for the Auctomatic period ended February 22, 2008, and amortization of $77,083 for one quarter has been recorded in the unaudited pro forma consolidated statement of operations for the Auctomatic period ended May 22, 2008.

k) To the extent any income is generated for tax purposes by the acquired assets such income is expected to be offset for tax purposes by losses available for carry forward by LCM.  To the extent the acquired assets generate loss carryforward benefits, such amounts are not considered more likely than not to be realized. As a result, no future income tax expense or recovery has been recorded in the pro forma consolidated statements of income.

F-7

Live Current Media Inc.
And Entity, Inc.

Notes to Unaudited Pro Forma Consolidated Financial Statements


NOTE 4 – SUBSEQUENT EVENT

Merger Agreement
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 $153,305 in certain assumed liabilities and (ii) 1,000,007 shares of common stock of the Company at $3.00 per share, in exchange for all the issued and outstanding shares of Auctomatic.

The consideration was paid or payable on the Closing Date as follows: (i) 340,001 shares of common stock of the Company and (ii) $1,200,000 less $153,305 in assumed liabilities.  An additional 246,402 shares of the common stock were issued and shall be distributed to the Auctomatic shareholders in three equal tranches 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 will occur in three equal tranches on the first, second and third anniversary of the Closing Date to the Auctomatic founders subject to their continuing employment with the Company or a subsidiary on each Distribution Date.

Transaction costs of $376,052 have been incurred and will be allocated to the purchase price.
 
 
 
F-8

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