UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal year ended
For the transition period from ________ to ________
COMMISSION FILE NUMBER
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act: |
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value Per Share.
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
[__] Yes [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
[__] Yes [X]
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. [ X ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
[ X ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public company accounting firm that prepared or issued its audit report.
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
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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: $
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 31, 2022 the Registrant had
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LIVE CURRENT MEDIA, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2021
TABLE OF CONTENTS
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this registration statement constitute "forward-looking statements." These statements, identified by words such as "plan," "anticipate," "believe," "estimate," "should," "expect" and similar expressions include the Company's 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 Company'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, and/or evolving industry standards, as well as those factors discussed in "Part II, Item 1A. Risk Factors" of this annual report on Form 10-K.
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 "Part II, Item 1A. Risk Factors" of this annual report on Form 10-K.
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.
As used in this registration statement, unless the context otherwise requires, "we," "us," "our," the "Company" and "Live Current" refers to Live Current Media, Inc. All dollar amounts in this registration statement are in U.S. dollars unless otherwise stated.
ITEM 1. BUSINESS
General
Live Current is a digital technology company involved in the entertainment industry. Live Current is currently developing SPRT MTRX and Trivia Matrix, which are positioned in the sports/gaming sector.
Live Current Media, Inc. (the "Company") was incorporated under the laws of the State of Nevada on October 10, 1995. The Company has an authorized capital of 500,000,000 shares of common stock with 35,559,027 shares currently issued and outstanding.
The Company is the sole shareholder of 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, Inc. (95% ownership), formed under the laws of the State of Delaware on March 13, 2008. Perfume, Inc. is currently dormant and does not carry on an active business. References herein to the Company include DHI and Perfume, Inc. (collectively, the "Subsidiaries") unless otherwise stated.
On March 21, 2019, the Company executed a distribution agreement (the "Distribution Agreement") with Cell MedX Corp. ("Cell MedX" or the "Device Manufacturer"), pursuant to which Cell MedX granted to the Company exclusive worldwide rights to distribute the eBalance microcurrent device to households and individual users. On January 29, 2020, the Company and Cell MedX entered a Buyback agreement to sell the exclusive distribution rights to the eBalance microcurrent device back to Cell MedX.
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Evasyst Inc.
On January 20, 2022, Live Current Media Inc. (the "Company") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Evasyst Inc. ("Evasyst") and the Company's wholly owned subsidiary formed for the purpose of completing the transactions set out in the Merger Agreement, Evasyst Acquisition Inc. ("LIVC Sub"). Under the terms of the Merger Agreement, the Company will acquire all of the outstanding shares of Evasyst (the "Evasyst Acquisition") by means of a reverse triangular merger, whereby LIVC Sub will merge with and into KAST, with KAST continuing as the surviving corporation (the "Merger"). Upon completion of the Merger all of the outstanding shares of Evasyst's common stock will be converted into the right to receive a total of 125,000,000 shares of the Company's common stock and each share of LIVC Sub common stock outstanding will be converted into one share of Evasyst common stock. Upon completion of the Merger, the board of directors of the Company is expected to consist of Mark Ollila, David Jeffs, Justin Weissberg, Leslie Klinger and Heidi Steiger. Mr. Ollila will act as the Chief Executive Officer and Chief Financial Officer of the Company, with Mr. Jeffs acting as the Secretary of the Company. Closing of the Merger remains subject to the satisfaction of certain conditions precedent, including (i) there being no outstanding securities of Evasyst other than shares of Evasyst common stock, (ii) Evasyst having no outstanding indebtedness other than trade payables incurred in the ordinary course of business, (iv) certain significant shareholders of the Company entering into lock up agreements for a period of six (6) months following completion of the Merger, and (v) Evasyst delivering to the Company those audited and unaudited financial statements as are required to be filed pursuant to the provisions of the Securities Exchange Act of 1934. The Merger is expected to complete prior to April 30, 2022.
Evasyst is a digital technology company operating the social video application "Kast". Users of Kast can host public or private watch parties with friends on their PC, Mac, web or mobile device. Kast's technology allows for the creation of intimate private watch parties that scales with millions of users.
Upon completion of the Merger, although the Company will continue to enhance its SPRT MTRX and Trivia Matrix gaming apps, the Company expects to devote most of its resources to the development and commercialization of Kast.
Gaming
Market. 70% of Americans play games online. 54% of those gamers are male, 46% are female and 52% are college educated. 60% play on their mobile devices. Gamers play for mental stimulation, relaxation and stress relief, while prize money is a major inducement.
In addition, gaming advertising revenue has doubled in the last two years. The most common platform for playing games is the smartphone leaving no doubt as to why gaming is taking off. 72% of revenue generated from the App Store is generated from gaming apps.
SPRT MTRX
SPRT MTRX is a gaming app, available in both iPhone and Android versions, in which players bid on the final scores of NHL, NFL and NBA games. The events are organized as "Challenges" and cover multiple games over one day. A cash prize is awarded to the player who receives the most points for correctly bidding on the final scores of the sports events included in the Challenge. The system for bidding on the final scores is unique in the gaming industry.
Business Model. The business model entails offering free prizes for playing the game, developing a large contingent of users and delivering advertisements. This model has proven popular among gamers as the lure of free money is a very attractive inducement. In addition, in-app purchases in the form of sports data and bidding preferences will be added in the future.
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Trivia Matrix
Trivia Matrix is a mobile trivia game app. The game consists of a 4 x 4 grid of eight mixed pairs of trivia data belonging to a specific category. The categories are Geography, History, Sports, Natural World, Pop Culture and Entertainment. The goal of the game is to eliminate each pair of trivia by matching them together and clear the grid of all data. Examples of matches are; actor with movie, musician with band, painter with painting, country with capital and country with silhouette. Players can play individual games to beat the clock or play against other players (H2H) to climb a challenge ladder.
Revenue Model. Trivia Matrix is a free to play (F2P) game. Revenue is generated by presenting advertisements periodically to players who complete games and will be generated by in app purchases (IAP) such as pay to avoid advertisements and pay to gain access to a premium account, which includes more data and more questions. In-app purchases have not yet been enabled.
Trivia Matrix is available on the Apple App Store and Google Play Store.
Boxing.com FEDERATION
The Company was developing Boxing.com Federation during the 2020 fiscal year. In March 2021 the Company terminated development of this project.
ITEM 1A. RISK FACTORS
An investment in the Company's common shares involves a high degree of risk. You should carefully consider the risks described below and the other information in this registration statement before investing in its common shares. If any of the following risks occur, the Company's business, operating results and financial condition could be seriously harmed. The trading price of its common shares could decline due to any of these risks, and you may lose all or part of your investment.
You should consider each of the following risk factors and the other information in this registration statement, including the Company's financial statements and the related notes, in evaluating its business and prospects. The risks and uncertainties described below are not the only ones that impact on the Company's business. Additional risks and uncertainties not presently known to the Company or that the Company currently consider immaterial may also impair its business operations. If any of the following risks do occur, its business and financial results could be harmed. In that case, the trading price of its common stock could decline.
Risks Associated with Completion of the Evasyst Acquisition
No Assurance of Completion. Completion of the Evasyst Acquisition remains subject to a number of conditions precedent. There is no assurance that the Evasyst Acquisition will complete prior to April 30, 2022 or at all.
Completion of the Evasyst Acquisition will result in Substantial Dilution. Completion of the Evasyst Acquisition will result in the issuance of 125,000,000 shares of the Company's common stock, resulting in a change in control of the Company. Existing stockholders of the Company will experience substantial dilution upon completion of the Merger.
Risks Associated with the Company's Gaming Business
Licensing. Currently, other than business and operations licenses applicable to most commercial ventures, the Company is not required to obtain any governmental approval for its business operations. There can be no assurance, however, that governmental institutions will not, in the future, impose licensing or other requirements on the Company. Additionally, as noted below, there are a variety of laws and regulations that may, directly or indirectly, have an impact on the Company's business.
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Privacy Legislation and Regulations. While the Company is not currently subject to licensing requirements, 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. This, in turn, may increase the cost of doing business and make it unattractive to collect and transfer information regarding users of services. This, in turn, may reduce the revenues of the Company and its strategic partners, thus reducing potential revenues and profitability. 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 reducing potential revenue sources. The Company may also be impacted by the US 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 and the attractiveness of Live Current's inventory of domain names.
Advertising Regulations. In response to concerns regarding "spam" (unsolicited electronic messages), "pop-up" web pages and other Internet advertising, the federal government and a number of states have adopted or proposed laws and regulations which would limit the use of unsolicited Internet advertisements. While a number of factors may prevent the effectiveness of such laws and regulations, the cumulative effect may be to limit the attractiveness of effecting and promoting sales on the Internet, thus reducing the value of the Company's advertising driven revenue model.
There are currently few laws or regulations that specifically regulate communications or commerce on the Internet. However, laws and regulations may be adopted in the future that address issues such as user privacy, pricing and the characteristics and quality of products and services. 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 Live Current's business and add additional costs to doing business on the Internet.
Competition. The Company competes with many companies possessing greater financial resources and technical facilities than itself in the B2C (business-to-consumer) market as well as for the recruitment and retention of qualified personnel. In addition, some of these competitors have been in business for longer than Live Current and may have established more strategic partnerships and relationships than the Company.
Dependence on One or a Few Major Customers. The Company does not currently depend on any single customer for a significant proportion of its business. However, as the Company enters into strategic transactions, the Company may choose to grant exclusive rights to a small number of parties or otherwise limit its activities that could, in turn, create such dependence. The Company, however, has no current plans to do so.
The Company will consider seeking further trademark protection for its online businesses, however, the Company may be unable to avail itself of trademark protection under United States laws. Consequently, the Company will seek trademark protection only where it has determined that the cost of obtaining protection, and the scope of protection provided, results in a meaningful benefit to the Company.
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Market Acceptance. SPRT MTRX and Trivia Matrix are new products in a product abundant gaming market and there is no guarantee that they will be accepted by the market. In addition to acceptance, should they be accepted, there is no guarantee that they will maintain their popularity in a notoriously fickle gaming market.
Suspension of Live, Professional Sports. SPRT MTRX relies on live, professional sports to provide game content. Without live professional sports, SPRT MTRX will be forced to change its business model. This could possibly include developing artificial intelligence induced content. There could be significant costs associated with this change and there is no guarantee that it would meet with public acceptance.
Risks Related to the Company's Securities
Additional financing will be required. The Company anticipates that it will require significant additional financing to fund its proposed business development plans. The costs of developing the Company's platforms is anticipated to be substantially greater than the Company's existing financial resources.
If the Company is unable to obtain additional financing when needed, the Company may not be able to complete its business development plans or its business could fail. The Company will scale back its development plans depending upon its existing financial resources.
The Company's ability to obtain future financing will be subject to a number of factors, including the variability of the global economy, investor interest in our planned business projects, and the performance of equity markets in general. These factors may make the timing, amount, terms or conditions of additional financing unavailable to the Company. If the Company is not able to obtain financing when needed or in an amount sufficient to enable us to complete our programs, the Company may be required to scale back its business development plans.
Additional financings equity financing will dilute existing stockholders. The most likely source of future financing presently available to the Company is through the sale of shares of its common stock. Issuing shares of common stock, for financing purposes or otherwise, will dilute the interests of existing stockholders. Existing stockholders of the Company are also expected to have their interests significantly diluted as a result of the completion of the Evasyst Acquisition.
The Company's stock price is volatile. The stock markets in general, and the stock prices of internet companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of any specific public company. The market price of the Company's Common Stock is likely to fluctuate in the future, especially if the Company's Common Stock is thinly traded. Factors that may have a significant impact on the market price of the Company's Common Stock include:
(a) actual or anticipated variations in the Company's results of operations;
(b) the Company's ability or inability to generate new revenues;
(c) increased competition;
(d) government regulations, including internet regulations;
(e) conditions and trends in the internet industry;
(f) proprietary rights; or
(g) rumors or allegations regarding the Company's financial disclosures or practices.
The Company's stock price may be impacted by factors that are unrelated or disproportionate to its operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of the Company's Common Stock.
The Company does not expect to pay dividends in the foreseeable future. The Company has never paid cash dividends on its Common Stock and has no plans to do so in the foreseeable future. The Company intends to retain earnings, if any, to develop and expand its business.
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Lack of operating revenues. The Company has limited operating revenues and is expected to continue to do so for the foreseeable future. Management has assessed the Company's ability to continue as a going concern and the financial statements included with this registration statement includes disclosure that there is a substantial doubt as to the Company's ability to continue as a going concern. The audit report of the Company's principal independent accountants for the years ended December 31, 2021 and December 31, 2020 includes a statement regarding the uncertainty of the Company's ability to continue as a going concern. The Company's failure to achieve profitability and positive operating revenues could have a material adverse effect on its financial condition and results of operations, and could cause the Company's business to fail.
No assurance that forward-looking assessments will be realized. The Company's ability to accomplish their objectives and whether or not they are financially successful is dependent upon numerous factors, each of which could have a material effect on the results obtained. Some of these factors are in the discretion and control of management and others are beyond management's control. The assumptions and hypotheses used in preparing any forward-looking assessments contained herein are considered reasonable by management. There can be no assurance, however, that any projections or assessments contained herein or otherwise made by management will be realized or achieved at any level.
Uncertainty due to Global Outbreak of COVID-19. In March of 2020, the World Health Organization declared an outbreak of COVID-19 a global pandemic. The COVID-19 has impacted a vast array of businesses through the restrictions put in place by most governments internationally, including the USA federal government as well as provincial and municipal governments, regarding travel, business operations and isolation/quarantine orders. At this time, it is unknown to what extent the impact of the COVID-19 outbreak may have on the Company as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place world-wide to fight the virus. While the extent of the impact is unknown, the COVID-19 outbreak may hinder the Company's ability to raise financing for exploration or operating costs due to uncertain capital markets, supply chain disruptions, increased government regulations and other unanticipated factors, all of which may also negatively impact the Company's business and financial condition.
ITEM 2. PROPERTIES
The Company does not currently have any interests in any real property.
The Company and its Subsidiaries operate from their principal office at 50 West Liberty Street, Suite 880, Reno, Nevada. The Company's telephone number is (604) 648-0500.
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Wrongful Dismissal Proceedings with Former CEO of DHI
On March 9, 2000, a former Chief Executive Officer of DHI commenced a legal action against DHI for wrongful dismissal and breach of contract. He is seeking, at a minimum, 18.39% of the outstanding shares of DHI, specific performance of his contract, special damages of approximately $30,000, aggravated and punitive damages, interest and costs. On June 1, 2000, DHI filed a defense and counterclaim claiming damages and special damages for breach of fiduciary duty and breach of his employment contract. No further action has been taken with respect to these proceedings since 2000 and the Company does not consider these proceedings to be material.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Holders of the Company's Shares
As of the date of this Annual Report, the Company had 74 registered shareholders. The number of registered shareholders does not include shareholders holding their shares on deposit with brokers or dealers and registered in the name of stock depositories.
Market Information
The Company's common shares trade over-the-counter in the United States on the OTCQB marketplace under the symbol "LIVC."
Quotations entered on the OTCQB marketplace reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
Dividend Rights
There are no provisions in the Company's articles of incorporation or bylaws restricting the Company's ability to pay dividends on our common stock. Chapter 78 of the Nevada Revised Statutes (the "NRS") does provide certain limitations on the Company's ability to declare and pay dividends. Section 78.288 of the NRS prohibits the Company from declaring dividends where, after giving effect to the distribution of the dividend:
(a) The Company would not be able to pay its debts as they become due in the usual course of business; or
(b) Except as allowed in the Company's articles of incorporation the Company's total assets would be less than the sum of the Company's total liabilities plus the amount that would be needed to satisfy any preferential rights.
The Company has never declared, nor paid, any dividend since their incorporation and they do not foresee paying any dividend in the near future since all available funds will be used to conduct the Company's business development activities. Any future payment of dividends will depend on its financing requirements and financial condition and other factors which the board of directors, in its sole discretion, may consider appropriate.
Recent Sales of Unregistered Securities
February 2022 Convertible Note Offering
On February 15, 2022 the Company completed a private placement offering (the "February 2022 Convertible Note Offering") of Original Issue Discount Senior Convertible Promissory Notes (the "February 2022 Convertible Notes") and warrants to purchase shares of the Company's common stock (the "February 2022 Warrants") with Mercer Street Global Opportunity Fund, LLC ("Mercer") pursuant to a securities purchase agreement between the Company and Mercer (the "Mercer Securities Purchase Agreement"). Under the February 2022 Convertible Note Offering, for an aggregate purchase price of $1,500,000, the Company issued to Mercer a February 2022 Convertible Note having a face value of $1,620,000, and February 2022 Warrants to purchase a total of 3,573,529 shares of the Company's common stock. At the request of the Company, the Company and Mercer may close a second tranche of February 2022 Convertible Notes having a face value of $1,080,000 and on February 2022 Warrants to purchase up to an additional 2,382,353 shares of the Company's common stock for gross proceeds of $1,000,000. Closing of the second tranche under the February 2022 Convertible Note Offering is conditional upon completion of the Evasyst Acquisition and certain other conditions precedent.
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The February 2022 Convertible Notes mature 24 months after issuance, bear interest at a rate of 4% per annum and are convertible into shares of the Company's common stock at an initial conversion price of $0.34 per share, subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. The Company may prepay the February 2022 Convertible Notes (i) at any time during the first 90 days following closing at the face value of the February 2022 Convertible Notes, (ii) at any time during the period from 91 to 180 days following closing at a premium of 110% of the face value of the February 2022 Convertible Notes, and (iii) thereafter at 120% of the face value of the February 2022 Convertible Notes. The February 2022 Convertible Notes contain a number of customary events of default. Additionally, the February 2022 Convertible Notes are secured by all of the assets of the Company, including a lien on and security interest in all of the issued and outstanding equity interests of the wholly-owned subsidiaries of the Company, pursuant to a security agreement that was entered into in connection with the issuance of the February 2022 Convertible Notes.
The February 2022 Warrants are exercisable at an initial exercise price of $0.60 per share for a term ending on the 5 year anniversary of the date of issuance. The exercise price of the February 2022 Warrants are subject to adjustment for certain stock splits, stock combinations and dilutive share issuances.
In addition to the forgoing, until such time as there are no February 2022 Convertible Notes outstanding, if the Company proposes to offer and sell any securities of the Company in a subsequent financing, Mercer may elect to surrender its February 2022 Convertible Notes and February 2022 Warrants for securities of the same type offered in such subsequent financing on the same terms and conditions as that subsequent financing. Subject to certain stated exceptions, the Company is prohibited from incurring any debt, filing registration statements, entering into any variable rate transactions while the February 2022 Convertible Notes are outstanding, and until the earlier of 90 days following closing of the second tranche, or 180 days following closing of the first tranche, the Company is prohibited from issuing any shares of its common stock.
The February 2022 Convertible Notes and February 2022 Warrants may not be converted or exercised by the holder if, after give effect to such conversion or exercise, the holder would beneficially own greater than 4.99% of the Company's outstanding common stock, provided that the holder may, on not less than 61 days prior written notice to the Company, increase the limitation to 9.99% of the Company's outstanding common stock.
In connection with the Offering, the Company also entered into a registration rights agreement (the "Mercer Registration Agreement") with Mercer, pursuant to which the Company has agreed to file a registration statement (a with the Securities and Exchange Commission to register the resale of the shares of common stock issuable upon conversion of the February 2022 Convertible Notes and the February 2022 Warrants by no later than April 7, 2022, and to use commercially reasonable efforts to have such registration statement declared effective within 60 days after filing.
The February 2022 Convertible Note Offering was completed pursuant to the exemptions from registration provided by Rule 506(b) of Regulation D of the United States Securities Act of 1933, as amended (the "Securities Act"), on the basis that Mercer is an "accredited investor" as defined in Rule 501 of Regulation D.
In connection with the February 2022 Convertible Note Offering, the Company issued 221,402 shares of the Company's common stock at a deemed cost of $0.271 per share as a brokerage fee.
March 2022 Convertible Note Offering
On March 28, 2022, the Company completed a private placement offering (the "March 2022 Convertible Note Offering") of Original Issue Discount Senior Unsecured Convertible Promissory Notes (the "March 2022 Convertible Notes") and warrants to purchase shares of the Company's common stock (the "March 2022 Warrants"). For gross proceeds of $886,000, the Company issued March 2022 Convertible Notes having an aggregate face value of $956,880 and March 2022 Warrants exercisable for a total of 2,110,765 shares of the Company's common stock.
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The March 2022 Warrants are exercisable at an initial exercise price of $0.60 per share for a term ending on the 5 year anniversary of the date of issuance. The exercise price of the March 2022 Warrants are subject to adjustment for certain stock splits, stock combinations and dilutive share issuances.
There were no most favored nation rights or registration rights granted in respect of the March 2022 Convertible Note Offering.
The March 2022 Convertible Note Offering was completed pursuant to the exemptions from registration provided by Rule 506(b) of Regulation D and Rule 903 of the Securities Act, on the basis that each subscriber was either an "accredited investor" as defined in Rule 501 of Regulation D or was not a U.S. person as defined in Rule 902 of Regulation S.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Management's Discussion and Analysis
The following selected financial data was derived from the Company's audited and unaudited consolidated financial statements. The information set forth below should be read in conjunction with the Company's consolidated financial statements and related notes included elsewhere in this registration statement. In addition, upon completion of the Evasyst Acquisition, of which there is no assurance, the Company expects to focus its resources on the development of Evasyst's video streaming business and the Company's own Gaming business. These businesses are significantly different from the domain name and web development business that the Company has historically been engaged in. As a result, historical results and capital requirements are not expected to be reflective of the Company's financial results and capital requirements moving forward.
Summary of Results
| 12 months ended | |||||||||
| December 31, 2021 |
December 31, 2020 |
% Change | |||||||
| Operating expenses (income) | |||||||||
| Impairment of computer software | $ | 195,962 | $ | - | n/a | ||||
| Domain content and registration | 3,072 | 3,140 | -2.17% | ||||||
| General and administration | 52,032 | 42,162 | 23.41% | ||||||
| Interest expense | - | 204 | n/a | ||||||
| Management fees | 123,651 | 123,708 | -0.05% | ||||||
| Marketing | 90,195 | 23,376 | 285.84% | ||||||
| Professional fees | 79,839 | 60,450 | 32.07% | ||||||
| Transfer agent and regulatory | 30,201 | 29,229 | 3.33% | ||||||
| Travel | 2,481 | - | n/a | ||||||
| Website Development | 62,302 | 1,506 | 4,036.92% | ||||||
| $ | 639,735 | $ | 283,775 | 125.45% | |||||
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Results of Operation
Revenue
The Company recognized a gain of $913,246 from the sale of a domain name during the year ended December 31, 2021 (2020 - $117,466). The Company did not recognize recurring revenues during its 2021 or 2020 fiscal years. 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. The Company does not anticipate earning significant advertising revenue from SPRT MTRX or Trivia Matrix in the 2022 fiscal year.
The Company has an accumulated deficit of $17,888,257 at December 31, 2021. The Company is presently in the development stage of its business and cannot provide any assurances that it will be able to generate regular or recurring revenues in the near future.
Operating Expenses
Operating expenses for the year ended December 31, 2021 were $639,735 as compared to $283,775 for the year ended December 31, 2020, an increase of approximately $356,000. The change is mainly due to an increase in development costs associated with Trivia Matrix and an increase in marketing activities and impairment expense related to SPRT MTRX.
Net Loss
The Company recorded a net loss of $150,615 for the year ended December 31, 2021 and net profit of $231,999 for the year ended December 31, 2020. The majority of the difference is the result of two transactions as follows: During the year ended December 31, 2021 the Company had a net gain of $913,246 from the sale of domain names compared to a net gain of $117,466 in the year ended December 31, 2020. In 2021 the equity investment resulting from the sale of the eBalance distribution rights described below decreased in value by $346,253 compared to an increase of $47,147 in 2020. In addition, in 2020 the Company recorded a one time gain on the sale of a licence related to the eBalance distribution rights transaction of $351,134. And in 2021 the Company recorded $95,722 in stock based compensation relating to the issuance of options to management, directors and consultants.
On January 29, 2020, the Company made the decision to exit the medical device distribution business and agreed to sell back to Cell MedX Corp. ("Cell MedX") the exclusive worldwide distribution rights to Cell MedX's eBalance microcurrent device, acquired in 2019 (the "Distribution Rights"). Under the terms of the agreement, the Company sold the Distribution Rights back to Cell MedX in consideration for a royalty on future sales of the eBalance device capped at US$507,500, plus warrants to purchase up to 2,000,000 shares in the common stock of Cell MedX (the "Warrants") exercisable for a period of three (3) years. 1,000,000 of the Warrants are exercisable at a price of $US0.50 per share (the "$0.50 Warrants"), with the remaining 1,000,000 Warrants exercisable at US$1.00 per share (the "$1.00 Warrants"). The Warrants are subject to an acceleration right, with the $0.50 Warrants being subject to acceleration if Cell MedX's common stock trades at or above $1.00 per share for 30 consecutive trading days, and the $1.00 Warrants being subject to acceleration if Cell MedX's common stock trades at or above $1.75 per share for 30 consecutive trading days.
14
At December 31, 2021, the Company had a working capital surplus of $566,159, compared to $41,938 at December 31, 2020. The Company's only source of cashflow during the year ended December 31, 2021 was through the sale of domain names totaling $913,246. Due to the fact that the Company has incurred recurring losses and anticipates incurring further losses in the future, the Company has determined there is substantial doubt as to its ability to continue as a going concern.
In February 2022, the Company completed the February 2022 Convertible Note Offering for gross proceeds of $1,500,000, and in March 2022, the Company completed the March 2022 Convertible Note Offering for gross proceeds of $886,000. See "Recent Sales of Unregistered Securities" for additional details regarding the February 2022 Convertible Note Offering and the March 2022 Convertible Note Offering.
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.
Critical Accounting Policies
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
15
Audited financial statements for the fiscal years ended December 31, 2021, including:
16
LIVE CURRENT MEDIA INC.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
(Expressed in US Dollars)
F-1
To the shareholders and the board of directors of Live Current Media, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Live Current Media, Inc. (the "Company") as of December 31, 2021 and 2020, the related statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated revenues since inception, expects to incur further losses from operations, and requires additional funds to meet its obligations and repay its liabilities arising from normal business operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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 in accordance with the standards of the PCAOB.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
| Critical Audit Matter | How the Matter was Addressed in the Audit |
| Royalties Refer to Note 5 of the financial statements. The Company and Cell MedX Corp. (“CMXC”) entered into a buyback agreement to sell the exclusive distribution rights to the eBalance microcurrent device back to CMXC. The sale price included a retained royalty on future sales of the eBalance device capped at $507,000. The Company constrained the income recognized to reduce the probability of a significant income reversal in future periods. The estimate was based on historical experience, anticipated future performance, market conditions, and management’s best estimate at the time. A significant change in the estimate of future sales could have affected the estimated gain on sale. The Company regularly reviewed and updated its estimates. Given the judgment necessary to estimate projected future sales, auditing such estimates required increased audit effort due to the complexity of the therapeutic market and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures. |
Our audit procedures relating to the variable consideration measurement included the following:
• We obtained a confirmation from CMXC on amount of royalty payable to the Company as at December 31, 2021. • We reviewed the latest publicly available information from CMXC on whether the license has been obtained. • We evaluated the reasonableness of management’s estimates of future sales and evaluated the basis for expected future changes. • We performed lookback testing on sales history of the eBalance device. |
/s/ DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
We have served as the Company’s auditor since 2017
March 31, 2022
F-2
| LIVE CURRENT MEDIA INC. |
| CONSOLIDATED BALANCE SHEETS |
| December 31, 2021 | December 31, 2020 | |||||
| (expressed in US dollars) | ||||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash | $ | $ | ||||
| Prepaid Expenses | ||||||
| Non-current assets | ||||||
| Intangible assets | ||||||
| Development of Computer Software | ||||||
| Equity Investment | ||||||
| $ | $ | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities | ||||||
| Accounts payable | $ | $ | ||||
| Other payable | ||||||
| Stockholders' equity | ||||||
| Capital stock | ||||||
| Authorized: | ||||||
| Issued and outstanding as of December 31, 2021 and December 31, 2020: | ||||||
| Additional paid in capital | ||||||
| Deficit | ( |
) | ( |
) | ||
| $ | $ | |||||
The accompanying notes are an integral part of these consolidated financial statements
F-3
| LIVE CURRENT MEDIA INC. |
| CONSOLIDATED STATEMENTS OF OPERATIONS (expressed in US dollars) |
| For the years ended | ||||||
| December 31, 2021 | December 31, 2020 | |||||
| Operating expenses (income) | ||||||
| Impairment of computer software | $ | $ | ||||
| Domain content and registratio | ||||||
| General and administration | ||||||
| Interest expense | ||||||
| Management fees | ||||||
| Marketing | ||||||
| Professional fees | ||||||
| Transfer agent and regulatory | ||||||
| Travel | ||||||
| Website Development | ||||||
| Write-off notes payable | ( |
) | ||||
| Fair value change of equity investment | ( |
) | ||||
| Gain on sale of license | ( |
) | ||||
| Gain on sale of domain names | ( |
) | ( |
) | ||
| Stock based compensation | ||||||
| Income (Loss) from operations | ( |
) | ||||
| Net income (loss) before taxes | ( |
) | ||||
| Provision for taxes | ||||||
| Current taxes recovered | ||||||
| Net income (loss) for the year | $ | ( |
) | $ | ||
| Basic and diluted income (loss) per share | $ | $ | ||||
| Weighted average number of basic common shares outstanding | ||||||
The accompanying notes are an integral part of these consolidated financial statements
F-4
| LIVE CURRENT MEDIA INC. |
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (expressed in US dollars) |
| Common Stock | Additional | Total | |||||||||||||
| Number | Paid In | Accumulated | Stockholders' | ||||||||||||
| of Shares | Amount | Capital | Deficit | Deficit | |||||||||||
| Balance, December 31, 2019 | $ | $ | $ | ( |
) | $ | |||||||||
| Net income | - | - | - | ||||||||||||
| Stock based compensation | - | - | - | ||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ( |
) | $ | |||||||||
| Net loss | - | - | - | ( |
) | ( |
) | ||||||||
| Stock based compensation | - | - | - | ||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( |
) | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements
F-5
| LIVE CURRENT MEDIA INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS (expressed in US dollars) |
| For the years ended | ||||||
| December 31, 2021 | December 31, 2020 | |||||
| Cash flows used in operating activities | ||||||
| Net income (loss) for the year | $ | ( |
) | $ | ||
| Prepaid expense | ( |
) | ||||
| Non-cash items | ||||||
| Impairment of computer software | ||||||
| Gain on sale of domain names | ( |
) | ( |
) | ||
| Fair value change on equity investment | ( |
) | ||||
| Gain on sale of licences | ( |
) | ||||
| Accrued interest | ||||||
| Stock based compensation | ||||||
| Changes in non-cash working capital item | ||||||
| Accounts payable and accrued liabilities | ( |
) | ||||
| Cash used in operating activities | ( |
) | ( |
) | ||
| Cash flows used in investing activities | ||||||
| Proceeds received for sale of domain name | ||||||
| Website development | ( |
) | ( |
) | ||
| Cash used in investing activities | ( |
) | ||||
| Change in cash | ( |
) | ||||
| Cash, beginning of year | ||||||
| Cash, end of year | $ | $ | ||||
| Supplemental cash flow information: | ||||||
| Interest paid | $ | $ | ||||
| Income taxes paid | $ | $ | ||||
The accompanying notes are an integral part of these consolidated financial statements
F-6
| LIVE CURRENT MEDIA INC. |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
| December 31, 2021 |
1. NATURE AND CONTINUANCE OF OPERATIONS
Live Current Media Inc. (the "Company" or "Live Current") was incorporated under the laws of the State of Nevada on October 10, 1995. The Company's wholly owned principal operating subsidiary, Domain Holdings Inc. ("DHI"), was incorporated under the laws of British Columbia on July 4, 1994 under the name "IMEDIAT Digital Creations Inc.". On April 14, 1999, IMEDIAT 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.
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.
Live Current is a digital technology company involved in the entertainment industry. Currently developing the mobile apps SPRT MTRX and Trivia Matrix, which are positioned in the sports and gaming sectors.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2021, the Company has not achieved profitable operations, has incurred recurring operating losses and further losses are possible. The Company has an accumulated deficit of $
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States ("US GAAP'), and pursuant to the rules and regulations of the United States Security and Exchange Commission ("SEC"), and are expressed in United States dollars.
Basis of Presentation
These consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances have been eliminated on consolidation.
Development Costs
The Company has adopted the provisions of ASC 985-20-25, Costs of Software to Be Sold, Leased or Marketed, whereby costs incurred to establish the technological feasibility of a computer software product to be sold, leased or marketed are research and development coasts. Those costs are expressed as incurred; costs of producing product masters incurred subsequent to establishing technological feasibility are capitalized; and costs incurred when the product is available for general release to the customers are expensed as incurred. Upgrades and enhancements are capitalized if they result in added functionality which enables the software to preform tasks it was previously incapable of performing.
F-7
| LIVE CURRENT MEDIA INC. |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| December 31, 2021 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. Examples of key estimates in these financial statements include the valuation of deferred tax assets, estimated variable consideration on the sale of license, fair value of stock-based compensation and valuation of intangible assets. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash and cash equivalents
All highly liquid investments, with an original term to maturity of three months or less are classified as cash and cash equivalents. Cash and cash equivalents are are recorded at fair value.
Intangible Assets not subject to amortization
Intangible assets not subject to amortization consist of direct navigation domain names. While the domain names are renewed annually, through payment of a renewal fee to the applicable registry, the Company has the exclusive right to renew these names at its option. The Company has determined that there are currently no legal, regulatory, contractual, economic or other factors that limit the useful life of these domain names on an aggregate basis and accordingly treat the portfolio of domain names as indefinite life intangible assets.
The Company reviews individual domain names in the portfolio for potential impairment throughout the fiscal year in determining whether a particular URL should be renewed. Impairment is recognized for names that are not renewed. The Company performs an annual assessment of individual domain names in its portfolio to determine whether it is more likely than not that the fair market value of a domain name is less than its carrying amount. When it is determined that the fair value of a domain name is less than it's carrying amount, impairment is recognized.
Foreign Currency Translation
The Company's functional currency is the US dollar and reporting currency is the United States dollar. The Company translates assets and liabilities to US dollars using year-end exchange rates, stockholders' deficit accounts are translated at historical exchange rates, and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the Statement of Operations.
Income Recognition
The Company recognizes income from the sale of intangible assets when the control of the asset is transferred to the customer at the amount that reflects the consideration it expects to be entitled to in exchange for this performance obligation. In determining the transaction price for the sale of assets, the Company considers the effects of variable consideration. Some contracts for the sale of assets provide the Company future royalty payments based on the sales generated by the purchaser. The Company constrained its estimates to reduce the probability of a significant income reversal in future periods. The Company uses the expected value method to estimate the variable consideration because this method best predicts the amount of variable consideration to which the Company will be entitled. The Company uses historical evidence, current information and forecasts to estimate the variable consideration. The requirements in ASC 606 on constraining estimates of variable consideration are applied to determine the amount of variable consideration that can be included in the transaction price. The estimate is updated at each reporting period date.
F-8
| LIVE CURRENT MEDIA INC. |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| December 31, 2021 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
The Company follows the liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Deferred income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes. Deferred income tax assets and liabilities are measured using tax rates and laws expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is "more likely-than-not" that a deferred tax asset will not be realized. Deferred tax assets and deferred tax liabilities, along with any associated valuation allowance, are offset and shown in the consolidated financial statements as a single noncurrent amount when these items arise within the same tax jurisdiction.
The Company and its subsidiaries are subject to U.S. federal income tax and Canadian income tax, as well as income tax of multiple state and local jurisdictions. Based on the Company's evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the Company's financial statements.
Stock Based Payments
The Company accounts for all stock-based payments and awards under the fair value based method. The Company accounts for the granting of stock options to employees using the fair value method whereby all awards to employees will be measured at fair value on the date of the grant. The fair value of all stock options are expensed over their vesting period with a corresponding increase to additional paid-in capital. Upon exercise of stock options, the consideration paid by the option holder, together with the amount previously recognized in additional paid-in capital is recorded as an increase to share capital. Stock options granted to employees are accounted for as liabilities when they contain conditions or other features that are indexed to other than a market, performance or service condition. Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if the Company had paid cash instead of paying with or using equity based instruments. The fair value of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date are measured and recognized at that date.
The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. Changes in these assumptions can materially affect the fair value estimate.
Fair Value of Financial Instruments
The estimated fair values for financial instruments are determined based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, receivable and accounts payable approximate their carrying value due to the short-term nature of those instruments.
ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
F-9
| LIVE CURRENT MEDIA INC. |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| December 31, 2021 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or no market activity, there for requiring an entity to develop its own assumptions about the assumption that market participants would use in pricing.
The Company had no Level 3 assets or liabilities required to be recorded at fair value on a recurring basis in accordance with US GAAP as at December 31, 2021 and 2020. Cash is measured at fair value using level 1 and marketable securities are measured at fair value using level 2.
Basic and Diluted Income (Loss) per Share
Earnings or loss per share ("EPS") is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of the common stock that were outstanding during the years presented. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants, would be used to purchase common shares at the average market price for the period.
3. SHARE CAPITAL
Authorized
The authorized capital of the Company consists of
4. STOCK OPTIONS
The Company's Stock Option Plan (the "Plan") provides the grant of
The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. Changes in these assumptions can materially affect the fair value estimates.
On January 8, 2021, the board of directors granted
F-10
| LIVE CURRENT MEDIA INC. |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| December 31, 2021 |
| At January 8, 2021 | |||
| Expected Life of Options |
|
||
| Risk-Free Interest Rate | |||
| Expected Dividend Yield | |||
| Expected Stock Price Volatility |
As at December 31, 2021, the Company had
5. EQUITY INVESTMENT AND ROYALTIES
On March 21, 2019, the Company entered an agreement with Cell MedX Corp/ ("CMXC") to purchase the direct rights to distribute the eBalance device from CMXC. On January 29, 2020 the Company and CMXC entered a Buyback agreement to sell the exclusive distribution rights to the eBalance microcurrent device back to CMXC.
The sale price included a retained royalty on future sales of the eBalance device capped at US$
As of December 31, 2021, the fair value of the equity investment was calculated to be $
| Assumptions: | 2021 | 2020 | ||||
| Risk-free rate (%) | ||||||
| Expected stock price volatility (%) | ||||||
| Expected dividend yield (%) | ||||||
| Expected life of options (years) |
|
|
The initial recognition of the equity investment in CMXC resulted in a $
During the year ending December 31, 2021, no CMXC warrants were sold and no realized gain or loss from sale of equity investment was realized. The transaction is considered to be a related party transaction as the Company has a common director with Cell MedX and there are beneficial shareholders in common for both Companies.
6. PAYABLES
During the year the Company wrote off notes payable in the amount of $
7. INTANGIBLE ASSETS
| December 31, 2021 | December 31, 2020 | |||||
| Domain names | $ | $ | ||||
| $ | $ |
The Company's portfolio of domain names are considered by management to be indefinite life intangible assets not subject to amortization. Management performs an annual impairment assessment of its domain names; during the year ended December 31, 2021, the Company recorded an impairment charge of $
F-11
| LIVE CURRENT MEDIA INC. |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| December 31, 2021 |
| December 31, 2021 | December 31, 2020 | |||||
| Computer software development | $ | $ | ||||
| Impairment | ( |
) | ||||
| $ | $ |
During the year ended December 31, 2021, the Company completed its development of SPRT MTRX and ceased capitalization. The Company did not generate any revenue and the deferred costs were expensed as the Company does not anticipate generating significant revenue in 2022 from the software.
8. INCOME TAXES
The Company was subject to United States federal income taxes at an approximate rate of
| December 31, 2021 | December 31, 2020 | |||||
| Net income (loss) for the year | $ | ( |
) | $ | ||
| Statutory rate | ||||||
| Expected income tax expense (recovery) | ( |
) | ||||
| Impact of statutory tax rate on earnings of subsidiary | ( |
) | ||||
| Non-taxable earnings | ( |
) | ( |
) | ||
| Change in valuation allowance | ||||||
| $ | $ |
The significant components of deferred income tax assets at December 31, 2021 and December 31, 2020 are as follows:
| December 31, 2021 | December 31, 2020 | |||||
| Net operating losses | $ | $ | ||||
| Intangible assets | ( |
) | ||||
| Valuation allowance | ( |
) | ( |
) | ||
| $ | $ |
At December 31, 2021, the Company had approximately $
9. SUBSEQUENT EVENTS
On January 20, 2022, the Company signed a plan of merger agreement with Evasyst Inc. of San Diego to complete an RTO with Evasyst emerging as the surviving corporation. The merger is expected to complete before April 30, 2022.
F-12
| LIVE CURRENT MEDIA INC. |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
| December 31, 2021 |
On February 15, 2022 the Company completed a private placement offering of Original Issue Discount Senior Convertible Promissory Notes and warrants to purchase shares of the Company’s common stock, pursuant to a securities purchase agreement. For the aggregate purchase price of $
The February 2022 Convertible Notes mature
The February 2022 Warrants are exercisable at an initial exercise price of $
On February 18, 2022, the Company issued
On February 18, 2022, directors and contractors that held outstanding options at December 31, 2021 exercised
On March 28, 2022, the Company completed a private placement offering of Original Issue Discount Senior Unsecured Convertible Promissory Notes and warrants to purchase shares of the Company’s common stock. For gross proceeds of $
The March 2022 Convertible Notes mature
The March 2022 Warrants are exercisable at an initial exercise price of $
F-13
Not applicable
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2019 (the "Evaluation Date"). This evaluation was carried out under the supervision and with the participation of our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the Evaluation Date.
Management's Annual Report on Internal Control Over Financial Reporting
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002 (SOX). Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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 conducted an assessment of the effectiveness of our internal control over financial reporting as of May 31, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As a result of this assessment, it was found that the internal controls cannot be relied upon due to lack of segregation of duties.
Our independent auditors have not issued an attestation report on management's assessment of our internal control over financial reporting. As a result, this Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report.
17
As of the Evaluation Date, there were no changes in our internal control over financial reporting that occurred during the fiscal year ended December 31, 2021 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls and Procedures
Our management, including our principal executive officer and principal financial officer, do not expect that our controls and procedures will prevent all potential error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
ITEM 9B. OTHER INFORMATION
None.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the name and positions of the Company's executive officers and directors as of the date hereof.
| Name | Age | Positions |
| David M Jeffs (Appointed October 15, 2010.) |
52 | Director, Chief Executive Officer, President, Treasurer and Secretary |
| John da Costa (Appointed December 15, 2016) |
57 | Director |
| Amir Vahabzadeh (Appointed December 15, 2016) |
53 | Director |
Set forth below is a brief description of the background and business experience of the Company's executive officers and directors:
David Jeffs Mr. Jeffs has been the Chief Executive Officer, President, Treasurer and Secretary of the Company since October 2010. He was also the Chief Executive Officer of the Company from July 2002 through May 2007 and the President and a director of the Company from July 2002 through September 2007. Previously he was a consultant to the Company's subsidiary, Domain Holdings Inc., from November 2000 and was responsible for revenue-generating initiatives. Prior to consulting for Domain Holdings Inc., Mr. Jeffs was the president and director of a private corporation trading in consumer goods products since 1997. Mr. Jeffs graduated from the University of British Columbia with a Bachelor of Arts where he majored in economics.
Joao (John) da Costa Mr. da Costa has more than twenty-five years of experience providing bookkeeping and accounting services to both private and public companies and is the founder and President of Da Costa Management Corp., a company that has provided management and accounting services to public and private companies since August 2003. Mr. da Costa currently serves as the CFO, Treasurer and a director of Red Metal Resources Ltd., a mineral exploration company listed on the Canadian Securities Exchange, the CFO and a director of Kesselrun Resources Ltd., a mineral exploration company listed on the TSX Venture Exchange, and the COO and a director of Cell MedX Corp., a biotech company trading on the OTCQB Marketplace.
Amir Vahabzadeh Mr. Vahabzadeh has been involved in the internet industry as a private online business owner and consultant for more than 20 years. Mr. Vahabzadeh holds a Bachelor of Arts degree and is a graduate of the University of British Columbia and has been a shareholder of the Company since 2000.
Term Of Office
The Company's directors are elected to hold office until the next annual meeting of the shareholders and until their respective successors have been elected and qualified. The Company's executive officers are appointed by its board of directors and hold office until removed by its board of directors or until their successors are appointed.
Other Significant Employees
Other than the Company's sole executive officer, the Company does not have any significant employees.
19
The Company does not currently have a separately designated audit committee. As such, the Company's entire board of directors acts as its audit committee. The Company's board of directors has determined that Mr. da Costa qualifies as an "audit committee financial expert" as that term is defined in Item 407(d) of Regulation SK. The OTCQB Marketplace, where the Company's securities are traded, does not have independence requirements. In determining independence, the Company has applied the definition set out in NASDAQ Rule 5605(a)(2). Mr. da Costa meets the qualifications for independence set forth in that rule.
Code of Ethics
We adopted a Code of Ethics applicable to our officers and directors which is a "code of ethics" as defined by applicable rules of the SEC. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our principal executive officer, principal financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a current report on Form 8-K filed with the SEC. A copy of our Code of Ethics is attached as an exhibit to this Annual Report.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our securities ("Reporting Persons"), to file reports of ownership and changes in ownership with the SEC. Based solely on our review of the reports electronically filed by the Reporting Persons, the Company has determined that the following persons have failed to file, on a timely basis, the reports required by Section 16(a) of the Exchange Act during our fiscal year ended December 31, 2021:
| Name and Principal Position | Number of Late Insider Reports |
Transactions Not Timely Reported |
Known Failures to File a Required Form |
| David Jeffs CEO, Treasurer, Secretary and Director |
1 | 1 | Nil |
| Amir Vahazadeh Director |
5 | 11 | Nil |
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the total compensation paid or accrued to the Company's named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K, during its last two completed fiscal years.
| SUMMARY COMPENSATION TABLE | |||||||||
| Name & Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non- Equity Incentive Plan Compen- sation ($) |
Nonqualified Deferred Compen- sation Earnings ($) |
All Other Compen- sation ($) |
Total ($) |
| David Jeffs President, CEO, Treasurer & Director |
2021 | $120,000 | $0 | $0 | $59,826 | $0 | $0 | $0 | $179,826 |
| 2020 | $120,000 | $0 | $0 | $0 | $0 | $0 | $0 | $120,000 | |
20
Notes:
(1) The Company does not have a written compensation arrangement in place with David Jeffs, however, it has agreed to compensate Mr. Jeffs at a rate of $120,000 per year, commencing in January of 2017, for his commitment as Chief Executive Officer.
Outstanding Equity Awards at Fiscal Year End
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information concerning unexercised options for each of our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K as of our fiscal year end of December 31, 2021.
| Name and Position | No. of Securities Underlying Unexercised Options (#) Exercisable |
No. of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price |
Vest Date | Option Expiration Date |
| David Jeffs CEO, President, Secretary, Treasurer & Director | 1,000,000 | 0 | $0.10 | 1/08/2021 | 1/08/2023 |
Director Compensation
The following table sets forth the compensation paid to our directors during our December 31, 2021 fiscal year, other than directors who were also named executive officers as that term is defined in Item 402(m)(2). Compensation paid to directors who were also named executive officers during our December 31, 2021 fiscal year is set out in the tables above.
| Name | Fees Earned or Paid in Cash(1) ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
| Amir Vahabzadeh(1) | $0 | $0 | $11,965 | $0 | $0 | $0 | $11,965 |
| John da Costa(2) | $0 | $0 | $11,965 | $0 | $0 | $0 | $11,965 |
Notes:
(1) Mr. Vahabzadeh was granted 200,000 options exercisable at a price of $0.10 per share, expiring January 8, 2023.
(2) Mr. da Costa was granted 200,000 options exercisable at a price of $0.10 per share, expiring January 8, 2023.
Compensation Committee Interlocks and Insider Participation
The Company does not have a compensation committee. The Board of Directors conducts reviews with regard to the compensation of the directors and the Chief Executive Officer once a year. To make its recommendations on such compensation, the Board of Directors takes into account the types of compensation and the amounts paid to officers of comparable publicly traded companies.
21
Equity Compensation Plan Information
The following table sets forth certain information concerning all equity compensation plans previously approved by stockholders and all previous equity compensation plans not previously approved by stockholders, as of December 31, 2022, our most recent fiscal year end.
Equity Compensation Plan Information
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) |
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in column (a)) (c) |
| Equity Compensation Plans Approved By Security Holders | None | Not Applicable | None |
| Equity Compensation Plans Not Approved by Security Holders | 1,800,000 | $0.10 | 3,200,000 |
2018 Stock Option Plan
On November 28, 2018, our board of directors approved and adopted the Company's 2018 Stock Option Plan (the "Plan"). The purpose of the Plan is to enhance long-term shareholder value by offering the Company's directors, officers, employees and eligible consultants the ability to acquire and maintain stock ownership in the Company and to participate in the Company's future growth.
The Plan allows the board to grant awards to officers, directors, employees and certain eligible consultants. To be eligible for grants under the Plan, consultants must be individuals who (1) render bona fide services to the Company not connected to the offer or sale of the Company's securities in capital raising transactions, and (2) do not directly or indirectly promote or maintain a market for the Company's securities.
Initially, up to 5,000,000 shares of the Company's common stock may be purchased pursuant to options granted under the Plan. After March 31, 2019, the Board may increase the shares of common stock that may be purchased under the Plan, provided that the total number of shares that may be purchased under the Plan cannot exceed 15% of the total number of shares outstanding, less any options outstanding under previous stock option plans.
Awards under the Plan may be granted in the form of incentive stock options or non-qualified stock options. Incentive stock options granted under the Plan are those intended to qualify as "incentive stock options" as defined under Section 422 of the Internal Revenue Code (the "Code"). To qualify as "incentive stock options" under Section 422 of the Code, the Plan must be approved by the stockholders of the Company within 12 months of its adoption. If the Plan is not approved by the Company's stockholders within 12 months of its adoption, any options granted as "incentive stock options" will be treated as "non-qualifying stock options". Non-qualified stock options granted under the Plan are option grants that do not qualify as incentive stock options under Section 422 of the Code.
The exercise price for incentive stock options granted under the Plan cannot be less than the fair market value of the Company's common stock on the date of grant (110% of fair market value for optionees that own 10% of the combined voting power of the Company). Non-qualified stock options may not have an exercise price less than 75% of fair market value at the time of grant. "Fair market value" for purposes of the Plan is defined as the lesser of the closing price of the Company's common stock on the day immediately preceding the date of grant, and the average closing price of the Company's common stock during the ten trading days immediately preceding the grant date, provided that the Company's common stock trades on a national securities exchange or the OTC Link system (maintained by OTC Markets Group Inc.). If the Company's common stock does not trade on the OTC Link or a national securities exchange in the United States, the Board may determine fair market value, acting in good faith.
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Options granted under the Plan have a maximum term of ten years from the grant date, or such lesser period as determined by the Board.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning the number of common shares owned beneficially as of March, 31 2022 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of the Company's voting securities, (ii) each of its directors, (iii) each of its named executive officers; and (iv) officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.
| Title of Class | Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percentage of Common Shares(1) |
| Directors and Officers | |||
| Common Shares | Amir Vahabzadeh, 1825 West King Edward Avenue, Vancouver, BC V6J 2W3 | 5,509,934 Direct |
15.5% |
| Common Shares | David Jeffs, 2615 15th Avenue West, Vancouver, BC V6K 2Z6 | 9,409,903(3) Direct 1,124,500 Indirect(2) |
28.8% |
| Common Shares | John da Costa, 820 - 1130 West Pender Street, Vancouver, BC V6E 4A4 | 200,000(4) | 0.6% |
| All Officers and Directors as a Group | 16,244,337 | 44.2% | |
| 5% Shareholders | |||
| Common Shares | Amir Vahabzadeh, 1825 West King Edward Avenue, Vancouver, BC V6J 2W3 | 5,509,934 Direct |
15.5% |
| Common Shares | David Jeffs, 2615 15th Avenue West, Vancouver, BC V6K 2Z6 | 9,409,903 Direct 1,124,500 Indirect |
28.8% |
| Common Shares | Susan Jeffs, 11750 Fairtide Road, Ladysmith, BC V9G 1K5 | 3,797,500(2) Direct |
10.7% |
| Common Shares | Richard Jeffs, 11750 Fairtide Road, Ladysmith, BC V9G 1K5 | 2,560,607 Direct |
7.2% |
Notes:
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of its shares actually outstanding on March 31, 2022. As of March 31, 2022, there were 35,559,027 shares of common stock issued and outstanding.
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(3) Includes options to purchase 1,000,000 shares of our common stock at an exercise price of $0.10 per share.
(4) Includes options to purchase 200,000 shares of our common stock at an exercise price of $0.10 per share.
Changes in Control
On January 20, 2022, the Company entered into an Agreement and Plan of Merger agreement (the "Merger Agreement") with Evasyst Inc. ("Evasyst") and the Company's wholly owned subsidiary formed for the purpose of completing the transactions set forth in the Merger Agreement, Evasyst Acquisition Inc. ("Merger Sub"). Under the terms of the Merger Agreement, Merger Sub will merge with and into Evasyst, with Evasyst continuing as the surviving entity (the "Merger"). Upon completion of the Merger, all of the outstanding shares of Evasyst's common stock will be converted into the right to receive a total of 125,000,000 shares of the Company's common stock, and each share of Merger Sub common stock outstanding will be converted into one share of Evasyst Common Stock. The Merger is expected to complete before April 30, 2022. If this Merger completes as expected, the current shareholders of Evasyst will, as a group, own more than 50% of the outstanding common stock of the Company, resulting in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Transactions
None of the following parties has, during the Company's last two fiscal years, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us, in which the Company is a participant and the amount involved exceeds the lesser of $120,000 or 1% of the average of the Company's total assets for the last two completed fiscal years:
(i) Any of its directors or officers;
(ii) Any person proposed as a nominee for election as a director;
(iii) Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to its outstanding common shares;
(iv) Any of its promoters; and
(v) Any relative or spouse of any of the foregoing persons who has the same house as such person.
Amir Vahabzadeh, a director of the Company, participated in the Company's March 2022 Convertible Note Offering. For an aggregate purchase price of $255,000, Mr. Vahabzadeh purchased March 2022 Convertible Notes having an original principal amount of $275,400 and March 2022 Warrants entitling him to purchase up to 607,500 shares of the Company's common stock. See "Recent Sales of Unregistered Securities" for additional details regarding the March 2022 Convertible Note Offering.
Director Independence
Quotations for the Company's common stock are currently entered on the OTC QB marketplace, which does not have director independence requirements. In determining whether any of its directors are independent, the Company has applied the definition for "Independent Directors" set out in NASDAQ Rule 5605(a)(2). In applying this definition, the Company has determined that John da Costa and Amir Vahabzadeh are independent directors.
24
The aggregate fees billed for the two most recently completed fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal periods were as follows:
|
|
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
|
Audit Fees |
$17,000 |
$17,000 |
|
Audit-Related Fees |
10,500 |
11,500 |
|
Tax Fees |
4,000 |
4,000 |
|
All Other Fees |
- |
- |
|
Total |
$31,500 |
$32,500 |
Our board of directors annually reviews the qualifications of Dale Matheson Carr-Hilton Labonte LLP, prior to engaging them as our auditors in accordance with Rule 2-01(c)(7)(i)(A) of Regulation S-X.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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| 101.INS | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| Live Current Media, Inc. | |||
| Date: | March 31, 2022 | By: | /s/ DAVID M. JEFFS |
| DAVID M. JEFFS | |||
| Chief Executive Officer, President, Secretary and Treasurer | |||
| (Principal Executive Officer and Principal Financial Officer) | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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DAVID M. JEFFS |
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Chief Executive Officer, President, Secretary and Treasurer |
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(Principal Executive Officer and Principal Financial Officer), and Director |
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CERTIFICATIONS
I, David M. Jeffs, certify that;
(1) I have reviewed this Annual Report on Form 10-K of Live Current Media, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | March 31st, 2022 | |
| /s/ David M. Jeffs | ||
| By: | David M. Jeffs | |
| Title: | Chief Executive Officer, President, Treasurer and Secretary |
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, David M. Jeffs, the Chief Executive Officer and Treasurer of Live Current Media Inc. (the "Company"), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(i) the Annual Report on Form 10-K of the Company, for the fiscal year ended December 31, 2021, and to which this certification is attached as Exhibit 32.1 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ David M. Jeffs |
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DAVID M. JEFFS |
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Title: |
Chief Executive Officer and Treasurer (chief financial officer) |
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Date: |
March 31st , 2022 |
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form 10-K/A to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
CONSOLIDATED BALANCE SHEETS - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Current assets | ||
| Cash | $ 668,469 | $ 176,511 |
| Prepaid Expenses | 12,710 | 0 |
| Total Current Assets | 681,179 | 176,511 |
| Non-current assets | ||
| Intangible assets | 6,663 | 105,417 |
| Development of Computer Software | 0 | 128,268 |
| Equity investment | 52,054 | 398,308 |
| Total Assets | 739,896 | 808,504 |
| Current liabilities | ||
| Accounts payable | 115,020 | 116,724 |
| Other payable | 0 | 17,849 |
| Total Liabilities | 115,020 | 134,573 |
| Stockholders' equity | ||
| Capital stock Authorized: 500,000,000 common shares, par value $0.001 per share Issued and outstanding as of December 31, 2021 and December 31, 2020: 34,837,625 common shares | 34,838 | 34,838 |
| Additional paid in capital | 18,478,295 | 18,376,735 |
| Deficit | (17,888,257) | (17,737,642) |
| Total Stockholders Equity | 624,876 | 673,931 |
| Total Liabilities and Stockholders Equity | $ 739,896 | $ 808,504 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
| Common Stock, Par Value Per Share | $ 0.001 | $ 0.001 |
| Common Stock, Shares, Issued | 34,837,625 | 34,837,625 |
| Common Stock, Shares, Outstanding | 34,837,625 | 34,837,625 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Operating expenses (income) | ||
| Impairment of computer software | $ 195,962 | $ 0 |
| Domain content and registration | 3,072 | 3,140 |
| General and administration | 52,032 | 42,162 |
| Interest expense | 0 | 204 |
| Management fees | 123,651 | 123,708 |
| Marketing | 90,195 | 23,376 |
| Professional fees | 79,839 | 60,450 |
| Transfer agent and regulatory | 30,201 | 29,229 |
| Travel | 2,481 | 0 |
| Website Development | 62,302 | 1,506 |
| Write-off notes payable | (17,849) | 0 |
| Fair value change of equity investment | 346,253 | (47,174) |
| Gain on sale of licenses | 0 | (351,134) |
| Gain on sale of domain names | (913,246) | (117,466) |
| Stock based compensation | 95,722 | 0 |
| Income (Loss) from operations | (150,615) | 231,999 |
| Net income (loss) before taxes | (150,615) | 231,999 |
| Provision for taxes | ||
| Current taxes recovered | 0 | 0 |
| Net income (loss) for the year | $ (150,615) | $ 231,999 |
| Basic and diluted income (loss) per share | $ 0.00 | $ 0.01 |
| Weighted average number of basic common shares outstanding | 34,837,625 | 34,837,625 |
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) |
Common Stock [Member] |
Additional Paid In Capital [Member] |
Accumulated Deficit [Member] |
Total |
|---|---|---|---|---|
| Beginning Balance at Dec. 31, 2019 | $ 34,838 | $ 18,370,899 | $ (17,969,641) | $ 436,096 |
| Beginning Balance (in shares) at Dec. 31, 2019 | 34,837,625 | |||
| Net income | 231,999 | 231,999 | ||
| Stock based compensation | 5,836 | 5,836 | ||
| Ending Balance at Dec. 31, 2020 | $ 34,838 | 18,376,735 | (17,737,642) | 673,931 |
| Ending Balance (in shares) at Dec. 31, 2020 | 34,837,625 | |||
| Net income | (150,615) | (150,615) | ||
| Stock based compensation | 101,560 | 101,560 | ||
| Ending Balance at Dec. 31, 2021 | $ 34,838 | $ 18,478,295 | $ (17,888,257) | $ 624,876 |
| Ending Balance (in shares) at Dec. 31, 2021 | 34,837,625 |
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Cash flows used in operating activities | ||
| Net income (loss) for the year | $ (150,615) | $ 231,999 |
| Prepaid expense | (12,710) | |
| Non-cash items | ||
| Impairment of computer software | 195,962 | 0 |
| Gain on sale of domain names | (913,246) | (117,466) |
| Fair value change on equity investment | 346,253 | (47,174) |
| Gain on sale of licenses | 0 | (351,134) |
| Accrued interest | 0 | 204 |
| Stock based compensation | 95,722 | 5,836 |
| Changes in non-cash working capital item | ||
| Accounts payable and accrued liabilities | (19,552) | 25,684 |
| Cash used in operating activities | (458,186) | (252,051) |
| Cash flows used in investing activities | ||
| Proceeds received for sale of domain name | 1,012,000 | 123,980 |
| Website development | (61,856) | (128,268) |
| Cash used in investing activities | 950,144 | (4,288) |
| Change in cash | 491,958 | (256,339) |
| Cash, beginning of year | 176,511 | 432,850 |
| Cash, end of year | 668,469 | 176,511 |
| Supplemental cash flow information: | ||
| Interest paid | 0 | 0 |
| Income taxes paid | $ 0 | $ 0 |
NATURE AND CONTINUANCE OF OPERATIONS |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Nature And Continuance Of Operations [Abstract] | |
| NATURE AND CONTINUANCE OF OPERATIONS [Text Block] |
1. NATURE AND CONTINUANCE OF OPERATIONS Live Current Media Inc. (the "Company" or "Live Current") was incorporated under the laws of the State of Nevada on October 10, 1995. The Company's wholly owned principal operating subsidiary, Domain Holdings Inc. ("DHI"), was incorporated under the laws of British Columbia on July 4, 1994 under the name "IMEDIAT Digital Creations Inc.". On April 14, 1999, IMEDIAT 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. 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. Live Current is a digital technology company involved in the entertainment industry. Currently developing the mobile apps SPRT MTRX and Trivia Matrix, which are positioned in the sports and gaming sectors. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2021, the Company has not achieved profitable operations, has incurred recurring operating losses and further losses are possible. The Company has an accumulated deficit of $17,888,257. The Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to further develop its business. To date, the Company has funded operations through the issuance of capital stock and debt. Management plans to continue raising additional funds through equity or debt financings and loans from directors. There is no certainty that further funding will be available as needed. These factors raise substantial doubt about the ability of the Company to continue operating as a going concern. The ability of the Company to continue its operations as a going concern is dependent upon its ability to raise sufficient new capital to fund its operating commitments and ongoing losses and ultimately on generating profitable operations. The financial statements do not include any adjustments to be recorded to assets or liabilities that might be necessary should the Company be unable to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Accounting Policies [Abstract] | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Text Block] |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States ("US GAAP'), and pursuant to the rules and regulations of the United States Security and Exchange Commission ("SEC"), and are expressed in United States dollars.
Basis of Presentation
These consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances have been eliminated on consolidation.
Development Costs
The Company has adopted the provisions of ASC 985-20-25, Costs of Software to Be Sold, Leased or Marketed, whereby costs incurred to establish the technological feasibility of a computer software product to be sold, leased or marketed are research and development coasts. Those costs are expressed as incurred; costs of producing product masters incurred subsequent to establishing technological feasibility are capitalized; and costs incurred when the product is available for general release to the customers are expensed as incurred. Upgrades and enhancements are capitalized if they result in added functionality which enables the software to preform tasks it was previously incapable of performing.
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 Company's estimates. Examples of key estimates in these financial statements include the valuation of deferred tax assets, estimated variable consideration on the sale of license, fair value of stock-based compensation and valuation of intangible assets. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash and cash equivalents
All highly liquid investments, with an original term to maturity of three months or less are classified as cash and cash equivalents. Cash and cash equivalents are are recorded at fair value.
Intangible Assets not subject to amortization
Intangible assets not subject to amortization consist of direct navigation domain names. While the domain names are renewed annually, through payment of a renewal fee to the applicable registry, the Company has the exclusive right to renew these names at its option. The Company has determined that there are currently no legal, regulatory, contractual, economic or other factors that limit the useful life of these domain names on an aggregate basis and accordingly treat the portfolio of domain names as indefinite life intangible assets.
The Company reviews individual domain names in the portfolio for potential impairment throughout the fiscal year in determining whether a particular URL should be renewed. Impairment is recognized for names that are not renewed. The Company performs an annual assessment of individual domain names in its portfolio to determine whether it is more likely than not that the fair market value of a domain name is less than its carrying amount. When it is determined that the fair value of a domain name is less than it's carrying amount, impairment is recognized.
Foreign Currency Translation
The Company's functional currency is the US dollar and reporting currency is the United States dollar. The Company translates assets and liabilities to US dollars using year-end exchange rates, stockholders' deficit accounts are translated at historical exchange rates, and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the Statement of Operations.
Income Recognition
The Company recognizes income from the sale of intangible assets when the control of the asset is transferred to the customer at the amount that reflects the consideration it expects to be entitled to in exchange for this performance obligation. In determining the transaction price for the sale of assets, the Company considers the effects of variable consideration. Some contracts for the sale of assets provide the Company future royalty payments based on the sales generated by the purchaser. The Company constrained its estimates to reduce the probability of a significant income reversal in future periods. The Company uses the expected value method to estimate the variable consideration because this method best predicts the amount of variable consideration to which the Company will be entitled. The Company uses historical evidence, current information and forecasts to estimate the variable consideration. The requirements in ASC 606 on constraining estimates of variable consideration are applied to determine the amount of variable consideration that can be included in the transaction price. The estimate is updated at each reporting period date.
Income taxes
The Company follows the liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Deferred income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes. Deferred income tax assets and liabilities are measured using tax rates and laws expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is "more likely-than-not" that a deferred tax asset will not be realized. Deferred tax assets and deferred tax liabilities, along with any associated valuation allowance, are offset and shown in the consolidated financial statements as a single noncurrent amount when these items arise within the same tax jurisdiction.
The Company and its subsidiaries are subject to U.S. federal income tax and Canadian income tax, as well as income tax of multiple state and local jurisdictions. Based on the Company's evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the Company's financial statements.
Stock Based Payments
The Company accounts for all stock-based payments and awards under the fair value based method. The Company accounts for the granting of stock options to employees using the fair value method whereby all awards to employees will be measured at fair value on the date of the grant. The fair value of all stock options are expensed over their vesting period with a corresponding increase to additional paid-in capital. Upon exercise of stock options, the consideration paid by the option holder, together with the amount previously recognized in additional paid-in capital is recorded as an increase to share capital. Stock options granted to employees are accounted for as liabilities when they contain conditions or other features that are indexed to other than a market, performance or service condition. Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if the Company had paid cash instead of paying with or using equity based instruments. The fair value of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date are measured and recognized at that date.
The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. Changes in these assumptions can materially affect the fair value estimate.
Fair Value of Financial Instruments
The estimated fair values for financial instruments are determined based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, receivable and accounts payable approximate their carrying value due to the short-term nature of those instruments.
ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or no market activity, there for requiring an entity to develop its own assumptions about the assumption that market participants would use in pricing.
The Company had no Level 3 assets or liabilities required to be recorded at fair value on a recurring basis in accordance with US GAAP as at December 31, 2021 and 2020. Cash is measured at fair value using level 1 and marketable securities are measured at fair value using level 2.
Basic and Diluted Income (Loss) per Share
Earnings or loss per share ("EPS") is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of the common stock that were outstanding during the years presented. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants, would be used to purchase common shares at the average market price for the period. |
SHARE CAPITAL |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Stockholders' Equity Note [Abstract] | |
| SHARE CAPITAL [Text Block] |
3. SHARE CAPITAL Authorized The authorized capital of the Company consists of 500,000,000 shares of common stock with a par value of $0.001 per share. No other shares have been authorized |
STOCK OPTIONS |
12 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||
| STOCK OPTIONS [Text Block] |
4. STOCK OPTIONS The Company's Stock Option Plan (the "Plan") provides the grant of 5,000,000 shares of common stock of the Company, subject to increase after March 31, 2019, upon approval by the Company's directors, provided that the total number of shares that may be optioned and sold under the Plan shall at no time be greater than 15% of total number of shares of common stock outstanding, less any options still outstanding under any previous stock option plan. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. Changes in these assumptions can materially affect the fair value estimates. On January 8, 2021, the board of directors granted 1,600,000 options to its directors and one of its contractors. These stock options vested immediately. The fair value of the options granted calculated to be $95,722. The fair values were determined using the Black-Scholes Option Pricing model with the following assumptions:
As at December 31, 2021, the Company had 1,800,000 (2020 - 200,000) options outstanding and exercisable with a weighted average exercise price and weighted average life of $.10 and .92 years, respectively. |
EQUITY INVESTMENT AND ROYALTIES |
12 Months Ended | |||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||
| Equity Investment And Royalties [Abstract] | ||||||||||||||||||||||||||||||||||||
| EQUITY INVESTMENT AND ROYALTIES [Text Block] |
5. EQUITY INVESTMENT AND ROYALTIES
On March 21, 2019, the Company entered an agreement with Cell MedX Corp/ ("CMXC") to purchase the direct rights to distribute the eBalance device from CMXC. On January 29, 2020 the Company and CMXC entered a Buyback agreement to sell the exclusive distribution rights to the eBalance microcurrent device back to CMXC.
The sale price included a retained royalty on future sales of the eBalance device capped at US$507,000 and share purchase warrants for 2,000,000 shares of CMXC of which 1,000,000 are exercisable at $0.50 and 1,000,000 exercisable at $1.00. As of December 31, 2021. The Company's equity investment consists of 2,000,000 share purchase warrants. Each CMXC share purchase warrant is exercisable for a period of three years expiring on January 31, 2023.
As of December 31, 2021, the fair value of the equity investment was calculated to be $52,054 (2020 - $398,308) based on the market price of $0.179 (2020 - $0.270) per CMXC common share using a Black Scholes Options Pricing model with the following assumptions.
The initial recognition of the equity investment in CMXC resulted in a $351,134 gain on sale of distribution license which is equivalent to the fair value of equity investment received. On December 31, 2020 the equity investment was revalued resulting in a cumulative gain of $398,308. The Company constrained the gain to the fair value of the equity instruments received, as at the point of sale future royalty payments were uncertain as Cell MedX had limited sales and had not obtained Health Canada Class II Medical Device License for the eBalance® Device or the 510K certification from the Food and Drug Administration. The company reviewed its estimates at December 31, 2021 and did not include an additional gain from the royalty.
During the year ending December 31, 2021, no CMXC warrants were sold and no realized gain or loss from sale of equity investment was realized. The transaction is considered to be a related party transaction as the Company has a common director with Cell MedX and there are beneficial shareholders in common for both Companies. |
PAYABLES |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Notes Payable [Abstract] | |
| PAYABLES [Text Block] |
6. PAYABLES During the year the Company wrote off notes payable in the amount of $17,849 payable to two former investors. |
INTANGIBLE ASSETS |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS [Text Block] |
7. INTANGIBLE ASSETS
The Company's portfolio of domain names are considered by management to be indefinite life intangible assets not subject to amortization. Management performs an annual impairment assessment of its domain names; during the year ended December 31, 2021, the Company recorded an impairment charge of $Nil (2020: $Nil).
During the year ended December 31, 2021, the Company completed its development of SPRT MTRX and ceased capitalization. The Company did not generate any revenue and the deferred costs were expensed as the Company does not anticipate generating significant revenue in 2022 from the software. |
INCOME TAXES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES [Text Block] |
8. INCOME TAXES The Company was subject to United States federal income taxes at an approximate rate of 21%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company's income tax expense as reported is as follows:
The significant components of deferred income tax assets at December 31, 2021 and December 31, 2020 are as follows:
At December 31, 2021, the Company had approximately $351,000 of non-capital losses carry-forwards in Canada which expire in 2041 and non-capital loss carry-forwards of approximately $8,262,000 that may be carried forward indefinitely, subject to limitations. The potential future tax benefits of these expenses and losses carried-forward have not been reflected in these consolidated financial statements due to the uncertainty regarding their ultimate realization. Tax attributes are subject to review, and potential adjustment by tax authorities. |
SUBSEQUENT EVENTS |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS [Text Block] |
9. SUBSEQUENT EVENTS On January 20, 2022, the Company signed a plan of merger agreement with Evasyst Inc. of San Diego to complete an RTO with Evasyst emerging as the surviving corporation. The merger is expected to complete before April 30, 2022. On February 15, 2022 the Company completed a private placement offering of Original Issue Discount Senior Convertible Promissory Notes and warrants to purchase shares of the Company’s common stock, pursuant to a securities purchase agreement. For the aggregate purchase price of $1,500,000, the Company issued a Convertible Note having a face value of $1,620,000, and Warrants to purchase a total of 3,573,529 shares of the Company’s common stock. The Company may close a second tranche of the Convertible Notes having a face value of $1,080,000 and Warrants to purchase up to an additional 2,382,353 shares of the Company’s common stock for gross proceeds of $1,000,000. Closing of the second tranche under the Convertible Note Offering is conditional upon completion of the Evasyst Acquisition and certain other conditions precedent. The February 2022 Convertible Notes mature 24 months after issuance, bear interest at a rate of 4% per annum and are convertible into shares of the Company's common stock at an initial conversion price of $0.34 per share, subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. The Company may prepay the February 2022 Convertible Notes (i) at any time during the first 90 days following closing at the face value of the February 2022 Convertible Notes, (ii) at any time during the period from 91 to 180 days following closing at a premium of 110% of the face value of the February 2022 Convertible Notes, and (iii) thereafter at 120% of the face value of the February 2022 Convertible Notes. The February 2022 Convertible Notes contain a number of customary events of default. Additionally, the February 2022 Convertible Notes are secured by all of the assets of the Company, including a lien on and security interest in all of the issued and outstanding equity interests of the wholly-owned subsidiaries of the Company, pursuant to a security agreement that was entered into in connection with the issuance of the February 2022 Convertible Notes. The February 2022 Warrants are exercisable at an initial exercise price of $0.60 per share for a term ending on the 5 year anniversary of the date of issuance. The exercise price of the February 2022 Warrants are subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. On February 18, 2022, the Company issued 221,402 shares as a brokerage fee for the $1.5M Convertible Promissory Note. On February 18, 2022, directors and contractors that held outstanding options at December 31, 2021 exercised 500,000 of those options for proceeds of $50,000. On March 28, 2022, the Company completed a private placement offering of Original Issue Discount Senior Unsecured Convertible Promissory Notes and warrants to purchase shares of the Company’s common stock. For gross proceeds of $886,000, the Company issued Convertible Notes having an aggregate face value of $956,880 and Warrants exercisable for a total of 2,110,765 shares of the Company’s common stock. The March 2022 Convertible Notes mature 24 months after issuance, bear interest at a rate of 4% per annum and are convertible into shares of the Company's common stock at an initial conversion price of $0.34 per share, subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. The Company may prepay the March 2022 Convertible Notes (i) at any time during the first 90 days following closing at the face value of the March 2022 Convertible Notes, (ii) at any time during the period from 91 to 180 days following closing at a premium of 110% of the face value of the March 2022 Convertible Notes, and (iii) thereafter at 120% of the face value of the March 2022 Convertible Notes. The March 2022 Convertible Notes contain a number of customary events of default. The March 2022 Convertible Notes are unsecured. The March 2022 Warrants are exercisable at an initial exercise price of $0.60 per share for a term ending on the 5 year anniversary of the date of issuance. The exercise price of the March 2022 Warrants are subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation [Policy Text Block] |
Basis of Presentation
These consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances have been eliminated on consolidation. |
| Development Costs [Policy Text Block] |
Development Costs
The Company has adopted the provisions of ASC 985-20-25, Costs of Software to Be Sold, Leased or Marketed, whereby costs incurred to establish the technological feasibility of a computer software product to be sold, leased or marketed are research and development coasts. Those costs are expressed as incurred; costs of producing product masters incurred subsequent to establishing technological feasibility are capitalized; and costs incurred when the product is available for general release to the customers are expensed as incurred. Upgrades and enhancements are capitalized if they result in added functionality which enables the software to preform tasks it was previously incapable of performing. |
| Use of Estimates [Policy Text Block] |
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 Company's estimates. Examples of key estimates in these financial statements include the valuation of deferred tax assets, estimated variable consideration on the sale of license, fair value of stock-based compensation and valuation of intangible assets. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
| Cash and cash equivalents [Policy Text Block] |
Cash and cash equivalents
All highly liquid investments, with an original term to maturity of three months or less are classified as cash and cash equivalents. Cash and cash equivalents are are recorded at fair value. |
| Intangible Assets not subject to amortization [Policy Text Block] |
Intangible Assets not subject to amortization
Intangible assets not subject to amortization consist of direct navigation domain names. While the domain names are renewed annually, through payment of a renewal fee to the applicable registry, the Company has the exclusive right to renew these names at its option. The Company has determined that there are currently no legal, regulatory, contractual, economic or other factors that limit the useful life of these domain names on an aggregate basis and accordingly treat the portfolio of domain names as indefinite life intangible assets.
The Company reviews individual domain names in the portfolio for potential impairment throughout the fiscal year in determining whether a particular URL should be renewed. Impairment is recognized for names that are not renewed. The Company performs an annual assessment of individual domain names in its portfolio to determine whether it is more likely than not that the fair market value of a domain name is less than its carrying amount. When it is determined that the fair value of a domain name is less than it's carrying amount, impairment is recognized. |
| Foreign Currency Translation [Policy Text Block] |
Foreign Currency Translation
The Company's functional currency is the US dollar and reporting currency is the United States dollar. The Company translates assets and liabilities to US dollars using year-end exchange rates, stockholders' deficit accounts are translated at historical exchange rates, and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the Statement of Operations. |
| Income Recognition [Policy Text Block] |
Income Recognition
The Company recognizes income from the sale of intangible assets when the control of the asset is transferred to the customer at the amount that reflects the consideration it expects to be entitled to in exchange for this performance obligation. In determining the transaction price for the sale of assets, the Company considers the effects of variable consideration. Some contracts for the sale of assets provide the Company future royalty payments based on the sales generated by the purchaser. The Company constrained its estimates to reduce the probability of a significant income reversal in future periods. The Company uses the expected value method to estimate the variable consideration because this method best predicts the amount of variable consideration to which the Company will be entitled. The Company uses historical evidence, current information and forecasts to estimate the variable consideration. The requirements in ASC 606 on constraining estimates of variable consideration are applied to determine the amount of variable consideration that can be included in the transaction price. The estimate is updated at each reporting period date. |
| Income taxes [Policy Text Block] |
Income taxes
The Company follows the liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Deferred income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes. Deferred income tax assets and liabilities are measured using tax rates and laws expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is "more likely-than-not" that a deferred tax asset will not be realized. Deferred tax assets and deferred tax liabilities, along with any associated valuation allowance, are offset and shown in the consolidated financial statements as a single noncurrent amount when these items arise within the same tax jurisdiction.
The Company and its subsidiaries are subject to U.S. federal income tax and Canadian income tax, as well as income tax of multiple state and local jurisdictions. Based on the Company's evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in the Company's financial statements. |
| Stock Based Payments [Policy Text Block] |
Stock Based Payments
The Company accounts for all stock-based payments and awards under the fair value based method. The Company accounts for the granting of stock options to employees using the fair value method whereby all awards to employees will be measured at fair value on the date of the grant. The fair value of all stock options are expensed over their vesting period with a corresponding increase to additional paid-in capital. Upon exercise of stock options, the consideration paid by the option holder, together with the amount previously recognized in additional paid-in capital is recorded as an increase to share capital. Stock options granted to employees are accounted for as liabilities when they contain conditions or other features that are indexed to other than a market, performance or service condition. Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if the Company had paid cash instead of paying with or using equity based instruments. The fair value of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date are measured and recognized at that date.
The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected term of the option, risk-free interest rates, the value of the common stock and expected dividend yield of the common stock. Changes in these assumptions can materially affect the fair value estimate. |
| Fair Value of Financial Instruments [Policy Text Block] |
Fair Value of Financial Instruments
The estimated fair values for financial instruments are determined based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, receivable and accounts payable approximate their carrying value due to the short-term nature of those instruments.
ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or no market activity, there for requiring an entity to develop its own assumptions about the assumption that market participants would use in pricing.
The Company had no Level 3 assets or liabilities required to be recorded at fair value on a recurring basis in accordance with US GAAP as at December 31, 2021 and 2020. Cash is measured at fair value using level 1 and marketable securities are measured at fair value using level 2. |
| Basic and Diluted Income (Loss) per Share [Policy Text Block] |
Basic and Diluted Income (Loss) per Share
Earnings or loss per share ("EPS") is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of the common stock that were outstanding during the years presented. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants, would be used to purchase common shares at the average market price for the period. |
STOCK OPTIONS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||
| Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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| Stock options granted contractors [Member] | ||||||||||||||||||||||||||||||||||||
| Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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EQUITY INVESTMENT AND ROYALTIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||
| Equity Investment And Royalties [Abstract] | ||||||||||||||||||||||||||||||||||||
| Schedule of Stock Options, Valuation Assumptions [Table Text Block] |
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INTANGIBLE ASSETS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
| Schedule of finite-lived intangible assets [Table Text Block] |
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| Schedule of computer software development [Table Text Block] |
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INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
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| Schedule of Deferred Tax Assets and Liabilities [Table Text Block] |
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NATURE AND CONTINUANCE OF OPERATIONS (Narrative) (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Nature And Continuance Of Operations [Abstract] | ||
| Accumulated deficit | $ 17,888,257 | $ 17,737,642 |
SHARE CAPITAL (Narrative) (Details) - $ / shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Stockholders' Equity [Abstract] | ||
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, par value per share | $ 0.001 | $ 0.001 |
STOCK OPTIONS (Narrative) (Details) - USD ($) |
Jan. 08, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Stock options authorized under stock option plan | 5,000,000 | ||
| Maximum amount of options, as a percentage of common stock outstanding | 15.00% | ||
| Option outstanding | 1,800,000 | 200,000 | |
| Weighted average exercise price | $ 0.10 | $ 0.92 | |
| Stock options granted contractors [Member] | |||
| Number of stock options granted contractor | 1,600,000 | ||
| Number of stock options granted fair value | $ 95,722 |
STOCK OPTIONS - Schedule of share-based payment award, stock options, valuation assumptions (Details) - Stock options granted contractors [Member] |
Jan. 08, 2021 |
|---|---|
| Expected life of options (years) | 2 years |
| Risk-free rate (%) | 0.14% |
| Expected dividend yield (%) | 0.00% |
| Expected stock price volatility (%) | 118.60% |
EQUITY INVESTMENT AND ROYALTIES - Schedule of stock options, valuation assumptions (Details) - Cell MedX Corp. [Member] |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Risk-free rate (%) | 0.39% | 0.13% |
| Expected stock price volatility (%) | 121.28% | 182.61% |
| Expected dividend yield (%) | 0.00% | 0.00% |
| Expected life of options (years) | 1 year 29 days | 2 years 29 days |
PAYABLES (Detail Textuals) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
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| Notes Payable [Abstract] | ||
| Write-off notes payable | $ 17,849 | $ 0 |
INTANGIBLE ASSETS (Narrative) (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Domain names [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Impairment of intangible assets | $ 0 | $ 0 |
INTANGIBLE ASSETS - Schedule of finite-lived intangible assets (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Indefinite-lived Intangible Assets [Line Items] | ||
| Indefinite-lived Intangible Assets | $ 6,663 | $ 105,417 |
| Domain name [Member] | ||
| Indefinite-lived Intangible Assets [Line Items] | ||
| Indefinite-lived Intangible Assets | $ 6,663 | $ 105,417 |
INTANGIBLE ASSETS - Schedule of computer software development (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Computer software development | $ 195,962 | $ 128,268 |
| Impairment | (195,962) | 0 |
| Computer software development, net | $ 0 | $ 128,268 |
INCOME TAXES (Narrative) (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2021
USD ($)
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| Operating Loss Carryforwards [Line Items] | |
| Effective Income Tax Rate Reconciliation, Percent | 21.00% |
| Operating Loss Carryforwards | $ 8,262,000 |
| Canada [Member] | |
| Operating Loss Carryforwards [Line Items] | |
| Operating Loss Carryforwards | $ 351,000 |
INCOME TAXES - Schedule of effective income tax rate reconciliation (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Income Tax Disclosure [Abstract] | ||
| Net income (loss) for the year | $ (150,615) | $ 231,999 |
| Statutory rate | 21.00% | 21.00% |
| Expected income tax expense (recovery) | $ (32,000) | $ 49,000 |
| Impact of statutory tax rate on earnings of subsidiary | 46,000 | (2,000) |
| Non-taxable earnings | (109,000) | (101,000) |
| Change in valuation allowance | 95,000 | 54,000 |
| Income tax expense (benefit), total | $ 0 | $ 0 |
INCOME TAXES - Schedule of deferred tax assets and liabilities (Details) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Income Tax Disclosure [Abstract] | ||
| Net operating losses | $ 1,830,000 | $ 1,762,000 |
| Intangible assets | 20,000 | (7,000) |
| Deferred tax assets, gross | 1,850,000 | 1,755,000 |
| Valuation allowance | (1,850,000) | (1,755,000) |
| Deferred tax assets, net, total | $ 0 | $ 0 |
SUBSEQUENT EVENTS (Narrative) (Details) - Subsequent Event [Member] - USD ($) |
1 Months Ended | ||
|---|---|---|---|
Mar. 28, 2022 |
Feb. 18, 2022 |
Feb. 15, 2022 |
|
| Subsequent Event [Line Items] | |||
| Aggregate purchase price of private placement offering | $ 1,500,000 | ||
| Convertible Note, face value | $ 956,880 | $ 1,500,000 | $ 1,620,000 |
| Number of common shares called by warrants | 2,110,765 | 3,573,529 | |
| Warrant exercise price | $ 0.60 | $ 0.60 | |
| Convertible notes, maturity period | 24 months | 24 months | |
| Convertible notes, interest rate per annum | 4.00% | 4.00% | |
| Initial conversion price | $ 0.34 | $ 0.34 | |
| Convertible notes, payment terms | The Company may prepay the March 2022 Convertible Notes (i) at any time during the first 90 days following closing at the face value of the March 2022 Convertible Notes, (ii) at any time during the period from 91 to 180 days following closing at a premium of 110% of the face value of the March 2022 Convertible Notes, and (iii) thereafter at 120% of the face value of the March 2022 Convertible Notes. The March 2022 Convertible Notes contain a number of customary events of default. The March 2022 Convertible Notes are unsecured. | The Company may prepay the February 2022 Convertible Notes (i) at any time during the first 90 days following closing at the face value of the February 2022 Convertible Notes, (ii) at any time during the period from 91 to 180 days following closing at a premium of 110% of the face value of the February 2022 Convertible Notes, and (iii) thereafter at 120% of the face value of the February 2022 Convertible Notes. The February 2022 Convertible Notes contain a number of customary events of default. Additionally, the February 2022 Convertible Notes are secured by all of the assets of the Company, including a lien on and security interest in all of the issued and outstanding equity interests of the wholly-owned subsidiaries of the Company, pursuant to a security agreement that was entered into in connection with the issuance of the February 2022 Convertible Notes. | |
| Term of warrants | 5 years | 5 years | |
| Number of common shares issued as brokerage fee | 221,402 | ||
| Number of options exercised | 500,000 | ||
| Proceeds from stock options exercised | $ 50,000 | ||
| Gross proceed of private placement offering of convertible note and warrants | $ 886,000 | ||
| Second Tranche [Member] | |||
| Subsequent Event [Line Items] | |||
| Convertible Note, face value | $ 1,080,000 | ||
| Number of common shares called by warrants | 2,382,353 | ||
| Proceeds from Issuance of Common Stock | $ 1,000,000 | ||
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