UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
From ________________ to ________________
Commission File Number
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 200 - |
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| (Address of principal executive offices) | (Zip Code) |
(
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | |||||
| N/A | N/A | N/A | |||||
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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. |
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x | No | ¨ | ||
| 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 (§232.405 of this chapter) during the prior 12 months (or for such shorter period that the registrant was required to submit such files). |
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x | No | ¨ | ||
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.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | Emerging growth company |
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☒ | Smaller reporting company |
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1
| 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. | ☐ | |||
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | Yes | ☐ | No |
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The number of shares outstanding of Common Stock, $0.001 par value per share, on November 12, 2022 was
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
FINANCIAL STATEMENTS (Unaudited) - for the three and nine months ended September 30, 2022 and 2021:
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Quarterly Report on Form 10-Q contains "forward-looking statements" which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements contain information about our expectations, beliefs, plans or intentions regarding our product development and commercialization efforts, research and development efforts, business, financial condition, results of operations, strategies and prospects, and other similar matters. These forward-looking statements are based on management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. These statements may be identified by words such as "expects," "plans," "projects," "will," "may," "anticipates," "believes," "should," "intends," "estimates," "hopes" and other words of similar meaning.
Actual results could differ materially from those contained in forward-looking statements. Many factors could cause actual results to differ materially from those in forward-looking statements, including those matters discussed below. Readers are urged to read the risk factors set forth in our recent filings with the U.S. Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in other documents we file with the SEC from time to time.
Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. Given these risks and uncertainties, the forward-looking statements discussed in this Quarterly Report on Form 10-Q may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of our management as of the date of this Quarterly Report on Form 10-Q. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations, except as required by law.
This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources.
3
| September 30, | December 31, | |||||
| 2022 | 2021 | |||||
| ASSETS | ||||||
| Current assets | ||||||
|
Cash |
$ | $ | ||||
|
Prepaid expenses and other current assets |
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|
Total current assets |
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Fixed assets, net |
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Intangible assets and goodwill (provisional) |
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Other assets |
||||||
| Total assets | $ | $ | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) | ||||||
| Current liabilities | ||||||
|
Accounts payable |
$ | $ | ||||
|
Accrued expenses |
||||||
|
Accrued rent payable |
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|
Accrued interest payable |
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Deferred subscription revenue |
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Convertible notes, net of discount |
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Secured promissory notes |
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Operating lease liability |
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Total current liabilities |
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| Convertible notes | ||||||
| Interest payable | ||||||
|
Operating lease liability |
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| Total liabilities | ||||||
| Commitments andcontingencies | ||||||
| Stockholders' equity (deficit): | ||||||
|
Preferred stock |
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Common stock $ |
||||||
|
Stock subscription receivable |
( |
) | ||||
|
Additional paid in capital |
||||||
|
Accumulated deficit |
( |
) | ( |
) | ||
| Total stockholders' equity (deficit) | ( |
) | ||||
| Total liabilities and stockholders' equity (deficit) | $ | $ |
See accompanying notes to the condensed consolidated financial statements.
4
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| Revenues | $ | $ | $ | $ | |||||||||
| Operating expenses | |||||||||||||
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Software and platform development costs |
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Professional fees |
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Depreciation and amortization |
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Wages and salaries |
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Advertising |
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General and administrative |
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Loss on cancellation of stock subscription receivable and related interest receivable |
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|
||||||||
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Gain on settlement of lease liability |
|
|
( |
) |
|
||||||||
|
Impairment of right to use asset |
|||||||||||||
| Total operating expenses | |||||||||||||
| Income (loss) from operations | ( |
) | ( |
) | ( |
) | |||||||
| Other income (expense) | |||||||||||||
|
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | |||||
|
Gain on forgiveness of PPP Loan |
|||||||||||||
|
Change in fair value of warrants |
( |
) | |||||||||||
|
Other income (expense), net |
( |
) | |||||||||||
| Total other income (expense) | ( |
) | ( |
) | ( |
) | |||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Net Loss per Common Share: | |||||||||||||
| Basic & Diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Weighted Average Common Shares Outstanding: | |||||||||||||
| Basic & Diluted | |||||||||||||
See accompanying notes to the condensed consolidated financial statements.
5
| Additional | Stock | Total | ||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Subscription | Accumulated | Stockholders' | |||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Receivable | Deficit | Equity | |||||||||||||||||
| Balance at January 1, 2022 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net loss | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||
| Stock based compensation | - | - | - | - | - | - | ||||||||||||||||||
| Cancellation of stock subscription receivable | - | - | - | - | - | - | ||||||||||||||||||
| Balance at March 31, 2022 | - | ( |
) | ( |
) | |||||||||||||||||||
| Issuance of shares of common stock upon conversion of: | ||||||||||||||||||||||||
|
Preferred shares |
( |
) | ( |
) | - | - | - | |||||||||||||||||
|
Convertible notes payable and accrued interest |
- | - | - | - | ||||||||||||||||||||
|
Common stock payable |
- | - | - | - | ||||||||||||||||||||
| Options exercised on a cashless basis | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||
| Shares assumed as a result of reverse acquisition | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||
| Issuance of warrants | - | - | - | - | - | - | ||||||||||||||||||
| Balance at June 30, 2022 | - | - | - | ( |
) | |||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||
| Balance at September 30, 2022 | - | $ | - | $ | $ | $ | - | $ | ( |
) | $ | |||||||||||||
| Balance at January 1, 2021 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net income | - | - | - | - | - | - | ||||||||||||||||||
| Stock based compensation | - | - | - | - | - | - | ||||||||||||||||||
| Balance at March 31, 2021 | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||
| Stock based compensation | - | - | - | - | - | - | ||||||||||||||||||
| Balance at June 30, 2021 | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||
| Stock based compensation | - | - | - | - | - | - | ||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||||||
See accompanying notes to the condensed consolidated financial statements.
6
| 2022 | 2021 | |||||
| Cash Flows From Operating Activities: | ||||||
| Net loss |
$ |
( |
) | $ | ( |
) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||
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Depreciation |
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Amortization of debt discount |
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Stock based compensation |
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Professional fees paid with convertible notes payable |
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Compensation paid with common stock payable |
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Loss on cancellation of stock subscription receivable and related interest receivable |
||||||
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Impairment of right of use asset |
||||||
|
Change in fair value of warrants |
||||||
|
Gain on settlement of lease liability |
( |
) | ||||
|
Gain on forgiveness of PPP loan |
( |
) | ||||
| Change in: | ||||||
|
Prepaid expenses |
( |
) | ( |
) | ||
|
Other assets |
( |
) | ||||
|
Accounts payable |
( |
) | ||||
|
Accrued expenses |
( |
) | ( |
) | ||
|
Accrued rent payable |
||||||
|
Deferred subscription revenue |
( |
) | ||||
|
Accrued interest payable |
||||||
|
Net cash provided by (used in) by operating activities |
( |
) | ||||
| Cash Flows From Investing Activities: | ||||||
|
Additions to fixed assets |
( |
) | ||||
|
Cash acquired upon reverse acquisition |
||||||
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Acquisition of intangible |
( |
) | ||||
|
Net cash provided by investing activities |
||||||
| Cash Flows From Financing Activities: | ||||||
|
Proceeds from secured promissory notes |
||||||
|
Payments on secured promissory notes |
( |
) | ( |
) | ||
|
Proceeds from issuance of warrant |
||||||
|
Proceeds from exercise of stock options |
||||||
|
Net cash provided by used in financing activities |
( |
) | ||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
$ | ||||
| NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||
|
Convertible note issued for accrued expenses |
$ |
$ | ||||
|
Convertible note issued for accounts payable |
||||||
|
Stock payable issued for accrued liabilities |
||||||
|
Stock payable issued for interest payable |
||||||
|
Stock payable issued for promissory note |
See accompanying notes to the condensed consolidated financial statements.
1. Organization and Summary of Significant Accounting Policies
Nature of Business
Live Current Media, Inc. was incorporated under the laws of the State of Nevada on October 10, 1995. Evasyst Inc. ("Evasyst") was a private company founded on August 18, 2017, in San Diego California, that operates a social video application called KAST. On April 22, 2022, Live Current Media completed its reverse acquisition with Evasyst (the "Merger"), and the business conducted by Evasyst became the primary business conducted by the Company (see Note 2). As used herein, "Live Current" refers to the Company as it existed prior to the Merger, and the "Company" refers to the consolidated accounts of Live Current and its wholly owned subsidiary Evasyst after the Merger.
Going concern
The accompanying consolidated financial statements prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has not achieved profitable operations and has incurred recurring operating losses. For the nine months ended September 30, 2022, the Company incurred a net loss of $
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. The consolidated financial statements do not include any adjustments hat might result from the outcome of this uncertainty should the Company be unable to continue as a going concern.
COVID-19
As of the date of this filing, there continues to be concern regarding the ongoing impacts and disruptions caused by the COVID-19 pandemic in the regions in which the Company operates. Although the impacts of the pandemic on our business have not been material to date, a prolonged downturn in economic conditions as a result of the pandemic could have a material adverse effect on our customers and demand for our services and products. At this time, it is not possible for the Company to predict the duration or magnitude of the impacts of the pandemic, or other outbreaks of communicable diseases, on the Company's business, financial condition and results of operations.
Inflation and Economic Disruption
Our business is dependent in part on general economic conditions. Many jurisdictions in which our customers are located have experienced and could continue to experience unfavorable general economic conditions, such as inflation, increased interest rates and recessionary concerns, which could negatively affect demand for our products. Under difficult economic conditions, customers may seek to cease spending on our services and products, which could negatively affect our financial performance. We cannot predict the timing or magnitude of an economic slowdown or the timing or strength of any economic recovery. These and other economic factors could have a material adverse effect on our business, financial condition, and results of operations.
Basis of Presentation
The unaudited condensed consolidated financial statements, including notes, of the Company are representations of the Company's management, which is responsible for their integrity and objectivity. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods reported. The balance sheet at December 31, 2021 was derived from audited annual consolidated financial statements but does not contain all of the footnote disclosures from the annual consolidated financial statements contained in the Company's Form 8-K/A filed with the Securities and Exchange Commission on July 8, 2022. All amounts presented are in U.S. dollars.
8
| LIVE CURRENT MEDIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2022 and 2021 - unaudited |
The results of operations for the nine months ended September 30, 2022, are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period.
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation.
Use of Estimates
The preparation of the Company's financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. On an ongoing basis, management reviews its estimates and, if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, assumptions used in valuing stock-based compensation, the valuation allowance for deferred tax assets, accruals for potential liabilities, and assumptions used in the determination of the Company's liquidity. Actual results could differ materially from those estimates.
Revenue Recognition
The Company recognizes revenue based on contracts with customers. A customer contract exists when both parties have approved the contract and are committed to perform their respective obligations, each party's rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable the Company will collect substantially all of the consideration to which it is entitled. The Company derives revenue primarily from subscription- based services. Revenues are recognized when control of these services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
During 2020, the Company's wholly owned subsidiary Evasyst began to offer a premium subscription service to its users by form of a monthly or annual contract. Subscription services revenue is comprised of subscription fees that provide the paying user the right to access the Company's preferred features as a "Premium User", for a period of time. The Company has determined such access represents a stand-ready service provided continually throughout the contract term. As such, control and satisfaction of this stand-ready performance obligation is deemed to occur over time. The Company's subscription contracts include an annual option, beginning on the date that access is made available to the customer. The passage of time is deemed to be the most faithful depiction of the transfer of control of the services as the customer simultaneously receives and consumes the benefit provided by the Company's performance. Subscription contracts are either one month or twelve months in length, billed either monthly or annually, all in advance, which coincides with the terms of the agreement. The Company recognizes deferred revenue at each period end for contracts that have subscriptions that have been paid but expire after period end. At September 30, 2022 and December 31, 2021, the amount of deferred subscription revenue was $
The Company's subscription contracts do not have a significant financing component and customer invoices are paid upfront. There is no significant variable consideration related to these arrangements. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred.
Intangible Assets and Goodwill (Provisional)
At September 30, 2022, the Company is in the process of finalizing the allocation of the consideration to net assets acquired in relation to the reverse acquisition between Live Current and Evasyst (see Note 2), including determining the fair value of domain names, and licensing agreements that were acquired. Excess consideration over the fair value of net assets acquired will be assigned to goodwill.
9
| LIVE CURRENT MEDIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2022 and 2021 - unaudited |
At September 30, 2022, management concluded that there were no impairment triggering events. If economic uncertainty increases and/or the global economy worsens, the Company's business, financial condition and results of operations may be sufficiently impacted to result in future impairment charges in the short-term. Management will continue to monitor the effects that macroeconomic conditions have on its business and operations, and will review impairment indicators to the extent necessary in the upcoming months.
Leases
The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company's right to use an underlying asset during the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments.
Stock-Based Compensation
The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. Stock option grants, which are generally time or performance vested, are measured at the grant date fair value and depending on the conditions associated with the vesting of the award, compensation cost is recognized on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life, and future dividends. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.
Income Taxes
The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense.
Fair Value of Financial Instruments
Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value:
Level 1 - Quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date.
10
| LIVE CURRENT MEDIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2022 and 2021 - unaudited |
Level 2 - Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
Level 3 - Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions.
The Company believes the carrying amount of its financial instruments (consisting of cash, accounts receivable, accounts payable and accrued liabilities, and convertible notes) approximates fair value due to the short-term nature of such instruments.
Net Loss per Share
The Company calculates basic earnings (loss) per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. The Company does not include the impact of any potentially dilutive common stock equivalents in its basic earnings (loss) per share calculations. Diluted earnings per share reflect potentially dilutive common stock equivalents, including options and warrants that could share in our earnings through the conversion of common shares, except where their inclusion would be anti-dilutive. For the three- and nine-month periods ended September 30, 2022 and 2021, the Company had the following securities are excluded from the calculation of diluted income per share as their effect would have been anti-dilutive to the net loss for the periods.
| September 30, 2022 | September 30, 2021 | |||||
| Stock options | ||||||
| Restricted stock units | ||||||
| Warrants | ||||||
| Convertible notes | ||||||
| Preferred stock | ||||||
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06") "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)." ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity's own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 will be effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Effective January 1, 2021, the Company early adopted ASU 2020-06 and that adoption did not have an impact on our financial statements and the related disclosures.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.
11
| LIVE CURRENT MEDIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2022 and 2021 - unaudited |
2. Reverse Acquisition
On April 22, 2022, Live Current completed its merger with Evasyst pursuant to the terms of a merger agreement dated January 20, 2022, by which a wholly-owned subsidiary of Live Current merged with and into Evasyst, with Evasyst continuing as a wholly-owned subsidiary of Live Current (the "Merger"), and the business conducted by Evasyst became the primary business conducted by the Live Current. Live Current and Evasyst are collectively referred to as the "Company" after the Merger.
Prior to the Merger, Evasyst had
Following the Merger, Live Current's shareholders retained
The Merger is accounted for as a reverse acquisition in accordance with GAAP. Under this method of accounting, Evasyst was determined to be the acquiring company for accounting purposes, and Live Current is treated as the acquired company. Accordingly, the assets and liabilities of Live Current were recorded at estimated fair value as of April 22, 2022, the Merger closing date. The accounting acquirer was primarily determined based on Evasyst shareholders having the largest voting interest in the post-combination company, and the ability to appoint the majority of the members of the Board of Directors as well as management in the post-combination company.
Consideration transferred by Evasyst is comprised
The purchase price consideration and provisional allocation to net assets acquired is presented below.
| Fair value of consideration | |||
| Live Current shares of common stock | $ | ||
| Live Current stock options | |||
| Total fair value of consideration | $ | ||
| Allocation of the consideration to the fair value of assets acquired and liabilities assumed: | |||
| Assets | |||
| Cash and cash equivalents | $ | ||
|
Note receivable due from Evasyst |
|
||
| Prepaid expenses and other assets | |||
| Acquisition related intangible assets and goodwill (provisional) | |||
| Total assets acquired | |||
| Liabilities | |||
| Accounts payable accrued expenses | ( |
) | |
| Convertible notes payable | ( |
) | |
| Total liabilities assumed | ( |
) | |
| Fair value of net assets acquired | $ | ||
12
| LIVE CURRENT MEDIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2022 and 2021 - unaudited |
The Company is in the process of finalizing the determination of the fair value of the consideration and allocation of the consideration to individual net assets acquired. The Company is currently determining the fair value of domain names, and licensing agreements that were acquired. Excess consideration received over the fair value of net assets acquired will be assigned to goodwill.
From acquisition date through September 30, 2022, Live Current had no revenue and incurred a net loss of $
The pro forma financial information below represents the combined results of operations for the three and nine months ended September 30, 2022, as if the acquisition had occurred as of January 1, 2021. Based on preliminary assessment of net assets acquired, no intangible assets with definite lives have been identified thus no amortization of such intangibles is reflected in the pro forma information. The unaudited pro forma financial information is presented for informational purposes only and is neither indicative of the results of operations that would have occurred if the acquisition had taken place at the beginning of the period presented nor indicative of future operating results.
| For the three-month period | For the nine-month period | |||||||||||
| September 30, 2022 |
September 30, 2021 |
September 30, 2022 |
September 30, 2021 |
|||||||||
| Revenue | $ | $ | $ | $ | ||||||||
| Earnings | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
3. Convertible Notes Payable
Convertible notes payable consists of the following:
|
September 30, |
December 31, |
|||||
| Live Current convertible notes | ||||||
| Convertible notes payable (a) | $ | $ | ||||
| Debt discount | ( |
) | ||||
| Convertible notes payable, net of discount | ||||||
| Evasyst convertible notes | ||||||
| Convertible notes payable (b) | ||||||
| Total | $ | $ |
(a) On February 15, 2022 and March 28, 2022, Live Current issued convertible promissory notes for $
In connection with the 2022 Convertible Notes, Live Current issued warrants to the note holders to purchase up to
The Notes were accounted for as follows:
|
Total |
|||
| Face value of convertible notes | $ | ||
| Original issue discount | ( |
) | |
| Legal and brokerage fees recorded as discount | ( |
) | |
| Allocation of proceeds to warrants recorded as discount | ( |
) | |
| Allocation of proceeds to convertible notes upon issuance | |||
| Amortization of discount to April 22, 2022 | |||
| Convertible note payable, net of discount at April 22, 2022 | |||
| Amortization of discount to September 30, 2022 | |||
| Convertible note payable, net of discount at September 30, 2022 | $ |
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| LIVE CURRENT MEDIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2022 and 2021 - unaudited |
Upon issuance of the Notes, total debt discount of $
The Company may prepay the notes
(b) At December 31, 2021, the balance of Evasyst convertible notes was $
4. Secured Promissory Notes
At December 31, 2021, Evasyst had two secured notes payable aggregating $
On February 17, 2022 and March 14, 2022, Evasyst entered into two loan agreements with Live Current Media, Inc. for $
On February 4, 2022, Live Current entered into a loan agreement for $
5. PPP Loan
On May 1, 2020, the Company received a loan of $
6. Leases
The Company leases its office in San Diego. The lease, as amended expires in January 2024. The initial ROU asset and liability were recorded in 2019 relating to this lease were calculated based on the future lease payments due under the lease discounted using an estimated incremental borrowing rate of
Under the lease agreement, the Company was still obligated to pay the required lease payments. At December 31, 2021, the balance of accrued rent due under the agreement was $
14
| LIVE CURRENT MEDIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2022 and 2021 - unaudited |
For the nine-month periods ended September 30, 2022 and 2021, rent expense of $
In February 2022, the Company entered into a short-term lease for an office space with payments due of $
7. Stockholders' Equity
During the nine months ended September 30, 2022, the Company issued
Shares issued upon conversion of Preferred Stock
At December 31, 2021, Evasyst had
Shares issued for compensation and other payables
On March 29, 2022, the board of directors of the Evasyst approved shares of common stock to be issued for services to Mark Ollila, CEO of Evasyst. and Justin Weissberg, Chairman of Evasyst, with a fair value of $
In addition, shares with a fair value of $
In April 2022, prior to the Merger, the Company issued
Shares issued upon conversion of convertible notes
Prior to the Merger, the balance of Evasyst convertible notes was $
Shares issued upon exercise of options
At December 31, 2021, Evasyst had options outstanding exercisable into
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| LIVE CURRENT MEDIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2022 and 2021 - unaudited |
8. Equity Investment
9. Options and Warrants
The activity in the Company’s outstanding stock options for the nine month period ended September 30, 2022 is as follows:
| Number of Options |
Weighted Average Exercise Prices |
Weighted Average Remaining Term (years) |
|||||||
| Balance December 31, 2021 | $ | - | |||||||
| Assumed in reverse acquisition |
|
||||||||
| Exercised | ( |
) | - | ||||||
| Expired | - | ||||||||
| Forfeited | ( |
) | - | ||||||
| Balance September 30, 2022 | $ |
|
The activity in the Company’s outstanding stock warrants for the nine month period ended September 30, 2022 is as follows:
| Number of Warrants |
Weighted Average Exercise Prices |
Weighted Average Remaining Term (years) |
|||||||
| Balance December 31, 2021 | - | ||||||||
| Assumed in reverse acquisition | $ |
|
|||||||
| Exercised | - | ||||||||
| Expired | - | ||||||||
| Balance September 30, 2022 | $ |
|
10. Subsequent Events
On October 27, 2022, the Company and the note holder of the convertible notes (see Note 3) agreed to an amendment to the note terms whereby:
In October, the Company entered into a preferred stock financing to raise up to $
In October, the Company entered into an asset purchase agreement with PowerSpike, Inc. ("PowerSpike") to purchase PowerSpike's assets, including intellectual property, for
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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this report. This discussion and analysis may contain forward-looking statements based on assumptions about our future business. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under "Risk Factors" and elsewhere in this report.
Live Current Media Inc. (the "Company", "we", "us" or "our"") was incorporated under the laws of the State of Nevada on October 10, 1995.
On January 20, 2022, 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"). On April 22, 2022, the merger was completed. Under the terms of the Merger Agreement, the Company acquired all of the outstanding shares of Evasyst (the "Evasyst Acquisition") by means of a reverse acquisition, whereby LIVC Submerged with and into LIVC Sub, with LIVC Sub continuing as the surviving corporation (the "Merger"). Upon completion of the Merger all of the outstanding shares of Evasyst's common stock were 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's common stock outstanding were converted into one share of Evasyst common stock. Upon completion of the Merger, the board of directors of the Company now consists of Mark Ollila (Chairman), David Jeffs, Justin Weissberg, Leslie S. Klinger, Annamaria Rapakko and Heidi Steiger. Mr. Ollila was appointed the Chief Executive Officer of the Company, with Mr. Jeffs maintaining his previous roles as the President and Secretary of the Company and Steve Smith has been appointed as CFO of the Company.
Evasyst is a digital technology company operating the social video streaming 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.
Prior to the Merger, the Company was a digital technology company primarily involved in the development of two game apps, SPRT MTRX and Trivia Matrix. Subsequent to the Merger, the Company intends to focus its business resources primarily on the development of its Kast business and also expects to continue the development of SPRT MTRX and Trivia Matrix.
During fiscal 2022 and 2023, the Company intends to focus on increasing its consumer revenue streams through marketing designed to attract new users as well as negotiating content licensing arrangements to add value to the Kast video streaming service and encourage more subscribed users. There is no assurance that the Company will be able to achieve its revenue goals or to otherwise increase revenues during the next 12 months, if ever. As the Company's business is still developing, and it is still in the process of establishing itself in the social media and gaming app marketplaces, any revenues that the Company generates are likely to be subject to significant fluctuations and may be difficult to reliably predict.
RESULTS OF OPERATIONS
The Merger was accounted for as a reverse acquisition, with Evasyst being treated as the acquiring entity for accounting and financial reporting purposes. As such, the Company's financial statements are presented as a continuation of the operations of Evasyst and not Live Current Media Inc. The operations of Live Current Media Inc. are included in the consolidated financial statements for the Company from the effective date of the Merger, April 22, 2022.
The following selected financial data was derived from the Company's unaudited condensed interim consolidated financial statements. The information set forth below should be read in conjunction with the Company's financial statements and related notes included elsewhere in this Quarterly Report.
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Three Months Ended September 30, 2022, Compared to Three Months Ended September 30, 2021
| Three months ended September 30, | ||||||||||
| 2022 | 2021 | Change | ||||||||
| Revenues | $ | 75,402 | $ | 116,821 | $ | (41,419 | ) | |||
| Operating expenses | ||||||||||
| Software and platform development costs | 62,994 | 43,090 | 19,904 | |||||||
| Professional fees | 513,994 | 54,424 | 459,570 | |||||||
| Depreciation and amortization | 6,307 | 4,984 | 1,323 | |||||||
| Wages and salaries | 504,718 | 6,802 | 497,916 | |||||||
| Advertising | 78,093 | - | 78,093 | |||||||
| General and administrative | 215,423 | 4,985 | 210,438 | |||||||
|
Loss on cancellation of stock subscription receivable and related interest receivable |
- |
- |
- |
|||||||
|
Gain on settlement of lease liability |
40,000 |
- |
40,000 |
|||||||
|
Impairment of right to use asset |
- |
- |
- |
|||||||
| Total operating expenses | 1,421,529 | 114,285 | 1,307,244 | |||||||
| Income from operations | (1,346,127 | ) | 2,536 | (1,348,663 | ) | |||||
| Total other income (expense) | (135,796 | ) | (29,835 | ) | (104,961 | ) | ||||
| Net loss | $ | (1,481,923 | ) | $ | (27,299 | ) | $ | (1,454,624 | ) | |
Revenue
The Company earns revenues from subscription-based services from its users. Subscription services revenue is comprised of cloud-based subscription fees that provide the paying user the right to access the platform's preferred features as a "Premium User" for a period of time. The subscription contracts may be made on a monthly or annual option, beginning on the date that access is made available to the customer. Monthly subscription contracts are billed monthly, and annual subscription contracts are billed annually, all in advance. The contracts do not have a significant financing component and customer invoices are paid upfront.
The Company earned revenues of $75,402 during the three months ending September 30, 2022 as compared to revenue of $116,821 for the three months ending September 30, 2021, a decrease of $41,419. Revenue decreased during the three months ended September 30, 2022 as compared to the same period ended 2021 as a result of reduced content on the platform, including Public Parties and Kast TV.
Operating expenses
Operating expenses for the three months ended September 30, 2022 were $1,421,529 compared with $114,285 prior period. The increase is due to Professional Services and Wages and Salaries increases as most of the Company's current employees and professional consultants began April 1, 2022, resulting in approximately $686,000 in expenses for the period. General and Administrative costs increased for the period with insurance and other operating expenses.
Other income (expense)
Interest expense for the three months ended September 30, 2022 was $148,780 compared to $30,589 in the three months ended September 30, 2021 due to convertible notes entered into in February and March 2022.
Net Loss
The Company recorded a net loss of $1,481,923 for the period compared with $27,299 in the prior comparable period.
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Nine Months Ended September 30, 2022, Compared to Nine Months Ended September 30, 2021
| Nine months ended September 30, | ||||||||||
| 2022 | 2021 | Change | ||||||||
| Revenues | $ | 230,372 | $ | 350,818 | $ | (120,446 | ) | |||
| Operating expenses | ||||||||||
| Software and platform development costs | 207,275 | 217,000 | (9,725 | ) | ||||||
| Professional fees | 1,720,414 | 91,117 | 1,629,297 | |||||||
| Depreciation and amortization | 17,775 | 14,682 | 3,093 | |||||||
| Wages and salaries | 1,833,632 | 34,813 | 1,798,819 | |||||||
| Advertising | 171,920 | 3,595 | 168,325 | |||||||
| General and administrative | 460,557 | 100,819 | 359,738 | |||||||
|
Loss on cancellation of stock subscription receivable and related interest receivable |
96,432 |
- |
96,432 |
|||||||
|
Gain on settlement of lease liability |
(399,230 |
) |
- |
(399,230 |
) |
|||||
| Impairment of right to use asset | - | 354,895 | 354,895 | |||||||
| Total operating expenses |
4,108,775 |
816,921 |
3,291,854 |
|||||||
| Loss from operations | (3,878,403 | ) | (466,103 | ) | (3,412,300 | ) | ||||
| Total other income (expense) | (382,216 | ) | 169,601 | (551,817 | ) | |||||
| Net loss | $ | (4,260,619 | ) | $ | (296,502 | ) | $ | (3,964,117 | ) | |
Revenue
The Company earned revenues of $230,372 during the nine months ended September 30, 2022 as compared to revenue of $350,818 for the nine months ended September 30, 2021, a decrease of $120,446. Revenue decreased during the nine months ended September 30, 2022 as compared to the prior period as a result of reduced content on the platform, including Public Parties and Kast TV.
Operating expenses
Operating expenses for the nine months ended September 30, 2022 of $4,108,775 are abnormally high for the Company ($816,921 prior period). The sharp increase in operating expenses is related to the merger transaction with Live Current Media and some related consulting and officer compensations, and reigniting operations on April 1, 2022 with new team members and software engineers.
An impairment of the right to use asset of $354,895 during the nine month period ended September 30, 2022 is due to the Company abandoning its office lease in early 2021. For the nine months ended September 30, 2022, a gain on settlement of the Company's office lease of $399,230 was recorded which resulted from settling with the lessor of its former office space. The settlement of $180,000 was less than the amount the Company had previously accrued as rent expense and as the related operating lease liability.
Other income (expense)
During the nine months ended September 30, 2021, the Company recognized a gain on forgiveness of its PPP loan of $265,952. Interest expense for the nine months ended September 30, 2022 was $371,960 compared to $95,207 in the nine months ended September 30, 2021 due to the new convertible notes entered into in February and March 2022.
Liquidity and Capital Resources
Going concern
The accompanying consolidated financial statements prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has not achieved profitable operations and has incurred recurring operating losses. For the nine months ended September 30, 2022, the Company incurred a net loss of $4,260,619 and used cash in operating activities of $2,719,002. These factors raise substantial doubt about the ability of the Company to continue operating as a going concern within one year after the date the financial statements are issued.
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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. The consolidated financial statements do not include any adjustments hat might result from the outcome of this uncertainty should the Company be unable to continue as a going concern.
At September 30, 2022, the Company had cash and cash equivalents of $41,436 and negative working capital of $2,447,068, a decrease from the Company's negative working capital of $943,679 at December 31, 2021.
Secured Note Transaction
On February 15, 2022, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with Mercer Street Global Opportunity Fund LLC ("Mercer") pursuant to which the Company agreed to sell to Mercer, for gross proceeds of up to $2,500,000, Original Issue Discount Senior Convertible Promissory Notes (the "Secured Notes") having an aggregate principal amount of up to $2,700,000 and warrants (the "Secured Note Warrants") to purchase up to 5,955,882 shares of the Company's common stock in two tranches (the "Secured Note Transaction").
Under the first tranche under the Purchase Agreement, which closed upon signing of the Purchase Agreement, for gross proceeds of $1,500,000, the Company issued Secured Notes (the "First Secured Notes") in the aggregate principal amount of $1,620,000 and the Secured Note Warrants (the "First Secured Note Warrants") to purchase up to 3,573,529 shares of the Company's common stock (the "Common Stock"). The Secured Notes mature 24 months after issuance, bear interest at a rate of 4% per annum and are convertible into shares of 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 Secured Notes (i) at any time during the first 90 days following closing at the face value of the Secured 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 Secured Notes, and (iii) thereafter at 120% of the face value of the Secured Notes. The Secured Notes contain a number of customary events of default. Additionally, the Secured 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 Secured Notes (the "Security Agreement").
The Secured Note 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 Secured Note Warrants is subject to adjustment for certain stock splits, stock combinations and dilutive share issuances.
Subject to the terms and conditions set forth in the Purchase Agreement, for gross proceeds of $1,000,000 the Company and Mercer may close a second tranche for an additional Secured Note having an aggregate principal amount of $1,080,000 (the "Second Secured Note") and additional Secured Note Warrants to purchase up to 2,382,353 shares of Common Stock (the "Second Secured Note Warrants"). There is no assurance that a second tranche will be completed or that the Second Secured Note and the Second Secured Note Warrants will be sold under the Purchase Agreement.
In connection with the Secured Note Transaction, the Company paid to registered broker dealers a cash fee of $120,000 and issued an aggregate of 221,402 shares of Common Stock at a deemed price of $0.281 per share. If a second tranche is completed under the Purchase Agreement, the Company will pay a further cash fee equal to 8% of the funds raised in the second tranche, plus shares of Common Stock in an amount equal to 4% of the funds raised in the second tranche divided by the last closing price of the Common Stock prior to closing of the second tranche.
March 2022 Notes
On March 28, 2022, for gross proceeds of $886,000, the Company issued Original Issue Discount Senior Unsecured Convertible Promissory Notes (the "Unsecured Notes") having an original principal amount equal to $956,880 and warrants (the "Unsecured Note Warrants") to purchase up to 2,110,763 shares of Common Stock (the "March Private Placement").
20
The Unsecured Notes are unsecured, mature 24 months after issuance, bear interest at a rate of 4% per annum and are convertible into shares of 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 Unsecured Notes (i) at any time during the first 90 days following closing at the face value of the Unsecured 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 Unsecured Notes, and (iii) thereafter at 120% of the face value of the Unsecured Notes. The Unsecured Notes contain a number of customary events of default.
The Unsecured Note 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 Unsecured Note Warrants is subject to adjustment for certain stock splits, stock combinations and dilutive share issuances.
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
Use of Estimates
The preparation of the Company's financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. On an ongoing basis, management reviews its estimates and, if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, assumptions used in valuing stock-based compensation, the valuation allowance for deferred tax assets, accruals for potential liabilities, and assumptions used in the determination of the Company's liquidity. Actual results could differ materially from those estimates.
Revenue Recognition
The Company recognizes revenue based on contracts with customers. A customer contract exists when both parties have approved the contract and are committed to perform their respective obligations, each party's rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable the Company will collect substantially all of the consideration to which it is entitled. The Company derives revenue primarily from subscription- based services. Revenues are recognized when control of these services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
Intangible Assets and Goodwill (Provisional)
At September 30, 2022, the Company is in the process of finalizing the allocation of the consideration to net assets acquired in relation to the reverse acquisition between Live Current and Evasyst, including determining the fair value of domain names, and licensing agreements that were acquired. Excess consideration over the fair value of net assets acquired will be assigned to goodwill. At September 30, 2022, management concluded that there were no impairment triggering events. If economic uncertainty increases and/or the global economy worsens, the Company's business, financial condition and results of operations may be sufficiently impacted to result in future impairment charges in the short-term. Management will continue to monitor the effects that macroeconomic conditions have on its business and operations, and will review impairment indicators to the extent necessary in the upcoming months.
Stock-Based Compensation
The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. Stock option grants, which are generally time or performance vested, are measured at the grant date fair value and depending on the conditions associated with the vesting of the award, compensation cost is recognized on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life, and future dividends. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.
21
Recent Accounting Pronouncements
See Note 1 in the accompanying consolidated financial statements for a discussion of recent accounting policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company's management, including the President and Principal Executive Officer ("PEO") and Principal Financial Officer ("PFO"), of the effectiveness of the design and operations of the Company's disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act). Based on that evaluation, the PEO and the PFO have concluded that as of the end of the period covered by this report, the Company's disclosure controls and procedures were not effective as it was determined that there were material weaknesses affecting our disclosure controls and procedures.
Management of the Company believes that these material weaknesses are due to the small size of the Company's accounting staff. The small size of the Company's accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation. To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As the Company grows, management expects to increase the number of employees, which will enable us to implement adequate segregation of duties within the internal control framework. During the fiscal quarter ended September 30, 2022, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 5. OTHER INFORMATION
None.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company was not involved in any material legal proceedings during the interim period ended September 30, 2022.
ITEM 1A. RISK FACTORS.
An investment in the Company's common stock involves a high degree of risk. You should carefully consider the risks described below and in other reports filed by the Company before investing in our common stock. Before making a decision to invest in the Company's securities, you should carefully consider the following risk factors, as well as the risks described under "Risk Factors" in any applicable prospectus supplement and the risks described in the Company's most recent Annual Report on Form 10-K, or any updates to our risk factors described in the Company's Quarterly Reports on Form 10-Q.
If any of these risks occur, the Company's business, operating results and financial condition could be seriously harmed, which could in turn adversely affect your investment. The market price of our securities could decline due to any of these risks, and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties, including those of which we are currently unaware or that we deem immaterial, could also affect our business or your investment in the Company's securities.
22
Risks Related to the Company's Business
Our Efforts to Attract and Retain Users may not be Successful. We have experienced significant user growth over the past several years. Our ability to continue to attract users will depend in part on our ability to effectively market our service, consistently provide our users with compelling content choices, as well as a quality experience for selecting and viewing factual entertainment. Furthermore, the relative service levels, content offerings, pricing and related features of competitors to our service may adversely impact our ability to attract and retain users. Competitors include other entertainment video providers, such as Multichannel Video Programming Distributors (MVPDs) and Subscription Video on Demand (SvoD) services. If consumers do not perceive our service offering to be of value, including if we introduce new or adjust existing features, adjust pricing or service offerings or change the mix of content in a manner that is not favorably received by them, we may not be able to attract and retain users. In addition, we believe that many of our users rejoin our service or originate from word-of-mouth advertising from existing users. If our efforts to satisfy our existing users are not successful, we may not be able to attract users, and as a result, our ability to maintain and/or grow our business will be adversely affected. Users may cancel our service for many reasons, including: a perception that they do not use the service sufficiently, the need to cut household expenses, selection of content is unsatisfactory, competitive services provide a better value or experience and customer service issues are not satisfactorily resolved. Membership growth is also impacted by seasonality, with the first quarter historically representing our greatest growth, also affecting the timing of our content release schedules. We must continually add new users both to replace cancelled users and to grow our business beyond our current user base. If we do not grow as expected, we may not be able to adjust our expenditures or increase our per user revenues commensurate with the lowered growth rate, such that our margins, liquidity and results of operations may be adversely impacted, and our ability to operate may be strained. If we are unable to successfully compete with current and new competitors in both retaining our existing users and attracting new users, our business will be adversely affected. Further, if excessive numbers of users cancel our service, we may be required to incur significantly higher marketing expenditures than we currently anticipate to replace these users with new users.
Operating Results are Likely to Fluctuate Significantly. We expect our operating results to fluctuate significantly in the future based on a variety of factors, many of which are outside our control and difficult to predict. As a result, period-to-period comparisons of our operating results may not be a good indicator of our future or long-term performance. The following factors may affect us from period-to-period and may affect our long-term performance:
• our ability to maintain and develop new and existing revenue-generating relationships;
• our ability to improve or maintain gross margins in our business;
• the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure;
• our ability to significantly increase our subscriber base and retain customers;
• our ability to enforce our contracts and collect receivables from third parties;
• our ability to develop, acquire and maintain an adequate breadth and depth of content via original productions, co-productions, commissions and/or licenses;
• changes by our competitors to their product and service offerings;
• increased competition;
• our ability to detect and comply with data collection and privacy regulation and customer questions related thereto in every jurisdiction in which we operate;
• changes in promotional support or other aspects of our relationships with our partners through which we make our service available, including the MVPDs and/or the vMVPDs (virtual multichannel video programming distributors), through which we offer our content;
• our ability to effectively manage the development of new business segments and markets, and determine appropriate contract and licensing terms;
• our ability to maintain and develop new and existing marketing relationships;
• our ability to maintain, upgrade and develop our website, our applications through which we offer our service on our customers' devices and our internal computer systems;
• fluctuations in the use of the Internet for the purchase of consumer goods and services such as those offered by us;
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• technical difficulties, system downtime or Internet disruptions;
• our ability to attract new and qualified personnel in a timely and effective manner and retain existing personnel;
• our ability to attract and retain sponsors and prove that our sponsorship offerings are effective enough to justify a pricing structure that is profitable for us;
• the success of our program sales to other media companies;
• our ability to successfully manage the integration of operations and technology resulting from possible future acquisitions;
• governmental regulation and taxation policies; and
• general economic conditions and economic conditions specific to the Internet, online commerce and the media industry.
Managing Growth. We have expanded rapidly since we launched our subscription service in March 2020 We anticipate that further expansion of our operations will be required to achieve significant growth in our products, lines of business and user base and to take advantage of favorable market opportunities. Any future expansion will likely place significant demands on our managerial, operational, administrative and financial resources. If we are not able to respond effectively to new or increased demands that arise because of our growth, or, if in responding, our management is materially distracted from our current operations, our business may be adversely affected. In addition, if we do not have sufficient breadth and depth of content necessary to satisfy increased demand arising from growth in our user base, our user satisfaction may be adversely affected.
We are continuing to expand our operations internationally, scaling our service to effectively and reliably handle anticipated growth in both users and features related to our service and ramping up our ability to produce original content. As our offerings evolve, we are managing and adjusting our business to address varied content offerings, consumer customs and practices, different technology infrastructure, different markets for factual video content, as well as differing legal and regulatory environments. As we scale our service, we are developing technology and utilizing third-party "cloud" computing services. As we ramp up our original content production, we are building out expertise in a number of disciplines, including creative, marketing, legal, finance, licensing and other resources related to the development and physical production of content. If we are not able to manage the growing complexity of our business, including improving, refining or revising our systems and operational practices related to our operations and original content, our business may be adversely affected.
Costs and Challenges Associated with Strategic Acquisitions and Investments. From time to time, we acquire or invest in businesses, content, and technologies that support our business. The risks associated with such acquisitions or investments include the difficulty of integrating solutions, operations, and personnel; inheriting liabilities and exposure to litigation; failure to realize anticipated benefits and expected synergies; and diversion of management's time and attention, among other acquisition-related risks. We may not be successful in overcoming such risks, and such acquisitions and investments may negatively impact our business.
In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquire goodwill, which must be assessed for impairment at least annually. If our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process. Acquisitions also could result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results.
Furthermore, if we do not integrate an acquired business successfully and in a timely manner, we may not realize the benefits of the acquisition to the extent anticipated. If an acquired business fails to meet our expectations, our operating results, business and financial condition may suffer. Acquisitions and investments may contribute to fluctuations in our quarterly financial results. These fluctuations could arise from transaction-related costs and charges associated with eliminating redundant expenses or write-offs of impaired assets recorded in connection with acquisitions and investments, which could negatively impact our financial results.
Certain of Our Growth Strategies are Untested, Unproven or not yet fully Developed. We intend to increase our revenues through expanding our subscriber base by, among other things, continuing to expand into international markets, expanding into the mobile video market. There can be no assurance that these international partnerships will be successful or result in our meeting revenue targets.
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If We Experience Excessive Rates of User Churn, Our Revenues and Business will be Harmed. In order to increase our revenues, we must minimize the rate of loss of existing users while adding new users to our Kast subscription service. Our experience during our operating history indicates that there are many variables that impact churn, including the type of plan selected, user engagement with the platform and length of a user's subscription to date. As a result, in periods of rapid user growth, we believe that our average churn is likely to increase as the average length of subscription to date decreases. Similarly, in periods of slow user growth, we believe that our average churn is likely to decrease since our average user duration is longer. However, these estimates are subject to change based on a number of factors, including the percentage of users selecting monthly vs. annual plans, increased rates of subscription cancellations and decreased rates of user acquisition. We cannot assure you that these estimates will be indicative of future performance or that the risks related to these estimates will not materialize. Users may cancel their subscription to our service for many reasons, including, among others, a perception that they do not use the service sufficiently, or the belief that the service is a poor value or that customer service issues are not satisfactorily resolved. We must continually add new users both to replace users who cancel and to continue to grow our business beyond our current user base. If too many of our users cancel our service, or if we are unable to attract new users in numbers sufficient to grow our business, our operating results will be adversely affected. Further, if excessive numbers of users cancel our service, we may be required to incur significantly higher marketing expenditures than we currently anticipate in order to replace these users with new users.
Risks Connected with Content We Acquire, Produce, License and/or Distribute, such as Unforeseen Costs and Potential Liability. As a producer and distributor of content, we face potential liability for negligence, copyright and trademark infringement, or other claims based on the nature and content of materials that we acquire, produce, license and/or distribute. We also may face potential liability for content used in promoting our service, including marketing materials. We are devoting more resources toward the development, production, marketing and distribution of original programming. We believe that original programming can help differentiate our service from other offerings, enhance our brand and otherwise attract and retain users. To the extent our original programming does not meet our expectations, in particular, in terms of costs, viewing and popularity, our business, including our brand and results of operations, may be adversely impacted. As we expand our original programming, we have become responsible for production costs and other expenses. We also take on risks associated with production, such as completion risk. To the extent we create and sell physical or digital merchandise relating to our original programming, and/or license such rights to third parties, we could become subject to product liability, intellectual property or other claims related to such products. We may decide to remove content from our service, not to place licensed or produced content on our service or discontinue or alter production of original content if we believe such content might not be well received by our users or could be damaging to our brand.
To the extent we do not accurately anticipate costs or mitigate risks, including for content that we obtain but ultimately does not appear on or is removed from our service, or if we become liable for content we acquire, produce, license and/or distribute, our business may suffer. Litigation to defend these claims could be costly and the expenses and damages arising from any liability or unforeseen production risks could harm our results of operations. We may not be indemnified against claims or costs of these types and we may not have insurance coverage for these types of claims.
Payment Processing Risks. Our users pay for our service using a variety of different payment methods, including credit and debit cards, gift cards, direct debit and online wallets. We rely on third parties to process payment. Acceptance and processing of these payment methods are subject to certain rules and regulations and require payment of interchange and other fees. To the extent there are disruptions in our payment processing systems, increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors and/or changes to rules or regulations concerning payment processing, our revenue, operating expenses and results of operation could be adversely impacted. In addition, the recent military invasion of Ukraine by Russian forces and the economic sanctions imposed by the U.S. and other nations on Russia, Belarus and certain Russian organizations and individuals may disrupt payments we receive for distribution of our content in Russian territories. In certain instances, we leverage third parties such as our MVPDs and other partners to bill subscribers on our behalf. If these third parties become unwilling or unable to continue processing payments on our behalf, we would have to find alternative methods of collecting payments, which could adversely impact user acquisition and retention. In addition, from time to time, we encounter fraudulent use of payment methods, which could impact our results of operation and if not adequately controlled and managed could create negative perceptions of our service.
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If We Fail to Maintain or, in Newer Markets Establish, a Positive Reputation with Consumers Concerning Our Service, Including the Content We Offer, We may not be Able to Attract or Retain Users, and Our Operating Results may be Adversely Affected. We believe that a positive reputation with consumers concerning our service is important in attracting and retaining users who have many choices when it comes to where to obtain video entertainment. To the extent our content is perceived as low quality, offensive or otherwise not compelling to consumers, our ability to establish and maintain a positive reputation may be adversely impacted. To the extent our content is deemed controversial or offensive by government regulators, we may face direct or indirect retaliatory action or behavior, including being required to remove such content from our service, and our entire service could be banned and/or become subject to heightened regulatory scrutiny across our business and operations. In light of the recent military invasion of Ukraine by Russian forces and the economic sanctions imposed by the U.S. and other nations on Russia, Belarus and certain Russian organizations and individuals, our contracts to sell and distribute our content to Russian distributors in Russian territories may cast us in a negative light with consumers, governmental authorities, business partners or other stakeholders and injure our reputation. Furthermore, to the extent our marketing, customer service and public relations efforts are not effective or result in negative consumer reaction, our ability to establish and maintain a positive reputation may likewise be adversely impacted. Lastly, to the extent we suffer any security vulnerabilities, bugs, errors or other performance failures, our ability to establish and maintain a positive reputation may be adversely impacted. With newer markets, we also need to establish our reputation with consumers and to the extent we are not successful in creating positive impressions, our business in these newer markets may be adversely impacted.
Risks Associated with the Company's eSports and 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.
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.
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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 us 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.
Patents, Trademarks and Proprietary Rights. On November 16, 2007, the Company filed a trademark application with the US Patent & Trademark Office ("USPTO") for the mark "LIVE CURRENT". A certificate of registration was issued on October 14, 2008 and the mark was assigned registration number 3,517,876.
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.
Market Acceptance. Both 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, and the Company anticipates that it will require substantial financing to develop and operate its businesses over the next 12 months.
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 that are 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.
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:
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(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.
"Penny Stock" rules may make buying or selling the Company's Common Stock difficult, and severely limit its market and liquidity. Trading in the Company's Common Stock is subject to certain regulations adopted by the SEC commonly known as the "penny stock" rules. The Company's Common Stock qualifies as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934, which imposes additional sales practice requirements on broker/dealers who sell the Common Stock in the aftermarket. The "penny stock" rules govern how broker-dealers can deal with their clients and "penny stocks". For sales of The Company's Common Stock, the broker/dealer must make a special suitability determination and receive from you a written agreement prior to making a sale to you. The additional burdens imposed upon broker-dealers by the "penny stock" rules may discourage broker-dealers from effecting transactions in The Company's Common Stock, which could severely limit their market price and liquidity of its Common Stock. This could prevent you from reselling your shares and may cause the price of the Common Stock to decline.
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 its objectives and whether or not we 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 to be 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.
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FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH AND NOT SET FORTH HEREIN, AN INVESTMENT IN OUR SECURITIES INVOLVES A CERTAIN DEGREE OF RISK. ANY PERSON CONSIDERING INVESTING IN OUR SECURITIES SHOULD BE AWARE OF THESE AND OTHER FACTORS SET FORTH IN THIS REPORT AND IN THE OTHER REPORTS AND DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH THE SEC AND SHOULD CONSULT WITH HIS/HER LEGAL, TAX AND FINANCIAL ADVISORS PRIOR TO MAKING AN INVESTMENT IN OUR SECURITIES. AN INVESTMENT IN OUR SECURITIES SHOULD ONLY BE ACQUIRED BY PERSONS WHO CAN AFFORD TO LOSE THEIR TOTAL INVESTMENT.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS.
The following exhibits are either provided with this Quarterly Report or are incorporated herein by reference:
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Notes:
(1) Filed as an exhibit to the Company's Registration Statement on Form 10, originally filed on February 1, 2018.
(2) Filed as an exhibit to the Company's Current Report on Form 8-K, filed on December 12, 2018.
(3) Filed as an exhibit to the Company's Current report on Form 8-K, filed on January 31, 2020.
(4) Filed as an exhibit to the Company's Current Report on Form 8-K, filed on January 23, 2021.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K filed on February 16, 2021.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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LIVE CURRENT MEDIA INC. |
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Date: |
November 8, 2022 |
By: |
/s/ Mark Ollila |
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MARK OLLILA |
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Chief Executive Officer |
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(Principal Executive Officer) |
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Date: |
November 8, 2022 |
By: |
/s/ Steve Smith |
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STEVE SMITH |
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Chief Financial Officer |
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(Principal Accounting Officer) |
CERTIFICATIONS
I, Mark Ollila, certify that;
(1) I have reviewed this Quarterly Report on Form 10-Q 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: November 21, 2022
/s/ Mark Ollila
___________________________________
By: Mark Ollila
Title: Chief Executive Officer
CERTIFICATIONS
I, Steve Smith, certify that;
(1) I have reviewed this Quarterly Report on Form 10-Q 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: November 21, 2022
/s/ Steve Smith
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By: Steve Smith
Title: Chief Financial Officer
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, Mark Ollila, the Chief Executive Officer 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 Quarterly Report on Form 10-Q of the Company, for the fiscal quarter ended September 30, 2022, 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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Mark Ollila |
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Chief Executive Officer |
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Date: |
November 21, 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-Q 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.
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Stee Smith, Chief Financial Officer 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 Quarterly Report on Form 10-Q of the Company, for the fiscal quarter ended September 30, 2022, and to which this certification is attached as Exhibit 32.2 (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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By: |
/s/ Steve Smith |
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Name: |
Steve Smith |
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Title: |
Chief Financial Officer |
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Date: |
November 21, 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-Q 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.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
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| Statement of Financial Position [Abstract] | ||
| Preferred Stock, No Par Value | $ 0 | $ 0 |
| Preferred Stock, Shares Authorized | 1,189,664 | 1,189,664 |
| Preferred Stock, Shares Issued | 0 | 907,232 |
| Preferred Stock, Shares Outstanding | 0 | 907,232 |
| Common Stock, Par Value Per Share | $ 0.001 | $ 0.001 |
| Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
| Common Stock, Shares, Issued | 160,559,027 | 42,635,457 |
| Common Stock, Shares, Outstanding | 160,559,027 | 42,635,457 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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| Statement of Operations [Abstract] | ||||
| Revenues | $ 75,402 | $ 116,821 | $ 230,372 | $ 350,818 |
| Operating expenses | ||||
| Software and platform development costs | 62,994 | 43,090 | 207,275 | 217,000 |
| Professional fees | 513,994 | 54,424 | 1,720,414 | 91,117 |
| Depreciation and amortization | 6,307 | 4,984 | 17,775 | 14,682 |
| Wages and salaries | 504,718 | 6,802 | 1,833,632 | 34,813 |
| Advertising | 78,093 | 0 | 171,920 | 3,595 |
| General and administrative | 215,423 | 4,985 | 460,557 | 100,819 |
| Loss on cancellation of subscription and interest receivable | 0 | 0 | 96,432 | 0 |
| Gain on settlement of lease liability | 40,000 | 0 | (399,230) | 0 |
| Impairment of right to use asset | 0 | 0 | 0 | 354,895 |
| Total operating expenses | 1,421,529 | 114,285 | 4,108,775 | 816,921 |
| Income (loss) from operations | (1,346,127) | 2,536 | (3,878,403) | (466,103) |
| Other income (expense) | ||||
| Interest expense | (148,780) | (30,589) | (371,960) | (95,207) |
| Gain on forgiveness of PPP Loan | 0 | 0 | 0 | 265,952 |
| Change in fair value of warrants | 7,933 | 0 | (20,232) | 0 |
| Other income (expense), net | 5,051 | 754 | 9,976 | (1,144) |
| Total other income (expense) | (135,796) | (29,835) | (382,216) | 169,601 |
| Net loss | $ (1,481,923) | $ (27,299) | $ (4,260,619) | $ (296,502) |
| Net Loss per Common Share: | ||||
| Basic net loss per common share | $ (0.01) | $ (0) | $ (0.04) | $ (0.01) |
| Diluted net loss per common share | $ (0.01) | $ (0) | $ (0.04) | $ (0.01) |
| Weighted average number of basic common shares outstanding | 160,559,027 | 42,635,457 | 112,435,806 | 42,635,457 |
| Weighted average number of diluted common shares outstanding | 160,559,027 | 42,635,457 | 112,435,806 | 42,635,457 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - USD ($) |
Preferred Stock [Member] |
Common Stock [Member] |
Additional Paid In Capital [Member] |
Stock Subscription Receivable [Member] |
Accumulated Deficit [Member] |
Total |
|---|---|---|---|---|---|---|
| Beginning Balance at Dec. 31, 2020 | $ 4,121,206 | $ 42,635 | $ 174,832 | $ (87,190) | $ (7,899,684) | $ (3,648,201) |
| Beginning Balance (in shares) at Dec. 31, 2020 | 907,232 | 42,635,457 | ||||
| Net loss | 144,588 | 144,588 | ||||
| Stock-based compensation | 6,802 | 6,802 | ||||
| Ending Balance at Mar. 31, 2021 | $ 4,121,206 | $ 42,635 | 181,634 | (87,190) | (7,755,096) | (3,496,811) |
| Ending Balance (in shares) at Mar. 31, 2021 | 907,232 | 42,635,457 | ||||
| Beginning Balance at Dec. 31, 2020 | $ 4,121,206 | $ 42,635 | 174,832 | (87,190) | (7,899,684) | (3,648,201) |
| Beginning Balance (in shares) at Dec. 31, 2020 | 907,232 | 42,635,457 | ||||
| Net loss | (296,502) | |||||
| Ending Balance at Sep. 30, 2021 | $ 4,121,206 | $ 42,635 | 195,239 | (87,190) | (8,196,186) | (3,924,296) |
| Ending Balance (in shares) at Sep. 30, 2021 | 907,232 | 42,635,457 | ||||
| Beginning Balance at Mar. 31, 2021 | $ 4,121,206 | $ 42,635 | 181,634 | (87,190) | (7,755,096) | (3,496,811) |
| Beginning Balance (in shares) at Mar. 31, 2021 | 907,232 | 42,635,457 | ||||
| Net loss | (413,791) | (413,791) | ||||
| Stock-based compensation | 6,803 | 6,803 | ||||
| Ending Balance at Jun. 30, 2021 | $ 4,121,206 | $ 42,635 | 188,437 | (87,190) | (8,168,887) | (3,903,799) |
| Ending Balance (in shares) at Jun. 30, 2021 | 907,232 | 42,635,457 | ||||
| Net loss | (27,299) | (27,299) | ||||
| Stock-based compensation | 6,802 | 6,802 | ||||
| Ending Balance at Sep. 30, 2021 | $ 4,121,206 | $ 42,635 | 195,239 | (87,190) | (8,196,186) | (3,924,296) |
| Ending Balance (in shares) at Sep. 30, 2021 | 907,232 | 42,635,457 | ||||
| Beginning Balance at Dec. 31, 2021 | $ 4,121,206 | $ 42,635 | 202,041 | (87,190) | (8,292,013) | (4,013,321) |
| Beginning Balance (in shares) at Dec. 31, 2021 | 907,232 | 42,635,457 | ||||
| Net loss | (2,056,639) | (2,056,639) | ||||
| Stock-based compensation | 324 | 324 | ||||
| Cancellation of stock subscription receivable | 87,190 | 87,190 | ||||
| Ending Balance at Mar. 31, 2022 | $ 4,121,206 | $ 42,635 | 202,365 | (10,348,652) | (5,982,446) | |
| Ending Balance (in shares) at Mar. 31, 2022 | 907,232 | 42,635,457 | ||||
| Beginning Balance at Dec. 31, 2021 | $ 4,121,206 | $ 42,635 | 202,041 | $ (87,190) | (8,292,013) | (4,013,321) |
| Beginning Balance (in shares) at Dec. 31, 2021 | 907,232 | 42,635,457 | ||||
| Net loss | (4,260,619) | |||||
| Ending Balance at Sep. 30, 2022 | $ 160,559 | 18,475,971 | (12,552,632) | 6,083,898 | ||
| Ending Balance (in shares) at Sep. 30, 2022 | 160,559,027 | |||||
| Beginning Balance at Mar. 31, 2022 | $ 4,121,206 | $ 42,635 | 202,365 | (10,348,652) | (5,982,446) | |
| Beginning Balance (in shares) at Mar. 31, 2022 | 907,232 | 42,635,457 | ||||
| Preferred shares | $ (4,121,206) | $ 40,652 | 4,080,554 | |||
| Preferred shares (shares) | (907,232) | 40,652,380 | ||||
| Convertible debt and accrued interest to shares of common stock | $ 26,213 | 3,556,857 | 3,583,070 | |||
| Convertible debt and accrued interest to shares of common stock (shares) | 26,212,690 | |||||
| Common stock payable | $ 9,878 | 1,010,124 | 1,020,002 | |||
| Common stock payable (shares) | 9,877,750 | |||||
| Options exercised on a cashless basis | $ 5,622 | (5,622) | (0) | |||
| Options exercised on a cashless basis (shares) | 5,621,723 | |||||
| Net loss | (722,057) | (722,057) | ||||
| Shares assumed as a result of reverse acquisition | $ 35,559 | 9,630,693 | 9,666,252 | |||
| Shares assumed as a result of reverse acquisition (shares) | 35,559,027 | |||||
| Issuance of warrants | 1,000 | 1,000 | ||||
| Ending Balance at Jun. 30, 2022 | $ 160,559 | 18,475,971 | (11,070,709) | 7,565,821 | ||
| Ending Balance (in shares) at Jun. 30, 2022 | 160,559,027 | |||||
| Net loss | (1,481,923) | (1,481,923) | ||||
| Ending Balance at Sep. 30, 2022 | $ 160,559 | $ 18,475,971 | $ (12,552,632) | $ 6,083,898 | ||
| Ending Balance (in shares) at Sep. 30, 2022 | 160,559,027 |
Organization and Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization and Summary of Significant Accounting Policies [Text Block] |
1. Organization and Summary of Significant Accounting Policies Nature of Business Live Current Media, Inc. was incorporated under the laws of the State of Nevada on October 10, 1995. Evasyst Inc. ("Evasyst") was a private company founded on August 18, 2017, in San Diego California, that operates a social video application called KAST. On April 22, 2022, Live Current Media completed its reverse acquisition with Evasyst (the "Merger"), and the business conducted by Evasyst became the primary business conducted by the Company (see Note 2). As used herein, "Live Current" refers to the Company as it existed prior to the Merger, and the "Company" refers to the consolidated accounts of Live Current and its wholly owned subsidiary Evasyst after the Merger. Going concern The accompanying consolidated financial statements prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has not achieved profitable operations and has incurred recurring operating losses. For the nine months ended September 30, 2022, the Company incurred a net loss of $4,260,619 and used cash in operating activities of $2,719,002. These factors raise substantial doubt about the ability of the Company to continue operating as a going concern within one year after the date the financial statements are issued. 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. The consolidated financial statements do not include any adjustments hat might result from the outcome of this uncertainty should the Company be unable to continue as a going concern. COVID-19 As of the date of this filing, there continues to be concern regarding the ongoing impacts and disruptions caused by the COVID-19 pandemic in the regions in which the Company operates. Although the impacts of the pandemic on our business have not been material to date, a prolonged downturn in economic conditions as a result of the pandemic could have a material adverse effect on our customers and demand for our services and products. At this time, it is not possible for the Company to predict the duration or magnitude of the impacts of the pandemic, or other outbreaks of communicable diseases, on the Company's business, financial condition and results of operations. Inflation and Economic Disruption Our business is dependent in part on general economic conditions. Many jurisdictions in which our customers are located have experienced and could continue to experience unfavorable general economic conditions, such as inflation, increased interest rates and recessionary concerns, which could negatively affect demand for our products. Under difficult economic conditions, customers may seek to cease spending on our services and products, which could negatively affect our financial performance. We cannot predict the timing or magnitude of an economic slowdown or the timing or strength of any economic recovery. These and other economic factors could have a material adverse effect on our business, financial condition, and results of operations. Basis of Presentation The unaudited condensed consolidated financial statements, including notes, of the Company are representations of the Company's management, which is responsible for their integrity and objectivity. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods reported. The balance sheet at December 31, 2021 was derived from audited annual consolidated financial statements but does not contain all of the footnote disclosures from the annual consolidated financial statements contained in the Company's Form 8-K/A filed with the Securities and Exchange Commission on July 8, 2022. All amounts presented are in U.S. dollars. The results of operations for the nine months ended September 30, 2022, are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. Use of Estimates The preparation of the Company's financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. On an ongoing basis, management reviews its estimates and, if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, assumptions used in valuing stock-based compensation, the valuation allowance for deferred tax assets, accruals for potential liabilities, and assumptions used in the determination of the Company's liquidity. Actual results could differ materially from those estimates. Revenue Recognition The Company recognizes revenue based on contracts with customers. A customer contract exists when both parties have approved the contract and are committed to perform their respective obligations, each party's rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable the Company will collect substantially all of the consideration to which it is entitled. The Company derives revenue primarily from subscription- based services. Revenues are recognized when control of these services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. During 2020, the Company's wholly owned subsidiary Evasyst began to offer a premium subscription service to its users by form of a monthly or annual contract. Subscription services revenue is comprised of subscription fees that provide the paying user the right to access the Company's preferred features as a "Premium User", for a period of time. The Company has determined such access represents a stand-ready service provided continually throughout the contract term. As such, control and satisfaction of this stand-ready performance obligation is deemed to occur over time. The Company's subscription contracts include an annual option, beginning on the date that access is made available to the customer. The passage of time is deemed to be the most faithful depiction of the transfer of control of the services as the customer simultaneously receives and consumes the benefit provided by the Company's performance. Subscription contracts are either one month or twelve months in length, billed either monthly or annually, all in advance, which coincides with the terms of the agreement. The Company recognizes deferred revenue at each period end for contracts that have subscriptions that have been paid but expire after period end. At September 30, 2022 and December 31, 2021, the amount of deferred subscription revenue was $35,195 and $34,202, respectively. The Company's subscription contracts do not have a significant financing component and customer invoices are paid upfront. There is no significant variable consideration related to these arrangements. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred. Intangible Assets and Goodwill (Provisional) At September 30, 2022, the Company is in the process of finalizing the allocation of the consideration to net assets acquired in relation to the reverse acquisition between Live Current and Evasyst (see Note 2), including determining the fair value of domain names, and licensing agreements that were acquired. Excess consideration over the fair value of net assets acquired will be assigned to goodwill. At September 30, 2022, management concluded that there were no impairment triggering events. If economic uncertainty increases and/or the global economy worsens, the Company's business, financial condition and results of operations may be sufficiently impacted to result in future impairment charges in the short-term. Management will continue to monitor the effects that macroeconomic conditions have on its business and operations, and will review impairment indicators to the extent necessary in the upcoming months. Leases The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company's right to use an underlying asset during the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments. Stock-Based Compensation The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. Stock option grants, which are generally time or performance vested, are measured at the grant date fair value and depending on the conditions associated with the vesting of the award, compensation cost is recognized on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life, and future dividends. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods. Income Taxes The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense. Fair Value of Financial Instruments Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value: Level 1 - Quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Level 2 - Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Level 3 - Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. The Company believes the carrying amount of its financial instruments (consisting of cash, accounts receivable, accounts payable and accrued liabilities, and convertible notes) approximates fair value due to the short-term nature of such instruments. Net Loss per Share The Company calculates basic earnings (loss) per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. The Company does not include the impact of any potentially dilutive common stock equivalents in its basic earnings (loss) per share calculations. Diluted earnings per share reflect potentially dilutive common stock equivalents, including options and warrants that could share in our earnings through the conversion of common shares, except where their inclusion would be anti-dilutive. For the three- and nine-month periods ended September 30, 2022 and 2021, the Company had the following securities are excluded from the calculation of diluted income per share as their effect would have been anti-dilutive to the net loss for the periods.
Recent Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06") "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)." ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity's own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 will be effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Effective January 1, 2021, the Company early adopted ASU 2020-06 and that adoption did not have an impact on our financial statements and the related disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
Reverse Acquisition |
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| Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reverse Acquisition [Text Block] |
2. Reverse Acquisition On April 22, 2022, Live Current completed its merger with Evasyst pursuant to the terms of a merger agreement dated January 20, 2022, by which a wholly-owned subsidiary of Live Current merged with and into Evasyst, with Evasyst continuing as a wholly-owned subsidiary of Live Current (the "Merger"), and the business conducted by Evasyst became the primary business conducted by the Live Current. Live Current and Evasyst are collectively referred to as the "Company" after the Merger. Prior to the Merger, Evasyst had 2,789,603 shares of common stock outstanding. Upon completion of the Merger, the 2,789,603 outstanding shares of Evasyst's common stock were automatically converted into the right to receive an aggregate of 125,000,000 newly issued shares of Live Current’s common stock. In substance, this results in a forward 44.81 to 1 stock split of Evasyst’s shares of common stock. Accordingly, all common shares, stock options, stock warrants and per share amounts in these condensed consolidated financial statements and footnotes for Evasyst and the Company have been adjusted retroactively to reflect the in substance stock split for all periods presented. Following the Merger, Live Current's shareholders retained 35,559,027 shares of the Company's common stock, which represents 22% of the Company's common stock, and the former stockholders of Evasyst own 125,000,000 of the Company, which represents approximately 78% the Company's common stock. Following the Merger, two former directors of Live Current resigned, and five new directors were appointed by Evasyst. A third former director of Live Current who was the former CEO/CFO of Live Current resigned those positions, and continues as the President and a director of the Company. The Merger is accounted for as a reverse acquisition in accordance with GAAP. Under this method of accounting, Evasyst was determined to be the acquiring company for accounting purposes, and Live Current is treated as the acquired company. Accordingly, the assets and liabilities of Live Current were recorded at estimated fair value as of April 22, 2022, the Merger closing date. The accounting acquirer was primarily determined based on Evasyst shareholders having the largest voting interest in the post-combination company, and the ability to appoint the majority of the members of the Board of Directors as well as management in the post-combination company. Consideration transferred by Evasyst is comprised 35,559,027 shares of common stock held by Live Current's shareholders with a fair value of $9,423,142 based on the price per shares of the Company's common stock on the date of the merger. In addition, the acquisition date fair value of 1,100,000 options of $243,108 held by Live Current employees to purchase shares of common stock is included as part of the consideration transferred. The Live Current options were in substance exchanged for share-based payment awards of Evasyst. The fair value of the stock options was calculated using the Black Scholes option model with the following variables: exercise price $0.10, stock price - $0.265, weighted average volatility - 148.28%, discount rate - 0.43%, and weighted average term of 0.67 years. The purchase price consideration and provisional allocation to net assets acquired is presented below.
The Company is in the process of finalizing the determination of the fair value of the consideration and allocation of the consideration to individual net assets acquired. The Company is currently determining the fair value of domain names, and licensing agreements that were acquired. Excess consideration received over the fair value of net assets acquired will be assigned to goodwill. From acquisition date through September 30, 2022, Live Current had no revenue and incurred a net loss of $462,618. The pro forma financial information below represents the combined results of operations for the three and nine months ended September 30, 2022, as if the acquisition had occurred as of January 1, 2021. Based on preliminary assessment of net assets acquired, no intangible assets with definite lives have been identified thus no amortization of such intangibles is reflected in the pro forma information. The unaudited pro forma financial information is presented for informational purposes only and is neither indicative of the results of operations that would have occurred if the acquisition had taken place at the beginning of the period presented nor indicative of future operating results.
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Convertible Notes Payable |
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| Convertible Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable [Text Block] |
3. Convertible Notes Payable Convertible notes payable consists of the following:
(a) On February 15, 2022 and March 28, 2022, Live Current issued convertible promissory notes for $1,620,000 (the "February Convertible Notes") and $956,880 (the "March Convertible Notes") (collectively, the “2022 Convertible Notes”), respectively, that bear interest at 4.0% per annum, and mature in two years. Upon completion of the Merger (see Note 2), the Company assumed the 2022 Convertible Notes. The notes have an initial conversion price into the Company's common stock of $0.34 per share (see Note 9). The February 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. The March Notes are unsecured. As of September 30, 2022, the Company may prepay the notes anytime at 120% of the face value. In connection with the 2022 Convertible Notes, Live Current issued warrants to the note holders to purchase up to 5,684,292 shares of common stock at an exercise price of $0.60 per share for a term of five years from the date of issuance. In addition, the Company paid fees of $157,874 and issued 221,402 shares of its common stock with a fair value of $60,000 to registered broker dealers. The Notes were accounted for as follows:
Upon issuance of the Notes, total debt discount of $1,182,540 was recorded and is being amortized over the term of the Notes using the interest method. During the three and nine months ended September 30, 2022, the Company recognized $25,698 and $45,466, respectively in interest expense and $147,567 and $306,628 in financing costs associated with the amortization of the debt discount. The unamortized discount balance is $827,227 at September 30, 2022 and will be amortized over 1.4 years. The Company may prepay the notes (i) at any time during the first 90 days following closing at the face value of the, (ii) at any time during the period from 91 to 180 days following closing at a premium of 110% of the face value, and (iii) thereafter at 120% of the face value. (b) At December 31, 2021, the balance of Evasyst convertible notes was $2,715,343 and accrued interest was $210,013, including $911,905 of convertible notes and $93,044 of accrued interest due to related parties. In 2022, prior to the Merger, the Company issued $631,167 of additional convertible notes for consulting services related to the Merger to entities associated with major shareholders of Evasyst. Prior to the Merger, the balance of Evasyst convertible notes was $3,346,510 and accrued interest was $236,560, and the total of $3,583,070 was converted into 26,212,690 shares of Evasyst common stock (see Note 7). |
Secured Promissory Notes |
9 Months Ended |
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Sep. 30, 2022 | |
| Debt Instruments [Abstract] | |
| Secured Promissory Notes [Text Block] |
4. Secured Promissory Notes At December 31, 2021, Evasyst had two secured notes payable aggregating $38,000, including $8,000 due to Mark Ollila, president of the Company. The notes were issued in 2020, accrue interest at 18% per year, and were secured by all the assets of Evasyst. On March 6, 2022, Evasyst paid off one note payable with a principal balance of 30,000 plus accrued interest of $3,124. On March 29, 2022, the note payable due to Mark Ollila with a principal balance of $8,000, and accrued interest of $1,450, or a total of $9,450, were exchanged into 1,542 shares of the Company's common stock prior to the Merger (see Note 7). On February 17, 2022 and March 14, 2022, Evasyst entered into two loan agreements with Live Current Media, Inc. for $200,000 each. The notes mature six months after issuance, interest at 18% per annum, are secured by all of Evasyst’s assets. Upon closing of the Merger (see Note 2) Evasyst assumed the $400,000 notes receivable and the notes are eliminated upon consolidation. On February 4, 2022, Live Current entered into a loan agreement for $43,000, secured by future receipts of the Company’s revenue, that matures August 5, 2023, interest at 12.5% per annum, and requires a $5,375 bi-monthly payment. On September 20, 2022, the Company entered into a loan agreement for $90,000, secured by substantially all of the Company’s assets, that matures September 19, 2023, interest at 18.6% per annum, and requires a $2,054 weekly payment. The Company received total proceeds of $133,000. During the nine months ended September 30, 2022, the Company repaid principal of $22,678, and at September 30, 2022, the outstanding balance was $110,322. |
PPP Loan |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Debt Disclosure [Abstract] | |
| PPP Loan [Text Block] |
5. PPP Loan On May 1, 2020, the Company received a loan of $265,952 pursuant to the Paycheck Protection Program (the "PPP") under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The loan, which was in the form of a note dated May 1, 2020, had an original maturity date on April 30, 2022 and an interest rate of 1% per annum. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for certain qualifying expenses, as defined. In September 2021, the Company received notice that the PPP loan balance of $265,952 was forgiven, and a $265,952 gain on forgiveness of the CARES Act loan was recorded. |
Leases |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Leases [Abstract] | |
| Leases [Text Block] |
6. Leases The Company leases its office in San Diego. The lease, as amended expires in January 2024. The initial ROU asset and liability were recorded in 2019 relating to this lease were calculated based on the future lease payments due under the lease discounted using an estimated incremental borrowing rate of 12.0%. In February 2021, the Company vacated the premises and pursuant to the terms of the lease agreement, was considered in default. As a result, the balance of the ROU asset of $354,895 was impaired during the nine months ended September 30, 2021. Under the lease agreement, the Company was still obligated to pay the required lease payments. At December 31, 2021, the balance of accrued rent due under the agreement was $256,519 and the balance of the lease liability was $273,561. In June 2022, the Company agreed to a settlement with the lessor to settle the amount due. Management initially estimated that the settlement would total $140,000. During the three months ended June 30, 2022, the Company recognized a gain on settlement of lease of $439,230 to reduce total outstanding liabilities associated with the lease of $579,230 ($305,669 in accrued rent payable and $273,561 in lease liability) to $140,000. The settlement was finalized in October 2022 with the Company obligated to pay $180,000, which was $40,000 more than originally estimated. The Company offset the gain on settlement of the lease by $40,000 during the three months ended September 30, 2022, for this difference. For the nine-month periods ended September 30, 2022 and 2021, rent expense of $17,422 and $70,977, respectively, was recognized on this lease. In February 2022, the Company entered into a short-term lease for an office space with payments due of $5,039 per month. Rent expense of $57,784 was recognized during the nine months ended September 30, 2022. |
Stockholders' Equity |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Stockholders' Equity Note [Abstract] | |
| Stockholders' Equity [Text Block] |
7. Stockholders' Equity During the nine months ended September 30, 2022, the Company issued 82,364,543 shares of its common stock as follows (all issuances were made by Evasyst prior to the Merger): Shares issued upon conversion of Preferred Stock At December 31, 2021, Evasyst had 907,232 shares of preferred stock outstanding. In April 2022, prior to the Merger, all of the outstanding shares of preferred shares were converted into 40,652,380 shares of the Evasyst's common stock. Shares issued for compensation and other payables On March 29, 2022, the board of directors of the Evasyst approved shares of common stock to be issued for services to Mark Ollila, CEO of Evasyst. and Justin Weissberg, Chairman of Evasyst, with a fair value of $750,000 and $214,000, respectively. The shares authorized to be issued for compensation on March 29, 2022, were subsequently modified on April 20, 2022, to include vesting terms over a period of eight years. Upon completion of the Merger, all vesting of Evasyst shares were accelerated as consistent with the Company's Stock Plan. Mr. Ollila and Mr. Weissberg's compensation was calculated based upon the number of Live Current shares that each individual received upon the merger multiplied by the trading price of Live Current shares on the date of the board authorized the compensation. In addition, shares with a fair value of $56,002 were authorized to satisfy an outstanding promissory note and accrued interest totaling $9,450 to Mr. Ollila, $24,768 of accrued wages due to Mr. Ollila, $9,000 accrued wages due to Mr. Weissberg, and $12,784 due for shares issuable for stock options exercised. In April 2022, prior to the Merger, the Company issued 9,877,750 shares of common stock valued at $1,020,002 to settle the above payables. Shares issued upon conversion of convertible notes Prior to the Merger, the balance of Evasyst convertible notes was $3,346,510 and accrued interest was $236,560, and the total of $3,583,070 was converted into 26,212,690 shares of Evasyst common stock. Shares issued upon exercise of options At December 31, 2021, Evasyst had options outstanding exercisable into 8,133,012 shares of common stock. In March 2022, 2,511,332 options were exercised for total proceeds of $12,784 (see shares issued for compensation and other payables above). In April 2022, prior to the Merger, the remaining 5,621,723 outstanding options were exercised on a cashless basis. |
Equity Investment |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Equity Investment And Royalties [Abstract] | |
| Equity Investment [Text Block] |
8. Equity Investment Upon the completion of the Merger on April 22, 2022, the Company acquired Live Current's investment in warrants exercisable into 2,000,000 shares of Cell MedX Corp, a biotech startup company. 1,000,000 of the warrants are exercisable at $0.50 per shares, 1,000,000 of the warrants are exercisable at $1.00 per share, and all the warrants expire January 31, 2023. On September 30, 2022, the fair value of the warrants was $11,880 and is included in other assets on the consolidated balance sheet. During the three and nine month periods ended September 30, 2022, the Company recognized a change in the fair value of the warrants of $7,933 and $(20,232) respectively.
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Options and Warrants |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options and Warrants [Text Block] |
9. Options and Warrants The activity in the Company’s outstanding stock options for the nine month period ended September 30, 2022 is as follows:
The activity in the Company’s outstanding stock warrants for the nine month period ended September 30, 2022 is as follows:
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Subsequent Events |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Subsequent Events [Abstract] | |
| Subsequent Events [Text Block] |
10. Subsequent Events On October 27, 2022, the Company and the note holder of the convertible notes (see Note 3) agreed to an amendment to the note terms whereby:
In October, the Company entered into a preferred stock financing to raise up to $5,750,000. The financing included warrants to purchase additional preferred shares and common shares. The preferred shares have redemption and conversion rights. In October, the Company entered into an asset purchase agreement with PowerSpike, Inc. ("PowerSpike") to purchase PowerSpike's assets, including intellectual property, for 1,006,036 shares of the Company’s common stock. The acquisition is expected to close in the fourth quarter of 2022. |
Organization and Summary of Significant Accounting Policies (Policies) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Nature of Business [Policy Text Block] |
Nature of Business Live Current Media, Inc. was incorporated under the laws of the State of Nevada on October 10, 1995. Evasyst Inc. ("Evasyst") was a private company founded on August 18, 2017, in San Diego California, that operates a social video application called KAST. On April 22, 2022, Live Current Media completed its reverse acquisition with Evasyst (the "Merger"), and the business conducted by Evasyst became the primary business conducted by the Company (see Note 2). As used herein, "Live Current" refers to the Company as it existed prior to the Merger, and the "Company" refers to the consolidated accounts of Live Current and its wholly owned subsidiary Evasyst after the Merger. |
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| Going concern [Policy Text Block] |
Going concern The accompanying consolidated financial statements prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has not achieved profitable operations and has incurred recurring operating losses. For the nine months ended September 30, 2022, the Company incurred a net loss of $4,260,619 and used cash in operating activities of $2,719,002. These factors raise substantial doubt about the ability of the Company to continue operating as a going concern within one year after the date the financial statements are issued. 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. The consolidated financial statements do not include any adjustments hat might result from the outcome of this uncertainty should the Company be unable to continue as a going concern. |
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| COVID 19 [Policy Text Block] |
COVID-19 As of the date of this filing, there continues to be concern regarding the ongoing impacts and disruptions caused by the COVID-19 pandemic in the regions in which the Company operates. Although the impacts of the pandemic on our business have not been material to date, a prolonged downturn in economic conditions as a result of the pandemic could have a material adverse effect on our customers and demand for our services and products. At this time, it is not possible for the Company to predict the duration or magnitude of the impacts of the pandemic, or other outbreaks of communicable diseases, on the Company's business, financial condition and results of operations. |
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| Inflation and Economic Disruption [Policy Text Block] |
Inflation and Economic Disruption Our business is dependent in part on general economic conditions. Many jurisdictions in which our customers are located have experienced and could continue to experience unfavorable general economic conditions, such as inflation, increased interest rates and recessionary concerns, which could negatively affect demand for our products. Under difficult economic conditions, customers may seek to cease spending on our services and products, which could negatively affect our financial performance. We cannot predict the timing or magnitude of an economic slowdown or the timing or strength of any economic recovery. These and other economic factors could have a material adverse effect on our business, financial condition, and results of operations. |
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| Basis of Presentation [Policy Text Block] |
Basis of Presentation The unaudited condensed consolidated financial statements, including notes, of the Company are representations of the Company's management, which is responsible for their integrity and objectivity. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods reported. The balance sheet at December 31, 2021 was derived from audited annual consolidated financial statements but does not contain all of the footnote disclosures from the annual consolidated financial statements contained in the Company's Form 8-K/A filed with the Securities and Exchange Commission on July 8, 2022. All amounts presented are in U.S. dollars. The results of operations for the nine months ended September 30, 2022, are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. |
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| Use of Estimates [Policy Text Block] |
Use of Estimates The preparation of the Company's financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. On an ongoing basis, management reviews its estimates and, if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, assumptions used in valuing stock-based compensation, the valuation allowance for deferred tax assets, accruals for potential liabilities, and assumptions used in the determination of the Company's liquidity. Actual results could differ materially from those estimates. |
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| Revenue Recognition [Policy Text Block] |
Revenue Recognition The Company recognizes revenue based on contracts with customers. A customer contract exists when both parties have approved the contract and are committed to perform their respective obligations, each party's rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable the Company will collect substantially all of the consideration to which it is entitled. The Company derives revenue primarily from subscription- based services. Revenues are recognized when control of these services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. During 2020, the Company's wholly owned subsidiary Evasyst began to offer a premium subscription service to its users by form of a monthly or annual contract. Subscription services revenue is comprised of subscription fees that provide the paying user the right to access the Company's preferred features as a "Premium User", for a period of time. The Company has determined such access represents a stand-ready service provided continually throughout the contract term. As such, control and satisfaction of this stand-ready performance obligation is deemed to occur over time. The Company's subscription contracts include an annual option, beginning on the date that access is made available to the customer. The passage of time is deemed to be the most faithful depiction of the transfer of control of the services as the customer simultaneously receives and consumes the benefit provided by the Company's performance. Subscription contracts are either one month or twelve months in length, billed either monthly or annually, all in advance, which coincides with the terms of the agreement. The Company recognizes deferred revenue at each period end for contracts that have subscriptions that have been paid but expire after period end. At September 30, 2022 and December 31, 2021, the amount of deferred subscription revenue was $35,195 and $34,202, respectively. The Company's subscription contracts do not have a significant financing component and customer invoices are paid upfront. There is no significant variable consideration related to these arrangements. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred. |
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| Intangible Assets and Goodwill (Provisional) [Policy Text Block] |
Intangible Assets and Goodwill (Provisional) At September 30, 2022, the Company is in the process of finalizing the allocation of the consideration to net assets acquired in relation to the reverse acquisition between Live Current and Evasyst (see Note 2), including determining the fair value of domain names, and licensing agreements that were acquired. Excess consideration over the fair value of net assets acquired will be assigned to goodwill. At September 30, 2022, management concluded that there were no impairment triggering events. If economic uncertainty increases and/or the global economy worsens, the Company's business, financial condition and results of operations may be sufficiently impacted to result in future impairment charges in the short-term. Management will continue to monitor the effects that macroeconomic conditions have on its business and operations, and will review impairment indicators to the extent necessary in the upcoming months. |
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| Leases [Policy Text Block] |
Leases The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company's right to use an underlying asset during the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments. |
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| Stock-Based Compensation [Policy Text Block] |
Stock-Based Compensation The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. Stock option grants, which are generally time or performance vested, are measured at the grant date fair value and depending on the conditions associated with the vesting of the award, compensation cost is recognized on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life, and future dividends. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods. |
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| Income Taxes [Policy Text Block] |
Income Taxes The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense. |
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| Fair Value of Financial Instruments [Policy Text Block] |
Fair Value of Financial Instruments Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value: Level 1 - Quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Level 2 - Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Level 3 - Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. The Company believes the carrying amount of its financial instruments (consisting of cash, accounts receivable, accounts payable and accrued liabilities, and convertible notes) approximates fair value due to the short-term nature of such instruments. |
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| Net Loss per Share [Policy Text Block] |
Net Loss per Share The Company calculates basic earnings (loss) per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. The Company does not include the impact of any potentially dilutive common stock equivalents in its basic earnings (loss) per share calculations. Diluted earnings per share reflect potentially dilutive common stock equivalents, including options and warrants that could share in our earnings through the conversion of common shares, except where their inclusion would be anti-dilutive. For the three- and nine-month periods ended September 30, 2022 and 2021, the Company had the following securities are excluded from the calculation of diluted income per share as their effect would have been anti-dilutive to the net loss for the periods.
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| Recent Accounting Pronouncements [Policy Text Block] |
Recent Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06") "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)." ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity's own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 will be effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Effective January 1, 2021, the Company early adopted ASU 2020-06 and that adoption did not have an impact on our financial statements and the related disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
Organization and Summary of Significant Accounting Policies (Tables) |
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of securities are excluded from the calculation of diluted income per share [Table Text Block] |
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Reverse Acquisition (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of purchase price consideration and provisional allocation to net assets acquired [Table Text Block] |
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| Schedule of pro forma financial information [Table Text Block] |
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Convertible Notes Payable (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of convertible notes payable [Table Text Block] |
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| Schedule of notes information [Table Text Block] |
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Options and Warrants (Tables) |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule Share-based Payment Arrangement, Option, Activity [Table Text Block] |
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| Schedule of Stockholders' Equity Note, Warrants or Rights, Activity [Table Text Block] |
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Organization and Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) |
3 Months Ended | 5 Months Ended | 9 Months Ended | |||||||
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Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Sep. 30, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||
| Net loss | $ (1,481,923) | $ (722,057) | $ (2,056,639) | $ (27,299) | $ (413,791) | $ 144,588 | $ 462,618 | $ (4,260,619) | $ (296,502) | |
| Cash in operating activities | (2,719,002) | $ 26,048 | ||||||||
| Deferred Revenue | $ 35,195 | $ 35,195 | $ 35,195 | $ 34,202 | ||||||
Reverse Acquisition - Schedule of assets acquired and liabilities assumed (Details) - Evasyst Inc [Member] |
1 Months Ended |
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Apr. 22, 2022
USD ($)
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| Business Acquisition [Line Items] | |
| Fair value of consideration | $ 9,666,250 |
| Assets | |
| Cash and cash equivalents | 2,355,065 |
| Note receivable due from Evasyst | 400,000 |
| Prepaid expenses and other assets | 37,932 |
| Acquisition related intangible assets and goodwill (provisional) | 8,406,199 |
| Total assets acquired | 11,199,196 |
| Liabilities | |
| Accounts payable accrued expenses | (89,921) |
| Convertible notes payable | (1,443,025) |
| Total liabilities assumed | (1,532,946) |
| Fair value of net assets acquired | 9,666,250 |
| Common Stock [Member] | |
| Business Acquisition [Line Items] | |
| Fair value of consideration | 9,423,142 |
| Stock Option [Member] | |
| Business Acquisition [Line Items] | |
| Fair value of consideration | $ 243,108 |
Reverse Acquisition - Schedule of pro-forma financial information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Business Combination and Asset Acquisition [Abstract] | ||||
| Revenue | $ 75,402 | $ 116,821 | $ 252,141 | $ 350,818 |
| Earnings | $ (1,481,922) | $ (235,526) | $ (4,502,568) | $ (77,344) |
Convertible Notes Payable - Schedule of convertible notes payable (Details) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Convertible notes payable, net of discount | $ 1,749,653 | $ 0 |
| Convertible notes | 0 | 2,715,343 |
| Live Current Convertible Notes [Member] | ||
| Short-Term Debt [Line Items] | ||
| Convertible notes payable | 2,576,880 | 0 |
| Debt discount | (827,227) | 0 |
| Convertible notes payable, net of discount | 1,749,653 | 0 |
| Evasyst Convertible Notes [Member] | ||
| Short-Term Debt [Line Items] | ||
| Convertible notes | $ 0 | $ 2,715,343 |
Convertible Notes Payable - Schedule of notes information (Details) - USD ($) |
9 Months Ended | |||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Apr. 22, 2022 |
Dec. 31, 2021 |
|
| Short-Term Debt [Line Items] | ||||
| Original issue discount | $ (827,227) | |||
| Allocation of proceeds to warrants recorded as discount | (1,000) | $ 0 | ||
| Convertible notes payable, net of discount | 1,749,653 | $ 0 | ||
| Convertible Notes Payable [Member] | ||||
| Short-Term Debt [Line Items] | ||||
| Face value of convertible notes | 2,576,880 | |||
| Original issue discount | (190,880) | |||
| Legal and brokerage fees recorded as discount | (217,874) | |||
| Allocation of proceeds to warrants recorded as discount | (773,786) | |||
| Allocation of proceeds to convertible notes upon issuance | 1,394,340 | |||
| Amortization of discount | 306,628 | $ 48,685 | ||
| Convertible notes payable, net of discount | $ 1,749,653 | $ 1,443,025 | ||
PPP Loan (Narrative) (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|---|
Feb. 04, 2022 |
May 01, 2020 |
Sep. 20, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Debt Instrument [Line Items] | |||||||
| Amount of loan received | $ 43,000 | $ 90,000 | |||||
| Maturity date | Aug. 05, 2023 | Sep. 19, 2023 | |||||
| Gain on forgiveness of PPP Loan | $ 0 | $ 0 | $ 0 | $ 265,952 | |||
| Amount of loan forgiven | $ 265,952 | ||||||
| Paycheck Protection Program [Member] | |||||||
| Debt Instrument [Line Items] | |||||||
| Amount of loan received | $ 265,952 | ||||||
| Loan interest rate | 1.00% | ||||||
Leases (Narrative) (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2022 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Oct. 31, 2022 |
Jun. 29, 2022 |
Dec. 31, 2021 |
Dec. 31, 2019 |
|
| Leases [Abstract] | ||||||||||
| Estimated incremental borrowing rate | 12.00% | |||||||||
| Impairment of right to use asset | $ 0 | $ 0 | $ 0 | $ 354,895 | ||||||
| Accrued rent payable | 180,000 | $ 140,000 | 180,000 | $ 180,000 | $ 256,519 | |||||
| Gain on settlement of lease liability | $ 40,000 | (439,230) | $ 0 | (399,230) | 0 | |||||
| Total outstanding liabilities, operating lease | 140,000 | $ 579,230 | ||||||||
| Accrued rent payable | 305,669 | |||||||||
| Increase in accrued rent payable | $ 40,000 | |||||||||
| Lease liability | $ 273,561 | $ 273,561 | ||||||||
| Rent expense | 17,422 | $ 70,977 | ||||||||
| Monthly payments | $ 5,039 | |||||||||
| Rent expense for short term lease | $ 57,784 | |||||||||
Equity Investment (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Apr. 22, 2022 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Fair value of warrant | $ (7,933) | $ 0 | $ 20,232 | $ 0 | |
| Warrant exercise price | $ 0.34 | $ 0.34 | |||
| Cell MedX Corp. [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Fair value of warrants | $ 11,880 | $ 11,880 | |||
| Fair value of warrant | $ 7,933 | $ (20,232) | |||
| Number of warrants issued | 2,000,000 | ||||
| Cell MedX Corp. [Member] | Warrant exercise price 0.50 [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Number of warrants issued | 1,000,000 | ||||
| Warrant exercise price | $ 0.5 | ||||
| Cell MedX Corp. [Member] | Warrant exercise price 1.00 [Member] | |||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
| Number of warrants issued | 1,000,000 | ||||
| Warrant exercise price | $ 1 | ||||
Options and Warrants - Schedule of outstanding stock purchase warrants (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
$ / shares
shares
| |
| Share-Based Payment Arrangement [Abstract] | |
| Number of warrants, Outstanding, Beginning of Period | shares | 0 |
| Weighted Average Exercise Price, Outstanding, Beginning of Period | $ / shares | $ 0 |
| Number of assumed in reverse acquisition | shares | 5,684,292 |
| Weighted Average Exercise Price, Issued | $ / shares | $ 0.6 |
| Weighted Average Remaining Term Issued | 4 years 6 months |
| Number of warrants, Exercised | shares | 0 |
| Weighted Average Exercise Price, Exercised | $ / shares | $ 0 |
| Number of warrants, Expired | shares | 0 |
| Weighted Average Exercise Price, Expired | $ / shares | $ 0 |
| Number of warrants, Outstanding, End of Period | shares | 5,684,292 |
| Weighted Average Exercise Price, Outstanding, End of Period | $ / shares | $ 0.6 |
| Weighted Average Remaining Term | 4 years 6 months |
Subsequent Events (Narrative) (Details) - USD ($) |
1 Months Ended | |
|---|---|---|
Oct. 27, 2022 |
Sep. 30, 2022 |
|
| Subsequent Event [Line Items] | ||
| Warrant exercise price | $ 0.34 | |
| Subsequent Event [Member] | ||
| Subsequent Event [Line Items] | ||
| Warrant exercise price | $ 0.18 | |
| Description of warrant volatility | volatility used in determining certain fair values, as defined, would be based on the greater of 100% or the 100 day volatility | |
| Subsequent Event [Member] | Preferred stock [Member] | ||
| Subsequent Event [Line Items] | ||
| Shares issued | $ 5,750,000 | |
| Subsequent Event [Member] | Asset purchase agreement [Member] | PowerSpike, Inc [Member] | ||
| Subsequent Event [Line Items] | ||
| Assets acquired | $ 1,006,036 |