livecurrent_corresp-082509.htm

On June 18, 2009 we were advised by Ernst & Young, our independent registered public accounting firm, that the audit opinion dated March 24, 2009 on our December 31, 2008 consolidated financial statements could no longer be relied upon. We were further advised by Ernst & Young that there were errors in our September 30, 2008 interim consolidated financial statements, in our December 31, 2008 consolidated financial statements and in our March 31, 2009 interim consolidated financial statements. Based on the foregoing, our Chief Executive Officer and Principal Financial Officer concluded that the previously filed consolidated financial statements contained in our Quarterly Report on Form 10-Q for the nine months ended September 30, 2008, our Annual Report on Form 10-K for the year ended December 31, 2008 and our Quarterly Report on Form 10-Q for the three months ended March 31, 2009 should no longer be relied upon due to errors in the consolidated financial statements which include the following:

(ii) As part of the acquisition of Entity Inc. (“Auctomatic”), we agreed to issue a total of approximately 1,000,000 shares to the former shareholders of Auctomatic. Of these, 413,604 shares were to be issued to three members of Auctomatic’s management, one third each on the first, second and third anniversaries of the transaction, conditional on the individuals remaining as our employees. The portion of the fair value of the shares to be issued based on the period of service these individuals provided to us, computed in relation to the period of service required for the individuals to become entitled to the shares, should have been recorded as an expense in our consolidated financial statements at June 30, 2008, September 30, 2008, December 31, 2008 and March 31, 2009.

(iii) As part of the employment agreement signed with our President and Chief Corporate Development Officer that became effective January 1, 2008, we are required to pay him a bonus of CDN $100,000 on January 1, 2009 and CDN $100,000 on January 1, 2010. These bonuses are to be paid only if he remains an officer of the Company at those dates. A portion of these bonuses should have been accrued as a liability and recorded as additional compensation expense in our consolidated financial statements at September 30, 2008, December 31, 2008 and March 31, 2009.

Since filing the Current Report on Form 8-K disclosing our need to restate these financial statements, we have determined that the financial statements that were included in the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008 were also impacted by the errors set forth above, as well as by the following errors:

(i) As part of the employment agreement signed with our former President and Chief Operating Officer, Jonathan Ehrlich, that became effective September 11, 2007, we were required to pay him bonuses of CDN $250,000 on October 1, 2008 and CDN $250,000 on October 1, 2009. These bonuses were to be paid only if he remained an officer of the company at those dates. A portion of the bonus should have been accrued as a liability and recorded as additional compensation expense in our consolidated financial statements at March 31, 2008, June 30, 2008, September 30, 2008, December 31, 2008 and March 31, 2009.

(ii) As part of the acquisition of Auctomatic, we calculated the purchase price allocation based on an average share price of $2.672 at the date of the announcement of the acquisition. Since the number of shares to be issued under the merger agreement was to be defined closer to the closing date of the merger, the purchase price allocation should have been calculated on an average share price of $2.922 at the date of closing. This resulted in an error in the purchase price allocation whereby the goodwill was recorded incorrectly in our consolidated financial statements at June 30, 2008, September 30, 2008, December 31, 2008 and March 31, 2009.

(iii) The calculation of stock based compensation for stock options granted under our Stock Option Plan were based on a Black-Scholes valuation utilizing an expected life of 3 years. According to GAAP, a company with limited historical data pertaining to stock options should calculate the term of its stock options using a defined formula. As a result, the term has been revised to 3.375 years, and the incremental stock based compensation expense has been recorded in our consolidated financial statements at March 31, 2008, June 30, 2008, September 30, 2008, December 31, 2008, and March 31, 2009.

(iv) In Q1 2008, we acquired additional shares in our subsidiary, Domain Holdings Inc. in exchange for settling intercompany debt. This was recorded as a step-acquisition of additional interest in this subsidiary. This resulted in goodwill and an effect to the non-controlling interest (NCI) in our consolidated financial statements at March 31, 2008, June 30, 2008, September 30, 2008, December 31, 2008 and March 31, 2009, none of which was previously recorded.

(v) We are required to estimate our deferred tax liability in relation to potential taxes owing on any gains on disposal of our domain name intangible assets. US GAAP does not permit taxable temporary differences associated with indefinite life intangible assets to be considered as evidence to otherwise reduce a valuation allowance associated with deductible timing differences in the same entity. As a result, we are required to record a related deferred tax liability and expense in our consolidated financial statements at December 31, 2008.

(vi) We disposed of a domain name at December 31, 2008 and did not record the disposition of the website development costs associated with the domain name. Due to the fact the amount was immaterial, we recorded the disposition of the website development costs in Q1 of 2009. However, we are including this adjustment in our restated consolidated financial statements at December 31, 2008 and March 31, 2009.

(vii) We have incorrectly accrued audit fees for the fiscal years ended December 31, 2007 and December 31, 2008 in each of those years, instead of accruing the expenses in the months subsequent to the fiscal year. Due to the fact the amounts were immaterial, we did not reflect the adjustment at December 31, 2008, however we are including this adjustment in our restated consolidated financial statements at December 31, 2008 and March 31, 2009.

(viii) In our response to an SEC comment letter dated May 28, 2009, we indicated that we would present amounts related to the minimum payments owing to the BCCI and IPL under our Global Cricket Venture separately on our balance sheets and statements of operations. This modification to the presentation of our consolidated financial statements will affect our balance sheets and statements of operations at December 31, 2008 and March 31, 2009.

Amending our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008 (collectively, the “Quarterly Report Amendments”) will be extremely burdensome for our company inasmuch as we have a limited number of staff persons who have the expertise to prepare them and these individuals will still be required to continue working on our day-to-day operations and on the preparation of documents for our on-going reporting obligations. Furthermore, the cost of having our auditors review the Quarterly Report Amendments will be significant, at a time when our resources are limited and the prospect of being able to raise additional funds for working capital is unlikely.

We understand that the Office of the Chief Accountant is concerned with enhancing transparency and relevancy of financial reporting and promoting the fair presentation and credibility of financial statements used for investment decisions. Set forth below is a detailed explanation of the ways in which we intend to amend our Annual Report on Form 10-K for the year ended December 31, 2008, which we believe will provide adequate protection for investors and is not inconsistent with the public interest.

(vi) We will make the appropriate revisions to Item 9A to disclose any material weaknesses that were identified as a result of the restatement and supplement, as appropriate, management’s original disclosure to include any other material information so that the disclosures are not misleading. We will also disclose the certifying officers’ conclusion regarding the effectiveness of our disclosure controls and procedures as of the end of the period covered by the amended filing.

By providing the quarterly information within the amendment to our Form 10-K, we believe that investors will be in possession of the information they need to make their investment decisions. We do not believe that filing the Quarterly Report Amendments will provide any additional benefit to the users of the financial statements. We expect to have the draft of the amendment to our Form 10-K completed by September 11, 2009.

March 31, 2008	As previously reported			Restatement adjustment			As restated
ASSETS
Current
Cash and cash equivalents	$	4,905,745		$	-		$	4,905,745
Accounts receivable (net of allowance for doubtful accounts of nil)		142,220			-			142,220
Prepaid expenses and deposits		165,062			-			165,062
Current portion of receivable from sales-type lease		140,540			-			140,540
Total current assets		5,353,567			-			5,353,567

Long-term portion of receivable from sales-type lease		23,423			-			23,423
Deferred acquisition costs		121,265			-			121,265
Property & equipment		314,600			-			314,600
Website development costs		147,025			-			147,025
Intangible assets		1,625,881			-			1,625,881
Goodwill		-			66,692			66,692
Total Assets	$	7,585,761		$	66,692		$	7,652,453

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	$	1,311,817		$	-		$	1,311,817
Bonuses payable		-			215,025			215,025
Deferred revenue		19,644			-			19,644
NCI Liability		-			23,972			23,972
Deferred tax liability		-			246,759			246,759
Current portion of deferred lease inducements		20,138			-			20,138
Total current liabilities		1,351,599			485,756			1,837,355

Deferred lease inducements		70,483			-			70,483
Total Liabilities		1,422,082			485,756			1,907,838

STOCKHOLDERS' EQUITY
Common Stock
Authorized: 50,000,000 common shares, $0.001 par value
Issued and outstanding:
21,446,623 common shares (December 31, 2007 - 21,446,623)		12,456			-			12,456
Additional paid-in capital		10,671,119			(57,394	)		10,613,725
Accumulated deficit		(4,519,896	)		(361,670	)		(4,881,566	)
Total Stockholders' Equity		6,163,679			(419,064	)		5,744,615
Total Liabilities and Stockholders' Equity	$	7,585,761		$	66,692		$	7,652,453

For the quarter ended March 31, 2008	As previously reported			Restatement adjustment			As restated

SALES	$	1,848,479		$	-		$	1,848,479

COSTS OF SALES		1,486,062			-			1,486,062

GROSS PROFIT		362,417			-			362,417

EXPENSES
Amortization and depreciation		15,266			-			15,266
Corporate general and administrative		447,895			63,750			511,645
ECommerce general and administrative		169,813			-			169,813
Management fees and employee salaries		1,073,546			85,179			1,158,725
Corporate marketing		26,459			-			26,459
ECommerce marketing		149,187			-			149,187
Other expenses		629,856			-			629,856
Total Expenses		2,512,022			148,929			2,660,951

OTHER INCOME (EXPENSES)
Global Cricket Venture expenses		(55,317	)		-			(55,317	)
Gain from sales and sales-type lease of domain names		168,206			-			168,206
Interest and investment income		42,498			-			42,498
Minority interest		-			51,506			51,506
Total Other Income (Expenses)		155,387			51,506			206,893

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

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

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

June 30, 2008	As previously reported			Restatement adjustment			As restated
ASSETS
Current
Cash and cash equivalents	$	1,897,940		$	-		$	1,897,940
Accounts receivable (net of allowance for doubtful accounts of nil)		131,898			-			131,898
AR from GCV		733,539			-			733,539
Prepaid expenses and deposits		310,726			-			310,726
Current portion of receivable from sales-type lease		98,378			-			98,378
Total current assets		3,172,481			-			3,172,481

Long-term portion of receivable from sales-type lease		23,423			-			23,423
Property & equipment		1,225,440			-			1,225,440
Website development costs		276,030			-			276,030
Intangible assets		1,625,881			-			1,625,881
Goodwill		2,417,296			177,438			2,594,734
Total Assets	$	8,740,551		$	177,438		$	8,917,989

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	$	1,518,222		$	-		$	1,518,222
Bonuses payable		333,442			340,276			673,718
Due to shareholders of Auctomatic		781,117			-			781,117
Deferred revenue		15,787			-			15,787
Deferred tax liability		-			246,759			246,759
Current portion of deferred lease inducements		20,138			-			20,138
Total current liabilities		2,668,706			587,035			3,255,741

Deferred lease inducements		65,449			-			65,449
Total Liabilities		2,734,155			587,035			3,321,190

STOCKHOLDERS' EQUITY
Common Stock
Authorized: 50,000,000 common shares, $0.001 par value
Issued and outstanding:
22,078,026 common shares (December 31, 2007 - 21,446,623)		13,087			-			13,087
Additional paid-in capital		12,483,794			52,765			12,536,559
Accumulated deficit		(6,490,485	)		(462,362	)		(6,952,847	)
Total Stockholders' Equity		6,006,396			(409,597	)		5,596,799
Total Liabilities and Stockholders' Equity	$	8,740,551		$	177,438		$	8,917,989

For the quarter ended June 30, 2008	As previously reported			Restatement adjustment			As restated

SALES	$	1,935,454		$	-		$	1,935,454

COSTS OF SALES		1,578,886			-			1,578,886

GROSS PROFIT		356,568			-			356,568

EXPENSES
Amortization and depreciation		43,888			-			43,888
Corporate general and administrative		591,169			-			591,169
ECommerce general and administrative		100,495			-			100,495
Management fees and employee salaries		1,479,782			124,664			1,604,446
Corporate marketing		20,243			-			20,243
ECommerce marketing		129,885			-			129,885
Other expenses		33,691			-			33,691
Total Expenses		2,399,153			124,664			2,523,817

OTHER INCOME (EXPENSES)
Interest and investment income		16,680			-			16,680
Minority interest		-			23,972			23,972
Total Other Income (Expenses)		16,680			23,972			40,652

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

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

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

September 30, 2008	As previously reported			Restatement adjustment			As restated
ASSETS
Current
Cash and cash equivalents	$	802,744		$	-		$	802,744
Accounts receivable (net of allowance for doubtful accounts of nil)		67,577			-			67,577
Prepaid expenses and deposits		101,042			-			101,042
Current portion of receivable from sales-type lease		23,423			-			23,423
Total current assets		994,786			-			994,786

Long-term portion of receivable from sales-type lease		23,423			-			23,423
Deferred financing costs		106,055			-			106,055
Deferred acquisition costs		320,264			-			320,264
Property & equipment		1,135,130			-			1,135,130
Website development costs		351,199			-			351,199
Intangible assets		1,625,881			-			1,625,881
Goodwill		2,428,602			177,438			2,606,040
Total Assets	$	6,985,340		$	177,438		$	7,162,778

LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	$	2,004,416		$	-		$	2,004,416
Bonuses payable		489,960			449,096			939,056
Due to shareholders of Auctomatic		749,699			-			749,699
Deferred revenue		12,371			-			12,371
Deferred tax liability		-			246,759			246,759
Current portion of deferred lease inducements		20,138			-			20,138
Total current liabilities		3,276,584			695,855			3,972,439

Deferred lease inducements		60,414			-			60,414
Total Liabilities		3,336,998			695,855			4,032,853

STOCKHOLDERS' EQUITY
Common Stock
Authorized: 50,000,000 common shares, $0.001 par value
Issued and outstanding:
22,141,026 common shares (December 31, 2007 - 21,446,623)		13,150			-			13,150
Additional paid-in capital		13,175,885			150,502			13,326,387
Accumulated deficit		(9,540,693	)		(668,919	)		(10,209,612	)
Total Stockholders' Equity		3,648,342			(518,417	)		3,129,925
Total Liabilities and Stockholders' Equity	$	6,985,340		$	177,438		$	7,162,778

For the quarter ended September 30, 2008	As previously reported			Restatement adjustment			As restated

SALES	$	1,954,684		$	-		$	1,954,684

COSTS OF SALES		1,602,249			-			1,602,249

GROSS PROFIT		352,435			-			352,435

EXPENSES
Amortization and depreciation		96,707			-			96,707
Amortization of website development costs		29,143			-			29,143
Corporate general and administrative		643,674			-			643,674
ECommerce general and administrative		114,973			-			114,973
Management fees and employee salaries		1,334,414			206,557			1,540,971
Corporate marketing		4,962			-			4,962
ECommerce marketing		99,412			-			99,412
Other expenses		20,000			-			20,000
Total Expenses		2,343,285			206,557			2,549,842

OTHER INCOME (EXPENSES)
Global Cricket Venture expenses		(1,010,023	)		-			(1,010,023	)
Accretion interest expense		(56,600	)		-			(56,600	)
Interest and investment income		7,266			-			7,266
Total Other Income (Expenses)		(1,059,357	)		-			(1,059,357	)

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

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

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