Note 14 - Note Settlement Agreement

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 14 - NOTE SETTLEMENT AGREEMENT

Effective as of August 14, 2012, LKA, executed a Letter Agreement with Brannon, whereby, the parties agreed to settle the entire unpaid principal balance of $766,321 and accrued interest of $365,762 on a note payable through the issuance of a total of six million shares of LKA common stock at a then pre-split settlement price of $0.1886 per share.

Under the Letter agreement, LKA was required to deliver to Brannon a stock certificate representing 400,000 shares of common stock and Brannon was to provide LKA written notice of its election when to issue the remaining 5,200,000 common shares of LKA. The 5,200,000 shares of issued, but not outstanding common shares to Brannon

were not subject to a 1:2 reverse stock split. As such, upon the 1-for-2 reverse-split of its common stock in 2013, LKA recognized an additional $2,756,000 in non-cash stock based expense for the exclusion of 5,200,000 pre-split (2,600,000 post-split) issued but not yet outstanding common shares related to October 2012 debt conversions.  The expense was calculated based on the market price of $1.06 per share on the 2,600,000 post-split shares as of March 15, 2013.

LKA was required, within 90 days of the date of the Letter Agreement and Note Settlement Agreement, to proceed with the court hearing process for the Settlement Shares to be issued pursuant to the exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended.   On October 15, 2012, the Circuit Court of the Eighteenth Judicial Circuit in and for Seminole County, Florida, issued its Consent Final Judgment with respect to the issuance to the five recipients of a total of 887,111 post-split shares of LKA common stock and with respect to Brannon, a total of 6,000,000 common shares, of which 2,150,000 were issued at December 31, 2014. The remaining 3,850,000 common shares were returned to LKA as part of the August 2014 private placement of 7,200,000 shares of common stock with KFLP (see Note 9). The private placement agreement called for LKA to purchase the Brannon rights to receive 4,200,000 shares of LKA common stock. Brannon received $300,000 in cash and 650,000 shares of LKA common stock in exchange for its rights to receive future distributions from the remaining 3,850,000 shares reserved by the Company for this purpose. LKA cancelled the remaining shares.