UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
WASHINGTON, D.C. 20549 |
FORM 20-F |
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 000-50492 |
LiveReel Media Corporation |
(Exact name of Registrant as specified in its charter) |
Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [X] |
US GAAP [ ] | International Financial Reporting Standards as issued by the International Accounting Standards Board[ ] | Other [X] |
Page No. | |
Forward-Looking Statements | 5 |
Foreign Private Issuer Status and Currencies and Exchange Rates | 5 |
Part I | |
Item 1. Identity of Directors, Senior Management and Advisors | 6 |
Item 2. Offer Statistics and Expected Timetable | 6 |
Item 3. Key Information | 6 |
Item 4. Information on the Company | 11 |
Item 5. Operating and Financial Review and Prospects | 13 |
Item 6. Directors, Senior Management and Employees | 18 |
Item 7. Major Shareholders and Related Party Transactions | |
Item 8. Financial Information | |
Item 9. The Offer and Listing | |
Item 10. Additional Information | |
Item 11. Quantitative and Qualitative Disclosures About Market Risk | |
Item 12. Description of Securities Other Than Equity Securities | |
Part II | |
Item 13. Defaults, Dividend Arrearages and Delinquencies | |
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds | |
Item 15. Controls and Procedures | |
Item 16. Audit Committee, Code of Ethics, and Principal Accountant's Fees, and Services | |
Part III | |
Item 17. Financial Statements | |
Item 18. Financial Statements | |
Item 19. Exhibits | |
Signature |
- Future earnings and cash flow, |
- Expansion and growth of our business and operations, and |
- Our prospective operational and financial information. |
- | Fluctuations in prices of our products and services, | |
- | Potential acquisitions and other business opportunities, |
- | General economic, market and business conditions, and | |
- | Other risks and factors beyond our control. |
2014 | 2013 | 2012 | ||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||
Net Loss | (125,820 | ) | (19,685 | ) | (161,139 | ) | ||||||
Net Loss per Share | (0.01 | ) | (0.00 | ) | (0.01 | ) | ||||||
Working Capital Deficit | (357,991 | ) | (232,171 | ) | (208,191 | ) | ||||||
Total Assets | 1,250 | 4,059 | 37,217 | |||||||||
Capital Stock | 7,880,660 | 7,880,660 | 7,880,660 | |||||||||
Contributed Surplus | 361,196 | 347,699 | 347,699 | |||||||||
Equity Component of Debt | - | 13,497 | 17,792 | |||||||||
Accumulated Deficit | (8,599,847 | ) | (8,474,027 | ) | (8,454,342 | ) | ||||||
Shareholders' Deficiency | (357,991 | ) | (232,171 | ) | (208,191 | ) | ||||||
Weighted Average Number of Shares Outstanding | 23,521,744 | 23,521,744 | 23,521,744 |
2013 | 2012 | 2011 | ||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||
Net Loss | (19,685 | ) | (161,139 | ) | (250,554 | ) | ||||||
Net loss per Share (1) | (0.00 | ) | (0.01 | ) | (0.01 | ) | ||||||
Working Capital (Deficit) | (232,171 | ) | (208,191 | ) | (64,844 | ) | ||||||
Total Assets | 4,059 | 37,217 | 77,156 | |||||||||
Capital Stock | 7,880,660 | 7,880,660 | 7,880,660 | |||||||||
Contributed Surplus | 347,699 | 347,699 | 347,699 | |||||||||
Equity Component of Debt | 13,497 | 17,792 | - | |||||||||
Accumulated Deficit | (8,474,027 | ) | (8,454,342 | ) | (8,293,203 | ) | ||||||
Shareholders' Equity (Deficit) | (232,171 | ) | (208,191 | ) | (64,844 | ) | ||||||
Weighted Average Number of Shares Outstanding | 23,521,744 | 23,521,744 | 21,227,300 |
2013 | 2012 | 2011 | ||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||
Net Loss | (19,685 | ) | (161,139 | ) | (250,554 | ) | ||||||
Comprehensive Loss | (19,685 | ) | (161,139 | ) | (250,554 | ) | ||||||
Loss per Share | (0.00 | ) | (0.01 | ) | (0.01 | ) | ||||||
Total Assets | 4,059 | 37,217 | 77,156 | |||||||||
Accumulated Deficit | (8,474,027 | ) | (8,454,342 | ) | (8,293,203 | ) | ||||||
Shareholders' Equity (Deficit) | (232,171 | ) | (208,191 | ) | (64,844 | ) |
2014 | 2013 | 2012 | ||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||
Net Loss | (125,820 | ) | (19,685 | ) | (161,139 | ) | ||||||
Comprehensive Loss | (125,820 | ) | (19,685 | ) | (161,139 | ) | ||||||
Loss per Share | (0.01 | ) | (0.00 | ) | (0.01 | ) | ||||||
Total Assets | 1,250 | 4,059 | 37,217 | |||||||||
Accumulated Deficit | (8,599,847 | ) | (8,474,027 | ) | (8,454,342 | ) | ||||||
Shareholders' Deficiency | (357,991 | ) | (232,171 | ) | (208,191 | ) |
2013 | September | August | July | June | May | April | ||||||||||||||||||||||||||||||||
2014 | September | August | July | June | May | April | ||||||||||||||||||||||||||||||||
High for period | $ | 0.9803 | $ | 0.9732 | $ | 0.9761 | $ | 0.9865 | $ | 0.9983 | $ | 0.9946 | $ | 0.9202 | $ | 0.9211 | $ | 0.9404 | $ | 0.9367 | $ | 0.9228 | $ | 0.9172 | ||||||||||||||
Low for period | $ | 0.9480 | $ | 0.9462 | $ | 0.9426 | $ | 0.9473 | $ | 0.9614 | $ | 0.9713 | $ | 0.8922 | $ | 0.9106 | $ | 0.9167 | $ | 0.9143 | $ | 0.9064 | $ | 0.9056 |
Year Ended June 30, | |||||
2014 | 2013 | 2012 | 2011 | 2010 | |
Average for the year | 0.9367 | 0.9735 | 0.9963 | 1.0013 | 1.0555 |
Year Ended June 30, | |||||
2013 | 2012 | 2011 | 2010 | 2009 | |
Average for the year | 0.9735 | 0.9963 | 1.0013 | 1.0555 | 1.1662 |
Year | Year | Year | ||||||||||
Ended | Ended | Ended | ||||||||||
June 30, | June 30, | June 30, | ||||||||||
2013 | 2012 | 2011 | ||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||
Expenses | $ | (128,154 | ) | $ | (161,139 | ) | $ | (250,554 | ) | |||
Debt forgiveness | $ | 75,929 | - | - | ||||||||
Write-down of production advances | $ | 32,540 | �� | $ | - | $ | - | |||||
Net loss for year | $ | (19,685 | ) | $ | (161,139 | ) | $ | (250,554 | ) | |||
Accumulated deficit at end of year | $ | (8,474,027 | ) | $ | (8,454,342 | ) | $ | (8,293,203 | ) |
Year | Year | Year | ||||||||||
Ended | Ended | Ended | ||||||||||
June 30, | June 30, | June 30, | ||||||||||
2014 | 2013 | 2012 | ||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||
Expenses | (125,820 | ) | (128,154 | ) | (161,139 | ) | ||||||
Debt forgiveness | - | 75,929 | - | |||||||||
Write-down of production advances | - | 32,540 | - | |||||||||
Net loss for year | (125,820 | ) | (19,685 | ) | (161,139 | ) | ||||||
Accumulated Deficit at end of period | $ | (8,599,847 | ) | $ | (8,474,027 | ) | $ | (8,454,342 | ) |
1. | On May 28, 2014, Paul Sparkes was appointed a director of the Company following the resignation of Jeff Kehoe, who resigned on March 18, 2014. The Board currently consists of three directors, Henry Kneis, Michael Wekerle and Paul Sparkes. |
2. | On May 28, 2014, the Company entered into an amending agreement to its unsecured loan agreement with Difference Capital dated December 19, 2012 and its unsecured loan agreement with Difference Capital dated March 22, 2013, whereby the terms of such loans were amended to provide that the maturity date shall be three (3) banking days from receipt of written demand from Difference Capital. |
1. | On September 17, 2012, the Company entered into an unsecured loan agreement with Billidan Family Trust, a related party to the Company's largest shareholder, in the aggregate principal amount of $25,000. The loan has a term of 12 months maturing September 17, 2013, accrues interest at 12% per annum until maturity, and may be prepaid at any time upon payment of a penalty of $2,000. This note and all accrued interest was repaid in connection with the change of control of the Company and additional debt financing of the Company on March 22, 2013. |
2. | On December 19, 2012, the Company entered into an unsecured loan agreement with Difference Capital, an arms-length party at the time of entering the loan,in the aggregate principal amount of $50,000. The loan has a term of 12 months maturing December 19, 2013, bears interest at 12% per annum until maturity, and may be prepaid at any time without notice or penalty. By loan amending agreement dated May 28, 2014, the term of this unsecured loan was amended to provide that the maturity date is three (3) banking days from written demand from Difference Capital. |
3. | On March 22, 2013, the Company entered into an additional unsecured loan agreement in the principal amount of $150,000 with Difference Capital. The loan has a term of 12 months, bears interest at 12% per annum, payable on maturity or termination, as the case may be, and may be repaid in advance without penalty. By loan amending agreement dated May 28, 2014, the term of this unsecured loan was amended to provide that the maturity date is three (3) banking days from written demand from Difference Capital. |
4. | Following the change in control of the Company on March 22, 2013, the Company announced the appointment of Michael Wekerle and Henry Kneis who joined the board of directors following the resignation of Janice Barone and Diana van Vliet. In addition, Mr. Jason Meretsky resigned as Chief Executive Officer and was replaced by Michael Wekerle, and Steve Wilson, the Corporation’s Chief Financial Officer resigned and was replaced by Henry Kneis. |
5. | On March 22, 2013, Difference Capital entered into five separate stock purchase agreements with arms-length third parties whereby it acquired 20,648,150 common shares in the capital of the Company, representing approximately 87.8% of the issued and outstanding voting securities of the Company on a fully-diluted basis. |
6. | On June 10, 2013, the Company announced the appointment of Jeff Kehoe as a director of the Company following the resignation of Jason Meretsky. |
1. | On July 21, 2011 the Company entered into unsecured loan agreements with its largest shareholder, Mad Hatter Investments Inc., and another related entity, 1057111 Ontario Limited, in the aggregate principal amount of $50,000. The loans |
2. | On November 23, 2011, the Company entered into a secured loan agreement with Enthrive Inc., a related party by virtue of having certain common controlling shareholders, in the principal amount of $50,000. The loan had a term to maturity of the earlier of 18 months or upon the sale or change of control of the Company, accrues interest at 10% per annum until maturity, and is convertible at the option of the holder into common shares of the Company at $0.10 per share. This note and all accrued interest was repaid in connection with the change of control of the Company and additional debt financing of the Company on March 22, 2013. |
Year | Year | Year | ||||||||||
Ended | Ended | Ended | ||||||||||
June 30, | June 30, | June 30, | ||||||||||
2013 | 2012 | 2011 | ||||||||||
Consulting expenses | $ | 40,000 | $ | 52,500 | $ | 165,000 | ||||||
Professional fees | 33,030 | 56,395 | 40,410 | |||||||||
Office and general | 11,289 | 16,325 | 15,786 | |||||||||
Foreign exchange loss | 33 | 312 | 8,220 | |||||||||
Shareholder information | 18,834 | 18,652 | 20,428 | |||||||||
Bank charges and interest | 1,095 | 860 | 710 | |||||||||
Financing costs | 23,873 | 16,095 | - | |||||||||
Total | 128,154 | 161,139 | 250,554 |
Year | Year | Year | ||||||||||
Ended | Ended | Ended | ||||||||||
June 30, | June 30, | June 30, | ||||||||||
2014 | 2013 | 2012 | ||||||||||
Consulting expenses | $ | - | $ | 40,000 | $ | 52,500 | ||||||
Professional fees | 45,981 | 33,030 | 56,395 | |||||||||
Office and general | 13,707 | 11,289 | 16,325 | |||||||||
Shareholder information | 41,615 | 18,834 | 18,652 | |||||||||
Bank charges and interest | 320 | 1,095 | 860 | |||||||||
Financing costs | 24,197 | 15,307 | - | |||||||||
Accretion on convertible notes payable | - | 8,566 | 16,095 | |||||||||
Foreign exchange loss | - | 33 | 312 | |||||||||
$ | 125,820 | $ | 128,154 | $ | 161,139 |
Name and principal position | Year | Salary ($) | Share- based awards ($) | Option- based awards ($) | Non-equity incentive plan compensation ($) | Pension value ($) | All other compensation ($) | Total compensation ($) | |||
Annual incentive plans | Long- term incentive plans | ||||||||||
Michael Wekerle, Chief Executive Officer | 2014 2013 2012 | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | Nil | Nil - | |
Henry Kneis, Chief Financial Officer | 2014 2013 2012 | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | Nil Nil - | ||
Paul Sparkes, director | 2014 2013 2012 | Nil - - | Nil - - | Nil - - | Nil - - | Nil - - | Nil - - | Nil - - | Nil - - | ||
Jeff Kehoe, former director | 2014 2013 2012 | Nil Nil - | Nil - | ||||||||
- | - | Nil Nil - | Nil Nil - | Nil Nil - | |||||||
Nil Nil |
· | reviewing the quarterly and annual consolidated financial statements and management discussion and analyses; |
· | meeting at least annually with our external auditor; |
· | reviewing the adequacy of the system of internal controls in consultation with the chief executive and financial officer; |
· | reviewing any relevant accounting and financial matters including reviewing our public disclosure of information extracted or derived from our financial statements; |
· | establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; |
· | pre-approving all non-audit services and recommending the appointment of external auditors; and |
· | reviewing and approving our hiring policies regarding personnel of our present and former external auditor |
1. | 2006 Stock Option Plan, as amended on July 22, 2008, which provides for the issuance of up to 4,000,000 options. |
2. | 2006 Consultant Stock Compensation Plan, which provides for the issuance of up to 1,000,000 shares. |
Option-Based Awards | Share-Based Awards | |||||||
Name | Number of Shares Held | Number of securities underlying unexercised options (#) | Option exercised price ($) | Option expiration date | Value of unexercised in-the-money options ($) | Number of shares or units of shares that have not vested (#) | Market or payout value of share based awards that have not vested ($) | |
Michael Wekerle, Chief Executive Officer | 20,648,150 (1) | Nil | Nil | Nil | Nil | Nil | ||
Henry Kneis, Chief Financial Officer | 20,648,150 (1) | Nil | Nil | Nil | ||||
Nil | Nil | Nil | ||||||
(1) |
Difference Capital holds |
Name of shareholder | No. of shares held | % of issued shares |
Difference Capital Financial Inc. | 20,648,150 | 87.8% |
On May 28, 2014, the Company entered into an amending agreement to its unsecured loan agreement with Difference Capital dated December 19, 2012 and its unsecured loan agreement with Difference Capital dated March 22, 2013, whereby the terms of such loans were amended to provide that the maturity date shall be three (3) banking days from receipt of written demand from Difference |
3. | The Company accrued financing costs of $24,197 on the |
1. | On |
On |
Fiscal year ended June 30 | High in US $ | Low in US$ | High in US $ | Low in US$ | |||||||||
2014 | 0.14 | 0.04 | |||||||||||
2013 | 0.19 | 0.04 | 0.19 | 0.04 | |||||||||
2012 | 0. 08 | 0.02 | 0.08 | 0.02 | |||||||||
2011 | 0.02 | 0.01 | 0.02 | 0.01 | |||||||||
2010 | 0.02 | 0.01 | 0.02 | 0.01 | |||||||||
2009 | 0.08 | 0.01 | 0.08 | 0.01 | |||||||||
2008 | 0.06 | 0.02 | 0.06 | 0.02 | |||||||||
2007 | 1.70 | 0.06 | 1.70 | 0.06 | |||||||||
2006 | 2.15 | 0.61 | 2.15 | 0.61 | |||||||||
2005 (April 28, 2005 to June 30, 2005) | 0.65 | 0.54 | 0.65 | 0.54 |
Fiscal Quarter ended | High in US $ | Low in US$ | High in US $ | Low in US$ | ||||||||||
September 30, 2014 | 0.07 | 0.07 | ||||||||||||
June 30, 2014 | 0.07 | 0.05 | ||||||||||||
March 31, 2014 | 0.05 | 0.04 | ||||||||||||
December 31, 2013 | 0.14 | 0.04 | ||||||||||||
September 30, 2013 | 0.19 | 0.14 | 0.19 | 0.14 | ||||||||||
June 30, 2013 | 0.19 | 0.04 | 0.19 | 0.04 | ||||||||||
March 31, 2013 | 0.05 | 0.04 | 0.05 | 0.04 | ||||||||||
December 31, 2012 | 0.06 | 0.05 | 0.06 | 0.05 | ||||||||||
September 30, 2012 | 0.18 | 0.08 | 0.18 | 0.08 | ||||||||||
June 30, 2012 | 0.08 | 0.062 | 0.08 | 0.062 | ||||||||||
March 31, 2012 | 0.06 | 0.06 | 0.06 | 0.06 | ||||||||||
December 31, 2011 | 0.08 | 0.02 | 0.08 | 0.02 | ||||||||||
September 30, 2011 | 0.18 | 0.11 | 0.18 | 0.11 | ||||||||||
June 30, 2011 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||
March 31, 2011 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||
December 31, 2010 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||
September 30, 2010 | 0.0275 | 0.01 | 0.0275 | 0.01 | ||||||||||
June 30, 2010 | 0.006 | 0.006 | 0.006 | 0.006 | ||||||||||
March 31, 2010 | 0.015 | 0.006 | 0.015 | 0.006 | ||||||||||
December 31, 2009 | 0.08 | 0.08 | 0.08 | 0.08 | ||||||||||
September 30, 2009 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||
June 30, 2009 | .015 | 0.015 | �� | .015 | 0.015 | |||||||||
March 31, 2009 | 0.08 | 0.012 | 0.08 | 0.012 | ||||||||||
December 31, 2008 | 0.08 | 0.012 | 0.08 | 0.012 | ||||||||||
September 30, 2008 | 0.02 | 0.01 | 0.02 | 0.01 | ||||||||||
June 30, 2008 | 0.03 | 0.02 | 0.03 | 0.02 | ||||||||||
March 31, 2008 | 0.04 | 0.03 | 0.04 | 0.03 | ||||||||||
December 31, 2007 | 0.06 | 0.04 | 0.06 | 0.04 | ||||||||||
September 30, 2007 | 0.06 | 0.06 | 0.06 | 0.06 | ||||||||||
June 30, 2007 | 0.11 | 0.10 | 0.11 | 0.10 | ||||||||||
March 31, 2007 | 0.15 | 0.10 | 0.15 | 0.10 | ||||||||||
December 31, 2006 | 0.50 | 0.12 | 0.50 | 0.12 | ||||||||||
September 30, 2006 | 1.70 | 0.30 | 1.70 | 0.30 | ||||||||||
June 30, 2006 | 0.85 | 2.15 | 0.85 | 2.15 | ||||||||||
March 31, 2006 | 1.20 | 0.20 | 1.20 | 0.20 | ||||||||||
December 31, 2005 | 0.65 | 0.35 | 0.65 | 0.35 | ||||||||||
September 30, 2005 | 0.61 | 0.56 | 0.61 | 0.56 |
Month | High in US $ | Low in US $ | ||
September 2013 | 0.16 | 0.15 | ||
August 2013 | 0.16 | 0.14 | ||
July 2013 | 0.19 | 0.16 | ||
June 2013 | 0.19 | 0.15 | ||
May 2013 | 0.17 | 0.12 | ||
April 2013 | 0.15 | 0.04 |
Month | High in US $ | Low in US $ | |||
September 2014 | 0.07 | 0.07 | |||
August 2014 | 0.07 | 0.07 | |||
July 2014 | 0.07 | 0.07 | |||
June 2014 | 0.07 | 0.05 | |||
May 2014 | 0.05 | 0.05 | |||
April 2014 | 0.05 | 0.05 |
(a) | acquisition of common shares by a person in the ordinary course of a person’s business as a trader or dealer in securities; |
(b) | acquisition of control of a Canadian corporation in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the ICA; and |
(c) | acquisition of control of a Canadian corporation by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the corporation, through the ownership of voting interests, remains unchanged. |
(a) | the value of the shares is derived principally from “real property” in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production, |
(b) | the shareholder was resident in Canada for 120 months during any period of 20 consecutive years preceding the disposition, was resident in Canada at any time during the 10 years immediately preceding the disposition and the shares were owned by him when he ceased to be resident in Canada, or |
(c) | the shares formed part of the business property of a “permanent establishment” or pertained to a fixed base used for the purpose of performing independent personal services that the shareholder has or had in Canada within the 12 months preceding the disposition. |
June 30, 2013 | June 30, 2012 | June 30, 2014 | June 30, 2013 | |||||||||||||
Audit Fees | 15,000 | 15,000 | 13,000 | 15,000 | ||||||||||||
Audit Related Fees | - | 2,500 | - | - | ||||||||||||
Tax Fees | - | - | - | - | ||||||||||||
All Other Fees | - | 1,500 | - | - |
Description of Document | Page No. |
Cover Sheet | F-1 |
Index | F-2 |
Independent Auditor's Report of | F-3 |
Consolidated Statements of Financial Position as at June 30, | F-4 |
Consolidated Statements of Operations and Comprehensive Loss for the Fiscal Years Ended June 30, | F-5 |
Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, | F-6 |
Consolidated Statements of Changes in Equity for the Fiscal Years Ended June 30, | F-7 |
Notes to the Consolidated Financial Statements |
1.1 | Application for Authorization to continue in another jurisdiction dated October 20, 2006.- Incorporated herein by reference to Exhibit 1.1 to the Company’s Registration Statement on Form 20-F filed on December 26, 2006. |
1.2 | Articles of Incorporation of the Company - Incorporated herein by reference to Exhibit 1.1 to the Company’s Registration Statement on Form 20-F filed on March 12, 2004. |
1.3 | By-Laws of the Company - Incorporated herein by reference to Exhibit 1.3 to the Company’s Registration Statement on Form 20-F filed on December 26, 2006. |
1.4 | Certificate of name change from Minedel Mining & Development Company Limited to Minedel Mines Limited - Incorporated herein by reference to Exhibit 1.3 to the Company’s Registration Statement on Form 20-F filed on March 12, 2004. |
1.5 | Certificate of name change from Minedel Mines Limited to Havelock Energy & Resources Inc. - Incorporated herein by reference to Exhibit 1.4 to the Company’s Registration Statement on Form 20-F filed on March 12, 2004. |
1.6 | Certificate of name change from Havelock energy & Resources Inc. to Municipal Ticket Corporation - Incorporated herein by reference to Exhibit 1.5 to the Company’s Registration Statement on Form 20-F filed on March 12, 2004. |
1.7 | Certificate of name change from Municipal Ticket Corporation to I.D. Investment Inc. - Incorporated herein by reference to Exhibit 1.6 to the Company’s Registration Statement on Form 20-F filed on March 12, 2004. |
1.8 | Certificate of Amalgamation. to Biolink Corporation - Incorporated herein by reference to Exhibit 1.7 to the Company’s Registration Statement on Form 20-F filed on March 12, 2004. |
1.9 | Certificate of name change from Biolink Corp. to First Empire Entertainment.com Inc. - Incorporated herein by reference to Exhibit 1.8 to the Company’s Registration Statement on Form 20-F filed on March 12, 2004. |
1.10 | Certificate of name change from First Empire Entertainment.com Inc. to First Empire Corporation Inc. - Incorporated herein by reference to Exhibit 19 to the Company’s Annual Report on Form 20-F filed on March 12, 2004. |
1.11 | Certificate of name change from First Empire Corporation Inc. to Noble House Entertainment Inc. dated November 4, 2004 - Incorporated herein by reference to Exhibit 1.10 to the Company’s Annual Report on Form 20-F filed on December 1, 2005. |
1.12 | Articles of Amendment dated November 19, 2004 consolidating the common shares of the Company on the basis of one new common share in exchange for every two old common shares - Incorporated herein by reference to Exhibit 1.11 to the Company’s Annual Report on Form 20-F filed on December 1, 2005. |
1.13 | Certificate of name change from First Empire Music Corp. to Noble house Film & Television Inc. dated January 21, 2005 - Incorporated herein by reference to Exhibit 1.12 to the Company’s Annual Report on Form 20-F filed on December 1, 2005. |
1.14 | Certificate of name change from Noble House Film & Television Inc. to LiveReel Productions Corporation dated August 10, 2006 - Incorporated herein by reference to Exhibit 1.14 to the Company’s Registration Statement on Form 20-F filed on December 26, 2006. |
1.15 | Certificate of name change from Noble House Entertainment Inc. to LiveReel Media Corporation dated October 12, 2006 - Incorporated herein by reference to Exhibit 1.15 to the Company’s Registration Statement on Form 20-F filed on December 26, 2006. |
2.(a) | Specimen Common Share certificate - Incorporated herein by reference to Exhibit 2(a) to the Company’s Annual Report on Form 20-F filed on December 1, 2005. |
2.(b)(i) | Unsecured loan agreement with Mad Hatter Investments Inc. dated July 21, 2011 - Incorporated herein by reference to Exhibit 2(b)(i) to the Company’s Registration Statement on Form 20-F filed on November 25, 2011. |
2.(b)(ii) | Unsecured loan agreement with 1057111 Ontario Limited dated July 21, 2011 - Incorporated herein by reference to Exhibit 2(b)(ii) to the Company’s Registration Statement on Form 20-F filed on November 25, 2011. |
2.(b)(iii) | Secured loan agreement with Enthrive Inc. dated November15, 2011 - Incorporated herein by reference to Exhibit 2(b)(iii) to the Company’s Registration Statement on Form 20-F filed on November 25, 2011. |
2.(b)(iv) | Unsecured loan agreement with Billidan Family Trust dated September 17, 2012- Incorporated herein by reference to Exhibit 2(b)(iv) to the Company’s Registration Statement on Form 20-F filed on October 29, 2012. |
2.(b)(v) | Unsecured loan agreement with Difference Capital Funding Inc. (now Difference Capital Financing Inc.) dated December 19, 2012. |
2.(b)(vi) | Unsecured loan agreement with Difference Capital Funding Inc. (now Difference Capital Financing Inc.) dated March 22, 2013. |
2.(b)(vii) | Loan amending agreement with Difference Capital Financing Inc. dated May 29, 2014 with respect to the unsecured loan entered into on December 19, 2012. |
2.(b)(viii) | Loan amending agreement with Difference Capital Financing Inc. dated May 29, 2014 with respect to the unsecured loan entered into on March 22, 2013. |
4.(b) | Offer to Purchase dated November 30, 2004 regarding acquisition of film properties from Noble House Production Inc. - Incorporated herein by reference to Exhibit 1.12 to the Company’s Annual Report on Form 20-F filed on December 1, 2005. |
4.(c) | 2006 Consultant Stock Compensation Plan and 2006 Stock Option Plan - Incorporated |
11. | Code of Ethics. |
12 | The certifications required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)) |
13 (a) | The Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
14(a)(i) | Corporate Governance Charter - Incorporated herein by reference to Exhibit 14 (a)(i) to the Company’s Registration Statement on Form 20-F filed on December 26, 2006. |
4(a)(ii) | Audit Committee Charter - Incorporated herein by reference to Exhibit 14 (a)(ii) to the Company’s Registration Statement on Form 20-F filed on December 26, 2006. |
Page | ||
Independent Auditor's Report of | ||
Consolidated Statements of Financial Position | ||
Consolidated Statements of Operations and Comprehensive Loss | ||
Consolidated Statements of Cash Flows | ||
Consolidated Statements of Changes in Equity | ||
Notes to | ||
F-6 to F-15 |
Toronto, Ontario | Chartered Accountants |
October | Licensed Public Accountants |
As at | Note | June 30, 2014 | June 30, 2013 | |||||||||
Assets | ||||||||||||
Current Assets | ||||||||||||
Cash | $ | 1,250 | $ | 20 | ||||||||
Other assets | - | 4,039 | ||||||||||
Total Assets | 1,250 | 4,059 | ||||||||||
Liabilities | ||||||||||||
Current Liabilities | ||||||||||||
Accounts payable and accrued liabilities | 6 | $ | 36,696 | $ | 27,041 | |||||||
Due to related party | 10 | 89,159 | - | |||||||||
Short-term loans payable | 7 | 233,386 | 209,189 | |||||||||
Total Liabilities | 359,241 | 236,230 | ||||||||||
Shareholders’ Deficiency | ||||||||||||
Capital stock | 8 | 7,880,660 | 7,880,660 | |||||||||
Contributed surplus | 361,196 | 347,699 | ||||||||||
Equity component of debt | - | 13,497 | ||||||||||
Accumulated deficit | (8,599,847 | ) | (8,474,027 | ) | ||||||||
Total Shareholders’ Deficiency | (357,991 | ) | (232,171 | ) | ||||||||
Total Liabilities and Shareholders’ Deficiency | $ | 1,250 | $ | 4,059 | ||||||||
Going Concern (Note 1) | ||||||||||||
Related Party Transactions (Note 10) |
As at | Note | June 30, 2013 | June 30, 2012 | ||||||||
Assets | |||||||||||
Current Assets | |||||||||||
Cash | $ | 20 | $ | 13,771 | |||||||
Other assets | 6 | 4,039 | 23,446 | ||||||||
Total Assets | 4,059 | 37,217 | |||||||||
Liabilities | |||||||||||
Current Liabilities | |||||||||||
Accounts payable and accrued liabilities | 7 | $ | 27,041 | $ | 147,105 | ||||||
Convertible notes payable | 8 | - | 98,303 | ||||||||
Short-term loan payable | 9 | 209,189 | - | ||||||||
Total Liabilities | 236,230 | 245,408 | |||||||||
Shareholders’ Deficiency | |||||||||||
Capital stock | 10 | 7,880,660 | 7,880,660 | ||||||||
Contributed surplus | 347,699 | 347,699 | |||||||||
Equity component of debt | 8 | 13,497 | 17,792 | ||||||||
Accumulated deficit | (8,474,027 | ) | (8,454,342 | ) | |||||||
Total Shareholders’ Deficiency | (232,171 | ) | (208,191 | ) | |||||||
Total Liabilities and Shareholders’ Equity | $ | 4,059 | $ | 37,217 | |||||||
Going Concern (Note 1) | |||||||||||
Related Party Transactions (Note 13) |
For the years ended | Note | June 30, 2014 | June 30, 2013 | |||||||||
Revenue | $ | - | $ | - | ||||||||
Expenses | ||||||||||||
Consulting | 10 | - | 40,000 | |||||||||
Professional fees | 10 | 45,981 | 33,030 | |||||||||
Shareholders information | 41,615 | 18,834 | ||||||||||
Office and general | 13,707 | 11,289 | ||||||||||
Financing costs | 10 | 24,197 | 15,307 | |||||||||
Accretion on convertible notes payable | - | 8,566 | ||||||||||
Bank charges | 320 | 1,095 | ||||||||||
Foreign exchange loss | - | 33 | ||||||||||
125,820 | 128,154 | |||||||||||
Other income | ||||||||||||
Debt forgiveness | - | (75,929 | ) | |||||||||
Write-down of production advances | - | (32,540 | ) | |||||||||
- | (108,469 | ) | ||||||||||
Net loss and comprehensive loss | $ | (125,820 | ) | $ | (19,685 | ) | ||||||
Net loss per share – basic and diluted | 9 | $ | (0.01 | ) | $ | (0.00 | ) | |||||
Weighted average number of shares outstanding | 23,521,744 | 23,521,744 |
For the years ended | ||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||
Note | 2013 | 2012 | 2011 | |||||||||||
Revenue | $ | - | $ | - | $ | - | ||||||||
- | - | - | ||||||||||||
Expenses | ||||||||||||||
Consulting | 13 | 40,000 | 52,500 | 165,000 | ||||||||||
Professional fees | 13 | 33,030 | 56,395 | 40,410 | ||||||||||
Financing costs | 23,873 | 16,095 | - | |||||||||||
Shareholders information | 18,834 | 18,652 | 20,428 | |||||||||||
Office and general | 11,289 | 16,325 | 15,786 | |||||||||||
Bank charges and interest | 1,095 | 860 | 710 | |||||||||||
Foreign exchange loss | 33 | 312 | 8,220 | |||||||||||
128,154 | 161,139 | 250,554 | ||||||||||||
Other income | ||||||||||||||
Debt forgiveness | 13 | (75,929 | ) | - | - | |||||||||
Write-down of production advances | 7 | (32,540 | ) | - | - | |||||||||
(108,469 | ) | - | - | |||||||||||
Net loss and comprehensive loss | $ | (19,685 | ) | $ | (161,139 | ) | $ | (250,554 | ) | |||||
Net loss per share – basic and diluted | 11 | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
Weighted average number of shares outstanding | 23,521,744 | 23,521,744 | 21,227,300 |
For the years ended | Note | June 30, 2014 | June 30, 2013 | ||||||
Cash flows from operating activities | |||||||||
Net loss for the year | $ | (125,820 | ) | $ | (19,685 | ) | |||
Adjustment for non-cash items: | |||||||||
Accrued interest | 24,197 | 9,189 | |||||||
Accretion on convertible notes payable | 8,566 | ||||||||
Forgiveness of debt | (75,929 | ) | |||||||
Write-down of production advances | (32,540 | ) | |||||||
Changes in working capital items: | |||||||||
Other assets | 4,039 | 19,407 | |||||||
Accounts payable and accrued liabilities | 9,655 | (11,595 | ) | ||||||
(87,929 | ) | (102,587 | ) | ||||||
Cash flows from financing activities | |||||||||
Due to related party | 89,159 | - | |||||||
Proceeds from short-term loans | - | 225,000 | |||||||
Repayment of short-term loans | - | (25,000 | ) | ||||||
Repayment of notes payable | - | (111,164 | ) | ||||||
89,159 | 88,836 | ||||||||
Increase (decrease) in cash | 1,230 | (13,751 | ) | ||||||
Cash, beginning of year | 20 | 13,771 | |||||||
Cash, end of year | $ | 1,250 | $ | 20 |
For the years ended | Note | June 30, 2013 | June 30, 2012 | June 30, 2011 | |||||||||
Cash flows from operating activities | |||||||||||||
Net loss for the year | $ | (19,685 | ) | $ | (161,139 | ) | $ | (250,554 | ) | ||||
Adjustment for non-cash items: | |||||||||||||
Accretion on convertible notes payable | 8,566 | 16,095 | - | ||||||||||
Accrued interest | 9,189 | - | - | ||||||||||
Forgiveness of debt | (75,929 | ) | - | - | |||||||||
Write-down of production advances | (32,450 | ) | |||||||||||
Changes in working capital items: | |||||||||||||
Other assets | 19,407 | 45,114 | (29,237 | ) | |||||||||
Accounts payable and accrued liabilities | (11,595 | ) | 5,105 | 84,319 | |||||||||
(102,587 | ) | (94,825 | ) | (195,472 | ) | ||||||||
Cash flows from financing activities | |||||||||||||
Proceeds from short-term loans | 225,000 | 100,000 | - | ||||||||||
Repayment of short-term loans | (25,000 | ) | |||||||||||
Repayment of notes payable | (111,164 | ) | - | - | |||||||||
Exercise of warrants | - | - | 60,062 | ||||||||||
88,836 | 100,000 | 60,062 | |||||||||||
Increase (decrease) in cash | (13,751 | ) | 5,175 | (135,410 | ) | ||||||||
Cash, beginning of year | 13,771 | 8,596 | 144,006 | ||||||||||
Cash, end of year | $ | 20 | $ | 13,771 | $ | 8,596 |
# of shares | Share Capital | Warrants Reserve | Contributed Surplus | Equity Component of Debt | Accumulated Deficit | Shareholders Equity (deficit) | ||||||||||||||||||||||
Balance, July 1, 2010 | 17,621,744 | $ | 6,728,846 | $ | 1,146,081 | $ | 293,370 | $ | - | $ | (8,042,649 | ) | $ | 125,648 | ||||||||||||||
Value of warrants Exercised | - | 1,091,752 | (1,091,752 | ) | - | - | - | - | ||||||||||||||||||||
Shares issued on exercise of warrants | 5,900,000 | 60,062 | - | - | - | - | 60,062 | |||||||||||||||||||||
Value of warrants exercised | - | - | (54,329 | ) | 54,329 | - | - | - | ||||||||||||||||||||
Net loss for the year | - | - | - | - | - | (250,554 | ) | (250,554 | ) | |||||||||||||||||||
Balance, June 30, 2011 | 23,521,744 | 7,880,660 | - | 347,699 | - | (8,293,203 | ) | (64,844 | ) | |||||||||||||||||||
Equity component of debt issue | - | - | - | - | 17,792 | - | 17,792 | |||||||||||||||||||||
Net loss for the year | - | - | - | - | - | (161,139 | ) | (161,139 | ) | |||||||||||||||||||
Balance, June 30, 2012 | 23,521,744 | 7,880,660 | - | 347,699 | 17,792 | (8,454,342 | ) | (208,191 | ) | |||||||||||||||||||
Change in equity component of debt | - | - | - | - | (4,295 | ) | - | (4,295 | ) | |||||||||||||||||||
Net loss for the year | - | - | - | - | - | (19,685 | ) | (19,685 | ) | |||||||||||||||||||
Balance, June 30, 2013 | 23,521,744 | $ | 7,880,660 | - | $ | 347,699 | $ | 13,497 | $ | (8,474,027 | ) | $ | (232,171 | ) |
Number of Shares | Share Capital | Contributed Surplus | Equity Component of Debt | Accumulated Deficit | Shareholders’ Equity (Deficit) | |||||||||||||||||||
Balance, July 1, 2012 | 23,521,744 | $ | 7,880,660 | $ | 347,699 | $ | 17,792 | $ | (8,454,342 | ) | $ | (208,191 | ) | |||||||||||
Change in equity component of debt | - | - | - | (4,295 | ) | - | (4,295 | ) | ||||||||||||||||
Net loss for the year | - | - | - | - | (19,685 | ) | (19,685 | ) | ||||||||||||||||
Balance, June 30, 2013 | 23,521,744 | $ | 7,880,660 | $ | 347,699 | $ | 13,497 | $ | (8,474,027 | ) | $ | (232,171 | ) | |||||||||||
Change in equity component of debt | - | - | 13,497 | (13,497 | ) | - | - | |||||||||||||||||
Net loss for the year | - | - | - | - | (125,820 | ) | (125,820 | ) | ||||||||||||||||
Balance, June 30, 2014 | 23,521,744 | $ | 7,880,660 | $ | 361,196 | $ | - | $ | (8,599,847 | ) | $ | (357,991 | ) |
1. | NATURE OF OPERATIONS AND GOING CONCERN |
2. | SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The consolidated financial statements were approved by the Company’s board of directors and authorized for issue on October
These consolidated financial statements have been prepared on the historical cost basis. Historical cost is based on the fair value of the consideration given in exchange for assets. LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30, 2013 2. SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Consolidation The consolidated financial statements include the accounts of the Company and its LRPC holds titles to the film properties and All intercompany balances and transactions have been eliminated on consolidation. (d) Functional and Presentation Currency These consolidated financial statements have been prepared in Canadian dollars, which is the Company’s functional and presentation currency. (e) Financial instruments Financial assets: All financial assets are recognized and derecognized on the trade date where the purchase or sale of a financial asset is under contract whose terms require delivery of the financial asset within the time frame established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified at fair value through profit or loss which are initially measured at fair value. Financial assets are classified into the following categories: financial assets ‘at fair value through profit or loss’ (“FVTPL”), ‘held-to-maturity investments’, ‘available-for-sale’ financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial liabilities: Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’. Other financial liabilities including borrowings are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest costs over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or (where appropriate) to the net carrying amount on initial recognition. LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30, 2013
De-recognition of financial liabilities: The Company derecognizes financial liabilities when the obligations are discharged, cancelled or expire. The Company’s financial instruments consist of the following:
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment. Change in assumptions could significantly affect the estimates. The Company provides disclosure of the three-level hierarchy that reflects the significance of the inputs used in making the fair value measurements. Fair value of financial assets and financial liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Financial assets and financial liabilities in Level 2 include valuations using inputs based on observable market data, either directly or indirectly, other than the quoted prices. Level 3 valuations are based on inputs that are not based on observable market data. Impairment of financial assets: Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investments have been negatively impacted. Evidence of impairment could include: significant financial difficulty of the issuer or the counterparty; or default or delinquency in interest or principal payments; or the likelihood that the borrower will enter bankruptcy or financial reorganization. The carrying amount of financial assets is reduced by any impairment loss directly for all financial assets with the exception of amounts receivable, where the carrying value is reduced through the use of an allowance account. When an amounts receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30, 2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic loss per share is calculated by dividing net loss (the numerator) by the weighted average number of common shares outstanding (the denominator) during the period. Diluted loss per share reflects the dilution that would occur if outstanding stock options and share purchase warrants were exercised or converted into common shares using the treasury stock method and are calculated by dividing net loss applicable to common shares by the sum of the weighted average number of common shares outstanding and all additional common shares that would have been outstanding if potentially dilutive common shares had been issued. The inclusion of the Company’s stock options and share purchase warrants in the computation of diluted loss per share would have an anti-dilutive effect on loss per share and are therefore excluded from the computation. Consequently, there is no difference between basic loss per share and diluted loss per share.
Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized in equity, in which case it is recognized in equity. Current income tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous years. Deferred tax liabilities or assets are recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30, 2013 2. SIGNIFICANT ACCOUNTING POLICIES (continued)
The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting estimates based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods. Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, include the valuation of financial instruments and (i)Recent accounting policies The Company continues to monitor the potential changes proposed by the IASB and considers the impact changes in the standards would have on the Company’s operations. IFRS 9 Accounting standards adopted during the year As of July 1, 2013 the Corporation adopted several new IFRS IFRS 10 – “Consolidated Financial Statements” replaces Standing Interpretations Committee 12, “Consolidation - Special Purpose Entities” and the IFRS 11 – “Joint Arrangements” replaces IAS 31 “Interests in Joint Ventures”. The new standard focuses on the rights and obligations of an arrangement, rather than its legal form. The standard redefines joint operations and joint ventures and requires joint operations to be proportionately consolidated and joint ventures to be equity accounted. LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30,
IFRS 12 IFRS 13
The Company includes equity, comprised of issued share capital, reserves and deficit, in the definition of capital. The Company’s primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund its activities relating to identifying and evaluating qualifying transactions. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity or debt. 4. FINANCIAL INSTRUMENTS AND RISK FACTORS There has been no change with respect to the overall risk management objectives during the year ended June 30, The Company’s financial instruments consisting of cash,
LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30, 5. CATEGORIES OF FINANCIAL INSTRUMENTS
Accounts payable and accrued liabilities include the following:
On December 19, 2012, the Company entered into an unsecured loan agreement with Difference Capital Financial Inc. (“Difference”), at the time an arms’ length party, in the aggregate principal amount of $50,000. The loan On March 22, 2013, Difference acquired control of the Company by the acquisition of a majority of During the year, LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30,
Loss per share is calculated on the weighted average number of common shares outstanding during the year ended June 30,
Transactions with related parties are incurred in the normal course of business and are measured at the exchange amount which is the amount of consideration established by and agreed to by the related parties. Related party transactions for the
F-13 LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30, 2014 and 2013 11. INCOME TAXES Current Income Taxes The major factors that cause variations from the Company’s combined federal and provincial statutory Canadian income tax rates of 26.5% (2013 – 26.5%) were the following:
Deferred Income Taxes Net deferred income tax balances are summarized as follows:
No deferred tax asset has been recognized in respect of the above because the amount of future taxable profit that will be available to realize such assets is not probable. F-14 LiveReel Media Corporation Notes to Consolidated Financial Statements (Expressed in Canadian Dollars) June 30, 2014 and 2013 11. INCOME TAXES (continued) Non-capital Losses The Company has non-capital tax losses available for carry-forward of approximately $3,734,000, which may be applied against future taxable income and expire as detailed below. The benefit arising from these losses has not been recorded in these consolidated financial statements.
12. SEGMENTED INFORMATION The Company does not have any reportable segments at this time and all operations take place in Canada. 13. RECLASSIFICATION OF PREVIOUS YEAR FIGURES Certain comparative figures for 2013 have been reclassified to conform with the basis of presentation adopted by the Company for the current year. LIVEREEL MEDIA CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, Prepared as at October -- 1 -- Index
-- 2 -- Management Discussion and Analysis The following discussion and analysis by management of the financial results and condition of LiveReel Media Corporation for the year ended June 30, The management discussion and analysis is prepared by management as at October 22, 2014. In this report, the words “us”, “we” “our”, “the Company” and “LiveReel” have the same meaning unless otherwise stated and refer to LiveReel Media Corporation and its subsidiaries. Overview Summary of Results In April 2010, a new majority shareholder took over control of the Company. The four former directors resigned effective April 5, 2010 and a new Chief Executive Officer was appointed. The new board of directors and management team intended to continue to review investment opportunities both inside and outside of the film industry. On July 15, 2010, the Company granted an option to a third party with whom it negotiated at arm’s length to purchase either its wholly owned subsidiary, On October 4, 2010, 100,000 options issued to the Chief Financial Officer were cancelled. On November 20, 2010, 5,900,000 warrants were exercised at $0.01 USD per warrant resulting in proceeds of $60.062 CDN. In addition, 293,600 previously issued warrants expired on November 30, 2010. On July 21, 2011, the Company entered into two unsecured loan agreements (1) with its former largest shareholder, Mad Hatter Investments Inc., in the amount of $33,333 and (2) with a related entity, 1057111 Ontario Limited (which is owned by the same person who owns Mad Hatter), in the amount of $16,667. The terms were both the same - loans had a term of approximately 12 months ending July 31, 2012, accrued interest at 10% per annum until maturity, and each were convertible at the option of the holder into common shares of the Company at $0.10 per share. These loans and all accrued interest were repaid in connection with the change of control of the Company and additional debt financing of the Company on March 22, 2013. On November 23, 2011, the Company entered into a secured loan agreement with Enthrive Inc., a related party by virtue of having certain common controlling shareholders at the time, in the principal amount of $50,000. The loan had a term of 18 months ending May 23, 2013 or upon the sale or change of control of the Company, accrued interest at 10% per annum until maturity, and was convertible at the option of the holder into common shares of the Company at $0.10 per share. The loan was secured against the assets of the Company. This loan and all accrued interest was repaid in connection with the change of control of the Company and additional debt financing of the Company on March 22, 2013. -- 3 -- On September 17, 2012, the Company entered into an unsecured loan agreement with Billidan Family Trust, a related party to the Company's former largest shareholder, in the aggregate principal amount of $25,000. The loan had a term of 12 months ending September 17, 2013, accrued interest at 12% per annum until maturity, and On December 19, 2012, the Company entered into an unsecured loan agreement with Difference Capital Financial Inc. (“Difference Capital”), an arms-length party at the time, in the aggregate principal amount of $50,000. The loan On March 22, 2013, the Company entered into an additional unsecured loan agreement in the principal amount of $150,000 (the “Loan”) with Difference Capital. The loan Following the change of control of the Company, the Company announced the appointment of Michael Wekerle and Henry Kneis who joined the board of directors following the resignation of Janice Barone and Diana van Vliet. Jason Meretsky, the Company’s Chief Executive Officer resigned and was replaced by Michael Wekerle. Steve Wilson, the Company’s Chief Financial Officer resigned and was replaced by Henry Kneis. On March 22, 2013, Difference Capital entered into five separate stock purchase agreements with arms-length third parties whereby it acquired 20,648,150 common shares in the capital of the Company, representing approximately 87.8% of the issued and outstanding voting securities of the Company on a fully-diluted basis. On June 10, 2013, the Company announced the appointment of Jeff Kehoe as a director of the Company following the resignation of Jason Meretsky. On March 18, 2014, Jeff Kehoe resigned as a director of the Company and was replaced by Paul Sparkes. The Board currently consists of three directors, Henry Kneis, Paul Sparkes and Michael
-- 4 -- The following table summarizes financial information for the past three years:
The following table summarizes financial information for the 4th quarter of fiscal
Refer to the Results of Operations section for further analysis of income Number of Common Shares There are 23,521,744 common shares issued and outstanding as of June 30, A total of 18,767,200 shares issued are subject to resale restrictions under U.S securities laws. -- 5 -- Business Environment Risk factors The following is a brief discussion of those distinctive or special characteristics of our operations and industry that may have a material impact on, or constitute risk factors in respect of, the Company’s future financial performance. THE COMPANY HAS AN UNSUCCESSFUL OPERATING HISTORY Since March 1997, when it was incorporated in Ontario, Canada by amalgamating with two other Ontario entities, the Company has no significant revenues or earnings from operations since its incorporation. While one of the film properties acquired by the Company in fiscal 2005 and the film that was financed in fiscal 2007 have now been developed into feature films for which the Company holds certain distribution rights, it is not clear whether this will generate any revenue for the Company. The Company has operated at a loss to date and in all likelihood will continue to sustain operating losses in the foreseeable future. There is no assurance that the Company will ever be profitable. INVESTMENT STRATEGY The controlling shareholder of the Company changed in March 2013 and a new Board of Directors were appointed. The Company has focused its efforts on identifying for purchase other active business interests, both within and outside of the film industry. The Company has not yet identified or selected any additional specific investment opportunity or business. Accordingly, there is no current basis for the reader to evaluate the possible merits or risks of the investment opportunity which we may ultimately decide to pursue. UNCERTAINTY REGARDING AUDIENCE ACCEPTANCE OF PROGRAMS The television and motion picture industries have always involved a substantial degree of risk. There can be no assurance of the economic success of any motion picture or television program as revenue derived depends on audience acceptance, which cannot be accurately predicted. Audience acceptance is a factor not only of the response to the television program's or motion picture's artistic components but also to the reviews of critics, promotions, the quality and acceptance of other competing programs released into, or channels existing in, the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions, public tastes generally and other intangible factors, all of which could change rapidly and many of which are beyond the Company’s control. A lack of audience acceptance for any of the films licensed, co-produced or distributed by the Company could have an adverse effect on its businesses, results of operations, prospects and financial condition. UNAUTHORIZED OR PIRATED USE MAY ADVERSELY AFFECT REVENUE Technological advances and the conversion of motion pictures into digital formats have made it easier to create, transmit and "share" high quality unauthorized copies of motion pictures in theatrical release, on videotapes and DVDs, from pay-per-view through unauthorized set-top boxes and other devices and through unlicensed broadcasts on free TV. As a result, users may be able to download and distribute unauthorized or "pirated" copies of copyrighted motion pictures over the Internet. As long as pirated content is available to download digitally, some consumers may choose to digitally download pirated motion pictures rather than pay for legitimate motion pictures or to purchase pirated DVD’s of motion pictures or of boxed sets of television series from unauthorized vendors. -- 6 -- CHANGES IN REGULATIONS AND INCENTIVES MAY ADVERSELY AFFECT THE BUSINESS OF THE COMPANY The Company plans to co-produce with or license its scripts and other intellectual properties to other entities which are expected to rely heavily on grants and labor rebates available for Canadian contents under the current regulations of federal and provincial governments of Canada. Any significant changes in these regulations that result in reduced grants and rebates or elimination thereof may significantly affect the Company’s ability to produce and or license its scripts and in turn its ability to generate revenue. THE COMPANY MAY NOT BE ABLE TO ACHIEVE AND MAINTAIN ITS COMPETITIVE POSITION The entertainment industry is highly capital intensive and is characterized by intense and substantial competition. A number of the Company's competitors are well established, substantially larger and have substantially greater market recognition, greater resources and broader distribution capabilities than the Company. New competitors are continually emerging. Increased competition by existing and future competitors could materially and adversely affect the Company's ability to implement its business plan profitably. The lack of availability of unique quality content could adversely affect its business. THE COMPANY'S COMMON SHARES ARE CONSIDERED TO BE PENNY STOCK, WHICH MAY ADVERSELY AFFECT THE LIQUIDITY OF ITS COMMON SHARES The capital stock of the Company would be classified as “penny stock” as defined in Reg. § 240.3a51-1 promulgated under the Securities Exchange Act of 1934 (the “1934 Act”). In response to perceived abuse in the penny stock market generally, the 1934 Act was amended in 1990 to add new requirements in connection with penny stocks. In connection with effecting any transaction in a penny stock, a broker or dealer must give the customer a written risk disclosure document that (a) describes the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) describes the broker’s or dealer’s duties to the customer and the rights and remedies available to such customer with respect to violations of such duties, (c) describes the dealer market, including “bid” and “ask” prices for penny stock and the significance of the spread between the bid and ask prices, (d) contains a toll-free telephone number for inquiries on disciplinary histories of brokers and dealers, and (e) define significant terms used in the disclosure document or the conduct of trading in penny stocks. In addition, the broker-dealer must provide to a penny stock customer a written monthly account statement that discloses the identity and number of shares of each penny stock held in the customer’s account, and the estimated market value of such shares. The extensive disclosure and other broker-dealer compliance related to penny stocks may result in reducing the level of trading activity in the secondary market for such stocks, thus limiting the ability of the holder to sell such stock. MARKET PRICE FOR THE COMPANY'S COMMON SHARES HAS BEEN VOLATILE IN THE PAST AND MAY DECLINE IN THE FUTURE In recent years, the securities markets in Canada and the United States have experienced a high level of price and volume volatility, and the market prices of securities of many companies, particularly small-cap companies like ours, have experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. Our shares may continue to experience significant market price and volume fluctuations in the future in response to factors, which are beyond our control. -- 7 -- THE COMPANY MAY NOT BE ABLE TO RAISE ADDITIONAL FINANCING TO MEET CURRENT OPERATING NEEDS AND IMPLEMENT ITS NEW BUSINESS STRATEGY. The Company continues to review different investment opportunities both inside and outside of the film industry. If the Company is unable to achieve revenue or obtain financing and cannot pay its debts as they become due, it may be forced to solicit a buyer or be forced into bankruptcy by its creditors. DIVIDENDS All of the Company's available funds will be invested to finance the growth of the Company's business and therefore investors cannot expect and should not anticipate receiving a dividend on the Company's common shares in the foreseeable future. DILUTION The Company may in the future grant to some or all of its own and its subsidiaries' directors, officers, insiders and key consultants options to purchase the Company's Common Shares as non-cash incentives to those people. Such options may be granted at exercise prices equal to market prices at a time when the public market is depressed or at exercise prices which may be substantially lower than the market prices. To the extent that significant numbers of such options may be granted and exercised, the interests of the then existing shareholders of the Company may be subject to additional dilution. The Company is currently without a source of revenue and therefore is not able to adequately cover its operating costs. The Company will most likely be required to issue additional securities to finance its operations and may also issue substantial additional securities to finance the development of any or all of its projects. These actions will cause further dilution of the interests of the existing shareholders. SHARES ELIGIBLE FOR FUTURE SALE MAY DEPRESS OUR STOCK PRICE At June 30, Sales of shares of common stock pursuant to an effective registration statement or under Rule 144 or another exemption under the US Securities Act could have a material adverse effect on the price of our common stock and could impair our ability to raise additional capital through the sale of equity securities. YOUR RIGHTS AND RESPONSIBILITIES AS A SHAREHOLDER WILL BE GOVERNED BY CANADIAN LAW AND DIFFER IN SOME RESPECTS FROM THE RIGHTS AND RESPONSIBILITIES UNDER U.S. LAW The Company is incorporated under Canadian law. The rights and responsibilities of holders of our shares are governed by our Articles and By-Laws and by Canadian law. These rights and responsibilities may differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. -- 8 -- CHANGING REGULATIONS OF CORPORATE GOVERNANCE AND PUBLIC DISCLOSURE CAN CAUSE ADDITIONAL EXPENSES AND FAILURE TO COMPLY MAY ADVERSELY AFFECT OUR REPUTATION AND THE VALUE OF OUR SECURITIES Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and new and changing provisions of Canadian securities laws, are creating uncertainty because of the lack of specificity and varying interpretations of the rules. As a result, the application of the rules may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. The Company is committed to maintaining high standards of corporate governance and public disclosure. As a result, our efforts to comply with evolving laws, regulations and standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. Any failure to comply with applicable laws may materially adversely affect its reputation and the value of its securities. Forward Looking Statements Certain statements contained in this report are forward-looking statements as defined in the U.S. Each forward-looking statement reflects our current view of future events and is subject to risks, uncertainties and other factors that could cause actual results to differ materially from any results expressed or implied by our forward-looking statements. Risks and uncertainties include, but are not limited to:
Important factors that could cause the actual results to differ from materially from our expectations are disclosed in more detail set forth under the heading “Risk Factors” in the Management Business Plan and Strategy The Company’s business plan continued to However, in fiscal 2007, management also received board of director approval to utilize excess cash in our business to pursue additional investment opportunities outside the film industry in order to potentially increase our return to shareholders. Management is not limited to any particular industry or type of business with respect to what it considers as investment opportunities. -- 9 -- During fiscal 2009, the Company did deploy a portion of its excess cash by investing in exchange traded securities. It did have some success in the third quarter of fiscal 2009, but then incurred significant losses in the fourth quarter of fiscal 2009. As a result, the Company did not continue this practice in the fiscal 2010. In April 2010, the controlling shareholder of the business changed and a new board of directors and management team were appointed. The new management team continued to pursue investment opportunities both inside and outside of the film industry. On July 15, 2010, the Company granted an option to a third party with whom it negotiated at arm’s length to purchase either its wholly owned subsidiary, LRPC, or to sell LRPC’s assets and assume its liabilities for $1.00. The third party had the right to exercise the option until July 15, 2012. The Company also had an option in which it could force the third party to buy the subsidiary or its assets and assume its liabilities for a similar 24 month period. The option and put option described above expired unexercised. On July 21, 2011, the Company entered into two unsecured loan agreements (1) with its former largest shareholder, Mad Hatter Investments Inc., in the amount of $33,333 and (2) with a related entity, 1057111 Ontario Limited (which is owned by the same person who owns Mad Hatter), in the amount of $16,667. The terms were both the same - loans had a term of approximately 12 months ending July 31, 2012, accrued interest at 10% per annum until maturity, and each were convertible at the option of the holder into common shares of the Company at $0.10 per share. These notes and all accrued interest were repaid in connection with the change of control of the Company and additional debt financing of the Company on March 22, 2013. On November 23, 2011, the Company entered into a secured loan agreement with Enthrive Inc., a related party by virtue of having certain common controlling shareholders at the time, in the principal amount of $50,000. The loan had a term of 18 months ending May 23, 2013 or upon the sale or change of control of the Company, accrued interest at 10% per annum until maturity, and was convertible at the option of the holder into common shares of the Company at $0.10 per share. The loan was secured against the assets of the Company. This note and all accrued interest was repaid in connection with the change of control of the Company and additional debt financing of the Company on March 22, 2013. On September 17, 2012, the Company entered into an unsecured loan agreement with Billidan Family Trust, a related party to the Company's former largest shareholder, in the aggregate principal amount of $25,000. The loan had a term of 12 months ending September 17, 2013, accrued interest at 12% per annum until maturity, and may be prepaid at any time upon payment of a penalty of $2,000. This note and all accrued interest was repaid in connection with the change of control of the Company and additional debt financing of the Company on March 22, 2013. On December 19, 2012, the Company entered into an unsecured loan agreement with Difference Capital, an arms-length party at the time, in the aggregate principal amount of $50,000. The loan On March 22, 2013, the Company entered into an additional unsecured loan agreement in the principal amount of $150,000 (the “Loan”) with Difference Capital. The Loan The Company used the proceeds of the -- 10 -- Following the change in control of the Company, the Company announced the appointment of Michael Wekerle and Henry Kneis who joined the board of directors following the resignation of Janice Barone and Diana van Vliet. Mr. Jason Meretsky resigned as Chief Executive Officer and was replaced by Michael Wekerle. Steve Wilson, the Corporation’s Chief Financial Officer resigned and was replaced by Henry Kneis. On March 22, 2013, Difference Capital entered into five separate stock purchase agreements with arms-length third parties whereby it acquired 20,648,150 common shares in the capital of the Company, representing approximately 87.8% of the issued and outstanding voting securities of the Company on a fully-diluted basis. On June 10, 2013, the Company announced the appointment of Jeff Kehoe as a director of the Company following the resignation of Jason Meretsky. On March 18, 2014, Jeff Kehoe resigned as a director and was replaced by Paul Sparkes. The Board currently consists of three directors, Henry Kneis, Paul Sparkes and Michael On May 28 2014, the Company extended the term of its loans with Difference Capital to provide that such loans now mature on a demand basis. Currently, the Company is focused on preserving its cash by minimizing operating expenses, and looking to investment opportunities both within and outside of the film industry. Results of Operations
-- 11 -- Overview The following were the key events during the year ended June 30, 2014: The Company is focused on preserving its cash by minimizing operating expenses, and looking to investment opportunities both within and outside of the film industry. Operating expenses incurred during the year ended June 30, 2014 were primarily from professional fees, shareholder information costs in connection with the Company’s public filings, annual general meeting preparation and other corporate matters and financing costs related to the short term loans. On March 18, 2014, Jeff Kehoe resigned as a director and was replaced by Paul Sparkes on May 28, 2014. On May 28, 2014, the Company extended the term of its loans with Difference Capital to provide that such loans now mature on a demand basis. The Company received advances of $89,159 from Difference Capital, its largest shareholder, for working capital purposes. The advances are unsecured, non-interest bearing and due on demand. The following were the key events
The Company used the proceeds of the loan to pay out all of its existing indebtedness and the balance for working capital purposes. The following were the key events in the year ended June 30, 2012: -- 12 -- On November 15, 2011, the Company entered into a secured loan agreement with Enthrive Inc., a related party by virtue of having certain common controlling shareholders, in the principal amount of $50,000. The loan has a term of 18 months or upon the sale or change of control of the Company, accrues interest at 10% per annum until maturity, and is convertible at the option of the holder into common shares of the Company at $0.10 per share. The loan is secured against the assets of the Company. This note and all accrued interest was repaid in connection with the change of control of the Company and additional debt financing of the Company on March 22, 2013. Revenue The Other Income The Company had no other income 2014. During the year ended June 30, 2013, consulting fees of $60,000 owed to the former largest shareholder, Mad Hatter Investments Inc., for various consulting services rendered were firm for legal services provided to the Company were paid by its largest shareholder, Difference Capital, who forgave the debt owing to it by the Company. In addition, the Company derecognized $32,540 in production advances from two production companies that were made in 2006 as the existence and whereabouts of these companies are unknown. Expenses The overall analysis of the expenses is as follows:
-- 13 -- Consulting Expenses No consulting fees were incurred in the year ended June 30, 2014. Consulting fees include $25,000 of fees earned by the Chief Executive Officer for various consulting services rendered in the year ended June 30, 2013 (2012 - Consulting fees also include $15,000 earned by the Chief Financial Officer for services rendered during the year ended June 30, 2013 (2012 - During the year ended June 30, 2013, consulting fees of $60,000 owed to the former largest shareholder, Mad Hatter Investments Inc. were forgiven. Professional Fees Professional fees $56,395). Professional fees Shareholder Information Shareholder information costs for year ended June 30, - $18,652). Shareholder information costs Office and General These costs include primarily insurance and other various small office expenses not categorized elsewhere in the financial statements. Financing costs During the year ended June 30, During the year ended June 30, Liquidity and Capital Resources Working Capital As at June 30, The working capital position has declined by With the continued -- 14 -- Key Contractual Obligations Off Balance Sheet Arrangements As at June 30, Transactions with Related Parties Transactions with related parties are incurred in the normal course of business and are measured at the exchange
Financial and Derivative Instruments The Company’s excess cash, if any, is held at a Canadian chartered bank and bears interest at various rates on monthly Credit risk is minimized as all cash amounts are held with a large bank, which have acceptable credit ratings determined by a recognized rating agency. The carrying value of cash, accounts payable and accrued liabilities, and amounts due to related parties approximate their fair values due to the short-term maturities of these instruments. The Company never entered into and did not have at the end of the -- 15 -- Critical Accounting Estimates The Company’s audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). The significant accounting policies used by the Company are the same as those disclosed in Note 2 to the Consolidated Financial Statements for the year ended June 30, Evaluation of Disclosure Control and Procedures The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. Our management, including our Chief Executive Officer and Chief Financial Officer, together with the members of our Audit Committee have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. There were no changes to our internal control over financial reporting since June 30, Outlook Current Outlook The Company currently has Public Securities Filings Additional information, including the Company’s annual information form in the Form 20-F annual report is filed with the Canadian Securities Administrators at www.sedar.com and with the United States Securities and Exchange Commission and can be viewed at -- 16 -- |