Domain name company faces serious cash crunch.
Live Current Media (OTCbb: Livc.ob), owner of such prized domains as Cricket.com, Perfume.com, and Brazil.com, faces a serious cash crunch. The company reported earnings and released its 10-Q over the weekend, but it’s the balance sheet that demands the most attention.
For the quarter ending September 30, 2008 Live Current generated $1,954,684 in revenue, with nearly all of it coming from its Perfume.com operations. The company generated only $20,000 in domain advertising revenue this quarter, compared to $128,000 in the same quarter last year. Live Current canceled its pay-per-click advertising contract because it was overly restrictive. The biggest PPC domain in the past was Cricket.com, which has since been developed into a real web site.
The company reported a gross profit of $352,435, but expenses of $2,343,285. The math doesn’t work out too well, especially when you figure in additional expenses over $1 million related mostly to its cricket venture.
The company now has less than $1 million in current assets including cash. Its cash position would be even worse if its cricket partners didn’t cut it a break on required payments:
On or about October 1, 2008, the Company was scheduled to make a payment to the BCCI in the amount of $625,000 and a payment to the IPL in the amount of $375,000, in connection with the Global Cricket Venture. Subsequent to quarter end, the amount owing to the BCCI was renegotiated and decreased to $125,000. In addition, the payment of $750,000 that will be due to the BCCI on October 1, 2009 was eliminated entirely. The payments due to the BCCI and the IPL for the October 1, 2008 commitment, although negotiated to a lesser amount, have not been made to date. Discussions are underway with both parties with regards to the timing of such payments and payments will then be made accordingly. Such payments may be subject to certain withholding or other taxes which the Company may be required to gross up pursuant to the terms of the MOU.
Can Live Current survive? Its latest 10-Q sheds doubt on its ability to continue as an ongoing concern:
The Company’s ability to continue as a going-concern is in substantial doubt as it is dependent on continued financial support from its investors, the ability of the Company to raise future debt or equity financings, and the attainment of profitable operations to meet the Company’s liabilities as they become payable.
The company had hoped to complete a follow on stock offering buoyed by its high stock price earlier this year. After a flattering article was published in Kiplinger, the company’s stock skyrocketed to over $3.00 this year, but closed at only $.65 last Friday. In an effort to raise cash, the company announced it is attempting to sell 6 of its prized domains to raise $6-$10 million. Although possible, the current economic environment makes this much more challenging.
Some of the company’s recent moves are questionable, such as buying Auctomatic, which seems to have little relation to the company’s business. Auctomatic helps people sell items through eBay. Of course, at the time of the purchase Live Current probably expected to be able to raise more cash for its business through a stock offering.
[Note: the author owns or has owned stock in numerous domain name companies, including Live Current.]