UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      20-F








[
]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934





OR





[X] ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For
the fiscal year ended June 30, 2009




OR





[ ]TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the transition
period from ______________ to __________________




OR





[
] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15D OF THE SECURITIES EXCHANGE
ACT OF 1934





Date of event
requiring this shell company report





Commission
      file number: 000-50492





LiveReel Media
      Corporation


(Exact
      name of Registrant as specified in its
charter)








Canada


(Jurisdiction of
incorporation or organization)





3400 One First Canadian
Place, C/O Bennett Jones LLP, PO Box 130,


Toronto, Ontario M5X 1A4,
Canada


(Address of
principal executive offices)





J. Stephen Wilson,
416-607-6793, 416-863-1716, 3400 One First Canadian Place, C/O Bennett Jones
LLP, PO Box 130,


Toronto, Ontario M5X 1A4,
Canada


(Name, Telephone,
Facsimile number and Address of Company Contact Person)

















Securities
registered or to be registered pursuant to Section 12(b) of the Act.: None





Securities registered
or to be registered pursuant to Section 12(g) of the Act.





Common shares without par
value


(Title of
Class)





Securities for
which there is a reporting obligation pursuant to Section 15(d) of the Act :
None





Indicate the number
of outstanding shares of each of the Issuer’s classes of capital or common stock
as of the close of the period covered by the annual report





Common
shares without par value – 13,721,744 as at June 30, 2009





Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act.


[
] Yes [X]
No





If
this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.


[X] Yes  []
No





Note - Checking the
box above will not relieve any registrant required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 from their
obligations under those Sections.





Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such report) and (2) has been subject to such filing requirements for the past
90 days.


[X]Yes [ ]No





Indicate by check
mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files).
 [X]Yes [
]No





Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of "accelerated filer and large
accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer [ ]
            Accelerated
      filer [ ]
            Non-accelerated
      filer [X]














Indicate by check
mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing:





US
      GAAP  [ ]
            International
      Financial Reporting Standards as issued by the International Accounting
      Standards Board[ ]
            Other [X]




If
“Other” has been checked in response to the previous question, Indicate by check
mark which financial statement item the registrant has elected to
follow


Item 17: XItem 18





If
this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).


[
] Yes [X] No











TABLE
OF CONTENTS








Page
      No.Forward-Looking
      Statements
            1Foreign
      Private Issuer Status and Currencies and Exchange Rates
            2Part IItem 1.
      Identity of Directors, Senior Management and Advisors
            2Item 2. Offer
      Statistics and Expected Timetable
            2Item 3. Key
      Information
            3Item 4.
      Information on the Company
            9Item 5.
      Operating and Financial Review and Prospects
            13Item 6.
      Directors, Senior Management and Employees
            24Item 7. Major
      Shareholders and Related Party Transactions
            29Item 8.
      Financial Information
            31Item 9. The
      Offer and Listing
            32Item 10.
      Additional Information
            34Item 11.
      Quantitative and Qualitative Disclosures About Market Risk
            51Item 12.
      Description of Securities Other Than Equity Securities
            52Part
      IIItem 13.
      Defaults, Dividend Arrearages and Delinquencies
            52Item 14.
      Material Modifications to the Rights of Security Holders
            52and Use of ProceedsItem 15.
      Controls and Procedures
            52Item 16.
      Audit Committee, Code of Ethics, and Principal Accountant's Fees, and
      Services
            53Part
      IIIItem 17.
      Financial Statements
            54Item 18.
      Financial Statements
            54Item 19.
      Exhibits
            55Signature
            58














FORWARD-LOOKING
STATEMENTS








This annual report
includes "forward-looking statements." All statements, other than statements of
historical facts, included in this annual report that address activities, events
or developments, which we expect or anticipate, will or may occur in the future
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended.


The words
"believe", "intend", "expect", "anticipate", "project", "estimate", "predict"
and similar expressions are also intended to identify forward-looking
statements.





These
forward-looking statements address, among others, such issues as:





-
            Future
      earnings and cash flow,-
            Expansion and
      growth of our business and operations, and-
            Our
      prospective operational and financial
  information.





These statements
are based on assumptions and analyses made by us in light of our experience and
our perception of historical trends, current conditions and expected future
developments, as well as other factors we believe are appropriate in particular
circumstances. However, whether actual results and developments will meet our
expectations and predictions depends on a number of risks and uncertainties,
which could cause actual results to differ materially from our expectations,
including the risks set forth in "Item 3-Key Information-Risk Factors" and the
following:





-
            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.





Consequently, all
of the forward-looking statements made in this annual report are qualified by
these cautionary statements. We cannot assure you that the actual results or
developments anticipated by us will be realized or, even if substantially
realized, that they will have the expected effect on us or our business or
operations.




Unless the context
indicates otherwise, the terms "LiveReel Media Corporation", “the "Company”,
"LiveReel", “we”, “us”, “our” and “registrant” are used interchangeably in this
Annual Report and mean LiveReel Media Corporation and its
subsidiary.





-
1 -





FOREIGN PRIVATE ISSUER
STATUS AND CURRENCIES AND EXCHANGE RATES








Foreign
Private Issuer Status





LiveReel Media
Corporation is a Canadian corporation incorporated under the Federal Business
Laws of Canada. Approximately 63% of its common stock is held by non-United
States citizens and residents and our business is administered principally
outside the United States; As a result, we believe that we qualify as a "foreign
private issuer" for continuing to report regarding the registration of our
common stock using this Form 20-F annual report format.


Currency





The financial
information presented in this Annual Report is expressed in Canadian dollars
("CDN $") and the financial data in this Annual Report is presented in
accordance with accounting principles generally accepted in Canada ("Can.
GAAP"). Such financial data conforms in all material respects with accounting
principles generally accepted in the United States ("U.S. GAAP") except as
disclosed in Note 17 of the Notes to Consolidated Financial Statements contained
herein.


All dollar amounts
set forth in this report are in Canadian dollars, except where otherwise
indicated.





PART I








ITEM 1 - IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISORS





Not
applicable.





ITEM 2 - OFFER STATISTICS
AND EXPECTED TIMETABLE





Not
applicable.








-
2 -





ITEM 3 - KEY
INFORMATION





(A)
SELECTED FINANCIAL DATA





This Report
includes consolidated financial statements of the Company for the years ended
June 30, 2009, 2008 and 2007.  These financial statements were
prepared in accordance with accounting principles generally accepted in Canada.
Reference is made to Financial Statement Notes for a discussion of the material
differences between Canadian GAAP and U.S. GAAP, and their effect on the
Company's financial statements.
 
 The following is a
selected financial data for the Company for each of the last five fiscal years
2005 through 2009 on a consolidated basis. The data is extracted from the
audited financial statements of the Company for each of the said
years


Financial
data in accordance with Canadian GAAP (CDN $) - Fiscal year ended June
30




2009
              
              
              2008
              
              
              2007
              
              
              2006
              
              
              2005Revenue
              
              $
              4,901
              
              
              $
              40,012
              
              
              $
              72,697
              
              
              $
              7,052
              
              
              $
              5,031Net
      Loss
              
              $
              (916,260
              )
              
              $
              (788,811
              )
              
              $
              (624,965
              )
              
              $
              (682,097
              )
              
              $
              (259,333
              )Net loss per
      share  (1)
              
              $
              (0.07
              )
              
              $
              (0.06
              )
              
              $
              (0.04
              )
              
              $
              (0.07
              )
              
              $
              (0.04
              )Working
      capital (Deficit)
              
              $
              319,175
              
              
              $
              1,201,854
              
              
              $
              1,965,665
              
              
              $
              2,499,781
              
              
              $
              (194,696
              )Total
      assets
              
              $
              410,482
              
              
              $
              1,386,399
              
              
              $
              2,105,100
              
              
              $
              2,641,600
              
              
              $
              240,112Capital stock
      (2)
              
              $
              6,656,265
              
              
              $
              6,656,265
              
              
              $
              6,656,265
              
              
              $
              6,838,665
              
              
              $
              4,815,672Warrants
      (2)
              
              $
              1,146,081
              
              
              $
              1,146,081
              
              
              $
              1,146,081
              
              
              $
              1,146,081
              
              
              $
              -Shareholders'
      equity(Deficit)
              
              $
              319,175
              
              
              $
              1,201,854
              
              
              $
              1,990,655
              
              
              $
              2,524,781
              
              
              $
              37,804Weighted
      average number of shares outstanding
              
              
              13,721,744
              
              
              
              13,721,744
              
              
              
              14,089,963
              
              
              
              9,494,677
              
              
              
              6,629,968__________________
                
                (1) The
      effect of potential share issuances pursuant to the exercise
      of warrants would be anti-dilutive and, therefore, basic and diluted
      losses per share are the same.(2) During
      the fiscal years 2004 and 2006, 6,193,600 warrants were issued in
      connection with various private placements and the acquisition of certain
      theatrical film properties. The valuation of these warrants in 2006
      and 2007 was applied to the capital stock and resulted in an negative
      amount which is not permitted under Canadian GAAP. These items were
      restated in the 2008 audited financial statements with no impact on
      shareholder's equity, the consolidated statement of operations,
      consolidated statement of cash flows and the basic and diluted loss per
      share.





-
3 -





Financial
data in accordance with U.S. GAAP  (CDN $) – Fiscal year ended June
30





2009
              
              
              2008
              
              
              2007
              
              
              2006
              
              
              2005Revenue
              
              $
              4,901
              
              
              $
              40,012
              
              
              $
              72,697
              
              
              $
              7,052
              
              
              $
              5,031Net
      Loss
              
              $
              (916,260
              )
              
              $
              (788,811
              )
              
              $
              (624,695
              )
              
              $
              (648,139
              )
              
              $
              (259,736
              )Comprehensive
      Loss
              
              $
              (916,260
              )
              
              $
              (788,811
              )
              
              $
              (624,695
              )
              
              $
              (648,139
              )
              
              $
              (259,533
              )Loss per
      share
              
              $
              (0.07
              )
              
              $
              (0.06
              )
              
              $
              (0.04
              )
              
              $
              (0.07
              )
              
              $
              (0.04
              )Total
      assets
              
              $
              410,482
              
              
              $
              1,386,399
              
              
              $
              2,105,100
              
              
              $
              2,641,600
              
              
              $
              240,112Shareholders'
      equity(Deficit)
              
              $
              319,175
              
              
              $
              1,201,854
              
              
              $
              1,990,655
              
              
              $
              2,524,781
              
              
              $
              37,804





The Company has not
declared or paid any dividends in any of its last five
fiscal  years.


Exchange
Rates





In
this Annual Report on Form 20-F, unless otherwise specified, all monetary
amounts are expressed in Canadian dollars.  The exchange rates used herein
were obtained from Bank of Canada; however, they cannot be
guaranteed.





On
November 30, 2009, the exchange rate, based on the noon buying rates, for the
conversion of Canadian dollars into United States dollars (the “Noon Rate of
Exchange”) was $1.06.


The following table
sets out the high and low exchange rates for each of the last six
months.





2009
              
              November
              
              
              October
              
              
              September
              
              
              August
              
              
              July
              
              
              JuneHigh for
      period
              
              $
              1.05
              
              
              $
              1.03
              
              
              $
              1.06
              
              
              $
              1.07
              
              
              $
              1.08
              
              
              $
              1.08Low for
      period
              
              $
              1.08
              
              
              $
              1.08
              
              
              $
              1.11
              
              
              $
              1.11
              
              
              $
              1.17
              
              
              $
              1.17
 
 
 The following table
sets out the average exchange rates for the five most recent financial years
calculated by using the average of the Noon Rate of Exchange on the last day of
each month during the period.
 Year Ended June 30,2009
              
              
              2008
              
              
              2007
              
              
              2006
              
              
              2005Average for
      the year
              
              
              1.17
              
              
              
              1.01
              
              
              
              1.13
              
              
              
              1.16
              
              
              
              1.25


(B)
CAPITALIZATION AND INDEBTEDNESS





Not
applicable





(C)
REASONS FOR THE OFFER AND USE OF PROCEEDS





Not
applicable








-
4 -





(D)
RISK FACTORS





The following is a
brief discussion of those distinctive or special characteristics of the
Company’s operations and industry that may have a material adverse impact on, or
constitute risk factors in respect of, the Company’s future financial
performance.


THE
COMPANY HAS AN UNSUCCESSFUL OPERATING HISTORY





The Company is not
profitable and has had no significant revenues since its incorporation in March
1997. While one of the film properties acquired by the Company in fiscal 2005
and the film that was financed in fiscal 2007havenow 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 expenses in the foreseeable future. As of June 30, 2009, the Company
had incurred cumulative losses of approximately $7.8 million. There is no
assurance that the Company will ever be profitable.
 
 The Company’s
audited financials until fiscal 2005 included comments regarding the Company’s
ability to continue as a going concern. During fiscal 2006, the Company was able
to raise significant equity funds and restructure its operations, and as a
result, going concern ability comments were not considered relevant by our
auditors. However, there is a risk that the Company will need additional capital
to fund its business plan and operations.
 
 WE
MAY CHOOSE INVESTMENT STRATEGIES THAT ARE UNSUCCESSFUL
  We
have 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.   We are not
limited to any particular industry or type of business, and we may choose to
stay within the film industry.  We invested a portion of our excess
cash in exchange traded securities in fiscal 2009 resulting in a loss of
approximately $855,000 during the year.  We have not yet identified or
selected any additional specific investment
opportunity.   Accordingly, there is no current basis for you to
evaluate the possible merits or risks of the investment opportunity which we may
ultimately decide to pursue.




UNCERTAINTY
REGARDING AUDIENCE ACCEPTANCES 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.





-
5 -








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, which
could adversely affect our business.





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.





FOREIGN
EXCHANGE RISK





The Company has
foreign exchange risk because its functional currency is the Canadian dollar and
a significant part of its revenue may be generated from overseas countries. An
adverse move in foreign exchange rates between the Canadian dollar and the
currencies of these countries could have an adverse effect on its operating
results. The Company does not hedge against this risk.





-
6 -





THE
COMPANY'S COMMON SHARES ARE CONSIDERED TO BE PENNY STOCK, WHICH MAY ADVERSELY
AFFECT THE LIQUIDITY OF ITS COMMON SHARES





The common shares
of the Company are classified as “penny stock” as defined in Reg. § 240.3a51-1
promulgated under the Securities Exchange Act of 1934 (the “1934 Act”). 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.




THE COMPANY MAY NEED TO RAISE
ADDITIONAL FINANCING TO MEET FUTURE OPERATING NEEDS.




The Company is in
the business of film production, financing and distribution, which requires a
level of liquidity. The Company hopes to earn sufficient revenue from
distribution and scripts licensing to meet its operating needs and to raise
additional equity funds through private placements of its securities with
sophisticated investors.  The Company has avoided obtaining debt
financing but may have to pursue this option if it is unable to obtain equity
financing on acceptable terms.




If the
Company is unable to achieve the expected revenue and or to 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.




-
7 -





DIVIDENDS





All of the
Company's available funds will be invested to finance the Company's business and
therefore investors 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 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 proven sources of revenue except interest income which does
not cover operating costs and may be required to issue additional securities to
finance its operation and may also issue additional securities to finance the
development of any or all of its projects. These actions could cause further
dilution of the interests of the existing shareholders.




SHARES
ELIGIBLE FOR FUTURE SALE MAY DEPRESS OUR STOCK PRICE




At
June 30, 2008, we had approximately 13.7 million shares of common stock
outstanding of which approximately 9 million are restricted securities under
Rule 144 promulgated under the Securities Act. We also have approximately
6.2 million shares of common stock issuable under presently exercisable warrants
which have not yet been registered under the US Securities Act.




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.





OUR
OFFICERS AND DIRECTORS RESIDE OUTSIDE OF UNITED STATES AND THERE IS A RISK THAT
CIVIL LIABILITIES AND JUDGEMENTS MAY BE UNENFORCEABLE




Half of the
Company’s directors and officers are residents of countries other than the
United States, and most of the Company's assets are located outside the United
States.  As a result, it may not be possible for investors to effect
service of process within the United States upon such persons or enforce in the
United States against such persons judgments obtained in United States courts,
including judgments predicated upon the civil liability provisions of United
States federal securities laws or state securities laws.




-
8 -








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





We
are 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.





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. We are
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 our
reputation and the value of our securities.








ITEM 4 - INFORMATION ON THE
COMPANY





(A)
HISTORY AND DEVELOPMENT OF THE COMPANY





The Company changed
its name from Noble House Entertainment Inc. to LiveReel Media Corporation
effective October 12, 2006. The Company’s wholly owned subsidiary changed its
name from Noble House Film & Television Inc. to LiveReel Productions
Corporation (LRPC) effective August 10, 2006.





The Company is a
reporting issuer with Ontario Securities Commission. Its common shares are
currently listed and traded on Over The Counter Bulletin Board of the NASD
(OTCBB) under the trading symbol “NHSEF”. The Company received a new CUSIP
number and changed its trading and listing symbol to LVRLF effective December 1,
2006.





On
October 26, 2006, LiveReel completed its continuance under the jurisdiction of
the Canada Business Corporation Act from being governed by the Ontario Business
Corporation Act (Ontario).





-
9 -








The Company was
originally incorporated under the Business Corporation Act (Ontario) on March
18, 1997 as a result of an amalgamation under the name "Biolink Corp." The
Company went through several name changes and changes in its business
activities.





The Company has had
no significant revenue since its incorporation. While it tried some new business
initiatives including acquisition of scripts and related intellectual properties
of a musical, “The Count of Monte Cristo” in 2001 and acquisition of an artist
management contract and related developed properties like a demo 5-song CD, in
fiscal 2003, the Company was unable to raise the required funds to develop and
market these projects. Hence, by fiscal 2004, the Company abandoned these
projects and wrote off all the related costs.





The Company
continued its focus on entertainment sector. However, it changed its business
strategy to focus primarily on films and television program development,
licensing and distribution as a core business due to availability of various
government incentives, local talents and a wider commercial market compared to
the one for musicals, plays and song albums.





In
November 2004, the Company acquired certain film scripts and distribution rights
from an independent production house for $350,000, which was settled by issuance
of 3.5 million restricted shares and 3.5 million restricted warrants. These film
assets were rolled into the subsidiary, which is an operating arm of the
Company.





In
December 2004, the principals of the vendor production house joined the Company
as consultants and began managing the subsidiary with a mandate to explore and
exploit the existing properties commercially.





One of the scripts,
King of Sorrow, was sold by the Company and produced into a feature film by
another production company. In exchange for the rights to the screenplay, the
company holds certain distribution rights to the film. Sales and distribution
efforts have begun for this film.





The Company was a
co-producer in a feature film, “Due Process”. This film has been produced and is
ready for commercial exploitation. The Company has distribution rights to this
film.





The Company
completed two private placements in April and June 2006 with independent
accredited investors and raised approximately $3 million.





LRPC, the Company’s
subsidiary, opened a representative office in London, UK on June 26, 2006 to
facilitate European distribution networking.








-
10 -





During the last
quarter of fiscal 2006 and the first quarter of fiscal 2007, there was a change
in the management of the Company. Both the chief executive officer and chief
financial officer resigned and their consulting contracts were cancelled without
any penalty or further financial commitments. One of the significant
participants in the private placement became the chief executive officer and a
new chief financial offer was appointed. Further, the entire in-house production
team at the subsidiary also resigned and their contracts were
terminated.





The new management
concluded that the film properties held by the Company could not be profitably
developed and exploited and therefore wrote off all properties at June 30, 2006,
except for the script of King of Sorrow, which was already developed into a
commercial film. This script was left at its carrying value.





The new management,
while maintaining the overall business focus on feature film production and
distribution, began adopting a new approach in the final quarter of fiscal 2006
and continued with this strategy through fiscal 2009.


The Company plans
to focus on financing feature film productions as a producer or co-producer with
others. These feature films will be produced by independent production
companies, to be selected by management from time to time.  The
Company anticipates continuing to utilize consultants with expertise in the
industry to assist in selecting content and assisting in production and
distribution efforts on projects the Company chooses to be associated
with.




During fiscal 2007,
the Company began to explore the financing aspect of the entertainment industry
more extensively than in the past.  The Company entered into a
bridging loan agreement which called for advances of up to $1.8 million to an
independent production company involved in the production of a feature film, The
Poet.  All amounts drawn under the bridging facility plus interest
were repaid in the three months ended December 31, 2006.  The
production company is owned by a former director and officer of the Company and
a former officer of its wholly owned subsidiary.
 
 In
the three month period ended December 31, 2006, the Company entered into
additional financing agreements to provide up to $625,000 in financing in
exchange for financing fees and/or interest payments and the right to share in
future net revenues of The Poet.  After a series of advances and
repayments under this second facility, as at June 30, 2007, the amount advanced
was approximately $226,000.  The Company was obligated for further
advances of an additional $114,000 under the financing
agreement.





-
11 -





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.
 
 At
the start of the second quarter of fiscal 2008, the Company took write-downs on
its investments in film properties and advances to various production companies
due to less success than previously anticipated in the largest markets in the
world for its film properties.  It further wrote down its investments
in the fourth quarter of fiscal 2008 based on actual and/or expected collections
as of the end of the year.
 
 As a result of the limited success to date in
the film financing
business, 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.   It also invested excess cash in exchange traded
securities, and recorded a gain of $31,000in the three months ended
March 31, 2009.However,
  in thefourth quarter
the Company lost approximately $886,000 on such
investments.  Subsequent to the end of the year, no further investment
of short term cash has occurred,and the Companyis
re-assessingthisstrategy.
 
 The Company’s
principal business office is located at 3400 One First Canadian Place, C/O
Bennett Jones LLP, PO Box 130, Toronto, Ontario, Canada M5X 1A4 and its
telephone number is 416-607-6793.





(B)
BUSINESS OVERVIEW





The Company’s
business plan continues to become an integrated entertainment company focused on
films and television properties. During most of fiscal 2006, management focused
on three major activities: development and licensing of film properties,
providing production consulting including pre and postproduction and sales
exploitation of films. However, following successful completion of two private
placements in April 2006 and June 2006, in which the Company raised
approximately $3 million, there was a change in management and composition of
the board of directors.





The new management,
while maintaining the overall business focus on feature film production and
distribution, began adopting a new approach.





-
12 -





The Company plans
to focus on financing feature film productions as a producer or co-producer with
others. These feature films will be produced by independent production
companies, to be selected by management from time to time. The Company
anticipates continuing to utilize consultants with expertise in the industry to
assist in selecting content and assisting in production and distribution efforts
on projects the Company chooses to be associated with.
 
 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.


(C)
ORGANIZATIONAL STRUCTURE





As
at June 30, 2009, the Company had only one wholly-owned subsidiary, LiveReel
Productions Corporation, as explained above in (A).


(D)
PROPERTY PLANTS AND EQUIPMENT





The Company does
not own or lease any real property.
 
 Effective October
1, 2006, the Company moved its registered office to its lawyers’ location, at
3400 One First Canadian Place, C/O Bennett Jones LLP, PO Box 130, Toronto,
Ontario, Canada M5X 1A4.  It is not charged monthly rent under this
arrangement.





ITEM 5 - OPERATING AND
FINANCIAL REVIEW AND PROSPECTS





(A)
OPERATING RESULTS





The following
discussion should be read in conjunction with the Audited Financial Statements
of the Company and notes thereto contained elsewhere in this report.




-
13 -





Results
of operations





Year ended
      June 30
              
              2009
              
              
              2008
              
              
              2007in 000' CDN
      $
              
              
              in 000' CDN
      $
              
              
              in 000' CDN
      $Income
              
              
              5
              
              
              
              40
              
              
              
              73Expenses
              
              
              (921
              )
              
              
              (829
              )
              
              
              (697
              )Net loss for
      year
              
              
              (916
              )
              
              
              (789
              )
              
              
              (624
              )Deficit at
      end of year
              
              
              (7,810
              )
              
              
              (6,894
              )
              
              
              (6,105
              )
 
 
 Overview
 
 The following were
the key events in the year ended June 30, 2009 -
 
 1.
              On July 22,
      2008, the board of directors agreed to increase the size of the option
      pool to 4,000,000 options.  In addition, the 900,000 options
      previously issued to Gregg Goldstein, CEO, were
      cancelled.   Finally, a new grant of 3,900,000 options to
      Gregg Goldstein, CEO, at a strike price of $0.01 per option, expiring July
      22, 2013, and fully vested was approved.  In addition, the
      conversion price of all previously issued warrants was reduced to US $0.01
      per warrant and the expiry date was extended to November 30, 2010 by the
      board of directors of the Company.
 
 2.
              The Company
      continued to pay further advances totaling $57,000 to fulfill its
      commitment to fund The Poet through December 31,
    2007.
 
 3.
              On November
      13, 2008, the board of directors of the Company authorized management to
      be able to invest a portion of its excess cash on hand in exchange traded
      securities.  These investments commenced in the third quarter of
      fiscal 2009, and resulted in a gain of approximately $31,000 during that
      quarter.  However, in the fourth quarter the Company lost
      approximately $886,000 on such investments.  Subsequent to the
      end of the year, no further investment of short term cash has occurred,
      and the Company is re-assessing this
strategy.
 
 4.
              The Company
      showed a profit in the second and third quarters of fiscal 2009 primarily
      due to the positive foreign exchange impact on its US dollar denominated
      assets as the Canadian dollar weakened against the US
      dollar.  This trend was reversed in the fourth quarter of the
      year, but the Company still had a significant foreign exchange gain for
      the year.


-
14 -


The following were
the key events in the year ended June 30, 2008 -
 
 1.
              The Company
      and its subsidiary had been involved in the financing of two feature
      films, King of Sorrow and The Poet.  Advances totaling
      approximately $476,000 were made through September 30,
      2007.  Such advances were expected to be recovered through the
      sales of these films in various territories throughout the
      world.
 
 During fiscal 2007,
King of Sorrow was sold in various territories, but had not been sold
successfully into its largest potential market, the United
States.  This was due to a number of factors, and management had
anticipated that it would be successful at two major trade shows in the United
States in October and November 2007 that it was unable to attend in
2006.  However, sales at those shows were much less than what had
previously forecast, and as a result, a write down of the scripts for $25,000
and other advances of $93,243 was made in the first quarter of the 2008 fiscal
year to approximate management’s estimate of the net realizable value of the
assets.
 
 In addition, the
production company in charge of The Poet entered into an agreement for
international distribution in October 2007.  Going to the same trade
shows as discussed above, The Poet did have some commercial success in terms of
obtaining advances from certain territories at the trade
show.  However, estimated revenues were such that management revised
its projected future inflows from The Poet downward and resulted in taking a
write down of all previous advances and advances in the first quarter of fiscal
2008 totaling $283,667.
 
 2.
              The Company
      continued to pay further advances totaling $57,000 to fulfill its
      commitment to fund The Poet through December 31,
  2007.
 
 3.
              During the
      fourth quarter of fiscal 2008, the Company received payment of $29,840
      from distributing King of Sorrow which was applied to reduce this
      receivable.  While the Company has entered into a new agreement
      with another party to attempt to sell the film internationally, the
      Company wrote off $49,974 of the advance to $20,179 effective June 30,
      2008, which was received subsequent to year end.
 The following were
the key events in the year ended June 30, 2007 -
 
 1.
                The Company’s
      subsidiary, LRPC was restructured to reduce the number of full time
      consultants effective September 1, 2006.  The Company entered
      into an international distribution agreement for its film, King of
      Sorrow.  The first sales of King of Sorrow occurred at the
      Berlin Film Festival in February,
2007.







-
15 -




The Company’s
wholly owned subsidiary, LiveReel Productions Corporation (“LRPC”) formalized
distribution arrangements for one of its films, King of Sorrow, in the first
half of fiscal 2007.  The first successful international sales of the
film were entered into in February, 2007 at the Berlin Film Festival, and
further sales are continuing to be pursued.  However, as the
international distribution agent had been selling the film for over a year and
had limited success at two major fall trade shows, management re-evaluated its
expected future proceeds to be received from the film and reduced the expected
value of the advance to $100,000 and the value of the film script down to
nil.  This resulted in the expensing of $118,243 during the period
ended September 30, 2007 both as a write down of advances to production
companies and a write off of the script.
  2.
              The Company
      entered into an agreement with a production company, The Poet Inc., to
      provide bridge financing of up to $1.8 million for production expenses of
      the film that The Poet Inc. was in the process of developing in the three
      months ended September 30, 2006.  These were repaid in the three
      months ended December 31, 2006.
 
 3.
              In the three
      months ended December 31, 2006, the Company entered into additional
      agreements to provide up to $625,000 in additional financing to The Poet
      Inc.  After a number of advances and repayments under this
      second facility, as at June 30, 2007, the amount advanced was
      approximately $226,000.  The Company was obligated for further
      advances of an additional $114,000 under the financing
      agreement.  The Company was to be repaid upon successful
      completion and distribution of The
Poet.
  4.
              The lawsuit
      brought against the Company in Florida in October, 2005 was dismissed on
      March 29, 2007.
  5.
              On February
      9, 2007, 1,000,000 options were granted to management by the board of
      directors.  The options granted were issued at a strike price of
      US$0.15 per share, expire on February 9, 2012 and were fully
      vested.  On the same date, the board of directors increased the
      number of options available to be granted under the stock option plan to
      3,000,000.  The board of directors of the Company has full
      discretion to decide the option price and vesting periods. The options are
      convertible into an equal number of common shares of the
      Company.  As a result of the granting of the options described
      above, the fair value of these options was estimated, on February 9, 2007,
      the date of the grant, using a Black-Scholes option price
      model.
  The amount of
$136,179 was accounted for as a stock compensation expense in the three months
ended March 31, 2007.
  6.
              The Company
      changed its name from Noble House Entertainment Inc. to LiveReel Media
      Corporation effective October 12, 2006.  On October 20, 2006,
      the Company received regulatory approval for continuance under the
      jurisdiction of the Canada Business Corporations
  Act.


-
16 -


Income





The Company’s
primary source of income in the year ended June 30, 2009 and 2008 was from
interest earned on excess cash balances.
 
 The Company’s
primary source of income in the year ended June 30, 2007 was from interest
earned on the bridge financing facility provided to a production company
described earlier and by earning interest income on excess cash
balances.


Expenses


The overall
analysis of the expenses is as follows:


Year
              
              
              Year
              
              
              YearEnded
              
              
              Ended
              
              
              EndedJune
      30,
              
              
              June
      30,
              
              
              June
      30,2009
              
              
              2008
              
              
              2007Loss on
      investments
              
              $
              854,858
              
              
              $
              -
              
              
              $
              -Foreign
      exchange loss (gain)
              
              
              (175,838
              )
              
              
              70,290
              
              
              
              117,336Office and
      general
              
              
              75,911
              
              
              
              115,599
              
              
              
              90,871Consulting
      expenses
              
              
              60,000
              
              
              
              60,000
              
              
              
              138,678Professional
      fees
              
              
              59,354
              
              
              
              60,645
              
              
              
              114,311Stock based
      compensation
              
              
              33,581
              
              
              
              -
              
              
              
              204,578Shareholder
      information
              
              
              11,610
              
              
              
              10,292
              
              
              
              26,312Bank charges
      and interest
              
              
              1,685
              
              
              
              676
              
              
              
              1,560Writedown of
      production advances
              
              
              -
              
              
              
              426,884
              
              
              
              -Production
      advances
              
              
              -
              
              
              
              57,060
              
              
              
              -Amortization
      of investment in film
              
              
              -
              
              
              
              25,000
              
              
              
              -and
      televison programsPromotion
              
              
              -
              
              
              
              2,377
              
              
              
              3,746$
              921,161
              
              
              $
              828,823
              
              
              $
              697,392




Loss
on Investments
 
 On November 13,
2008, the board of directors of the Company authorized management to be able to
invest a portion of its excess cash on hand in exchange traded
securities.  These investments commenced in the third quarter of
fiscal 2009, and resulted in a gain of approximately $31,000 during that
quarter.  However, in the fourth quarter the Company lost
approximately $886,000 on such investments.  Subsequent to the end of
the year, no further investment of short term cash has occurred, and the Company
is re-assessing this strategy.
  Foreign
exchange loss (gain)
  Exchange gain
      for the twelve months ended June 30, 2009 of approximately $176,000
      related entirely to the translation of US dollar balances and transactions
      into Canadian dollars at June 30, 2009 compared to the exchange rate used
      at June 30, 2008 as the Canadian dollar weakened against the US
      dollar.   Most of the Company’s excess cash is held in a US
      dollar account, and translated at the balance sheet
  date.
  Exchange loss
      for the twelve months ended June 30, 2008 and 2007 related entirely to the
      translation of US dollar balances and transactions into Canadian dollars
      at the relevant measurement date compared to the prior year’s measurement
      date as the Canadian dollar strengthened against the US
      dollar.







-
17 -





Foreign
exchange loss (gain)
  Exchange gain
      for the twelve months ended June 30, 2009 of approximately $176,000
      related entirely to the translation of US dollar balances and transactions
      into Canadian dollars at June 30, 2009 compared to the exchange rate used
      at June 30, 2008 as the Canadian dollar weakened against the US
      dollar.   Most of the Company’s excess cash is held in a US
      dollar account, and translated at the balance sheet
  date.
  Exchange loss
      for the twelve months ended June 30, 2008 and 2007 related entirely to the
      translation of US dollar balances and transactions into Canadian dollars
      at the relevant measurement date compared to the prior year’s measurement
      date as the Canadian dollar strengthened against the US
      dollar.


Office
and general


These costs
      include insurance, rent, telephone, travel, and other general and
      administration costs.
  Insurance
      costs for the twelve months ended June 30, 2009 of $47,761 (2008 -
      $51,370; 2007 - $43,200) relate to a directors and officers insurance
      policy entered into during the first quarter of fiscal 2007 for a twelve
      month period of time.  It was renewed in fiscal 2008 and fiscal
      2009.
  The Company
      also reimbursed the CEO for various general and office expenses totalling
      approximately $26,000 including costs for his rent, communications costs,
      health benefits and professional fees (2008 - $58,000; 2007 –
      nil).
  Rent for the
      twelve months ended June 30, 2007 was $9,450 as the company shared its
      premises with a production company during the year.  There was
      no such rent incurred in 2009 and
2008.
  Miscellaneous
      office and general costs include the costs of various administrative
      travel, courier, web site development, etc. not categorized elsewhere in
      the financial statements.  These costs totalled $2,233 in the
      twelve months ended June 30, 2009 (2008 - $5,143; 2007 - $38,221) because
      of there being fewer employees and consultants in fiscal 2009 and 2008
      compared to 2007.









-
18 -







Consulting
Expenses
 
 Consulting expenses
for the twelve months ended June 30, 2009 and 2008 include $60,000 of fees paid
to the Chief Financial Officer for consulting services provided during the
period.
 
 Consulting expenses
for the twelve months ended June 30, 2007 include $65,000 of fees paid to the
Chief Financial Officer for consulting services provided during the period,
$40,000 of fees paid to a former director and officer, and the balance related
to consulting fees paid to 6 individuals who worked for the Company’s
subsidiary.  Two of the former executives of the subsidiary, Mr.
Damian Lee, the former President, and Mr. Lowell Conn, the former vice
president, were paid a total of approximately $23,000 in the twelve month
period.  All long term consulting contracts with the Company’s former
senior management were cancelled without any penalty or further obligation in
the three month period ended September 30, 2006.
  Professional
fees
 
 Professional fees
in the twelve months ended June 30, 2009 were comprised of legal fees of $39,154
and accounting fees of $20,200.  Legal fees relate primarily to the
review of the Company’s various public filings and general corporate
matters.   Accounting fees were comprised of audit fees of
$18,000 and the balance of $2,200 for various tax advice received during the
year.
 
 Professional fees
in the twelve months ended June 30, 2008 were comprised of legal fees of $28,795
and accounting fees of $31,850.  Legal fees relate primarily to the
review of the Company’s various public filings and general corporate
matters.   Accounting fees were comprised of audit fees of
$22,500 and the balance of $9,350 for various tax advice received during the
year.
 
 Professional fees
in the twelve months ended June 30, 2007 were comprised of legal fees of $84,461
and audit fees of $29,850.  Legal fees relate primarily to the review
of the Company’s various public filings, assistance in review of materials for
the annual general meeting of shareholders held March 12, 2007, assistance with
the special shareholder meeting held October 4, 2006 and general corporate
matters.





-
19 -





Stock
based Compensation
 
 Stock based
compensation is made up of the Company’s common shares and options to acquire
the Company’s common shares being issued to various consultants and directors of
the Company for services provided. The Company used this method of payment
mainly to conserve its cash flow for business investments purposes. This method
also allows the Company to avail the services of consultants with specialized
skills and knowledge in the business activities of the Company without having to
deplete its limited cash flow.
 
 On
July 22, 2008, the board of directors agreed to increase the size of the option
pool to 4,000,000 options.  In addition, the 900,000 options
previously issued to Gregg Goldstein, CEO, were
cancelled.   Finally, a new grant of 3,900,000 options to Gregg
Goldstein, CEO, at a strike price of $0.01 per option, expiring July 22, 2013,
and fully vested was approved.  In addition, the conversion price of
all previously issued warrants was reduced to US $0.01 per warrant and the
expiry date was extended to November 30, 2010 by the board of directors of the
Company.  This resulted in the recording of stock compensation of
$33,581 during fiscal 2009 as stock based compensation expense.
 
 During fiscal 2006,
the board of directors of the Company approved and created two new Plans, which
were all registered with Securities and Exchange Commission of the United States
of America as required under the Securities Act of 1933:
 
 1.
              2006
      Consultant Stock Compensation Plan covering one million common shares,
      which were issued to three consultants including a former director for his
      services as chief financial officer and two other consultants of the
      company for their services.  The shares were valued at $228,000
      based on the market price on the date of issuance. $114,001 was expensed
      in fiscal 2006 and the balance of $113,999 was expensed in fiscal
      2007.
 
 On
December 15, 2006, the Company cancelled 800,000 shares issued to a consultant
due to lack of performance of duties.  The Company recorded a
reduction in share capital related to the cancellation of shares of $182,400 and
an increase in contributed surplus of previously amortized charges of
$136,800.
 
 2.
              2006 Stock
      Option Plan covering one million options. None of the options were granted
      as at December 31, 2006.  On February 9, 2007, 1,000,000 options
      were granted to management by the Board of Directors.  On the
      same date the Board of Directors increased the number of options available
      to be granted under the plan to 3,000,000.  As a result of this
      grant, an expense of $136,179 was incurred in the three months ended March
      31, 2007.
 Shareholder
Information


Shareholder
information costs in the twelve months ended June 30, 2009 comprised transfer
agent fees of $4,787 and regulatory and related filing fees of
$6,823.
 
 Shareholder
information costs in the twelve months ended June 30, 2008 comprised transfer
agent fees of $3,843 and regulatory and related filing fees of
$6,449.
 
 Shareholder
information costs in the twelve months ended June 30, 2007 consist of the cost
of holding a special shareholders’ meetings in October 2006, an annual general
meeting of March 12, 2007 totaling approximately $8,800, regulatory and related
filing fees of approximately $8,700 and transfer agent fees of approximately
$9,500.   These costs increased from the prior year as third
parties were used to facilitate filings rather than being done by the management
of the Company and an extra meeting was held by the Company.
 
 -
20 -
 
 
 
 Write
Down of Production Advances and Production Advances
 
 The Company and its
subsidiary have been involved in the financing of two feature films, King of
Sorrow and The Poet.  Advances totaling approximately $476,000 were
made by September 30, 2007.  Such advances were expected to be
recovered through the sales of these films in various territories throughout the
world.
 
 During fiscal 2007,
King of Sorrow was sold in various territories, but had not been sold
successfully into its largest potential market, the United
States.  This was due to a number of factors, and management had
anticipated that it would be successful at two major trade shows in the United
States in October and November 2007 that it was unable to attend last
year.  However, sales at those shows were much less than what had
previously forecast, and as a result, a write down of the scripts for $25,000
and other advances of $93,243 was made in the first quarter to approximate
management’s estimate of net realizable value of the assets.
 
 In addition, the
production company in charge of The Poet entered into an agreement for
international distribution in October 2007.  Going to the same trade
shows as discussed above, The Poet did have some commercial success in terms of
obtaining advances from certain territories at the trade
show.  However, estimated revenues were such that management revised
its projected future inflows from The Poet downward and resulted in taking a
write down of all previous advances and advances in the first quarter of fiscal
2008 totaling $283,667.
 
 During the quarter
ended December 31, 2007, the Company expensed an additional $57,000 in advances
made to The Poet to fulfill its advance commitments for that film.
 
 During the fourth
quarter of fiscal 2008, the Company received payment of $29,840 from
distributing King of Sorrow which was applied to reduce this
receivable.  While the Company has entered into a new agreement with
another party to attempt to sell the film internationally, the Company wrote off
$49,974 of the advance to $20,186 effective June 30, 2008, which was received in
the first quarter of fiscal 2009.
  Amortization
      of Investments in Film and Television
Programs
  During fiscal 2006,
LRPC was holding nine scripts at a carrying value of $172,500 and four
distribution contracts at a carrying value of $60,000. At the year end of June
30, 2006, management decided to fully amortize all but one script and all
distribution contracts because it has decided not to pursue development of these
properties any further. The only script not amortized and kept at its carrying
value of $25,000 was that of King of Sorrow. The script has been developed into
a feature film for which the Company held the certain distribution
rights.  As at June 30, 2007, management concluded that based on the
estimates of the potential revenue that would be realized by the film, the
carrying value of the script was fully recoverable.  This was written
off in fiscal 2008 as discussed under write down of production advances
above.
 
 Promotion
 
 During the twelve
months ended June 30, 2008, these costs related to various meals and
entertainment costs incurred by management.  During the twelve months
ended June 30, 2007, these costs related to the promotion of King of
Sorrow.  During the twelve months ended June 30, 2006, these costs
related to sales, marketing, travel and related costs for visits to the UK and
US for promotional efforts for certain films and discussions with the group of
investors who participated in the private placement.
 
 
 - 21
-
 
 Warrants
 
 During the fiscal
years 2004 and 2006, 6,193,600 warrants were issued in connection with various
private placements and the acquisition of certain theatrical film
properties.  These warrants together with common shares formed a Unit
subscribed and paid for under the private placements and were combined with
shares in the acquisition of the theatrical film properties.  These
warrants were originally valued at $5,729,352 using the Black-Scholes valuation
model.
 
 On
February 27, 2007, the conversion price of all previously issued warrants was
reduced to US$0.10 per warrant and the expiry date was extended to November 30,
2009 by the board of directors of the Company.  The warrants were
valued at $486,395 using the Black-Scholes valuation model.
 
 The valuation in
2006 and 2007 were applied to the capital stock and resulted in a negative
amount, which is not permitted under CICA handbook section 3861.22.
 
 Management has
therefore revised the valuation of these warrants using the relative fair value
method allowed under both the Canadian and US accounting
standards.  Based on the valuation method, the revised value of the
warrants issued came to $1,146,081.  The excess value of $4,583,271
was credited to capital stock.  The valuation in 2007 was reversed
from the financial statements previously issued.
 
 
 These changes have
no effect on the shareholder’s equity, the consolidated statement of operations,
consolidated statements of cash flows, and the basic and diluted loss per
share.
 
 On
July 22, 2008, the board of directors agreed to reduce the conversion price of
all previously issued warrants to US $0.01 per warrant and the expiry date
was extended to November 30, 2010.








(B)
LIQUIDITY AND CAPITAL RESOURCES





Working
      Capital





As
at June 30, 2009, the Company had a net working capital position of $319,175
compared to a working capital position of $1,201,854 as of June 30,
2008.   Cash on hand as at June 30, 2009 was $398,408 compared to
$1,330,037 in cash as at June 30, 2008.
 
 The working capital
position has declined by approximately $882,000 on a year over year basis due to
the financing of the operating loss of the business in the twelve months ended
June 30, 2009.
 
 The Company
believes it has adequate cash on hand to meet its cash requirements in the
fiscal year ending June 30, 2010.


-
22 -











Operating cash
      flow





During fiscal 2009,
operating activities required a net cash flow of $77,000 which was spent on
corporate operations.
 
 The operating cash
requirement was met through cash on hand in the Company.
 
 Investment cash
flows
 
 The company had a
loss on short term investments of $855,000 as it invested a portion of its
excess cash in exchange traded securities.  The Company made $31,000
in the third quarter of fiscal 2009 but lost $886,000 on such investments in the
fourth quarter due to market conditions.
  Financing cash
      flows
 
 The Company had no
financing activities during the year.
 
 (C)RESEARCH AND DEVELOPMENT, PATENTS AND
LICENSES
 
 The Company has not
spent any funds on research and development during the fiscal years 2009, 2008,
2007.




(D)TREND INFORMATION




There are no
trends, commitments, events or uncertainties presently known to management that
are reasonably expected to have a material effect on the Company’s business,
financial condition or results of operation other than the nature of the
business (Refer to the heading entitled “Risk Factors”).





(E)OFF-BALANCE SHEET
ARRANGEMENTS




At
June 30, 2009, 2008, 2007, the Company did not have any off balance sheet
arrangements, including any relationships with unconsolidated entities or
financial partnerships to enhance perceived liquidity.


LiveReel and its
wholly owned subsidiary, LRPC, have made arrangements with various production
companies to provide scripts/screenplay, production consulting and distribution
services for which it will be compensated by way of a percentage of the net
proceeds from the sale/distribution of feature films. Certain of the production
companies are owned by persons who were previously director/executives in
LiveReel or its subsidiary.





In
all such cases, LiveReel does not record any production costs nor will it record
any losses that may be sustained by such production companies on the feature
films made with the help of LiveReel on the ground that LiveReel has not given
any guarantee or is otherwise not responsible for any production costs or any
other liabilities of the production companies.





-
23 -





(F)CONTRACTUAL
OBLIGATIONS




The Company has no
contractual commitments that can not be cancelled with 30 days
notice.




(G)SAFE HARBOR




Statements in Item
5 of this Annual Report on Form 20-F that are not statements of historical fact,
constitute “forward-looking statements.”  See “Forward-Looking
Statements” on page 1 f this Annual Report.  The Company is relying on
the safe harbor provided in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in
making such forward-looking statements.




ITEM 6 - DIRECTORS, SENIOR
MANAGEMENT AND EMPLOYEES








(A)
DIRECTORS AND SENIOR MANAGEMENT





Mr. Gregg Goldstein, joined
the board as chairman on June 13, 2006 . He also assumed the role of chief
executive officer effective the same date. Mr. Goldstein has over twenty years
experience in Investment Banking, Finance and Accounting. He is a graduate of
the MIT Sloan School of Management and began his career at Coopers &
Lybrand, Public Accountants. For the last six years, Mr. Goldstein has been a
private investor. Prior to that, Mr. Goldstein was a managing director in the
Investment Banking Division - Capital Markets of UBS (AG), where he headed and
managed sales and structuring in the Interest Rate Derivative and Structured
Products areas. In this capacity, Mr. Goldstein and histeams advised and traded
with Hedge Funds, Mutual Funds, Pension Funds, and Governments around the
world.


Mr.
Stephen Wilsonbecame a director and chief financial officer and
corporate secretary on September 14, 2006. Mr. Wilson has held various senior
financial and operating positions in a number of private and public companies
over the last 14 years in both Canada and the United States. He has extensive
experience in mergers and acquisitions and raising capital for high growth
companies. He is a graduate of the University of Michigan and a chartered
accountant.





Ms. Joanne Butterfield Douglasjoined the board as independent director on June 13, 2006. Ms. Douglas is
the Managing Director of SAM Investment Services Limited, a Bermuda based
management company. Prior to that, she was with the Bank of Bermuda working in
Directed Investments.





Mr. Steve Dabbah joined the
board as an independent director on October 26, 2006. He has been the Chairman
and Chief Executive Officer of Dabbah Securities Corp., a New York based NASD
broker / dealer firm and investment banking boutique since 1989.. Dabbah
Securities specializes in equity, fixed income and derivatives execution and
implementation. Mr. Dabbah is also the principal of Bedrock Capital Management,
LLC, an asset management firm and Bedrock Advisors, LLC a commodity pool
operator and commodity trading adviser registered with the CFTC.





-
24 -





(B)
COMPENSATION





The compensation
payable to directors and officers of the Company and its subsidiary is
summarized below:





1.General





The Company does
not compensate directors for acting solely as directors. Except as described
below, the Company does not have any arrangements pursuant to which directors
are remunerated by the Company or its subsidiary for their services in their
capacity as directors, other than options to purchase shares of the Company
which may be granted to the Company’s directors from time to time and the
reimbursement of direct expenses.





The Company does
not have any pension plans.





2. 
Statement of Executive Compensation





Mr. Gregg Goldstein
receives no cash remuneration nor has he signed any consulting contract with the
Company. During the year ended June 30, 2009, Mr. Goldstein was reimbursed for
various general and office expenses totalling approximately $26,000 including
costs for his rent, communications costs, health benefits and professional
fees.
 
 On
July 22, 2008, the board of directors agreed to increase the size of the option
pool to 4,000,000 options.  In addition, the 900,000 options
previously issued to Gregg Goldstein, CEO, were cancelled.   A
new grant of 3,900,000 options to Gregg Goldstein, CEO, at a strike price of
$0.01 per option, expiring July 22, 2013, and fully vested was
approved.


Mr. Stephen Wilson
has a consulting contract calling for the payment of monthly fees of $5,000 and
can be terminated with one month’s notice.  During the year ended June
30, 2007, Mr. Wilson was granted 100,000 options.





The following table
and accompanying notes set forth all compensation paid by the Company to all
persons who served as Company directors and senior management during the fiscal
year ended June 30, 2009.  The information is provided for the fiscal
years ended 2009, 2008 and 2007.


-
25 -





ANNUAL
      COMPENSATION
              
              
              LONG-TERM
      COMPENSATIONAwards
              
              
              PayoutsName
      and
                principal
      position
              Year
              
              Fee
              
              
              Bonus
              
              
              Other
      annual compensation
              
              
              Securities
      under options/SARs Granted (1)
              
              
              Shares
      or units subject to resale restrictions
              
              
              LTIP
      (2) payouts
              
              
              all
      other compensation($)
              
              
              ($)
              
              
              ($)
              
              
              
              (#)
              
              
              ($)
              
              
              ($)Gregg
      Goldstein, Chairman and CEO
              2009
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,900,000
              
              
              
              -
              
              
              
              -
              
              
              
              -2008
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Stephen
      Wilson, CFO
              2009
              
              
              60,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -2008
              
              
              60,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -2007
              
              
              65,000
              
              
              
              -
              
              
              
              -
              
              
              
              100,000
              
              
              
              -
              
              
              
              -
              
              
              
              -


Notes:





1.
            “SAR”
      means stock appreciation rights2.
            “LTIP”
      means long term incentive plan







Long Term Incentive Plan (LTIP)
Awards




The Company does
not have a LTIP, pursuant to which cash or non-cash compensation intended to
serve as an incentive for performance (whereby performance is measured by
reference to financial performance or the price of the Company’s securities) was
paid or distributed to the Named Executive Officers during the most recently
completed fiscal year.


Defined
Benefit or Actuarial Plan Disclosure




There is no pension
plan or retirement benefit plan that has been instituted by the Company and none
are proposed at this time.




(C)
BOARD PRACTICES





Directors may be
appointed at any time in accordance with the by-laws of the Company and then
re-elected annually by the shareholders of the Company. Directors receive no
compensation for serving as such, other than stock option and reimbursement of
direct expenses. Officers are elected annually by the Board of Directors of the
Company and serve at the discretion of the Board of Directors.





The Company has not
set aside or accrued any amount for retirement or similar benefits to the
directors.





-
26 -




Mandate
of the Board




The Board has
adopted a mandate, in which it has explicitly assumed responsibility for the
stewardship of LiveReel. In carrying out its mandate the Board holds at least
four meetings annually.  The frequency of meetings, as well as the nature
of the matters dealt with, will vary from year to year depending on the state of
our business and the opportunities or risks, which we face from time to time.
The Board held a total of 4 meetings during our fiscal year ended June 30, 2009.
 To assist in the discharge of its responsibilities, the Board has
designated two standing committee: a Corporate governance Committee and an Audit
Committee, as more particularly discussed below.


Corporate
Governance Committee





The Corporate
Governance Committee is comprised of Gregg Goldstein (Chair), Steve Dabbah and
Joanne Butterfield-Douglas. The responsibilities, powers and operation of the
Corporate Governance Committee are set out in the Corporate Governance Committee
Charter.  As described in its charter, the Corporate Governance
Committee is responsible for, among other things, assisting the Board of
Directors in fulfilling its corporate governance oversight
responsibilities.





Audit
Committee





The members of the
audit committee consist of Mr. Steve Dabbah and Ms. Joanne Butterfield Douglas,
both independent directors. The audit committee is charged with overseeing the
Company's accounting and financial reporting policies, practices and internal
controls. The committee reviews significant financial and accounting issues and
the services performed by and the reports of our independent auditors and makes
recommendations to our Board of Directors with respect to these and related
matters.





The Company’s Audit
Committee’s charter was detailed in the annual report for fiscal 2005 and became
effective on August 2, 2005.




The Audit Committee
assists the Board in fulfilling its responsibilities for our accounting and
financial reporting practices by:


·
            ·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;







-
27 -








·
            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





Compensation
Committee





The Company does
not currently have a Compensation Committee. The directors determined that, in
light of the Company’s size and resources, setting up such a committee would be
too expensive for the Company at this time. The Company has, however, set up an
Independent Review Committee of the Board to review and approve all non-arms'
length contracts. This Committee has the same composition as the Audit
Committee, and is currently comprised of the two independent directors - Mr.
Steve Dabbah and Ms. Joanne Butterfield Douglas.





(D)
EMPLOYEES





The Company
presently has no permanent employees. It uses the services of consultants from
time to time.





(E)
SHARE OWNERSHIP





The Corporation had
the following plans as at June 30, 2009:





1.
            2006 Stock
      Option Plan covering three million
options.





2.
            2006
      Consultant Stock Compensation Plan covering one million
      shares.





1,000,000 options
were granted under the 2006 Stock Option Plan on February 9, 2007 at a strike
price of $0.15 per share.  On the same date, the board of directors
increased the number of options available to be granted under the plan to
3,000,000. On July
22, 2008, the board of directors agreed to increase the size of the option pool
under the 2006 Stock Option Plan to 4,000,000 options.





-
28 -








The objective of
these Plans is to provide for and encourage ownership of common shares of the
Company by its directors, officers, consultants and employees and those of any
subsidiary companies so that such persons may increase their stake in the
Company and benefit from increases in the value of the common shares. The Plans
are designed to be competitive with the benefit programs of other companies in
the industry. It is the view of management that the Plans are a significant
incentive for the directors, officers, consultants and employees to continue and
to increase their efforts in promoting the Company’s operations to the mutual
benefit of both the Company and such individuals and also allow the Company to
avail of the services of experienced persons with minimum cash
outlay.




The following table
sets forth the share ownership of those persons listed in subsection 6.B above
and includes details of all warrants held by such persons at December 15,
2009:







Name
            # of Common
      shares held
              at December
      15, 2009
            # of
      Warrants
            Exercise
      price - in US$
            Expiry
      date(s)
            # of options
      held at
              December 15,
      2008
            Expiry
      dateGregg
      Goldstein
            2,800,000
            1,400,000
            $0.01
            Nov 30,
      2010
            3,900,000
            July 22,
      2013J. Stephen
      Wilson
            nil
            nil
            N/A
            N/A
            100,000
            Feb 9,
      2012





As
of June 30, 2009, the Company had 13,721,744 shares of common stock outstanding,
4,000,000 options to buy common stock, and 6,193,600 warrants to purchase common
stock.





ITEM
7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS





(A)MAJOR
SHAREHOLDERS





The Company's
securities are recorded on the books of its transfer agent in registered form.
The majority of such shares are, however, registered in the name of
intermediaries such as brokerage houses and clearing-houses on behalf of their
respective clients. The Company does not have knowledge of the beneficial owners
thereof.








-
29 -





As
at December 15, 2009, Intermediaries like CDS & Co, Toronto, Canada and Cede
& Co of New York, USA held approximately 22% of the issued and outstanding
common shares of the company on behalf of several beneficial shareholders whose
individual holdings details were not available.
 
 The following table
shows the record and, where known to us, the beneficial ownership of our shares
by each shareholder holding at least 5% of our common shares as of December 15,
2009.  As used herein, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of
1934.
 
 Name
      of shareholder
              No.
      of shares held
              %
      of issued sharesCrystal Star
      Productions Limited (1)
              11,063,250
              47%Gregg
      Goldstein (2)
              8,100,000
              34%Snapper
      Inc.
              795,000
              6%
   1.
              Includes
      4,500,000 shares issuable upon exercise of Warrants, exercisable by
      Crystal Star Productions Limited within 60 days of December 15,
      2009.
 
 2.
              Includes
      1,400,000 shares issuable upon exercise of Warrants, and 3,900,000 shares
      issuable upon exercise of options, in each case  exercisable by
      Mr. Goldstein within 60 days of December 15,
  2009.
 
 All of the
Company’s shareholders have the same voting rights.
 
 At
December 15, 2009, the Company had 13,721,744 shares of common stock
outstanding, which, as per the details provided by the Transfer Agents, were
held by 346 record holders excluding the beneficial shareholders held through
the intermediaries, 9 of which, holding an aggregate of 5,044,718 shares 37% of
common stock, were in the United States.
 
 The Registrant is a
publicly owned Canadian corporation, the shares of which are owned by Canadian
residents, US residents, and residents of other countries. The Registrant is not
owned or controlled directly or indirectly by another corporation or any foreign
government. There are no arrangements, known to the Company, the operation of
which may at a subsequent date result in a change of control of the
Company.
 
 (B)
RELATED PARTY TRANSACTIONS




Transactions with
related parties are incurred in the normal course of business and are measured
at the exchange amount. Related party transactions during the year ended June
30, 2009 are as follows:
 
 1.
              Consulting
      fees include $60,000 paid to the existing Chief Financial Officer for
      services rendered during the period (2008 - $60,000; 2007 –
      $65,000).  Consulting fees in 2007 also include $40,000 of fees
      paid to a former director and officer for various
      services.
 
 2.
              Office and
      general expenses include approximately $26,000 (2008 - $58,000; 2007 –
      nil) of reimbursable expenses to the Chief Executive Officer for various
      costs including rent, communications, health benefits, and professional
      fees.


-
30 -





Indebtedness
to Company of Directors, Executive Officers and Senior Officers




None of the
directors, consultants, executive officers and senior officers of the Company or
any of its subsidiaries, proposed nominees for election or associates of such
persons is or has been indebted to the Company at any time for any reason
whatsoever, including the purchase of securities of the Company or any of its
subsidiaries.




(C)
INTERESTS OF EXPERTS AND COUNSEL





Not
applicable







ITEM 8 - FINANCIAL
INFORMATION





(A)
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION




Information
regarding our financial statements is contained under the caption "Item 17.
Financial Statements" below.




Legal
Proceedings





A
case was filed on August 10, 2005 in the Court in Florida against the Company
and some of its past directors by a person alleging a liability of US$ 200,000
plus triple damages for failing to issue him common shares of the Company
against the funds that he alleged to have paid in 1997.





The Company’s
lawyer filed a motion to dismiss the case on October 12, 2005 for lack of
jurisdiction.  The case was dismissed in April 2007.





Dividend
Policy




Since its
incorporation, the Company has not declared or paid, and has no present
intention to declare or to pay in the foreseeable future, any cash dividends
with respect to its Common Shares. Earnings will be retained to finance further
growth and development of the business of the Company. However, if the Board of
Directors declares dividends, all Common Shares will participate equally in the
dividends, and, in the event of liquidation, in the net assets, of the
Company.




-
31 -







(B)
SIGNIFICANT CHANGES




There are no
significant events subsequent to June 30, 2009.




ITEM 9 - THE OFFER AND
LISTING






(A)
OFFER AND LISTING DETAILS




The Company’s
common shares began trading on OTCBB on April 27 2005. Prior to that date, the
Company’s shares were traded “Over -the Counter” on the Canadian Unlisted Board
(“CUB”) for a brief while in 2000. No real-time quotes or trades were available
to the public. There is no record of quotations under the CUB.





The following
tables set forth the reported high and low sale prices for the common shares of
the Company as quoted on OTCBB.




The following table
outlines the annual high and low market prices for each of the fiscal years
since the trading date of April 27, 2005:




Fiscal year ended June
      30
            
            High
              In US
      $
            
            Low
              In
      US$2009
            
            
            .08
            
            .012008
            
            
            .06
            
            .022007
            
            
            1.70
            
            .062006
            
            
            2.15
            
            .612005 (April
      28, 2005 to June 30, 2005)
            
            
            .65
            
            .54







-
32 -





The following table
outlines the high and low market prices for each fiscal financial quarter for
each of the quarters since April 27, 2005 and any subsequent
period:
 
 Fiscal Quarter ended
              
              High
              
              LowIn
      US$
              
              In
      US$September 30,
      2009
              
              
              .015
              
              .015June 30,
      2009
              
              
              .015
              
              .015March 31,
      2009
              
              
              .08
              
              .012December 31,
      2008
              
              
              .08
              
              .012September 30,
      2008
              
              
              .02
              
              .01June 30,
      2008
              
              
              .03
              
              .02March 31,
      2008
              
              
              .04
              
              .03December 31,
      2007
              
              
              .06
              
              .04September 30,
      2007
              
              
              .06
              
              .06June 30,
      2007
              
              
              .11
              
              .10March 31,
      2007
              
              
              .15
              
              .10December 31,
      2006
              
              
              .50
              
              .12September 30,
      2006
              
              
              1.70
              
              .30June 30,
      2006
              
              
              0.85
              
              2.15March 31,
      2006
              
              
              1.20
              
              .20December 31,
      2005
              
              
              .65
              
              .35September 30,
      2005
              
              
              .61
              
              .56
 
 The following table
outlines the high and low market prices for each of the most recent six
months:
 
 Month
              
              High
              
              LowIn
      US$
              
              In
      US$November,
      2009
              
              
              .015
              
              .015October,
      2009
              
              
              .015
              
              .015September,
      2009
              
              
              .015
              
              .015August ,
      2009
              
              
              .015
              
              .015July,
      2009
              
              
              .015
              
              .015June,
      2009
              
              
              .015
              
              .015
 
 (B)  
PLAN OF DISTRIBUTION




Not
applicable





(C)  
MARKETS




The company's
common shares were traded briefly during the fiscal 2000 "over-the-counter" on
the Canadian Unlisted Board ("CUB") with the trading symbol "FEPR" and CUSIP
#32008X 10 2. The CUB system was implemented in November 2000 but has currently
been discontinued. It was only available to traders and brokers for reporting
trades that they had arranged in unlisted and unquoted equity securities in
Ontario. No real-time quotes or trades were available to the public. There is no
record of quotations under the CUB.




-
33 -





Since April 27,
2005, the Company’s common shares began trading on OTCBB of the NASD under a
trading symbol “NHSEF”.




The Company
received a new CUSIP number and changed its trading and listing symbol to LVRLF
effective December 1, 2006.




(D)
SELLING SHAREHOLDERS




Not
applicable.




(E)
DILUTION




Not
applicable




(F)
EXPENSES OF THE ISSUE




Not
applicable






ITEM 10 - ADDITIONAL
INFORMATION




(A) SHARE CAPITAL




This Form 20F is
being filed as an Annual Report under the Exchange Act and, as such, there is no
requirement to provide any information under this section.




(B)
MEMORANDUM AND ARTICLES OF ASSOCIATION




Following approval
by the shareholders in a special meeting held on October 4, 2006 as explained in
item 8(B) above, the Company applied for authorization to continue from being
governed by the Business Corporations Act (Ontario) and was granted approval on
October 26, 2006 to continue under the jurisdiction of the Canada Business
Corporation Act.  An application for authorization to continue is
included in Exhibits 1.1 and 1.2 hereof, which exhibits have been incorporated
by reference into this report.




New by-laws were
adopted in the special meeting of shareholders on October 4, 2006 in compliance
with the requirements of the Canada Business Corporation Act. The new by-laws
included in Exhibit  1.3 hereof, which exhibit has been incorporated
by reference into this report.





(C)
MATERIAL CONTRACTS




All material
contracts entered into in last two fiscal years were in the ordinary course of
its business.


-
34 -





(D)
EXCHANGE CONTROLS




Limitations on the
ability to acquire and hold shares of the Company may be imposed by the
Competition Act (Canada) (the “Competition Act”).  This legislation permits
the Commissioner of Competition to review any acquisition of a significant
interest in us.  This legislation grants the Commissioner jurisdiction, for
up to three years, to challenge this type of acquisition before the Competition
Tribunal if the Commissioner believes that it would, or would be likely to,
result in a substantial lessening or prevention of competition in any market in
Canada.




The Competition Act
requires that any person proposing to acquire any of the assets in Canada of an
operating business file a notification with the Competition Bureau where (a) the
parties to the transaction, together with their respective affiliates, have (i)
assets in Canada the value of which exceeds $400,000,000 in the aggregate, or
(ii) annual gross revenues from sales in, from or into Canada that exceed
$400,000,000 in the aggregate; and (b) the aggregate
value of those assets, or the gross revenues from sales in or from Canada
generated from those assets, would exceed $50,000,000.  For the purposes of
the Competition Act, asset values and gross revenues are to be determined as of
the last day of the period covered by the most recent audited financial
statements in which the assets or gross revenues are accounted for.




This legislation
also requires any person who intends to acquire shares to file a notification
with the Competition Bureau if certain financial thresholds are exceeded, and
that person would hold more than 20% of our voting shares as a result of the
acquisition.  If a person already owns 20% or more of our voting shares, a
notification must be filed when the acquisition would bring that person’s
holdings over 50%.  Where a notification is required, the legislation
prohibits completion of the acquisition until the expiration of a statutory
waiting period, unless the Commissioner provides written notice that he does not
intend to challenge the acquisition.





There are no
governmental laws, decrees or regulations in Canada that restrict the export or
import of capital or that affect the remittance of dividends, interest or other
payments to non-resident holders of our securities.  However, any such
remittance to a resident of the United States may be subject to a withholding
tax pursuant to the Income Tax Act (Canada).  For further information
concerning such withholding tax, see “Taxation" below.




Except as may be
provided under the Investment Canada Act (the "ICA"), there are no specific
limitations under the laws of Canada, the Province of British Columbia, or in
the Notice of Articles and Articles of the Company with respect to the rights of
non-residents of Canada to hold and/or vote securities of the
Company.





-
35 -





The ICA requires
each individual, government or agency thereof, corporation, partnership, trust
or joint venture that is not a “Canadian” as defined in the ICA (a
“non-Canadian”) making an investment to acquire control of a Canadian business,
the gross assets of which exceed certain defined threshold levels, to file an
application for review with the Investment Review Division of Industry Canada.
 The current threshold level for non-Canadians who are World Trade
Organization investors (as defined in the ICA) is $265,000,000 (in 2006).
 This amount is subject to an annual adjustment on the basis of a
prescribed formula in the ICA to reflect inflation and real growth within
Canada.




In
the context of the Company, in essence, three methods of acquiring control of a
Canadian business are regulated by the ICA: (i) the acquisition of all or
substantially all of the assets used in carrying on business in Canada; (ii) the
acquisition, directly or indirectly, of voting shares of a Canadian corporation
carrying on business in Canada; (iii) the acquisition of voting shares of an
entity which controls, directly or indirectly, another entity carrying on
business in Canada.  An acquisition of a majority of the voting interests
of an entity, including a corporation, is deemed to be an acquisition of control
under the ICA.  However, under the ICA, there is a rebuttable presumption
that control is acquired if one-third of the voting shares of a Canadian
corporation or an equivalent undivided interest in the voting shares of such
corporation are held by a non-Canadian person or entity.  An acquisition of
less than one-third of the voting shares of a Canadian corporation is deemed not
to be an acquisition of control.  An acquisition of less than a majority,
but one-third or more, of the voting shares of a Canadian corporation is
presumed to be an acquisition of control unless it can be established that on
the acquisition the Canadian corporation is not, in fact, controlled by the
acquirer through the ownership of voting shares.  Certain transactions
relating to the acquisition of common shares would be exempt from review from
the ICA, including:




(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.




In
addition, if less than a majority of voting interests of a Canadian corporation
are owned by Canadians, the acquisition of control of any other Canadian
corporation by such corporation may be subject to review unless it can be
established that the corporation is not in fact controlled through the ownership
of voting interests and that two-thirds of the members of the board of directors
of the corporation are Canadians.




-
36 -





Where an investment
is reviewable under the ICA, it may not be implemented unless it is likely to be
of net benefit to Canada.  If an applicant is unable to satisfy the
Minister responsible for Industry Canada that the investment is likely to be of
net benefit to Canada, the applicant may not proceed with the investment.
 Alternatively, an acquiror may be required to divest control of the
Canadian business that is the subject of the investment.




In
addition to the foregoing, the ICA requires formal notification to the Canadian
government of all other acquisitions of control of Canadian businesses by
non-Canadians.  These provisions require a foreign investor to give notice
in the required form, which notices are for information, as opposed to review
purposes.




(E)
TAXATION




Canadian Federal Income Tax
Consequences




We
consider that the following general summary fairly describes the principal
Canadian federal income tax considerations applicable to holders of our common
shares who, for purposes of the Income Tax Act (Canada) (the “ITA”), deal at
arm’s length with the Company, hold such shares as capital property, do not
carry on business in Canada, have not been at any time residents of Canada for
purposes of the ITA and are residents of the United States (“US Residents”)
under the Canada-United States Income Tax Convention (1980) (the
“Convention”).




This summary is
based upon the current provisions of the ITA, the Income Tax Regulations (the
“Regulations”), the current publicly announced administrative and assessing
policies of the Canada Revenue Agency (formerly Canada Customs and Revenue
Agency), and all specific proposals (the “Tax Proposals”) to amend the ITA and
Regulations publicly announced prior to the date hereof by the Minister of
Finance (Canada).  This description is not exhaustive of all possible
Canadian federal income tax consequences and, except for the Tax Proposals, does
not take into account or anticipate any changes in law, whether by legislative,
governmental or judicial action, nor does it take into account provincial or
foreign tax considerations which may differ significantly from those discussed
herein.





The following
discussion is for general information only and it is not intended to be, nor
should it be construed to be, legal or tax advice to any holder or prospective
holder of our common shares and no opinion or representation with respect to any
Canadian federal, provincial or foreign tax consequences to any such holder or
prospective holder is made.  Accordingly, holders and prospective holders
of our common shares should consult with their own tax advisors about the
Canadian federal, provincial and foreign tax consequences of purchasing, owning
and disposing of our common shares.





-
37 -




Dividends




Dividends,
including stock dividends, paid or credited or deemed to be paid or credited on
our common shares to a US Resident will be subject to withholding tax at a rate
of 25%.  The Convention provides that the normal 25% withholding tax rate
will generally be reduced to 15% on dividends paid on shares of a corporation
resident in Canada for federal income tax purposes (such as the Company) to US
Residents, and also provides for a further reduction of this rate to 5% where
the beneficial owner of the dividends is a corporation which is a resident of
the United States and owns at least 10% of the voting shares of the corporation
paying the dividend.  These Convention reductions are not available to
beneficial owners who are a US LLC corporation.




Capital
Gains




The Convention
provides that a US Resident will not be subject to tax under the ITA in respect
of any capital gain on the disposition of our common shares unless such shares
constitute taxable Canadian property of the US Resident and the US Resident is
not entitled to the benefits of the Convention with regards to capital gains.
 Our common shares will constitute taxable Canadian property if at any time
during the five year period immediately preceding the disposition of our common
shares, the US Resident, or persons with whom the US Resident did not deal at
arm’s length, or the US Resident together with persons with whom the US resident
did not deal at arm’s length owned 25% or more of the issued shares of any class
of our capital stock.




Where a US resident
realizes a capital gain on a disposition of shares that constitute “taxable
Canadian property”, the Convention relieves the US resident from liability for
Canadian tax on such capital gains unless:





(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.




These Convention
benefits are generally not available to beneficial owners who are a US LLC
corporation.





-
38 -





U.S. Federal Income Tax
Consequences




The following is a
summary of the anticipated material U.S. federal income tax consequences to a
U.S. Holder (as defined below) arising from and relating to the acquisition,
ownership, and disposition of our common shares (“Common Shares”).





This summary is for
general information purposes only and does not purport to be a complete analysis
or listing of all potential U.S. federal income tax consequences that may apply
to a U.S. Holder as a result of the acquisition, ownership, and disposition of
Common Shares.  In addition, this summary does not take into account the
individual facts and circumstances of any particular U.S. Holder that may affect
the U.S. federal income tax consequences of the acquisition, ownership, and
disposition of Common Shares.  Accordingly, this summary is not intended to
be, and should not be construed as, legal or U.S. federal income tax advice with
respect to any U.S. Holder.  Each U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding the U.S. federal, U.S.
state and local, and foreign tax consequences of the acquisition, ownership, and
disposition of Common Shares.





Scope
of this Disclosure





Authorities





This summary is
based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury
Regulations (whether final, temporary, or proposed), published rulings of the
Internal Revenue Service (“IRS”), published administrative positions of the IRS,
the Convention Between Canada and the United States of America with Respect to
Taxes on Income and on Capital, signed September 26, 1980, as amended (the
“Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable and,
in each case, as in effect and available, as of the date of this Annual Report.
 Any of the authorities on which this summary is based could be changed in
a material and adverse manner at any time, and any such change could be applied
on a retroactive basis.  This summary does not discuss the potential
effects, whether adverse or beneficial, of any proposed legislation that, if
enacted, could be applied on a retroactive basis.





U.S.
Holders





For purposes of
this summary, a “U.S. Holder” is a beneficial owner of Common Shares that, for
U.S. federal income tax purposes, is (a) an individual who is a citizen or
resident of the U.S., (b) a corporation, or any other entity classified as
a corporation for U.S. federal income tax purposes, that is created or organized
in or under the laws of the U.S. or any state in the U.S., including the
District of Columbia, (c) an estate if the income of such estate is subject
to U.S. federal income tax regardless of the source of such income, or
(d) a trust if (i) such trust has validly elected to be treated as a
U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is
able to exercise primary supervision over the administration of such trust and
one or more U.S. persons have the authority to control all substantial decisions
of such trust.





-
39 -





Non U.S.
Holders





For purposes of
this summary, a “non-U.S. Holder” is a beneficial owner of Common Shares other
than a U.S. Holder.  This summary does not address the U.S. federal income
tax consequences of the acquisition, ownership, and disposition of Common Shares
to non-U.S. Holders.  Accordingly, a non-U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding the U.S. federal, U.S.
state and local, and foreign tax consequences (including the potential
application of and operation of any tax treaties) of the acquisition, ownership,
and disposition of Common Shares.





U.S. Holders Subject to
Special U.S. Federal Income Tax Rules Not Addressed





This summary does
not address the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Common Shares to U.S. Holders that are subject to
special provisions under the Code, including the following U.S. Holders:
 (a) U.S. Holders that are tax-exempt organizations, qualified
retirement plans, individual retirement accounts, or other tax-deferred
accounts; (b) U.S. Holders that are financial institutions, insurance
companies, real estate investment trusts, or regulated investment companies;
(c) U.S. Holders that are dealers in securities or currencies or U.S.
Holders that are traders in securities that elect to apply a mark-to-market
accounting method; (d) U.S. Holders that have a “functional currency” other
than the U.S. dollar; (e) U.S. Holders that are liable for the alternative
minimum tax under the Code; (f) U.S. Holders that own Common Shares as part
of a straddle, hedging transaction, conversion transaction, constructive sale,
or other arrangement involving more than one position; (g) U.S. Holders
that acquired Common Shares in connection with the exercise of employee stock
options or otherwise as compensation for services; (h) U.S. Holders that
hold Common Shares other than as a capital asset within the meaning of
Section 1221 of the Code; or (i) U.S. Holders that own, directly or
indirectly, 10% or more, by voting power or value, of our outstanding shares.
 U.S. Holders that are subject to special provisions under the Code,
including U.S. Holders described immediately above, should consult their own
financial advisor, legal counsel or accountant regarding the U.S. federal, U.S.
state and local, and foreign tax consequences of the acquisition, ownership, and
disposition of Common Shares.





If
an entity that is classified as partnership (or “pass-through” entity) for U.S.
federal income tax purposes holds Common Shares, the U.S. federal income tax
consequences to such partnership (or “pass-through” entity) and the partners of
such partnership (or owners of such “pass-through” entity) generally will depend
on the activities of the partnership (or “pass-through” entity) and the status
of such partners (or owners).  Partners of entities that are classified as
partnerships (or owners of “pass-through” entities) for U.S. federal income tax
purposes should consult their own financial advisor, legal counsel or accountant
regarding the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Common Shares.





-
40 -





Tax Consequences Other than
U.S. Federal Income Tax Consequences Not Addressed





This summary does
not address the U.S. state and local, U.S. federal estate and gift, or foreign
tax consequences to U.S. Holders of the acquisition, ownership, and disposition
of Common Shares.  Each U.S. Holder should consult its own financial
advisor, legal counsel, or accountant regarding the U.S. state and local, U.S.
federal estate and gift, and foreign tax consequences of the acquisition,
ownership, and disposition of Common Shares.  (See “Taxation—Canadian
Federal Income Tax Consequences” above).





U.S.
Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition
of Common Shares




Distributions on Common
Shares





General
Taxation of Distributions





A
U.S. Holder that receives a distribution, including a constructive distribution,
with respect to the Common Shares will be required to include the amount of such
distribution in gross income as a dividend (without reduction for any Canadian
income tax withheld from such distribution) to the extent of our current or
accumulated “earnings and profits”.  To the extent that a distribution
exceeds our current and accumulated “earnings and profits”, such distribution
will be treated (a) first, as a tax-free return of capital to the extent of
a U.S. Holder’s tax basis in the Common Shares and, (b) thereafter, as gain
from the sale or exchange of such Common Shares.  (See more detailed
discussion at “Disposition of Common Shares” below).





Reduced
Tax Rates for Certain Dividends





For taxable years
beginning after December 31, 2002 and before January 1, 2011, a dividend paid by
us generally will be taxed at the preferential tax rates applicable to long-term
capital gains if (a) we are a “qualified foreign corporation” (as defined
below), (b) the U.S. Holder receiving such dividend is an individual,
estate, or trust, and (c) such dividend is paid on Common Shares that have
been held by such U.S. Holder for at least 61 days during the 121-day period
beginning 60 days before the “ex-dividend date” (i.e., the first date that a
purchaser of such Common Shares will not be entitled to receive such
dividend).





-
41 -





We
generally will be a “qualified foreign corporation” under Section 1(h)(11)
of the Code (a “QFC”) if (a) we are incorporated in a possession of the
U.S., (b) we are eligible for the benefits of the Canada-U.S. Tax
Convention, or (c) the Common Shares are readily tradable on an established
securities market in the U.S.  However, even if we satisfy one or more of
such requirements, we will not be treated as a QFC if we are a “passive foreign
investment company” (as defined below) for the taxable year during which we pay
a dividend or for the preceding taxable year.  In 2003, the U.S. Department
of the Treasury (the “Treasury”) and the IRS announced that they intended to
issue Treasury Regulations providing procedures for a foreign corporation to
certify that it is a QFC.  Although these Treasury Regulations were not
issued in 2004, the Treasury and the IRS have confirmed their intention to issue
these Treasury Regulations.  It is expected that these Treasury Regulations
will obligate persons required to file information returns to report a
distribution with respect to a foreign security issued by a foreign corporation
as a dividend from a QFC if the foreign corporation has, among other things,
certified under penalties of perjury that the foreign corporation was not a
“passive foreign investment company” for the taxable year during which the
foreign corporation paid the dividend or for the preceding taxable year.





We
do not believe that we were a “passive foreign investment company” for the
taxable year ended June 30, 2008.   (See more detailed discussion at
“Additional Rules that May Apply to U.S. Holders” below).  There can be no
assurance that the IRS will not challenge the determination made by us
concerning our “passive foreign investment company” status or that we will not
be a “passive foreign investment company” for the current or any future taxable
year.  Accordingly, there can be no assurances that we will be a QFC for
the current or any future taxable year, or that we will be able to certify that
it is a QFC in accordance with the certification procedures issued by the
Treasury and the IRS.





If
we are not a QFC, a dividend paid by us to a U.S. Holder, including a U.S.
Holder that is an individual, estate, or trust, generally will be taxed at
ordinary income tax rates (and not at the preferential tax rates applicable to
long-term capital gains).  The dividend rules are complex, and each U.S.
Holder should consult its own financial advisor, legal counsel, or accountant
regarding the dividend rules.





Distributions
Paid in Foreign Currency





The amount of a
distribution paid to a U.S. Holder in foreign currency generally will be equal
to the U.S. dollar value of such distribution based on the exchange rate
applicable on the date of receipt.  A U.S. Holder that does not convert
foreign currency received as a distribution into U.S. dollars on the date of
receipt generally will have a tax basis in such foreign currency equal to the
U.S. dollar value of such foreign currency on the date of receipt.  Such a
U.S. Holder generally will recognize ordinary income or loss on the subsequent
sale or other taxable disposition of such foreign currency (including an
exchange for U.S. dollars).





-
42 -





Dividends
Received Deduction





Dividends paid on
the Common Shares generally will not be eligible for the “dividends received
deduction.”  The availability of the dividends received deduction is
subject to complex limitations that are beyond the scope of this discussion, and
a U.S. Holder that is a corporation should consult its own financial advisor,
legal counsel, or accountant regarding the dividends received
deduction.





Disposition of Common
Shares





A
U.S. Holder will recognize gain or loss on the sale or other taxable disposition
of Common Shares in an amount equal to the difference, if any, between
(a) the amount of cash plus the fair market value of any property received
and (b) such U.S. Holder’s tax basis in the Common Shares sold or otherwise
disposed of.  Any such gain or loss generally will be capital gain or loss,
which will be long-term capital gain or loss if the Common Shares are held for
more than one year.  Gain or loss recognized by a U.S. Holder on the sale
or other taxable disposition of Common Shares generally will be treated as “U.S.
source” for purposes of applying the U.S. foreign tax credit rules.
  (See more detailed discussion at “Foreign Tax Credit” below).





Preferential tax
rates apply to long-term capital gains of a U.S. Holder that is an individual,
estate, or trust.  There are currently no preferential tax rates for
long-term capital gains of a U.S. Holder that is a corporation.  Deductions
for capital losses and net capital losses are subject to complex limitations.
 For a U.S. Holder that is an individual, estate, or trust, capital losses
may be used to offset capital gains and up to US$3,000 of ordinary income.
 An unused capital loss of a U.S. Holder that is an individual, estate, or
trust generally may be carried forward to subsequent taxable years, until such
net capital loss is exhausted.  For a U.S. Holder that is a corporation,
capital losses may be used to offset capital gains, and an unused capital loss
generally may be carried back three years and carried forward five years from
the year in which such net capital loss is recognized.





Foreign Tax
Credit





A
U.S. Holder who pays (whether directly or through withholding) Canadian income
tax with respect to dividends paid on the Common Shares generally will be
entitled, at the election of such U.S. Holder, to receive either a deduction or
a credit for such Canadian income tax paid.  Generally, a credit will
reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar
basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S.
federal income tax.  This election is made on a year-by-year basis and
applies to all foreign taxes paid (whether directly or through withholding) by a
U.S. Holder during a year.





-
43 -





Complex limitations
apply to the foreign tax credit, including the general limitation that the
credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal
income tax liability that such U.S. Holder’s “foreign source” taxable income
bears to such U.S. Holder’s worldwide taxable income.  In applying this
limitation, a U.S. Holder’s various items of income and deduction must be
classified, under complex rules, as either “foreign source” or “U.S. source.”
 In addition, this limitation is calculated separately with respect to
specific categories of income (including “passive income,” “high withholding tax
interest,” “financial services income,” “general income,” and certain other
categories of income).  Dividends paid by us generally will constitute
“foreign source” income and generally will be categorized as “passive income”
or, in the case of certain U.S. Holders, “financial services income.”
 However, for taxable years beginning after December 31, 2006, the foreign
tax credit limitation categories are reduced to “passive income” and “general
income” (and the other categories of income, including “financial services
income,” are eliminated).  The foreign tax credit rules are complex, and
each U.S. Holder should consult its own financial advisor, legal counsel, or
accountant regarding the foreign tax credit rules.





Information Reporting;
Backup Withholding Tax





Payments made
within the U.S., or by a U.S. payor or U.S. middleman, of dividends on, and
proceeds arising from certain sales or other taxable dispositions of, Common
Shares generally will be subject to information reporting and backup withholding
tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S.
Holder’s correct U.S. taxpayer identification number (generally on Form W-9),
(b) furnishes an incorrect U.S. taxpayer identification number, (c) is
notified by the IRS that such U.S. Holder has previously failed to properly
report items subject to backup withholding tax, or (d) fails to certify,
under penalty of perjury, that such U.S. Holder has furnished its correct U.S.
taxpayer identification number and that the IRS has not notified such U.S.
Holder that it is subject to backup withholding tax.  However, U.S. Holders
that are corporations generally are excluded from these information reporting
and backup withholding tax rules.  Any amounts withheld under the U.S.
backup withholding tax rules will be allowed as a credit against a U.S. Holder’s
U.S. federal income tax liability, if any, or will be refunded, if such U.S.
Holder furnishes required information to the IRS.  Each U.S. Holder should
consult its own financial advisor, legal counsel, or accountant regarding the
information reporting and backup withholding tax rules.





Additional
Rules that May Apply to U.S. Holders





If
we are a “controlled foreign corporation,” or a “passive foreign investment
company” (each as defined below), the preceding sections of this summary may not
describe the U.S. federal income tax consequences to U.S. Holders of the
acquisition, ownership, and disposition of Common Shares.








-
44 -





Controlled Foreign
Corporation





We
generally will be a “controlled foreign corporation” under Section 957 of
the Code (a “CFC”) if more than 50% of the total voting power or the total value
of our outstanding shares are owned, directly or indirectly, by citizens or
residents of the U.S., domestic partnerships, domestic corporations, domestic
estates, or domestic trusts (each as defined in Section 7701(a)(30) of the
Code), each of which own, directly or indirectly, 10% or more of the total
voting power of our outstanding shares (a “10% Shareholder”).





If
we are a CFC, a 10% Shareholder generally will be subject to current U.S.
federal income tax with respect to (a) such 10% Shareholder’s pro rata
share of the “subpart F income” (as defined in Section 952 of the Code) of
the Company and (b) such 10% Shareholder’s pro rata share of our
earnings invested in “United States property” (as defined in Section 956 of
the Code).  In addition, under Section 1248 of the Code, any gain
recognized on the sale or other taxable disposition of Common Shares by a U.S.
Holder that was a 10% Shareholder at any time during the five-year period
ending with such sale or other taxable disposition generally will be treated as
a dividend to the extent of the “earnings and profits” of the Company that are
attributable to such Common Shares.  If we are both a CFC and a “passive
foreign investment company” (as defined below), we generally will be treated as
a CFC (and not as a “passive foreign investment company”) with respect to any
10% Shareholder.





We do not
believe that LiveReel has previously been, or currently is a CFC.  However,
there can be no assurance that we will not be a CFC for the current or any
future taxable year.





Passive Foreign Investment
Company





We
generally will be a “passive foreign investment company” under Section 1297
of the Code (a “PFIC”) if, for a taxable year, (a) 75% or more of our gross
income for such taxable year is passive income or (b) 50% or more of the
assets held by us either produce passive income or are held for the production
of passive income, based on the fair market value of such assets (or on the
adjusted tax basis of such assets, if we are not publicly traded and either is a
“controlled foreign corporation” or makes an election).  “Passive income”
includes, for example, dividends, interest, certain rents and royalties, certain
gains from the sale of stock and securities, and certain gains from commodities
transactions.





For purposes of the
PFIC income test and asset test described above, if we own, directly or
indirectly, 25% or more of the total value of the outstanding shares of another
foreign corporation, we will be treated as if it (a) held a proportionate
share of the assets of such other foreign corporation and (b) received
directly a proportionate share of the income of such other foreign corporation.
 In addition, for purposes of the PFIC income test and asset test described
above, “passive income” does not include any interest, dividends, rents, or
royalties that are received or accrued by us from a “related person” (as defined
in Section 954(d)(3) of the Code), to the extent such items are properly
allocable to the income of such related person that is not passive income.





-
45 -




We
do not believe that LiveReel has previously been, or currently are a PFIC
 However, there can be no assurance that the IRS will not challenge our
determination concerning our PFIC status or that we will not be a PFIC for the
current or any future taxable year.





Default
PFIC Rules Under Section 1291 of the Code





If
we are a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the
acquisition, ownership, and disposition of Common Shares will depend on whether
such U.S. Holder makes an election to treat the Company as a “qualified electing
fund” or “QEF” under Section 1295 of the Code (a “QEF Election”) or a
mark-to-market election under Section 1296 of the Code (a “Mark-to-Market
Election”).  A U.S. Holder that does not make either a QEF Election or a
Mark-to-Market Election will be referred to in this summary as a “Non-Electing
U.S. Holder.”





A
Non-Electing U.S. Holder will be subject to the rules of Section 1291 of
the Code with respect to (a) any gain recognized on the sale or other
taxable disposition of Common Shares and (b) any excess distribution paid
on the Common Shares.  A distribution generally will be an “excess
distribution” to the extent that such distribution (together with all other
distributions received in the current taxable year) exceeds 125% of the average
distributions received during the three preceding taxable years (or during a
U.S. Holder’s holding period for the Common Shares, if shorter).





Under
Section 1291 of the Code, any gain recognized on the sale or other taxable
disposition of Common Shares, and any excess distribution paid on the Common
Shares, must be ratably allocated to each day in a Non-Electing U.S. Holder’s
holding period for the Common Shares.  The amount of any such gain or
excess distribution allocated to prior years of such Non-Electing U.S. Holder’s
holding period for the Class Common Shares (other than years prior to the
first taxable year of the Company during such Non-Electing U.S. Holder’s holding
period and beginning after December 31, 1986 for which we was not a PFIC) will
be subject to U.S. federal income tax at the highest tax applicable to ordinary
income in each such prior year.  A Non-Electing U.S. Holder will be
required to pay interest on the resulting tax liability for each such prior
year, calculated as if such tax liability had been due in each such prior year.
 Such a Non-Electing U.S. Holder that is not a corporation must treat any
such interest paid as “personal interest,” which is not deductible.  The
amount of any such gain or excess distribution allocated to the current year of
such Non-Electing U.S. Holder’s holding period for the Common Shares will be
treated as ordinary income in the current year, and no interest charge will be
incurred with respect to the resulting tax liability for the current
year.





-
46 -





If
we are a PFIC for any taxable year during which a Non-Electing U.S. Holder holds
Common Shares, we will continue to be treated as a PFIC with respect to such
Non-Electing U.S. Holder, regardless of whether we cease to be a PFIC in one or
more subsequent years.  A Non-Electing U.S. Holder may terminate this
deemed PFIC status by electing to recognize gain (which will be taxed under the
rules of Section 1291 of the Code discussed above) as if such Common Shares
were sold on the last day of the last taxable year for which the Company was a
PFIC.


QEF
Election





A
U.S. Holder that makes a QEF Election generally will not be subject to the rules
of Section 1291 of the Code discussed above.  However, a U.S. Holder
that makes a QEF Election will be subject to U.S. federal income tax on such
U.S. Holder’s pro rata share of (a) the net capital gain of the Company,
which will be taxed as long-term capital gain to such U.S. Holder, and
(b) and the ordinary earnings of the Company, which will be taxed as
ordinary income to such U.S. Holder.  Generally, “net capital gain” is the
excess of (a) net long-term capital gain over (b) net short-term
capital loss, and “ordinary earnings” are the excess of (a) “earnings and
profits” over (b) net capital gain.  A U.S. Holder that makes a QEF
Election will be subject to U.S. federal income tax on such amounts for each
taxable year in which we are a PFIC, regardless of whether such amounts are
actually distributed to such U.S. Holder by us.  However, a U.S. Holder
that makes a QEF Election may, subject to certain limitations, elect to defer
payment of current U.S. federal income tax on such amounts, subject to an
interest charge.  If such U.S. Holder is not a corporation, any such
interest paid will be treated as “personal interest,” which is not deductible.





A
U.S. Holder that makes a QEF Election generally also (a) may receive a
tax-free distribution from us to the extent that such distribution represents
“earnings and profits” of the Company that were previously included in income by
the U.S. Holder because of such QEF Election and (b) will adjust such U.S.
Holder’s tax basis in the Common Shares to reflect the amount included in income
or allowed as a tax-free distribution because of such QEF Election.  In
addition, a U.S. Holder that makes a QEF Election generally will recognize
capital gain or loss on the sale or other taxable disposition of Common
Shares.





-
47 -





The procedure for
making a QEF Election, and the U.S. federal income tax consequences of making a
QEF Election, will depend on whether such QEF Election is timely.  A QEF
Election will be treated as “timely” if such QEF Election is made for the first
year in the U.S. Holder’s holding period for the Common Shares in which we were
a PFIC.  A U.S. Holder may make a timely QEF Election by filing the
appropriate QEF Election documents at the time such U.S. Holder files a U.S.
federal income tax return for such first year.  However, if we were a PFIC
in a prior year, then in addition to filing the QEF Election documents, a U.S.
Holder must elect to recognize (a) a gain (which will be taxed under the
rules of Section 1291 of the Code discussed above) as if the Common Shares
were sold on the qualification date or (b) if we were also a CFC, such U.S.
Holder’s pro rata share of the post-1986 “earnings and profits” of the Company
as of the qualification date.  The “qualification date” is the first day of
the first taxable year in which we were a QEF with respect to such U.S. Holder.
 The election to recognize such gain or “earnings and profits” can only be
made if such U.S. Holder’s holding period for the Common Shares includes the
qualification date.  By electing to recognize such gain or “earnings and
profits,” such U.S. Holder will be deemed to have made a timely QEF Election.
 In addition, under very limited circumstances, a U.S. Holder may make a
retroactive QEF Election if such U.S. Holder failed to file the QEF Election
documents in a timely manner.





A
QEF Election will apply to the taxable year for which such QEF Election is made
and to all subsequent taxable years, unless such QEF Election is invalidated or
terminated or the IRS consents to revocation of such QEF Election.  If a
U.S. Holder makes a QEF Election and, in a subsequent taxable year, we cease to
be a PFIC, the QEF Election will remain in effect (although it will not be
applicable) during those taxable years in which we are not a PFIC.
 Accordingly, if we become a PFIC in another subsequent taxable year, the
QEF Election will be effective and the U.S. Holder will be subject to the QEF
rules described above during any such subsequent taxable year in which we
qualify as a PFIC.  In addition, the QEF Election will remain in effect
(although it will not be applicable) with respect to a U.S. Holder even after
such U.S. Holder disposes of all of such U.S. Holder’s direct and indirect
interest in the Common Shares.  Accordingly, if such U.S. Holder reacquires
an interest in the Company, such U.S. Holder will be subject to the QEF rules
described above for each taxable year in which we are a PFIC.





Each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding
the availability of, and procedure for making, a QEF Election.  U.S.
Holders should be aware that there can be no assurance that we will satisfy
record keeping requirements that apply to a QEF, or that we will supply U.S.
Holders with information that such U.S. Holders require to report under the QEF
rules, in event that we are a PFIC and a U.S. Holder wishes to make a QEF
Election.





-
48 -





Mark-to-Market
Election





A
U.S. Holder may make a Mark-to-Market Election only if the Common Shares are
marketable stock.  The Common Shares generally will be “marketable stock”
if the Common Shares are regularly traded on (a) a national securities
exchange that is registered with the Securities and Exchange Commission,
(b) the national market system established pursuant to section 11A of the
Securities and Exchange Act of 1934, or (c) a foreign securities exchange
that is regulated or supervised by a governmental authority of the country in
which the market is located, provided that (i) such foreign exchange has
trading volume, listing, financial disclosure, and other requirements and the
laws of the country in which such foreign exchange is located, together with the
rules of such foreign exchange, ensure that such requirements are actually
enforced and (ii) the rules of such foreign exchange ensure active trading
of listed stocks.





A
U.S. Holder that makes a Mark-to-Market Election generally will not be subject
to the rules of Section 1291 of the Code discussed above.  However, if
a U.S. Holder makes a Mark-to-Market Election after the beginning of such U.S.
Holder’s holding period for the Common Shares and such U.S. Holder has not made
a timely QEF Election, the rules of Section 1291 of the Code discussed
above will apply to certain dispositions of, and distributions on, the Common
Shares.





A
U.S. Holder that makes a Mark-to-Market Election will include in ordinary
income, for each taxable year in which we are a PFIC, an amount equal to the
excess, if any, of (a) the fair market value of the Common Shares as of the
close of such taxable year over (b) such U.S. Holder’s tax basis in such
Common Shares.  A U.S. Holder that makes a Mark-to-Market Election will be
allowed a deduction in an amount equal to the lesser of (a) the excess, if
any, of (i) such U.S. Holder’s adjusted tax basis in the Common Shares over
(ii) the fair market value of such Common Shares as of the close of such
taxable year or (b) the excess, if any, of (i) the amount included in
ordinary income because of such Mark-to-Market Election for prior taxable years
over (ii) the amount allowed as a deduction because of such Mark-to-Market
Election for prior taxable years.





A
U.S. Holder that makes a Mark-to-Market Election generally also will adjust such
U.S. Holder’s tax basis in the Common Shares to reflect the amount included in
gross income or allowed as a deduction because of such Mark-to-Market Election.
 In addition, upon a sale or other taxable disposition of Common Shares, a
U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income
or loss (not to exceed the excess, if any, of (a) the amount included in
ordinary income because of such Mark-to-Market Election for prior taxable years
over (b) the amount allowed as a deduction because of such Mark-to-Market
Election for prior taxable years).





A
Mark-to-Market Election applies to the taxable year in which such Mark-to-Market
Election is made and to each subsequent taxable year, unless the Common Shares
cease to be “marketable stock” or the IRS consents to revocation of such
election.  Each U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the availability of, and procedure for making,
a Mark-to-Market Election.





-
49 -





Other
PFIC Rules





Under
Section 1291(f) of the Code, the IRS has issued proposed Treasury
Regulations that, subject to certain exceptions, would cause a U.S. Holder that
had not made a timely QEF Election to recognize gain (but not loss) upon certain
transfers of Common Shares that would otherwise be tax-deferred (e.g., gifts and
exchanges pursuant to corporate reorganizations).  However, the specific
U.S. federal income tax consequences to a U.S. Holder may vary based on the
manner in which Common Shares are transferred.





Certain additional
adverse rules will apply with respect to a U.S. Holder if we are a PFIC,
regardless of whether such U.S. Holder makes a QEF Election.  For example
under Section 1298(b)(6) of the Code, a U.S. Holder that uses Common Shares
as security for a loan will, except as may be provided in Treasury Regulations,
be treated as having made a taxable disposition of such Common Shares.





The PFIC rules are
complex, and each U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the PFIC rules and how the PFIC rules may
affect the U.S. federal income tax consequences of the acquisition, ownership,
and disposition of Common Shares.







This
summary is of a general nature only and is not intended to be relied on as legal
or tax advice or representations to any particular investor.  Consequently,
potential investors are urged to seek independent tax advice in respect of the
consequences to them of the acquisition of common stock having regard to their
particular circumstances.




(F)
DIVIDEND AND PAYING AGENTS




Not
applicable





-
50 -





(G)
STATEMENT BY EXPERTS




Not
applicable




(H)
DOCUMENTS ON DISPLAY




The documents
concerning the Company referred to in this Annual Report may be inspected at the
Company's office at 3400 One First Canadian Place, C/O Bennett Jones LLP, PO Box
130, Toronto, Ontario, Canada, M5X 1A4.  The Company may be reached at
(416) 607-6793. Documents filed with the Securities and Exchange Commission
("SEC") may also be read and copied at the SEC's public reference room at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms.




The Company is
subject to reporting requirements as a “reporting issuer” under applicable
securities legislation in Canada and as a “foreign private issuer” under the
Securities Exchange Act of 1934 (the “Exchange Act”). As a result, we must file
periodic reports and other information with the Canadian securities regulatory
authorities and the Securities and Exchange Commission.





A
copy of this Form 20-F Annual Report and certain other documents referred to in
this Annual Report and other documents filed by us may be retrieved from the
system for electronic document analysis and retrieval (“SEDAR”) system
maintained by the Canadian securities regulatory authorities at www.sedar.ca or
from the Securities and Exchange Commission electronic data gathering, analysis
and retrieval system(“EDGAR”) at www.sec.gov/edgar.




(I)
SUBSIDIARY INFORMATION




The documents
concerning the Company’s subsidiaries referred to in this Annual Report may be
inspected at the Company's office at 3400 One First Canadian Place, C/O Bennett
Jones LLP, PO Box 130, Toronto, Ontario, Canada, M5X 1A4.






ITEM 11 - QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK






We
are exposed to foreign currency exchange rates.  We do not use derivative
financial instruments.




The Company‘s
surplus funds are held with Canadian banks in US and Canadian currencies in
interest earning accounts.




The Company has no
debt instruments subject to interest payments, sales contracts, swaps,
derivatives, or forward agreements or contracts, or inventory.




The Company has no
currency or commodity contracts, and the Company does not trade in such
instruments.




-
51 -








The Company
periodically accesses the capital markets with the issuance of new shares to
fund operating expenses and new projects,






ITEM 12 - DESCRIPTION OF
SECURITIES OTHER THAN EQUITY SECURITIES





Not required since
this is an annual report.





PART II






ITEM 13 - DEFAULTS, DIVIDEND
ARREARAGES AND DELINQUENCIES




None.






ITEM 14 - MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS




No
modifications or qualifications have been made to the instruments defining the
rights of the holders of our Common Shares and no material amount of assets
securing our securities has been withdrawn or substituted by us or anyone else
(other than in the ordinary course of business).





As
explained earlier, we have moved the jurisdiction of our company from Ontario
Business Corporation Act to Canada Business Corporation act and have revised the
by-laws which govern rights of the security holders. We do not believe that
these changes have materially affected or modified the said rights.







ITEM 15T CONTROLS AND
PROCEDURES




A.    Evaluation
of Our Disclosure Controls and Internal Controls




Under the
supervision and with the participation of our senior management, including our
Chief Executive Officer and Chief Financial Officer, we conducted an evaluation
of the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended, (the “Exchange Act”) as of the end of the
period covered by this annual report (the “Evaluation Date”).  Based
upon this evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that, as of the Evaluation Date, the Company's disclosure controls and
procedures were effective such that the information relating to the Company,
including our consolidated subsidiary, required to be disclosed in our SEC
reports (i) is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms, and (ii) is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.





-
52 -





B.  
Management’s Annual Report on Internal Control over Financial
Reporting





Our internal
control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes of accounting principles generally
accepted in Canada.  It is our management’s responsibility to
establish and maintain adequate internal control over financial reporting for
the Company.  Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements.  Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives.  In evaluating the effectiveness of our internal control
over financial reporting, our management used the criteria set for the by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in
Internal Control – Integrated Framework.


This annual report
does not include and attestation report of our registered public accounting firm
regarding internal control over financial reporting.  Management’s
report was not subject to attestation by our registered public accounting firm
pursuant to temporary rules of the SEC that permit us to provide only
management’s report in this report.





C.  
Changes in Internal Controls




There have been no
changes in the Company's internal controls over financial reporting that
occurred during the year ended June 30, 2009 that have materially affected or
are reasonably likely to materially affect the Company’s internal control over
financial reporting.




ITEM 16[RESERVED]







ITEM 16A AUDIT COMMITTEE
FINANCIAL EXPERTS




As
at the Company’s financial year ended June 30, 2009, the audit committee
consisted of two directors, one of whom, Ms. Joanne Butterfield Douglas would be
qualified as an audit committee financial expert, as that term is defined under
Section 407 of the Sarbanes-Oxley Act of 2002. Ms. Douglas’s background is
described under Item 6(A) Directors and senior management.  She is an
independent director.


The other member of
the audit committee is Mr. Steve Dabbah.








ITEM 16B CODE OF
ETHICS





On
February 9, 2007, we adopted a Code of Ethics that applies to our principal
executive officer and  principal financial officer, or persons
performing similar functions.  A copy of our Code of Ethics will be
provided to any person requesting same without charge.  To request a
copy of our Code of Ethics, please make a written request to our chief financial
officer, C/O Live Reel Media Corporation, 3400 One First Canadian Place, C/O
Bennett Jones, PO Box 130, Toronto, Ontario, Canada, M5X
1A4.


-
53 -





ITEM 16C PRINCIPAL
ACCOUNTANT’S FEES AND SERVICES




The following
outlines the expenditures for accounting fees for the last two fiscal years
ended:


June 30
      2009
              
              June 30 2008Audit
      Fees
              
              
              20,200
              
              22,500Audit Related
      Fees
              
              
              -
              
              -Tax
      Fees
              
              
              -
              
              9,350All Other
      Fees
              
              
              -
              
              -
  Under our existing
policies, the audit committee must pre-approve all audit and non-audit related
services provided by the auditors.





ITEM 16
D  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES





Not
applicable








ITEM 16
E   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS





Not
applicable




ITEM 16F CHANGE IN
REGISTRANT’S CERTIFYING ACCOUNTANT
 
 Not
applicable
 
 ITEM 16G CORPORATE
GOVERNANCE
 
 Not
applicable




PART III






ITEM 17 - FINANCIAL
STATEMENTS




See the Financial
Statements and Exhibits listed in Item 19 hereof and filed as part of this
Annual Report.  These financial statements were prepared in accordance with
Canadian GAAP and are expressed in Canadian dollars.  Such financial
statements have been reconciled to U.S. GAAP (see Note 17 therein).  For a
history of exchange rates in effect for Canadian dollars as against U.S.
dollars, see Item 3(A) Exchange Rates of this Annual Report.




ITEM 18 - FINANCIAL
STATEMENTS




Not
applicable.





-
54 -





ITEM 19 --
EXHIBITS





(a)Financial
Statements





Description of Document
              Page No.Cover
      Sheet
              F-1Index
              F-2Independent
      Auditor’s Report dated October 21, 2009
              F-3Consolidated
      Balance Sheets as at June 30, 2009 and 2008
              F-4Consolidated
      Statements of Operations and Comprehensive Loss for the Fiscal Years Ended
      June 30, 2009, 2008 and 2007
              F-5Consolidated
      Statements of Cash Flows for the Fiscal Years Ended June 30, 2009, 2008,
      2007
              F-6Consolidated
      Statements of Shareholders’ Equity for the Fiscal Years Ended June 30,
      2009, 2008, 2007
              F-7Notes to
      Consolidated Financial Statements
              F-8





-
55 -





b)Exhibits




The following
documents are filed as part of this Annual Report on Form 20-F




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, 20061.2
            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, 20041.3
            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,
    20061.4
            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, 20041.5
            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, 20041.6
            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, 20041.7
            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, 20041.8
            Certificate
      of amalgmation. 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, 20041.9
            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, 20041.10
            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, 20041.11
            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, 20051.12
            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, 20051.13
            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,





-
56 -








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, 2005.4.(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 hereinby reference to Form S-8
      filed on March 9, 2006.11.
            Code of
      Ethics12
            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, 2006,14(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,








-
57 -





SIGNATURES





The Company hereby
certifies that it meets all of the requirements for filing on Form 20-F and has
duly caused and authorized the undersigned to sign this Annual Report on its
behalf.





Dated at Toronto,
Ontario, Canada, this December 15, 2009








LIVEREEL
MEDIA CORPORATION





Per:  (signed) Gregg
Goldstein


Title:
 Chairman and CEO





-
58 -














LIVEREEL
MEDIA CORPORATION





Consolidated
Financial Statements







For
the Years Ended June 30, 2009 and 2008







(Canadian
Dollars)





F
- 1













INDEX








PageAuditors’
      Report
            F-3Consolidated
      Balance Sheets
            F-4Consolidated
      Statements of Operations and Comprehensive Loss
            F-5Consolidated
      Statements of Cash Flows
            F-6Consolidated
      Statements of Shareholders’ Equity
            F-7Notes to
      Consolidated Financial Statements
            F-8 -
      F-25





F
- 2










Schwartz
Levitsky Feldman llp


CHARTERED
ACCOUNTANTS




TORONTO, MONTREAL,
OTTAWA





AUDITORS’
REPORT








To the Shareholders
of


LiveReel Media
Corporation







We have audited the
consolidated balance sheets of LiveReel Media Corporation as at June 30, 2009
and 2008 and the related consolidated statements of operations and comprehensive
loss, shareholders' equity and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
 
 We conducted our
audits in accordance with Canadian generally accepted auditing standards and
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.
 
 In our opinion,
these consolidated financial statements present fairly, in all material
respects, the financial position of the Company as at June 30, 2009 and 2008 and
the results of its operations and its cash flows for the years then ended, in
accordance with Canadian generally accepted accounting principles which differ
in certain respects from generally accepted accounting principles in the United
States (refer to note 17).
  The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.


/s/ SCHWARTZ
LEVITSKY FELDMAN LLP


“SCHWARTZ
LEVITSKY FELDMAN LLP”









Toronto, Ontario,
Canada Chartered Accountants




October 21,
2009 Licensed Public Accountants









1167 Caledonia Road


Toronto, Ontario M6A 2X1


Tel:  416 785
5353


Fax:  416 785
5663





F
- 3







LiveReel
Media Corporation


Consolidated
Balance Sheets


(Canadian
Dollars)


As
      at June 30
                
                Note
                
                
                2009
                
                
                2008AssetsCurrentCash
                
                
                
                
                $
                398,408
                
                
                $
                1,330,037Other
      assets
                
                
                3
                
                
                
                12,074
                
                
                
                56,362$
                410,482
                
                
                $
                1,386,399LiabilitiesCurrentAccounts
      payable and accrued liabilities
                
                
                4
                
                
                $
                91,307
                
                
                $
                184,54591,307
                
                
                
                184,545Shareholders'
      EquityCapital
      stock
                
                
                5
                
                
                
                6,656,265
                
                
                
                6,656,265Contributed
      surplus
                
                
                
                
                
                
                326,951
                
                
                
                293,370Warrants
                
                
                6
                
                
                
                1,146,081
                
                
                
                1,146,081Deficit
      and comprehensive loss
                
                
                
                
                
                
                (7,810,122
                )
                
                
                (6,893,862
                )319,175
                
                
                
                1,201,854$
                410,482
                
                
                $
                1,386,399Related
      Party Transactions (Note 12)Commitments
      and contingencies (Note 13)


Approved by the
Board  ”Gregg
Goldstein”  Director    ”J. Stephen Wilson”
Director


(signed)                                      (signed)











The
accompanying notes form an integral part of these consolidated financial
statements.





F
- 4





LiveReel
Media Corporation


Consolidated
Statements of Operations and Comprehensive Loss


(Canadian
Dollars)






For
      the Years Ended June 30
            
            Note
            
            
            2009
            
            
            2008
            
            
            2007RevenueInterest
      income
            
            
            
            
            $
            4,901
            
            
            $
            40,012
            
            
            $
            72,697Total
      Revenue
            
            
            
            
            $
            4,901
            
            
            $
            40,012
            
            
            $
            72,697ExpensesLoss
      on investments
            
            
            7
            
            
            $
            854,858
            
            
            $
            -
            
            
            $
            -Foreign
      exchange loss (gain)
            
            
            
            
            
            
            (175,838
            )
            
            
            70,290
            
            
            
            117,336Consulting
      expense
            
            8
      & 12
            
            
            
            93,581
            
            
            
            60,000
            
            
            
            343,256Office
      and general
            
            
            12
            
            
            
            75,911
            
            
            
            115,599
            
            
            
            90,871Professional
      fees
            
            
            
            
            
            
            59,354
            
            
            
            60,645
            
            
            
            114,311Shareholders
      information
            
            
            
            
            
            
            11,610
            
            
            
            10,292
            
            
            
            26,312Bank
      charges and interest
            
            
            
            
            
            
            1,685
            
            
            
            676
            
            
            
            1,560Writedown
      of production advances
            
            
            3
            
            
            
            -
            
            
            
            426,884
            
            
            
            -Production
      advances
            
            
            3
            
            
            
            -
            
            
            
            57,060
            
            
            
            -Amortization
      of investment in film
            
            
            9
            
            
            
            -
            
            
            
            25,000
            
            
            
            -and
      television programsPromotion
            
            
            
            
            
            
            -
            
            
            
            2,377
            
            
            
            3,746921,161
            
            
            
            828,823
            
            
            
            697,392Net
      loss and comprehensive loss for the year
            
            
            $
            (916,260
            )
            
            $
            (788,811
            )
            
            $
            (624,695
            )Net
      loss per share - basic and diluted
            
            
            10
            
            
            $
            (0.07
            )
            
            $
            (0.06
            )
            
            $
            (0.04
            )Weighted
      average number of shares outstanding
            
            
            
            13,721,744
            
            
            
            13,721,744
            
            
            
            14,089,963




The
accompanying notes form an integral part of these consolidated financial
statements.


F
- 5





LiveReel
Media Corporation


Consolidated
Statements of Cash Flows


(Canadian
Dollars)





For
      the Years Ended June 30
              
              2009
              
              
              2008
              
              
              2007Cash
      flows from operating activitiesNet
      loss for year
              
              $
              (916,260
              )
              
              $
              (788,811
              )
              
              $
              (624,695
              )Items
      not affecting cashLoss
      on investments
              
              $
              854,858Stock
      based compensation
              
              
              33,581
              
              
              
              -
              
              
              
              204,578Writedown
      of production advances
              
              
              -
              
              
              
              426,884
              
              
              
              -Amortization
      of investment in film and television programs
              
              
              -
              
              
              
              25,000
              
              
              
              -Effect
      of changes in:Other
      assets
              
              
              44,288
              
              
              
              (47,496
              )
              
              
              (73,819
              )Accounts
      payable and accrued liabilities
              
              
              (93,238
              )
              
              
              70,110
              
              
              
              (2,384
              )(76,771
              )
              
              
              (314,313
              )
              
              
              (496,320
              )Cash
      flows from investing activitiesInvestment
      in exchange traded securities
              
              
              (854,858
              )Redemption
      of treasury bills
              
              
              -
              
              
              
              -
              
              
              
              279,125(854,858
              )
              
              
              -
              
              
              
              279,125Decrease
      in cash
              
              
              (931,629
              )
              
              
              (314,313
              )
              
              
              (217,195
              )Cash,
      beginning of year
              
              
              1,330,037
              
              
              
              1,644,350
              
              
              
              1,861,545Cash,
      end of year
              
              $
              398,408
              
              
              $
              1,330,037
              
              
              $
              1,644,350Supplemental
      DisclosuresInterest
      paid
              
              
              -
              
              
              
              -
              
              
              
              -Income
      taxes paid
              
              
              -
              
              
              
              -
              
              
              
              -





The
accompanying notes form an integral part of these consolidated financial
statements.





F
- 6





LiveReel
Media Corporation


Consolidated
Statement of Shareholders’ Equity


(Canadian
Dollars)





For
the Years Ended June 30, 2009, 2008 and 2007
 Number of
                  Shares
                
                
                Share
                  Capital
                
                
                Warrants
                
                
                Contributed
                  surplus
                
                
                Deficit and
      Comprehensive
                  Loss
                
                
                Shareholders'
                  EquityBalance
      June 30, 2007
                
                
                13,721,744
                
                
                $
                6,656,265
                
                
                $
                1,146,081
                
                
                $
                293,370
                
                
                $
                (6,105,051
                )
                
                $
                1,990,665Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                
                -
                
                
                
                (788,811
                )
                
                
                (788,811
                )Balance
      June 30, 2008
                
                
                13,721,744
                
                
                $
                6,656,265
                
                
                $
                1,146,081
                
                
                $
                293,370
                
                
                $
                (6,893,862
                )
                
                $
                1,201,854Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                
                -
                
                
                
                (916,260
                )
                
                
                (916,260
                )Fair value of
      stock options granted for consulting services
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                33,581
                
                
                
                
                
                
                
                33,581Balance
      June 30, 2009
                
                
                13,721,744
                
                
                $
                6,656,265
                
                
                $
                1,146,081
                
                
                $
                326,951
                
                
                $
                (7,810,122
                )
                
                $
                319,175


The
accompanying notes form an integral part of these consolidated financial
statements.





F
- 7





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008





1. NATURE
OF OPERATIONS





LiveReel Media
Corporation. (the “Company") is a fully integrated entertainment company engaged
in the financing, development, licensing, production and distribution of feature
films, television series, television movies and non-fiction
programming.





The Company was
incorporated in Ontario on March 18, 1997 as a result of an
amalgamation.





The Company changed
its name from Noble House Entertainment Inc. to LiveReel Media Corporation
effective October 12, 2006.  On October 20, 2006, the Company received
regulatory approval for continuance under the jurisdiction of the Canada
Business Corporations Act.








2.  SIGNIFICANT
ACCOUNTING POLICIES





Basis
of Presentation





These consolidated
financial statements are prepared in Canadian dollars in accordance with
accounting principles generally accepted in Canada, which conform, in all
material respects, with accounting principles generally accepted in the United
States, except as disclosed in Note 17.





Principles
of Consolidation





The consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiary – LiveReel Productions Corporation (“LRPC”). The subsidiary changed
its name from Noble House Film & Television Inc. effective August 10,
2006.





LRPC holds titles
to the film properties and distribution rights acquired and is in the business
of licensing, developing, producing and distributing films and television
programs.





All intercompany
balances and transactions have been eliminated on consolidation.





Revenue
Recognition





Revenue from the
licensing of film and television programs is recognized when:




i.
            the Company
      has persuasive evidence of a contractual
  arrangement;


ii.
            the
      production has been completed;


iii.
            the
      contractual delivery arrangements have been
  satisfied;


iv.
            the licensing
      period has commenced and the customer can begin its exploitation,
      exhibition or sale;


v.
            the fee is
      fixed or determinable; and


vi.
            collectibility
      of proceeds is reasonably assured.





Revenue from the
theatrical release of feature films is recognized at the time of exhibition
based on the Company’s participation in box office receipts, provided that all
of the foregoing conditions are met.





F
- 8





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008








2.SIGNIFICANT ACCOUNTING POLICIES(continued)





Cash payments
received are recorded as deferred revenue until all the foregoing conditions of
revenue recognition have been met.





Investment
in Film and Television Programs





Investment in film
and television programs includes the unamortized costs of film and television
programs which have been produced by the Company or for which the Company has
acquired distribution rights, libraries acquired as part of acquisitions of
companies, and film and television programs in progress and in
development.  This investment was impaired in prior years and has been
fully provided for.
 
 For film and
television programs produced by the Company, capitalized costs include all
direct production and financing costs, capitalized interest and production
overhead. For acquired film and television programs, these capitalized costs
consist of minimum guarantee payments to acquire the distribution
rights.
 
 Costs of acquiring
and producing film and television programs and of acquired libraries are
amortized using the individual-film-forecast method, whereby these costs are
amortized. Participation and residual costs are accrued in the proportion that
the current year’s revenue bears to management’s estimate of ultimate revenue at
the beginning of the current year expected to be recognized from the
exploitation, exhibition or sale of the film or television programs. Ultimate
revenue includes estimates over a period not to exceed ten years following the
date of initial release or from the date of delivery of the first episode for
episodic television series. For titles included in acquired libraries, ultimate
revenue includes estimates over a period not to exceed twenty years following
the date of acquisition.
 
 The valuation of
investment in film and television programs is reviewed on a title-by-title
basis, when an event or change in circumstances indicates that the recoverable
value of a film or television program is less than its unamortized cost.
Additional amortization is recorded in the amount by which the unamortized costs
exceed the estimated fair value of the film or television program. The fair
value of the film or television program is determined using management’s future
revenue and cost estimates and a discounted cash flow approach. Estimates of
future revenue involve measurement uncertainty and it is therefore possible that
reductions in the carrying value of investment in film and television programs
may be required as a consequence of changes in management’s future revenue
estimates.


F
- 9








LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008





2.SIGNIFICANT ACCOUNTING POLICIES(continued)





Foreign
Currency Translation





The functional
currency of the Company is the Canadian dollar.  Monetary assets and
liabilities are translated at exchange rates in effect at the balance sheet
date.  Non-monetary assets are translated at the historical exchange
rates which were in effect when they were acquired.  Revenue and
expenses are translated at the approximate average rate of exchange for the
year, except that amortization is translated at the rates used to translate
related assets. The resulting gains or losses on translation are included in
operations.


Accumulated
Other Comprehensive Income (AOCI)





Effective July 1,
2007, AOCI is included on the consolidated balance sheet as a separate component
of shareholders’ equity and includes net unrealised gains and losses on short
term investments net of applicable taxes, held as available for
sale.  The Company does not have any such investments.





Future
Income Taxes





The Company follows
the asset and liability method of accounting for income taxes.  Under
this method, future income tax assets and liabilities are determined based on
temporary differences between financial reporting and tax bases of assets and
liabilities, as well as for the benefit of losses available to be carried
forward to future years for tax purposes.  Future income tax assets
and liabilities are measured using enacted or substantively enacted tax rates
and laws that will be in effect when the differences are expected to
reverse.  Future income tax assets are recognized in the financial
statements if realization is considered more likely than not.  A
valuation allowance against future tax assets is provided to the extent that the
realization of these future tax assets is not more likely than
not.


Stock-Based
Compensation Plan





The Company follows
a fair value based method of accounting for all Stock-based Compensation and
Other Stock-based Payments to employees and non-employees.  The fair
value of all share purchase options is expensed over their vesting period with a
corresponding increase to contributed surplus. Upon exercise of share purchase
options, the consideration paid by the option holder, together with the amount
previously recognized in contributed surplus, is recorded as an increase to
share capital. The Company uses the Black-Scholes option valuation model to
calculate the fair value of share purchase options at the date of
grant.





The market value of
the Company’s share on the date of issuance of shares under any stock
compensation plan is considered as fair value of the shares issued.




F
- 10





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008








2.SIGNIFICANT ACCOUNTING POLICIES(continued)





Loss
Per Share





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.





Use
of estimates





The preparation of
financial statements in conformity with Canadian generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the period.  Significant estimates
include recoverability of assets and fair value of stock based
compensation.  Actual results could differ from those
estimates.




Newly
Adopted Accounting Policies
  Accounting
Changes





Effective January
1, 2008, the Company adopted the revised CICA Section 1506, “Accounting changes”
which require that (i) voluntary changes in accounting policies can be made if,
and only if, the changes result in more reliable and relevant information (ii)
changes in accounting policies are accompanied by disclosure of prior period
amounts and justification for the changes, and (iii) for changes in
estimates, the nature and amount of the change should be disclosed. The Company
has not made any voluntary change in accounting policies since the adoption of
the revised Standard.





F
- 11





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008








2.SIGNIFICANT ACCOUNTING POLICIES(continued)




Financial
Instruments
 
 In January 2005,
the CICA issued Handbook Section 3855, Financial Instruments – Recognition and
Measurement; and Section 3865, Hedges. The standard is effective for interim and
annual financial statements relating to fiscal year beginning on or after
October 1, 2006, specifically July 1, 2007 for this Company.  The standards
require presentation of separate statement of comprehensive income under
specific circumstances.  Derivative financial instruments will be recorded
in the balance sheet at fair value and the changes in fair value of derivatives
designated as cash flow hedges will be reported in comprehensive income. 
The standards have no effect on the company financial statements.
 
 In December 2006,
the CICA issued two new handbook sections 3862 “Financial instruments –
Disclosures” and 3863 “Financial instruments – Presentation”. These sections
replace the handbook section 3861 “Financial instruments- Disclosure and
Presentation.” These new sections enhance disclosure requirements on the nature
and extent of risks arising from financial instruments and how the entity
manages those risks. These new standards are effective for fiscal years
beginning on or after October 1, 2007. The standards have no effect on the
company financial statements.
 
 General
standards of financial statement presentation
 
 In May 2007, the
Accounting Standards Board amended Section 1400 “General Standards of Financial
Statement Presentation” to change guidance on management’s responsibility to
assess and disclose the Company’s ability  to continue as a going concern
The amendments are effective for fiscal years beginning on or after January 1,
2008. The standards have no
effect on the company financial statements.
 
 Capital
Disclosures
 
 Section 1535
establishes standards for disclosing information about a company’s capital and
how it is managed.  The Company’s disclosure should include
information about its objectives, policies and processes for managing capital,
quantitative data about what the Company regards as capital, whether the Company
has complied with any capital requirements and if it has not complied, the
consequences of such non-compliance. (see Note 16)


F
- 12


LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008








2.      SIGNIFICANT ACCOUNTING POLICIES(continued)
 
 Inventories
 
 CICA Handbook
Section 3031, Inventories, replaces Section 3030 and establishes new standards
for the measurement and disclosure of inventories.  The main features of
the new Section are as follows:
 
 ·
              Measurement
      of inventories at the lower of cost and net realizable
    value
 ·
              Consistent
      use of either first-in, first-out or a weighted average cost formula to
      measure cost
 ·
              Reversal of
      previous write-downs to net realizable value when there is a subsequent
      increase to the value of
inventories.
 
 This standard is
effective for interim and annual financial statements relating to fiscal years
beginning on or after January 1, 2008.  The standards have no effect on the
company financial statements.
 
 Recent
accounting pronouncements
 
 (a )      
Adoption of International Financial Reporting Standards
 
 In
February 2008, the CICA Accounting Standards Board confirmed that publicly
accountable companies will be required to prepare interim and annual financial
statements under International Financial Reporting Standards (“IFRS”) for fiscal
years beginning on or after January 1, 2011. Management is currently assessing
the impact of adopting IFRS and has not yet determined its effect on the
Company’s financial statements.
  (b)      
Goodwill and intangible assets
 
 In February 2008,
the CICA issued Section 3064 “Goodwill and Intangible Assets”, which replaces
Section 3062 “Goodwill and Other Intangible Assets”, and results in the
withdrawal of Section 3450 “Research and Development Costs”, and Emerging Issues
Committee Abstract 27 “Revenues and Expenditures during the Pre-operating
Period”, and amendments to Accounting Guideline No 11 “Enterprises in the
Development Stage”.  The standard provides guidance on the recognition of
intangible assets in accordance with the definition of an asset and the criteria
for asset recognition as well as clarifying the application of the concept of
matching revenues and expenses, whether these assets are separately acquired or
internally developed.  This standard applies to interim and annual
financial statements relating to fiscal years beginning on or after October 1,
2008.  Earlier adoption is encouraged.  The Company has not yet
determined the impact of this standard on its financial statements.
  (c)      
Business Combinations
 
 In
January 2009 the CICA issued Section 1582, "Business Combinations".  This
section is effective January 1, 2011 and applies prospectively to business
combinations for which the acquisition date is on or after the first annual
reporting period of the Corporation beginning on   or after January 1,
2011.  Early adoption is permitted.   This section replaces
Section 1581.   "Business Combinations" and harmonizes the Canadian
standards with International Financial Reporting Standards (IFRS).  The
Company does not anticipate the adoption of this standard will impact the
financial results.


F
- 13





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008
  2.    
SIGNIFICANT ACCOUNTING
POLICIES(continued)
 
 (d)      
Consolidated Financial Statements
  CICA handbook
Section 1601, "Consolidated Financial Statements" and Handbook Section
1602,  "Non-controlling Interests" replaces CICA Handbook Section 1600.
Consolidated Financial  Statements.  Section 1601 establishes
standards for the presentation of consolidated financial.  Section 1602
established accounting for a non-controlling interest in subsidiary in
consolidated financial statements subsequent to the business combination. 
Section 1602 is equivalent to the corresponding section of the International
Financial Reporting Standard IAS 27, "Consolidated and Separate Financial
Statements". These standards are effective for the Company for interim and
annual financial statements beginning January 1, 2011.  The Company has not
yet determined the impact of the adoption of these standards on its
financial statements.






3. ACCOUNTS
RECEIVABLE AND PREPAYMENTS




2009
              
              
              2008Due from
      Production companies
              (a)
              
              $
              -
              
              
              $
              20,179Taxes
      recoverable
              
              
              11,394
              
              
              
              11,049Deposits and
      prepayments
              (b)
              
              
              680
              
              
              
              25,134$
              12,074
              
              
              $
              56,362





(a)
              Represented
      funds advanced to multiple production companies, owned by a former officer
      and director of the Company and a former executive of the Company’s
      subsidiary. The Company and its wholly owned subsidiary entered into
      various agreements to provide financing, license scripts and screen plays
      and handle global distribution for these entities. These funds were
      provided to the production companies and are secured by the film elements
      and are repayable at various interest rates and are generally due on
      demand.
 
 In
October and November 2007, the various production companies to whom advances had
been made and their distribution partners received advances and or sold the
rights to various territories that were lower than previous
estimates.  As a result, management revised its estimated future
repayments from these production companies downward and wrote down the advances
to the production companies to a net recoverable level of $100,000 and recorded
a charge of $376,910 in the three months ended September 30,
2007.    In the three months ended December 31, 2007, the
Company made additional advances totalling $57,060 and expensed these amounts in
the period.
 
 In
April 2008, the Company received payment of $29,840 from distributing one of the
films which was applied to reduce this receivable.  After evaluating
the future expected proceeds from various unsold territories of the properties
the production companies hold, the Company wrote off $49,974 of the production
advances effective June 30, 2008, reducing the balance to $20,179 at June 30,
2008.
  In
the first quarter of fiscal 2009, the Company received the remaining $20,179
outstanding at June 30, 2008.





F
- 14





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008










3.          
OTHER
ASSETS(continued)
 
 (b) The Company
paid an advance of US $ 7,500 in October 2005 to a law firm to defend itself
against alegal action initiated by an individual in Florida. The law
firm filed a motion to dismiss the case against the company in October
2005. This case was dismissed in April, 2007.  The balance of the
advance after accounting for the legal costs charged up to June 30, 2008 which
was previously held against future legal costs of approximately $1,900 is
included in deposits and prepayments.  This amount was received in the
three months ended December 31, 2008.
 
 The balance of the
deposits and prepayments at June 30, 2008 are for an extension of the Company’s
director’s and officer’s insurance policy entered into April 2008, which
extended the coverage to December 2008.  The costs of the policy are
expensed on a straight line basis over the life of the policy.  The
Company extended the insurance coverage for the balance of fiscal 2009 during
the last six months of the fiscal year at the end.  It obtained
additional directors and officer’s insurance coverage through the end of fiscal
2010, but this amount was not prepaid at year end.
 
 The final element
in the balance as of June 30, 2009, relates to an advance made by the Company of
$680 as a retainer for a lawyer to assist in possible future regulatory
filings.
   4.          
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 
 2009
              
              
              2008Accounts  payable
              (a)
              
              $
              40,767
              
              
              $
              129,505Accruals
              (b)
              
              
              18,000
              
              
              
              22,500Production
      advances
              (c)
              
              
              32,540
              
              
              
              32,540$
              91,307
              
              
              $
              184,545
   (a)
              As at June
      30, 2009 and 2008, accounts payable were regular trade payables incurred
      in the normal course of business, primarily for legal fees incurred during
      the year.  In addition, accounts payable at June 30, 2008
      include $31,000 due to the Chief Executive Officer for reimbursable office
      and general expenses.
  (b)
              Accruals at
      June 30, 2009 and 2008 are for estimated audit
  fees.
  (c)
              Production
      advances were received from two production companies towards script and
      screen play development. A former director and officer of the company and
      a former executive of its subsidiary are among the owners of one of the
      production companies, which advanced $26,540 (2008:
    $26,540).


F
- 15





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008
  5.           CAPITAL
STOCK
 
 (a)  Authorized:  Unlimited
number of common shares
  (b) Issued:
 2009
                  
                  
                  2008Common
                  
                  
                  
                  
                  
                  CommonShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  AmountBeginning
      of year
                  
                  
                  13,721,744
                  
                  
                  $
                  6,656,265
                  
                  
                  
                  13,721,744
                  
                  
                  $
                  6,656,265End
      of Year
                  
                  
                  13,721,744
                  
                  
                  $
                  6,656,265
                  
                  
                  
                  13,721,744
                  
                  
                  $
                  6,656,265
  (c) Stock
Options:
  On February 9,
2007, 1,000,000 options were granted to management by the board of directors.
The options granted were issued at a strike price of US$0.15 per share, expiring
on February 9, 2012 and were fully vested.  On the same date, the
board of directors increased the number of options available to be granted under
the plan to 3,000,000.  The board of directors of the Company has full
discretion to decide the option price and vesting periods.  The
options are convertible into an equal number of common shares of the
Company.
  As a result of the
granting of the options described above, the fair value of these options has
been estimated, on February 9, 2007, the date of the grant, using a
Black-Scholes option price model with the following assumptions:
 
 Risk free
      interest rate
                  4.5%Expected
      dividend
                  nilExpected
      volatility
                  146%Expected
      life
                  1826
      daysMarket
      price
                  US$0.15
 
 The amount of
$136,179 has been accounted for as a stock compensation expense in the year
ended June 30, 2007.
  On July 22, 2008,
the board of directors agreed to increase the size of the option pool to
4,000,000 options.  In addition, the 900,000 options previously issued
to the Chief Executive Officer were cancelled.   Finally, a new
grant of 3,900,000 options to the Chief Executive Officer, at a strike price of
$0.01 per option, expiring July 22, 2013, and fully vested was
approved.  All of these options are outstanding as of June 30,
2009.





F
- 16





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008




5.          
CAPITAL STOCK(continued)
  As a result of the
granting of the options described above, the fair value of these options has
been estimated, on July 22, 2008, the date of the grant, using a Black-Scholes
option price model with the following assumptions:
 
 Risk free
      interest rate
              3.25%Expected
      dividend
              nilExpected
      volatility
              129%Expected
      life
              1826
      daysMarket
      price
              US$0.01The amount of
      $33,581
  has been accounted
for as a stock compensation expense included in consulting expense in the
quarter ended September 30, 2008.
  The following table
summarizes the continuity of the Company's stock options:
  WeightedNumber
      of
              
              
              averageOptions
              
              
              exercise
      priceOutstanding,
      June 30, 2007 and 2008
              
              
              1,000,000
              
              
              $
              0.15Granted
              
              
              3,900,000
              
              
              $
              0.01Cancelled
              
              
              (900,000
              )
              
              $
              0.15Outstanding,
      June 30, 2009
              
              
              4,000,000
              
              
              $
              0.01
 
 As at June 30,
2009, the following stock options were outstanding:
  Outstanding
                
                
                ExercisableWeightedAverage
                
                
                Weighted
                
                
                
                
                
                WeightedRange
      of
                
                
                
                
                
                Remaining
                
                
                Average
                
                
                
                
                
                AverageExercise
      Prices
                
                
                Number
      of
                
                
                Contractual
      Life
                
                
                Exercise
      Price
                
                
                Number
      of
                
                
                Exercise
      Price$
                
                
                Shares
                
                
                (Years)
                
                
                
                
                
                Shares
                
                
                
                $0.15
                
                
                
                100,000
                
                
                
                2.6
                
                
                
                0.15
                
                
                
                100,000
                
                
                
                0.150.01
                
                
                
                3,900,000
                
                
                
                4.1
                
                
                
                0.01
                
                
                
                3,900,000
                
                
                
                0.014,000,000
                
                
                
                4.1
                
                
                
                0.01
                
                
                
                4,000,000
                
                
                
                0.01


F
- 17








LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008






6.
              WARRANTS
 
 As
      at June 30,
              
              2009
              
              
              
              
              
              2008#
      of warrants
              
              
              Fair
      value
              
              
              # of
      warrants
              
              
              Fair
      valueIssued and
      outstanding at end of year
              
              
              6,193,600
              
              
              $
              1,146,081
              
              
              
              6,193,600
              
              
              $
              1,146,081
 
  (a)
              On July 22,
      2008, the conversion price of all previously issued warrants was reduced
      to US$0.01 per warrant and the expiry date was extended to November 30,
      2010 by the board of directors of the Company.  There is no
      financial impact related to this
transaction.
  (b)
              The shares
      issuable upon exercise of the warrants issued are restricted in terms of
      their saleability in accordance with the regulations of the U.S.
      Securities and Exchange Commission.
 
 7.          
LOSS ON SHORT TERM INVESTMENTS
 
 During the year
ended June 30, 2009, the Company invested excess cash in certain exchange traded
securities.  This resulted in a loss of approximately $855,000 being
realized during the year.  In addition, all of the transactions
entered into were settled by quarter end and are reflected in the ending cash
balance of the Company.
 
 8.           CONSULTING
EXPENSE
 
 Consulting expense
relates to stock based compensation described below and the fees described in
Note 12.
 
 The stock based
compensation relates to the fair value of 1,000,000 shares issued under the
Company’s 2006 Consultant Stock Compensation Plan for services that were to be
performed by three consultants through December 31, 2006.  On March 6,
2006, the board of directors of the Company authorized the issuance, including
100,000 shares issued to the former director and Chief Financial Officer for his
services under a consulting contract.  At the time of issuance, the
shares were valued at fair market value of $228,000, and this amount was to be
amortized on a straight line basis over the 12 months ended December 31,
2006.  This resulted in a charge of $114,001 being amortized in the
year ended June 30, 2006.  The balance of $113,999 was fully amortized
in the year ended June 30, 2007 and is included in consulting expense during
that year.
 
 On December 15,
2006, the Company cancelled 800,000 shares issued to a consultant due to a lack
of performance of duties.  The Company recorded a reduction in share
capital related to the cancellation of shares of $182,400, and an increase in
contributed surplus of previously amortized charges of
$136,800.
 
 Stock based
compensation included in consulting expense is $33,581 in fiscal 2009 (2008 –
nil; 2007 - $113,999).





F
- 18


LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008








9.
              INVESTMENT
      IN FILM AND TELEVISION PROGRAMS
 
 As
at June 30, 2006, Management concluded that its short term business plan would
not include development of any of the previously acquired scripts except one,
King of Sorrow, which was licensed and has now developed into a commercial
feature film. Management therefore decided to fully write off the carrying value
of all scripts except for King of Sorrow. Management carried out evaluation of
its estimated costs and revenue details of King of Sorrow as at June 30, 2007
and concluded that no further amortization was required to the $25,000 carrying
value of this script.
 
 In
October and November 2007, the various production companies to whom advances had
been made and their distribution partners received advances and or sold the
rights to various territories that were lower than previous
estimates.  As a result, management revised its estimated future
repayments from these production companies downward and wrote down the value of
the King of Sorrow script to nil in the three months ended September 30, 2007,
resulting in a $25,000 charge to operations in that period.
 
 10.         LOSS
PER SHARE
 
 Loss per share is
calculated on the weighted average number of common shares outstanding
during the year ended June 30, 2009, which were 13,721,744 shares (2008 -
13,721,744; 2007 – 14,089,963).
 
 The Company had 6.2
million share purchase warrants and 1,000,000 stock options issued and
outstanding as at June 30, 2009. Inclusion of these warrants in the computation
of diluted loss per share would have an anti-dilutive effect on loss per share
and is therefore excluded from the computation. Consequently, there is no
difference between loss per share and diluted loss per share.
  
 11.        
INCOME TAXES
 
 The effective tax
rate of Nil (2008 – Nil; 2007 - Nil) for income taxes varies from the statutory
income tax rate of approximately 36% (2008 – 36%; 2007 - 36%) due to the fact
that no tax recoveries have been recorded for losses incurred, as management has
determined that it is more likely than not that the losses will be utilized
before they expire.
 
 The temporary
differences that give rise to future income tax assets and future income tax
liabilities are presented below:
  2009
                
                2008
                
                
                2007Amounts
      related to tax loss and credit carry forwards
                $
                1,238,000
                
                $
                933,000
                
                
                $
                628,000Net future
      tax assets
                $
                1,238,000
                
                $
                933,000
                
                
                $
                628,000Less:
      valuation allowance
                $
                (1,238,000)
                
                
                (933,000
                )
                
                
                (628,000
                )$
                -
                
                $
                -
                
                
                $
                -


F
- 19





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008








11.        
INCOME TAXES (continued)
 
 The tax effect
(computed by applying the Canadian federal and provincial statutory rates) of
the significant temporary differences, which comprise future tax assets and
liabilities, are as follows:
 
 2009
              
              
              2008Canadian
      statutory income tax rate
              
              
              36.00
              %
              
              
              36.00
              %Income tax
      recovery at statutory income tax rate
              
              $
              (329,854
              )
              
              $
              (287,369
              )Tax effect
      of:Permanent
      differences and other
              
              
              12,090
              
              
              
              -Change
      in valuation allowance
              
              
              317,764
              
              
              
              287,369Income Tax
      Recovery
              
              $
              -
              
              
              $
              -
 
 The Company has
carry forward tax losses of approximately $3.4 million, which may be applied
against future taxable income and expire as detailed below. The benefit arising
from these losses has not been recorded in the financial
statements.
 
 2010
              
              
              212,0002011
              
              
              214,0002015
              
              
              204,0002016
              
              
              503,0002027
              
              
              536,0002028
              
              
              868,0002029
              
              
              902,000$   3,439,000
 
 
 12.         RELATED
PARTY TRANSACTIONS
 
 Transactions with
related parties are incurred in the normal course of business and are measured
at the exchange amount. The transactions recorded approximate the fair market
value of the transactions.  Related party transactions and balances
not disclosed elsewhere in the financial statements are:
 
 i. Consulting fees
include $60,000 paid to the existing Chief Financial Officer for services
rendered during the period (2008 - $ 60,000; 2007 –
$65,000).  Consulting fees in 2007 also include $40,000 of fees paid
to a former director and officer for various services.
 
 ii. Office and general
expenses include approximately $26,000 (2008 - $58,000; 2007 – nil) of
reimbursable expenses to the Chief Executive Officer for various costs including
rent, communications, health benefits, and professional fees.
 
 13.           COMMITMENTS
AND CONTINGENT LIABILITIES
 
 (i) The Company's
wholly owned subsidiary, LRPC has entered into various film distribution, joint
venture and co-producing arrangements under which the Company will co-produce
two films, in addition to its current wholly-owned slate of projects. Under
these arrangements, co-producers, who will own 50% of the net revenue will
contribute half of the development fees to LRPC toward the development of the
projects.  LRPC will utilize these fees, in conjunction with its own, in
order to develop the projects and bring them to maturity. The extent of
financial commitments required under these arrangements cannot be reasonably
determined at this time.


F
- 20





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008








14.         SEGMENTED
INFORMATION





The Company has
three identifiable segments, namely licensing, production and
distribution.





The accounting
policies of the segments are same as those described in Note 2. The Company
evaluates each segment’s performance based on its contribution to consolidated
net earnings. There are no inter-segment charges or transactions. The table
below presents summarised financial information for the fiscal years ended June
30, 2009, 2008 and 2007.





Geographic
Information





The Company
operates from one location in Canada. All its assets are located at this
location.





Business
Segments




2009
              
              
              2008
              
              
              2007Licen.
              
              
              Prod.
              
              
              Dist.
              
              
              Total
              
              
              Licen.
              
              
              Prod.
              
              
              Dist.
              
              
              Total
              
              
              Licen.
              
              
              Prod.
              
              
              Dist.
              
              
              TotalTotal
      revenue
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              
              -
              
              
              
              -
              
              
              
              20,941
              
              
              $
              20,941Earnings
      (losses) from
                operations
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (25,000
              )
              
              
              -
              
              
              
              (483,944
              )
              
              
              (508,944
              )
              
              
              (16,413
              )
              
              
              (16,413
              )
              
              
              4,528
              
              
              $
              (28,298
              )Total
      assets
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              20,179
              
              
              
              20,179
              
              
              
              25,000
              
              
              
              -
              
              
              
              419,850
              
              
              $
              444,850Total
      liabilities
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              $
              32,540Reconciliation
      to
                Financial StatementsRevenueTotal revenue
      from
                reportable segments
              
              
              $
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              20,941Other
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              4,901
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              40,012
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              51,756$
              4,901
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              40,012
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              72,697Net
      LossTotal losses
      from
                reportable segments
              
              
              $
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (508,944
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (28,298
              )Other
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (916,260
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (279,867
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (596,397
              )$
              (916,260
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (788,811
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (624,695
              )AssetsTotal assets
      used for
                reportable segments
              
              
              $
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              20,179
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              444,850Other
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              410,482
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,366,220
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,660,250$
              410,482
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              1,386,399
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              2,105,100LiabilitiesTotal
      liabilities of the
                reportable segments
              
              
              $
              32,540
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              32,540
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              32,540Other
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              58,767
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              152,005
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              81,895$
              91,307
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              184,545
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              114,435










F
- 21








LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008








Geographic
Information





The Company
operates from one location in Canada. All its assets are located at this
location.





Business
Segments


2008
              
              
              2007
              
              
              2006Licen.
              
              
              Prod.
              
              
              Dist.
              
              
              Total
              
              
              Licensing
              
              
              Prod.
              
              
              Dist.
              
              
              Total
              
              
              Licensing
              
              
              Prod.
              
              
              Dist.
              
              
              TotalTotal
      revenue
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              20,941
              
              
              $
              20,941
              
              
              
              -
              
              
              
              -
              
              
              
              7,052
              
              
              $
              7,052Earnings
      (losses) from operations
              
              
              (25,000
              )
              
              
              -
              
              
              
              (483,944
              )
              
              
              (508,944
              )
              
              
              (16,413
              )
              
              
              (16,413
              )
              
              
              4,528
              
              
              
              (28,298
              )
              
              
              (239,060
              )
              
              
              (91,560
              )
              
              
              (144,508
              )
              
              $
              (475,128
              )Total
      assets
              
              
              -
              
              
              
              -
              
              
              
              20,179
              
              
              
              20,179
              
              
              
              25,000
              
              
              
              -
              
              
              
              419,850
              
              
              
              444,850
              
              
              
              25,000
              
              
              
              -
              
              
              
              34,213
              
              
              $
              59,213Total
      liabilities
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              
              32,540
              
              
              
              -
              
              
              $
              32,540Reconciliation
      to Financial StatementsRevenueTotal revenue
      from reportable segments
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              20,941
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              7,052Other
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              40,012
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              51,756
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -$
              40,012
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              72,697
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5,031Net
      LossTotal losses
      from reportable segments
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (508,944
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (28,298
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (475,128
              )Other
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (279,867
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (596,397
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (206,969
              )$
              (788,811
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (624,695
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (682,097
              )AssetsTotal assets
      used for reportable segments
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              20,179
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              444,850
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              366,213Other
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,366,220
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,660,250
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,275,387$
              1,386,399
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              2,105,100
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              2,641,600LiabilitiesTotal
      liabilities of the reportable segments
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              32,540
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              32,540
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              32,540Other
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              152,005
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              81,895
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              84,279$
              184,545
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              114,435
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              116,819




F
- 22





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008







15.        
FINANCIAL INSTRUMENTS AND CONCENTRATION OF RISKS
 
 The company has
classified cash as a held for trading financial instrument and accounts payable
and accrued liabilities as other liabilities.  The fair value of these
financial instruments approximates their carrying value due to their short term
nature.  The Company is exposed in varying degrees to a number of
risks arising from financial instruments. Management’s close involvement in the
operations allows for the identification of risks and variances from
expectations. The Company does not participate in the use of financial
instruments to mitigate these risks and has no designated hedging transactions.
The Board approves and monitors the risk management processes. The Board’s main
objectives for managing risks are to ensure liquidity, the fulfilment of
obligations, the continuation of the Company’s search for new business
participation opportunities, and limited exposure to credit and market risks
while ensuring greater returns on the surplus funds on hand. There were no
changes to the objectives or the process from the prior period.  The types
of risk exposure and the way in which such exposures are managed are as
follows:
 
 (a)
Concentration risk:
 
 Concentration risks
exist in cash and cash equivalents because significant balances are maintained
with one financial institution. The risk is mitigated because the financial
institution is a prime Canadian bank.
 
 (b)
Exchange rate risk:
 
 The operating
results and financial position of the Company are reported in Canadian
dollars.  A significant part of company’s cash is held in US dollars –
approximately 95% of total assets at June 30, 2008 (95% as of June 30,
2008).  The results of the company’s operations are therefore subject
to currency transaction and translation risk.
 
 Comparative foreign
exchange rates as at June 30, 2009 are as follows:
 
 June
      30,2009
              
              2008US Dollar to
      CDN Dollar
              1.1630
              
              1.0197
   16.
              CAPITAL
      DISCLOSURES
 
 The Company is an
Over-The-Counter-Bulletin-Board company currently reviewing investment
opportunities and considers the items included in Shareholder’s Equity as
capital. The Company’s objective in managing capital is to ensure sufficient
liquidity to pursue potential investments and may raise additional capital
through the equity markets as additional capital is required.  The Company
is not subject to any externally imposed capital requirements and does not
presently utilize any quantitative measures to monitor its capital.The Company’s
capital risk management strategy remains unchanged from the year ended June 30,
2008.





F
- 23





LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008





17.
              DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES
 
 These financial
statements have been prepared in accordance with generally accepted accounting
principles in Canada (“Canadian GAAP”). There are no material variations in the
accounting principles, practices and methods used in preparing these
consolidated financial statements from principles, practices and methods used in
the United States (“US GAAP”) and in SEC Regulation S-X.
 
 A separate
statement of comprehensive loss has not been presented as there are no
differences between net loss and comprehensive loss.
 
 US GAAP requires
the date up to which subsequent events have been evaluated should be disclosed
which is October 21, 2009.  There is no such requirement under
Canadian GAAP.
  Recently
issued accounting standards
  In April 2009, the
FASB issued FSP FAS 115-2 and FAS 124-2. This FSP amends SFAS 115, “Accounting
for Certain Investments in Debt and Equity Securities,” SFAS 124, “Accounting
for Certain Investments Held by Not-for-Profit Organizations,” and EITF Issue
No. 99-20, “Recognition of Interest Income and Impairment on Purchased
Beneficial Interests and Beneficial Interests That Continue to Be Held by a
Transferor in Securitized Financial Assets,” to make the other-than-temporary
impairments guidance more operational and to improve the presentation of
other-than-temporary impairments in the financial statements.. This FSP provides
increased disclosure about the credit and noncredit components of impaired debt
securities that are not expected to be sold and also requires increased and more
frequent disclosures regarding expected cash flows, credit losses, and an aging
of securities with unrealized losses. Although this FSP does not result in a
change in the carrying amount of debt securities, it does require that the
portion of an other-than-temporary impairment not related to a credit loss for a
held-to-maturity security be recognized in a new category of other comprehensive
income and be amortized over the remaining life of the debt security as an
increase in the carrying value of the security. This FSP shall be effective for
interim and annual periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009.  The Company
is currently evaluating this new FSP but does not believe that it will have a
significant impact on the determination or reporting of the financial
results.


F
- 24




LiveReel
Media Corporation


Notes
to Consolidated Financial Statements


(Canadian
Dollars)


June
30, 2009 and 2008





17.
              DIFFERENCES BETWEEN CANADIAN
      AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(continued)
 
 In April 2009, the
FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about
Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”). FSP
FAS 107-1 and APB 28-1 require companies to disclose in interim financial
statements the fair value of financial instruments within the scope of FASB
Statement No. 107, Disclosures about Fair Value of Financial Instruments.
The fair-value information disclosed in the footnotes must be presented together
with the related carrying amount, making it clear whether the fair value and
carrying amount represent assets or liabilities and how the carrying amount
relates to what is reported in the balance sheet. FSP FAS 107-1 and APB
28-1 also requires that companies disclose the method or methods and significant
assumptions used to estimate the fair value of financial instruments and a
discussion of changes, if any, in the method or methods and significant
assumptions during the period. The FSP shall be applied prospectively and is
effective for interim and annual periods ending after June 15, 2009, with
early adoption permitted for periods ending after March 15, 2009. The
Company is currently evaluating this new FSP and the impact it will have on the
determination or reporting of the financial results.
 
 In May 2009, the
FASB issued SFAS No. 165, "Subsequent Events" (“SFAS 165”). SFAS 165 sets forth
the period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements, and the disclosures that an
entity should make about events or transactions that occurred after the balance
sheet date. SFAS 165 will be effective for interim or annual period ending after
June 15, 2009 and will be applied prospectively. The Company does not anticipate
the adoption of SFAS 165 will have an impact on its consolidated results of
operations or consolidated financial position.
 
 In June 2009, the
FASB issued SFAS No. 168, “The FASB accounting standard codification” and the
Hierarchy of Generally Accepted Accounting Principles (“Codification”) which
supersedes all existing accounting standards and will become the single source
of authoritative non –governmental US GAAP. All the accounting literature not
included in the Codification will be considered non-authoritative. The
Codification was implemented on July 1, 2009 and will be effective for interim
and annual periods after September 15, 2009.


F
- 25