12.	Stockholders’ Equity:

The holders of common stock are entitled to

one

vote for each share held. There are

restrictions that limit the Company’s ability to pay dividends on its common stock. The Company has

not

declared any dividends since incorporation. The Company’s common stock has

par value per common stock and there is only

one

class of common shares. The Company has an unlimited number of common shares authorized for issue.

(a)

Common stock issuances:

Fiscal

201

March 2019,

the Company closed a TSX Venture Exchange approved private placement financing totaling

$2,000,000.

The private placement consisted of

5,000,000

common shares priced at

$0.40

per share. Pursuant to the private placement the Company paid a commission of

$200,000

and incurred share issuance expenses of

$36,800.

March 2019,

the Company issued

52,450,286

shares for total consideration of

$20,603,655

in the acquisition of all the issued and outstanding ordinary and preferred shares in the capital stock of Kidoz Ltd., a company incorporated under the laws of the State of Israel. (Note

)

Fiscal

2018

June 2018,

the related party warrant holders exercised their warrants for

1,200,000

shares at

CAD$0.65

(

US$0.50

) per share through the settlement of the promissory notes, in a non-cash transaction.

February 2018,

a warrant holder exercised their warrant for

15,000

shares at

$0.44

per share raising a total of

$6,600.

February 2018,

the Company closed a TSX Venture Exchange approved private placement financing totaling

$2,551,500.

The private placement consisted of

7,290,000

common shares priced at

$0.35

per share. Pursuant to the private placement the Company paid a commission of

$253,750

and incurred share issuance expense of

$18,342.

(b)

Warrants

The warrants had an exercise price in Canadian dollars whilst the Company’s functional currency is US Dollars. Therefore, in accordance with ASU

815

– Derivatives and Hedging, the warrants had a derivative liability value. This liability value has

effect on the cashflow of the Company and does

not

represent a cash payment of any kind.

A fair value of the derivative liability of

$215,687

was estimated on the date of the subscription using the Binomial Lattice pricing model. During the year ended

December 31, 2018,

the warrants were exercised resulting in a gain on derivative liability - warrants of

$44,572

and the derivative liability – warrants value was valued at

$Nil

as at

December 31, 2018.

A summary of warrant activity for the years ended

December 31, 2019

and

2018

are as follows:

	Number of warrants			Weighted average exercise price
Outstanding, December 31, 2017		5,219,163		$	0.48

Granted		-			-
Exercised		(1,215,000	)		(0.50	)
Expired, unexercised		(4,004,163	)		(0.51	)

Outstanding December 31, 2019 and 2018		-		$	-

(c)

Stock option plans:

2015

stock option plan

In the year ended

December 31, 2015,

the shareholders approved the

2015

stock option plan and the

1999,

2001

and the

2005

plans were discontinued. The

2015

stock option plan is intended to provide incentive to employees, directors, advisors and consultants of the Company to encourage proprietary interest in the Company, to encourage such employees to remain in the employ of the Company or such directors, advisors and consultants to remain in the service of the Company, and to attract new employees, directors, advisors and consultants with outstanding qualifications. The maximum number of shares issuable under the Plan shall

not

exceed

10%

of the number of Shares of the Company issued and outstanding as of each Award Date unless shareholder approval is obtained in advance. The Board of Directors determines the terms of the options granted, including the number of options granted, the exercise price and their vesting schedule. The maximum term possible is

years. Under the

2015

plan we have reserved

10%

of the number of Shares of the Company issued and outstanding as of each Award Date.

options were granted during the year ended

December 31, 2019.

During the year ended

December 31, 2018,

the Company granted

2,130,000

options, of which

710,000

options were fully vested expiring on

June 4, 2023,

with an exercise price of

CAD$0.54

(

US$0.42

1,275,000

options were fully vested expiring on

June 4, 2023,

with an exercise price of

$0.50

and

145,000

options were issued where

10%

vests on grant date,

15%

one

year following grant date and

per month thereafter, with an exercise price of

CAD$0.54

(

US$0.42

) to employees and consultants.

Subsequent to the year ended

December 31, 2019,

70,000

options were cancelled unexercised.

Of the options outstanding at

December 31, 2019,

a total of

3,065,000

(

2018

3,190,000

) were fully vested and a total of

135,750

(

2018

385,000

) were issued where

10%

vest at the grant date,

15%

one

year following the grant date and

per month starting

months after the grant date. A total of

3,097,850

(

2018

–

3,273,550

) of these options had vested at

December 31, 2019.

A summary of stock option activity for the stock option plans for the years ended

December 31, 2019

and

2018

are as follows:

	Number of options			Weighted average exercise price
Outstanding, December 31, 2017		1,605,000		$	0.42

Granted		2,130,000			0.47
Exercised		-			-
Cancelled		(160,000	)		(0.42	)

Outstanding December 31, 2018		3,575,000		$	0.45

Granted		-			-
Exercised		-			-
Cancelled		(374,250	)		(0.41	)

Outstanding December 31, 2019		3,200,750		$	0.45

The aggregate intrinsic value for options as of

December 31, 2019

was

$nil

(

2018

$nil

The following table summarizes information concerning outstanding and exercisable stock options at

December 31, 2019:

Range of exercise prices per option		Number outstanding		Number exercisable		Expiry date
$	0.40		670,000		670,000	December 20, 2021
	0.42		542,750		439,850	November 8, 2022
	0.42		713,000		713,000	June 4, 2023
	0.50		1,275,000		1,275,000	June 4, 2023
			3,200,750		3,097,850

The Company recorded stock-based compensation of

$15,890

on the

2,130,000

options granted and vested (

2018

–

$595,580

on the

2,130,000

options granted and vested) and as per the Black-Scholes option-pricing model, with a weighted average fair value per option of

$0.29

(

2018

$0.29