Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Basis of Accounting, Policy [Policy Text Block]

(a)

Basis of presentation:

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) applicable to annual financial information and with the rules and regulations of the United States Securities and Exchange Commission. The financial statements include the accounts of the Company’s subsidiaries:

Company	Registered	% Owned
Shoal Media (Canada) Inc.	British Columbia, Canada		100%
Coral Reef Marketing Inc.	Anguilla		100%
Kidoz Ltd.	Israel		100%
Rooplay Media Ltd.	British Columbia, Canada		100%
Rooplay Media Kenya Limited	Kenya		100%
Shoal Media Inc.	Anguilla		100%
Shoal Games (UK) Plc	United Kingdom		99%
Shoal Media (UK) Ltd.	United Kingdom		100%

In addition, there are the following dormant subsidiaries; Bingo.com (Antigua) Inc., Bingo.com (Wyoming) Inc., and Bingo Acquisition Corp.

During the year ended

December 31, 2019,

the Company acquired Kidoz Ltd. a company incorporated under the laws of the State of Israel. (Note

)

All inter-company balances and transactions have been eliminated in the consolidated financial statements.

Use of Estimates, Policy [Policy Text Block]

(b)

Use of estimates:

The preparation of consolidated financial statements in conformity with US GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and recognized revenues and expenses for the reporting periods.

Significant areas requiring the use of estimates include the collectability of accounts receivable, stock-based compensation, the valuation of deferred tax assets, the valuation of the acquisition of Kidoz Ltd. and the associated intangible assets, the useful lives of intangible assets, the determination of the fair value of goodwill after impairment, and the estimated interest rate of

12%

for the license right-of-use assets and

4.12%

for the rental units right-of-use asset. Actual results

may

differ significantly from these estimates.

Revenue from Contract with Customer [Policy Text Block]

(c)

Revenue recognition:

In accordance with ASC

606,

Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.

We derive substantially all of our revenue from the sale of Ad tech advertising revenue.

To achieve this core principle, the Company applied the following

five

steps:

) Identify the contract with a customer

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred, whose impression count will form the basis of the revenue and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from

third

parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are

not

met the promised services are accounted for as a combined performance obligation.

) Determine the transaction price

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer.

None

of the Company's contracts contain financing or variable consideration components.

) Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is

not

observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

) Recognize revenue when or as the Company satisfies a performance obligation

The Company satisfies performance obligations at a point in time as discussed in further detail under "Disaggregation of Revenue" below. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

Disaggregation of Revenue

All of the Company's performance obligations, and associated revenue, are generally transferred to customers at a point in time. The Company has the following revenue streams:

) Ad tech advertising revenue - The Company generally offers these services under a customer contract Cost-per-Impression (CPM), Cost-Per-Install or CPI arrangements, Cost per completed video view or CPC and/or Cost-Per-Action or CPA arrangements with

third

-party advertisers and developers, as well as advertising aggregators, generally in the form of insertion orders that specify the type of arrangement (as detailed above) at particular set budget amounts/restraints. These advertiser customer contracts are generally short term in nature at less than

one

year as the budget amounts are typically spent in full within this time period. These agreements typically include the delivery of Ad tech advertising through partner networks, defined as publishers / developers, to home screens of devices and agree on whose results will be relied on from a revenue point of view. The Company has concluded that the delivery of the Ad tech advertising is delivered at a point in time and, as such, has concluded these deliveries are a single performance obligation. The Company invoices fees which are generally variable based on the arrangement, which would typically include the number of impressions delivered at a specified price per application. For impressions delivered, revenue is recognized in the month in which the Company delivers the application to the end consumer.

) Content revenue – The Company recognizes content revenue on the following forms of revenue:

a) Carriers and OEMs - The Company generally offers these services under a customer contract per tablet device license fee model with OEMs. Monthly or quarterly license fees are based on the OEM agreement with the number of devices the Kidoz Kid Mode is installed upon.

b) Rooplay - The Company generates revenue through subscriptions or premium sales of Rooplay, (www.rooplay.com) the cloud-based EduGame system for kids to learn and play within its games on smartphones and tablet devices, such as Apple’s iPhone and iPad, and mobile devices utilizing Google’s Android operating system. Users can download the Company’s games through digital storefronts and decide to subscribe to the multiple of educational and fun games in the Rooplay, cloud-based EduGame system or make a premium per purchase of particular games. The revenue is recognized net of platform fees.

c) Rooplay licensing - The Company licenses it branded educational games under a monthly cost per game agreement license fee model. Monthly license fees are based on the number of games licensed.

d) Trophy Bingo and Garfield Bingo - The Company generates revenue through in-application purchases (“in-app purchases”) within its games; Garfield’s Bingo (www.garfieldsbingo.com) and Trophy Bingo (www.trophybingo.com) on smartphones and tablet devices, such as Apple’s iPhone and iPad, and mobile devices utilizing Google’s Android operating system. Users can download the Company’s free-to-play games through Facebook Messenger, Android, Amazon and iOS and pay to acquire virtual currency which can be redeemed in the game for power plays. The initial download of the mobile game from the digital storefront does

not

create a contract under ASC

606

because of the lack of commercial substance; however, the separate election by the player to make an in-application purchase satisfies the criterion thus creating a contract under ASC

606.

The Company has identified the following performance obligations in these contracts:

i. Ongoing game related services such as hosting of game play, storage of customer content, when and if available content updates, maintaining the virtual currency management engine, tracking gameplay statistics, matchmaking as it relates to multiple player gameplay, etc.

ii. Obligation to the paying player to continue displaying and providing access to the virtual items within the game.

Neither of these obligations are considered distinct since the actual mobile game and the related ongoing services are both required to purchase and benefit from the related virtual items. As such, the Company’s performance obligations represent a single combined performance obligation which is to make the game and the ongoing game related services available to the players. The revenue is recognized net of platform fees.

The Company also has relationships with certain advertising service providers for advertisements within smartphone games and revenue from these advertising providers is generated through impressions, clickthroughs, banner ads, and offers. Offers are the type of advertisements where the players are rewarded with virtual currency for completing specified actions, such as downloading another application, watching a short video, subscribing to a service or completing a survey. The Company has determined the advertising buyer to be its customer and displaying the advertisements within the mobile games is identified as the single performance obligation. Revenue from advertisements and offers are recognized at the point-in-time the advertisements are displayed in the game or the offer has been completed by the user as the customer simultaneously receives and consumes the benefits provided from these services.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

(d)

Foreign currency:

The consolidated financial statements are presented in United States dollars, the functional currency of the Company and its subsidiaries. The Company accounts for foreign currency transactions and translation of foreign currency financial statements under Statement ASC

830,

Foreign Currency Matters. Transaction amounts denominated in foreign currencies are translated at exchange rates prevailing at the transaction dates. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect the exchange rate at that date. Non-monetary assets and liabilities are translated at the exchange rate on the original transaction date.

Gains and losses from restatement of foreign currency monetary and non-monetary assets and liabilities are included in operations. Revenues and expenses are translated at the rates of exchange prevailing on the dates such items are recognized in earnings.

Cash and Cash Equivalents, Policy [Policy Text Block]

(e)

Cash and Cash Equivalents:

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short-term, highly liquid investments with original maturities of

three

months or less that are readily convertible to known amounts of cash, collateral accounts with maturities greater than

year and subject to an insignificant risk of change in value.

Accounts Receivable [Policy Text Block]

(f)

Accounts receivable:

Trade and other accounts receivable are reported at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable includes receivables from online platforms and trade receivables from customers. The Company estimates doubtful accounts on an item-by-item basis and includes over-aged accounts as part of allowance for doubtful accounts, which are generally ones that are

ninety

-days overdue. Bad debt expense, for the year ended

December 31, 2019

was

$2,029

(

2018

$nil

). (Note

)

Property, Plant and Equipment, Policy [Policy Text Block]

(g)

Equipment:

Equipment is recorded at cost less accumulated depreciation. Depreciation is provided for annually on the declining balance method over the following periods:

Equipment and computers (in years)			3
Furniture and fixtures (in years)			5

Expenditures for maintenance and repairs are charged to expenses as incurred. Major improvements are capitalized. Gains and losses on disposition of equipment are included in operations as realized.

In accordance with ASU

No.

2016

“Leases (Topic

842

), leasehold improvements are accounted as a prepayment of rental payments since they are deemed to be an asset of the lessor.

Internal Use Software, Policy [Policy Text Block]

(h)

Software Development Costs:

Software development costs incurred in the research and development of new software products and enhancements to existing software products for external use are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any software development costs are capitalized and amortized at the greater of the straight-line basis over the estimated economic life of the related product or the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for the related product.

If a determination is made that capitalized amounts are

not

recoverable based on the estimated cash flows to be generated from the applicable software, any remaining capitalized amounts are written off. Although the Company believes that its approach to estimates and judgments as described herein is reasonable, actual results could differ and the Company

may

be exposed to increases or decreases in revenue that could be material. As at

December 31, 2019

and

2018,

all capitalized software development costs have been fully amortized and the Company has

capitalized software development costs.

Total software development costs were

$7,730,851

as at

December 31, 2019 (

2018

$6,716,810

Advertising Cost [Policy Text Block]

(i)

Advertising:

The Company expenses the cost of advertising in the period in which the advertising space or airtime is used. Advertising costs from continuing operations charged to selling and marketing expenses in

2019

totaled

$369,321

(

2018

$352,770

Share-based Payment Arrangement [Policy Text Block]

(j) Stock-based compensation:

The Company accounts for stock-based compensation under the provisions of Accounting Standard Codification (“ASC”)

718,

“Compensation-Stock Compensation”. Under the fair value recognition provisions, stock-based compensation expense is measured at the grant date for all stock-based awards to employees, directors and non-employees and is recognized as an expense over the requisite service period, which is generally the vesting period. The Black-Scholes option valuation model is used to calculate fair value.

The fair value of each option grant has been estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:

	2019		2018
Expected dividend yield		-		-
Expected stock price volatility		-		109	%
Weighted average volatility		-		96	%
Risk-free interest rate		-		1.97	%
Expected life of options (in years)		-		5
Forfeiture rate		-		5	%

Right-of-use Asset, Policy [Policy

(k)	Right-of-use assets:

The Company determines if an agreement is a lease at inception. The Company evaluates the lease terms to determine whether the lease will be accounted for as an operating or finance lease. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current portion, and operating lease liabilities, net of current portion in the consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company leases do

not

provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms

may

include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

A lease that transfers substantially all of the benefits and risks incidental to ownership of property are accounted for as finance leases. At the inception of a finance lease, an asset and finance lease obligation is recorded at an amount equal to the lesser of the present value of the minimum lease payments and the property’s fair market value. Finance lease obligations are classified as either current or long-term based on the due dates of future minimum lease payments, net of interest.

Business Combinations Policy [Policy Text Block]

(l)Business Combinations:

When the Company acquires a business, the purchase consideration is allocated to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated respective fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require the Company to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are

not

limited to, future expected cash flows from acquired users, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results

may

differ from estimates. During the measurement period, which is

one

year from the acquisition date, the Company

may

record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to non-operating income (expense) in the consolidated statements of operations.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

(m) Impairment of long-lived assets and long-lived assets to be disposed of:

The Company accounts for long-lived assets in accordance with the provisions of ASC

360,

Property, Plant and Equipment and ASC

350,

Intangibles-Goodwill and Others. During the periods presented, the only long-lived assets reported on the Company’s consolidated balance sheet are equipment, and security deposits. These provisions require that long-lived assets and certain identifiable recorded intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less costs to sell.

The Company identified the following intangible assets in the acquisition of Kidoz Ltd. (Note

). Intangible assets are recorded at cost less accumulated amortization. Amortization is provided for annually on the straight-line method over the following periods:

	Amortization period (in years)
Ad Tech technology		5
Kidoz OS technology		3
Customer relationship		8

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

(n) Goodwill :

The Company accounts for goodwill in accordance with the provisions of ASC

350,

Intangibles-Goodwill and Others. Goodwill is the excess of the purchase price over the fair value of identifiable assets acquired, less liabilities assumed, in a business combination. The Company reviews goodwill for impairment. Goodwill is

not

amortized but is evaluated for impairment at least annually or whenever events or changes in circumstances indicate that it is more likely than

not

that the carrying amount

may

not

be recoverable. The evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If, after assessing qualitative factors, we determine it is more likely than

not

that the fair value of the reporting unit is less than the carrying amount, then the quantitative goodwill impairment test is performed.

The quantitative goodwill impairment test used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount and is based on discounted future cash flows, and a market approach, based on market multiples applied to free cash flow. The determination of the fair value of our reporting units requires management to make significant estimates and assumptions including the selection of control premiums, discount rates, terminal growth rates, forecasts of revenue and expense growth rates, income tax rates, changes in working capital, depreciation, amortization and capital expenditures. Changes in assumptions concerning future financial results, exogenous market conditions, or other underlying assumptions could have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

During the year ended

December 31, 2019,

the Company deemed there was an impairment of the goodwill and recognized an impairment of

$13,877,385.

Income Tax, Policy [Policy Text Block]

(o)

Income taxes:

The Company follows the asset and liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current period. The Company recognizes the income tax recovery from the receipt of tax credits upon receipt of funds. Deferred income taxes are provided based on the estimated future tax effects of temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as the benefit of losses available to be carried forward to future years for tax purposes.

Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered and settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets when it is

not

more likely than

not

that such future tax assets will be realized.

Earnings Per Share, Policy [Policy Text Block]

(p)	Net (loss) income per share:

ASC

260,

“Earnings Per Share”, requires presentation of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution, using the treasury stock method, that could occur if outstanding options or warrants were exercised and converted into common stock. In computing diluted earnings per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period.

Options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. A total of

3,200,750

(

2018

3,575,000

) stock options and

nil

(

2018

nil

) warrants were excluded as at

December 31, 2019.

The earnings per share data for the year ended

December 31, 2019

and

2018

are summarized as follows:

	2019			2018
Loss for the year	$	(14,654,232	)	$	(2,592,831	)

Basic and diluted weighted average number of common shares outstanding		121,208,912			72,111,456

Basic and diluted loss per common share outstanding	$	(0.12	)	$	(0.04	)

New Accounting Pronouncements, Policy [Policy Text Block]

(q) New accounting pronouncements and changes in accounting policies:

June 2016,

the FASB issued ASU

No.

2016

13,

“Financial Instruments - Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments”. The accounting standard changes the methodology for measuring credit losses on financial instruments and the timing when such losses are recorded. ASU

No.

2016

is effective for fiscal years, and interim periods within those years, beginning after

December 15, 2019.

Early adoption is permitted for fiscal years, and interim periods within those years, beginning after

December 15, 2018.

November 2018,

the FASB issued ASU

2018

19,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses ( “ASU

2018

19”

) . ASU

2018

clarifies that receivables arising from operating leases are

not

within the scope of Subtopic

326

20.

Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic

842,

Leases. In

April 2019,

the FASB issued ASU

2019

04,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses, Topic

815,

Derivatives and Hedging, and Topic

825,

Financial Instruments, which replaces the "incurred loss" impairment methodology with an approach based on "expected losses" to estimate credit losses on certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The Update also modified the accounting for available-for-sale ("AFS") debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic

326

30,

Financial Instruments—Credit Losses—Available-for-Sale Debt Securities. Credit losses relating to AFS debt securities will be recorded through an allowance for credit losses.

The codification improvements in ASU

2019

clarify that an entity should include recoveries when estimating the allowance for credit losses. The amendments specify that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account and should

not

exceed the aggregate of amounts previously written off and expected to be written off by the entity. In addition, for collateral dependent financial assets, the amendments clarify that an allowance for credit losses that is added to the amortized cost basis of the financial asset(s) should

not

exceed amounts previously written off. The amendment also clarifies FASB’s intent to include all reinsurance recoverables that are within the scope of Topic

944

to be within the scope of Subtopic

326

20,

regardless of the measurement basis of those recoverables. The Company does

not

believe that the adoption of this standard will have a material impact on the Company’s consolidated financial position or results of operations.

January 2017,

the FASB issued ASU

2017

04,

Intangibles - Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment, which eliminates Step

from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.

The amendments also eliminate the requirements for any reporting unit with a

zero

or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step

of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Early adoption is permitted. ASU

2017

should be adopted on a prospective basis. The Company does

not

believe that the adoption of this standard will have a material impact on the Company’s consolidated financial position or results of operations.

August 2018,

the FASB issued ASU

No.

2018

13,

“Fair Value Measurement: Disclosure Framework (Topic

840

) - Changes to the Disclosure Requirements for Fair Value Measurement”, which will improve the effectiveness of disclosure requirements for recurring and nonrecurring Level

Level

and Level

instruments in the fair value measurements. The standard removes, modifies, and adds certain disclosure requirements, and is effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

The adoption of this guidance will

not

have a material impact on the Company’s financial position, results of operations and liquidity.

August 2018,

the FASB issued ASU

No.

2018

15,

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which requires implementation costs in a hosting arrangement that is a service contract to be capitalized consistent with the rules in ASC

350

40,

Intangibles—Goodwill and Other—Internal-Use Software. This aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Costs incurred during the application development stage are to be capitalized and expensed according to their nature, while costs incurred during the preliminary project and post- implementation stages are to be expensed. This ASU also contains guidance with regard to the amortization period, impairment and presentation within the financial statements. The ASU is required to be adopted by the Company during

2020,

however early adoption is allowed in an interim period before then and

may

be applied retrospectively or prospectively to applicable costs on the Company’s consolidated financial statements. The adoption of this guidance will

not

have a material impact on the Company’s financial position, results of operations and liquidity.

March 2019,

the FASB issued ASU

No.

2019

01,

Leases (Topic

842

) (“ASU

2019

01”

), Codification Improvements , which aligned the new leases guidance with existing guidance for fair value of the underlying asset by lessors that are

not

manufacturers or dealers. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that

may

apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in ASC

820,

Fair Value Measurement) should be applied. More importantly, the ASU also exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. This standard is effective for fiscal years beginning after

December 15, 2019.

Early adoption is allowed. The adoption of this guidance will

not

have a material impact on the Company’s financial position, results of operations and liquidity.

May 2019,

the FASB issued ASU

2019

05,

Financial Instruments - Credit Losses (Topic

326

) (“ASU

2019

05”

). ASU

2019

provides entities that have certain instruments within the scope of Subtopic

326

20,

Financial Instruments - Credit Losses - Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic

825

10,

Financial Instruments - Overall, applied on an instrument-by-instrument basis for eligible instruments. ASU

2019

is effective for the Company’s financial statements for annual and interim periods beginning on or after

December 15, 2019.

November 2019,

FASB issued ASU

2019

Financial Instruments-Credit Losses (Topic

326

), Derivatives and Hedging (Topic

815

), and leases (Topic

842

). ASU

2019

extended the effectiveness of Topic

326

for smaller reporting companies until fiscal years beginning after

December 31, 2020.

Early adoption is permitted. The adoption of this guidance will

not

have a material impact on the Company’s financial position, results of operations and liquidity.

November 2019,

the FASB issued ASU

2019

11,

“Codification Improvements to Topic

326,

Financial Instruments – Credit Losses.” This ASU addresses issues raised by stakeholders during the implementation of ASU

No.

2016

13,

“Financial Instruments - Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.” Among other narrow-scope improvements, the new ASU clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. While applying the credit losses standard, stakeholders questioned whether expected recoveries were permitted on assets that had already shown credit deterioration at the time of purchase (also known as PCD assets). In response to this question, the ASU permits organizations to record expected recoveries on PCD assets. In addition to other narrow technical improvements, the ASU also reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities. The ASU includes effective dates and transition requirements that vary depending on whether or

not

an entity has already adopted ASU

2016

13.

The adoption of this guidance will

not

have a material impact on the Company’s financial position, results of operations and liquidity.

December 2019,

the FASB issued ASU

No.

2019

12,

“Income Taxes (Topic

740

): Simplifying the Accounting for Income Taxes”. The ASU is expected to reduce cost and complexity related to the accounting for income taxes by removing specific exceptions to general principles in Topic

740

(eliminating the need for an organization to analyze whether certain exceptions apply in a given period) and improving financial statement preparers’ application of certain income tax-related guidance. This ASU is part of the FASB’s simplification initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. This new guidance includes several provisions to simplify the accounting for income taxes. The standard removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation, and calculating income taxes in interim periods. This standard is effective for fiscal years beginning after

December 15, 2020,

and interim periods within those fiscal years. Early adoption of this standard is permitted. The adoption of this guidance will

not

have a material impact on the Company’s financial position, results of operations and liquidity.

January 2020,

the FASB issued ASU

2020

01,

“Investments – Equity Securities (Topic

321

), Investments – Equity Method and Joint Ventures (Topic

323

), and Derivatives and Hedging (Topic

815

) – Clarifying the Interactions between Topic

321,

Topic

323,

and Topic

815.”

The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU

2016

made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendments in the ASU are effective for fiscal years beginning after

December 15, 2020,

and interim periods within those fiscal years. Early adoption is permitted. The Company does

not

expect the adoption of ASU

2020

to have a material impact on its consolidated financial statements.

Effective

November 25, 2019,

the SEC adopted Staff Accounting Bulletin (SAB)

119.

SAB

119

updated portions of SEC interpretative guidance to align with FASB ASC

326,

“Financial Instruments – Credit Losses.” It covers topics including (

) measuring current expected credit losses; (

) development, governance, and documentation of a systematic methodology; (

) documenting the results of a systematic methodology; and (

) validating a systematic methodology.

There have been

other recent accounting standards, or changes in accounting standards, during the year ended

December 31, 2019,

as compared to the recent accounting standards described in the Annual Report, that are of material significance, or have potential material significance, to us.

Fair Value of Financial Instruments, Policy [Policy Text Block]

(r)

Financial instruments and fair value of financial assets and liabilities:

(i) Fair values:

The fair value of accounts receivable, accounts payable, accrued liabilities, short term loan and accounts payable and accrued liabilities - related party approximate their financial statement carrying amounts due to the short-term maturities of these instruments. Cash and long-term cash equivalents are carried at fair value using a level

fair value measurement.

The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions which are accounted for at the transferor’s carrying amount or exchange amount.

Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded in income.

Financial instruments, including receivables, accounts payable and accrued liabilities, and accounts payable with related parties are carried at amortized cost, which management believes approximates fair value due to the short-term nature of these instruments.

In general, fair values determined by Level

inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level

inputs utilize data points that are observable such as quoted prices, interest rates and yield curves.

Fair values determined by Level

inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset. The Company’s cash and long-term cash equivalents were measured using Level

inputs. Stock-based compensation was measured using Level

inputs. Goodwill impairment was measure using Level

inputs.

(ii) Foreign currency risk:

The Company operates internationally, which gives rise to the risk that cash flows

may

be adversely impacted by exchange rate fluctuations. The Company has

not

entered into any forward exchange contracts or other derivative instrument to hedge against foreign exchange risk.