Stockholders’ Equity:

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

Stockholders’ Equity:

10. Stockholders’ Equity:

The holders of common stock are entitled to one vote for each share held. There are no 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 no 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.

Kidoz Inc. and subsidiaries

(Expressed in United States Dollars)

Notes to Consolidated Financial Statements

Years ended December 31, 2021 and 2020

10. Stockholders’ Equity: (Continued)

(a) Common stock issuances:

Fiscal 2021

During the year ended December 31, 2021, the Company engaged Research Capital Corporation (“RCC”) as a financial and capital markets advisor. As part of the compensation for its services, RCC will receive a monthly fee of $5,119 (CAD$6,500) for its trading advisory services for a minimum of 6 months with extension by mutual agreement and a financial advisory fee to be satisfied by the issuance of 230,000 common shares of the Company valued at $179,293. In addition, the Company granted 230,000 common share purchase warrants to RCC (Note 2(i)). Each warrant will entitle the holder thereof to purchase one common share in the capital of the Company at an exercise price of $0.77 (CAD$0.98) at any time up to 24 months following the date of issuance. During the year ended December 31, 2021, the Company issued the shares and granted the warrants.

During the year ended December 31, 2021, the holder of 70,000 stock options exercised their options for 70,000 shares for $31,264 at an average exercise price of $0.45 (CAD$0.54) per share.

Fiscal 2020

There were no common stock issuances for the year ended December 31, 2020.

(b)   Warrants

A summary of warrant activity for the year ended December 31, 2021 are as follows:

	Number of options		Exercise price		Expiry date
Outstanding, December 31, 2020 and 2019		-	$	-
Granted		230,000		CAD$0.98		April 3, 2023
Outstanding December 31, 2021		230,000		CAD$0.98

A fair value of the derivative liability of $83,572 was been estimated on the date of the subscription using the Binomial Lattice pricing model. Since the warrant was issued there was a gain on derivative liability - warrants of $60,207 and the derivative liability – warrants value reduced to $23,365 with the following assumptions:

	December 31, 2021			April 1, 2021
Exercise price		CAD$0.98			CAD$0.98
Stock price		CAD$0.59			CAD$0.98
Expected term		1.25 years			2 years
Expected dividend yield		-			-
Expected stock price volatility		88.33	%		145.71	%
Risk-free interest rate		1.18	%		0.73	%

Kidoz Inc. and subsidiaries

(Expressed in United States Dollars)

Notes to Consolidated Financial Statements

Years ended December 31, 2021 and 2020

10. Stockholders’ Equity: (Continued)

(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 as amended in November 2020, 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 10 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. During the year ended December 31, 2020, the Rolling Stock Option plan was amended by inclusion of an Israeli Taxpayers Appendix.

During the year ended December 31, 2021, the Company granted to employees and consultants the following options:

● 1,040,000 options at CAD$0.50 ($0.39) where 10% vests on grant date, 15% one year following and 2% per month thereafter and expire on February 1, 2026. 400,000 of these options were granted to directors and officers of the Company.

● 35,000 options at CAD$0.50 ($0.39) which vested immediately and expire on February 1, 2026.

● 1,300,000 options at CAD$1.02 ($0.80) where 2% vests per month and expire on April 6, 2026. 400,000 of these options were granted to directors and officers of the Company.

● 300,000 options at CAD$0.66 ($0.52) where 2% vests per month and expire on July 12, 2026.

During the year ended December 31, 2020, the Company granted to employees and consultants 2,745,000 options with an exercise price of CAD$0.45 ($0.33) expiring on June 30, 2025, of which 60,000 options were fully vested, 2,595,000 options were issued where 2.08% vests per month commencing June 30, 2021, and 90,000 options were issued where 2% vests per month commencing on grant date. 1,250,000 of these options were granted to directors and officers of the Company.

Subsequent to the year ended December 31, 2021, a further 2,550,000 options were awarded where 2% vests per month, with an exercise price of CAD$0.50 ($0.39) and 210,000 options were cancelled.

Kidoz Inc. and subsidiaries

(Expressed in United States Dollars)

Notes to Consolidated Financial Statements

Years ended December 31, 2021 and 2020

10. Stockholders’ Equity: (Continued)

(c)    Stock option plans: (Continued)

A summary of stock option activity for the stock option plans for the years ended December 31, 2021 and 2020 are as follows:

	Number of options			Weighted average exercise price
Outstanding December 31, 2019		3,200,750		$	0.45
Granted		2,745,000			0.33
Exercised		-			-
Cancelled		(70,000	)		(0.42	)
Outstanding December 31, 2020		5,875,750		$	0.39
Granted		2,675,000			0.60
Exercised		(70,000	)		(0.45	)
Expired		(570,000	)		(0.43	)
Cancelled		(1,040,600	)		(0.42	)
Outstanding December 31, 2021		6,870,150		$	0.48

The aggregate intrinsic value for options as of December 31, 2021 was $334,897 (2020 - $137,250).

The following table summarizes information concerning outstanding and exercisable stock options at December 31, 2021:

Exercise prices per share		Number outstanding		Number exercisable		Expiry date
	CAD$0.45		2,030,400		399,672	June 30, 2025
	CAD$0.50		889,600		124,600	February 1, 2026
	CAD$0.54		506,150		506,150	November 8, 2022
	CAD$0.54		713,000		713,000	June 4, 2023
	CAD$0.66		300,000		20,000	July 12, 2026
	US$0.50		1,275,000		1,275,000	June 4, 2023
	CAD$1.02		1,156,000		190,000	April 6, 2026
			6,870,150		3,228,422

The Company recorded stock-based compensation of $660,266 on the options granted and vested (2020 – $158,883) and as per the Black-Scholes option-pricing model, with a weighted average fair value per option grant of $0.45 (2020 - $0.27).

Kidoz Inc. and subsidiaries

(Expressed in United States Dollars)

Notes to Consolidated Financial Statements

Years ended December 31, 2021 and 2020