Stockholders’ equity

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Stockholders’ equity

9. 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.

(a) Common stock issuances:

During the quarter ended June 30, 2021, the Company engaged with Agora Internet Relations Corp. for an online marketing campaign on the AGORACOM platform. The agreement was for 12 months for a fee of $79,705 (CAD$100,000) payable in shares of the Company. During the quarter ended June 30, 2022, the Company issued 156,510 shares in settlement of its obligation under the contract.

During the quarter ended June 30, 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 $5,200 (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. 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 quarter ended June 30, 2021, the Company issued the shares and granted the warrants.

During the quarter ended June 30, 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.

During the quarter ended September 30, 2022, the Company filed a Notice of Intention to Make a Normal Course Issuer Bid (the “Notice of Intention”) with the TSX-V on September 15, 2022. Upon receiving approval from the TSX-V, effective September 16, 2022, the Company commenced a normal course issuer bid (“NCIB”), whereby the Company may purchase for cancellation up to 6,579,074 shares, being 5% of the issued and outstanding shares as of such date. Any purchases under the NCIB will be made on the open market through the facilities of the TSX-V or alternative Canadian trading systems. Purchases will be made at market prices of the shares at the time of acquisition.

Purchases under the NCIB may commence as of September 16, 2022, and will end on the earlier of: (i) September 14, 2023; or (ii) the date on which the Company has purchased the maximum number of shares to be acquired under the NCIB. The Company may terminate the NCIB earlier if it feels it is appropriate to do so.

Kidoz Inc. and subsidiaries

(Expressed in United States Dollars)

Notes to Consolidated Financial Statements

Nine Months ended September 30, 2022 and 2021

(Unaudited)

9. Stockholders’ equity: (Continued)

(a) Common stock issuances: (continued)

The normal course issuer bid will be conducted through Kidoz Inc’s broker Research Capital Corporation. The purchase and payment of the Common Shares will be made in accordance with the requirements of the TSX-V and applicable securities laws. The actual number of Common Shares purchased, timing of purchases and share price will depend upon market conditions at the time and securities law requirements. All Common Shares acquired will be returned to treasury and cancelled.

The purchase of and payment for the shares will be made in accordance with the requirements of the TSX-V and applicable securities laws. The actual number of shares purchased, timing of purchases and share price will depend upon market conditions at the time and securities law requirements. All shares acquired pursuant to the NCIB will be returned to treasury and cancelled.

Subsequent to the quarter ended September 30, 2022, 45,000 shares were acquired for cancellation and were cancelled.

(b) Warrants

A summary of warrant activity for the quarter ended September 30, 2022 are as follows:

	Number of warrants		Exercise price		Expiry date
Outstanding, December 31, 2020		-	$	-
Granted		230,000	CAD$	0.98		April 3, 2023
Outstanding December 31, 2021		230,000	CAD$	0.98
Granted		-		-		-
Outstanding September 30, 2022		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 $83,555 ($60,207 recognized in fiscal 2021) and the derivative liability – warrants value reduced to $17 with the following assumptions:

	September 30, 2022			September 30, 2021
Exercise price	CAD$	0.98		CAD$	0.98
Stock price	CAD$	0.405		CAD$	0.65
Expected term		0.5 years			1.5 years
Expected dividend yield		-			-
Expected stock price volatility		55.09	%		90.87	%
Risk-free interest rate		3.44	%		0.98	%

Kidoz Inc. and subsidiaries

(Expressed in United States Dollars)

Notes to Consolidated Financial Statements

Nine Months ended September 30, 2022 and 2021

(Unaudited)

9.  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 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 amended 2015 plan we have reserved 10% of the number of Shares of the Company issued and outstanding as of each Award Date.

During the quarter ended March 31, 2022, the Company granted 2,550,000 options at CAD$0.50 ($0.40)

During the quarter ended September 30, 2021, the Company granted 300,000 options at CAD$0.66 ($0.52) During the quarter ended June 30, 2021, the Company granted 1,300,000 options at CAD$1.02 ($0.80) During the quarter ended March 31, 2021, the Company granted 1,075,000 options at CAD$0.50 ($0.39)

	Number of options			Weighted average exercise price
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
Granted		2,550,000			0.40
Cancelled		(285,000	)		(0.47	)
Outstanding September 30, 2022		9,135,150		$	0.43

The aggregate intrinsic value for options as of September 30, 2022 was $nil (December 31, 2021 - $334,897).

Kidoz Inc. and subsidiaries

(Expressed in United States Dollars)

Notes to Consolidated Financial Statements

Nine Months ended September 30, 2022 and 2021

(Unaudited)

9.  Stockholders’ equity: (Continued)

(c) Stock option plans:

The following table summarizes information concerning outstanding and exercisable stock options at September 30, 2022:

Exercise prices per share		Number outstanding		Number exercisable		Expiry date
CAD$	0.45		2,030,400		776,736	June 30, 2025
CAD$	0.50		859,600		375,800	February 1, 2026
CAD$	0.50		2,445,000		391,200	February 1, 2027
CAD$	0.54		506,150		506,150	November 8, 2022
CAD$	0.54		713,000		713,000	June 4, 2023
CAD$	0.66		200,000		56,000	July 12, 2026
US$	0.50		1,275,000		1,275,000	June 4, 2023
CAD$	1.02		1,106,000		380,000	April 6, 2026
			9,135,150		4,473,886

During the quarter ended September 30, 2022, the Company recorded stock-based compensation of $181,129 on the options granted and vested (September 30, 2021 – $178,763) and as per the Black-Scholes option-pricing model, with a weighted average fair value per option grant of $0.31 (September 30, 2021 - $0.36).

Subsequent to the quarter ended September 30, 2022, 506,150 options at CAD$0.54, expired unexercised.