Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
1.
|
|
Basis of Presentation:
|
The accompanying unaudited interim consolidated
financial statements have been prepared by Kidoz Inc. (“the Company”) in conformity with accounting principles generally accepted
in the United States of America (“US GAAP”) applicable to interim financial information and with the rules and regulations
of the United States Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed, or omitted,
pursuant to such rules and regulations. In the opinion of management, the unaudited interim consolidated financial statements include
all adjustments necessary for the fair presentation of the results of the interim periods presented. All adjustments are of a normal recurring
nature, except as otherwise noted below. These unaudited interim consolidated financial statements should be read in conjunction with
the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2020, included in the
Company’s Annual Report on Form 10-K, filed March 31, 2021, with the Securities and Exchange Commission. The results of operations
for the interim periods are not necessarily indicative of the results of operations for any other interim period or for a full fiscal
year.
Continuing operations
These unaudited interim consolidated financial
statements have been prepared on the going concern basis, which presumes the realization of assets and the settlement of liabilities in
the normal course of operations. The application of the going concern basis is dependent upon the Company achieving profitable operations
to generate sufficient cash flows to fund continued operations, or, in the absence of adequate cash flows from operations, obtaining additional
financing. The Company has reported losses from operations for the quarters ended June 30, 2021 and 2020 and has an accumulated deficit
of $41,340,602 as at June 30, 2021. These material uncertainties raise substantial doubt about the Company’s ability to continue
as a going concern.
In view of the matters described in the preceding
paragraph, recoverability of a major portion of the recorded asset amounts and settlement of the liability amounts shown in the accompanying
balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to succeed
in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in
existence.
Management continues to review operations in order
to identify additional strategies designed to generate cash flow, improve the Company’s financial position, and enable the timely
discharge of the Company’s obligations. If management is unable to identify sources of additional cash flow in the short term, it
may be required to further reduce or limit operations.
In March 2020 the World Health Organization
declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related
adverse public health developments, has adversely affected workforces, economies, and financial markets globally, has led to an
economic downturn. It has also disrupted the normal operations of many businesses, including the Company’s. In early March
2020, the Company’s employees commenced working from home and commenced social distancing. This outbreak has affected
spending, thereby affecting demand for the Company’s product and the Company’s business and results
of operations. It is not possible for the Company to predict the duration or magnitude of the outbreak and at this time its full effects
on the Company’s business, its future results of operations, or ability to raise funds.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
2.
|
|
Summary of significant accounting policies:
|
|
|
(a)
|
Basis of presentation:
|
These unaudited interim 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:
|
Consolidation, Wholly Owned and Less than Wholly Owned Subsidiary, Parent Ownership Interest
|
|
|
|
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.
All inter-company balances and transactions
have been eliminated in the unaudited interim consolidated financial statements.
The preparation of unaudited interim
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, the valuation of stock-based compensation, the valuation of deferred tax
assets, the useful lives of intangible assets, and the estimated interest rate of 12% for the license right-of-use assets, 4.12% - 5%
for the rental units right-of-use asset and the derivative liability – warrants valuation. Actual results may differ significantly
from these estimates.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
|
2.
|
Summary of significant accounting policies (Continued):
|
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:
1) 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.
2) 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.
3) 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.
4) 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.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
2.
|
|
Summary of significant accounting policies (Continued):
|
|
|
(c)
|
Revenue recognition: (Continued)
|
5) 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:
1) Ad
tech advertising revenue - The Company generally offers these services under a customer contract Cost-per-Impression (CPM), Cost-Per-Install
(CPI) arrangements, Cost per completed video view (CPC) and/or Cost-Per-Action (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 or the
month when the campaign ends.
2) 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.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
2.
|
|
Summary of significant accounting policies (Continued):
|
|
|
(c)
|
Revenue recognition: (Continued)
|
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
its 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.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
2.
|
|
Summary of significant accounting policies (Continued):
|
|
|
(d)
|
Software development costs:
|
The Company expensed all software development
costs as incurred for the period ended June 30, 2021 and 2020. As at June 30, 2021 and 2020, all capitalized software development costs
have been fully amortized and the Company has no capitalized 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.
As at June 30, 2021 and December 31,
2020, all capitalized software development costs have been fully amortized and the Company has no capitalized software development costs.
Total software development costs were
$9,584,092 as at June 30, 2021 (December 31, 2020 - $8,880,753).
|
|
(e)
|
Derivative liability – warrants
|
The warrants have 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 have a derivative liability value. This liability value has no 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 $83,572 was been estimated on the date of the subscription using the Binomial Lattice pricing model. During the quarter ended June
30, 2021, there was a gain on derivative liability - warrants of $37,984 and the derivative liability – warrants value reduced to
$45,588 with the following assumptions:
|
Schedule of fair value estimated
|
|
|
|
|
|
|
June 30, 2021
|
April 1, 2021
|
|
Exercise price
|
|
CAD$0.98
|
CAD$0.98
|
|
Stock price
|
|
CAD$0.68
|
CAD$0.98
|
|
Expected term
|
|
1.75 years
|
2 years
|
|
Expected dividend yield
|
|
-
|
-
|
|
Expected stock price volatility
|
|
102.74%
|
145.71%
|
|
Risk-free interest rate
|
|
0.87%
|
0.73%
|
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
2.
|
|
Summary of significant accounting policies (Continued):
|
|
|
(f)
|
Impairment of long-lived assets and long-lived assets to be disposed of:
|
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.
Intangible assets are recorded at
cost less accumulated amortization. Amortization is provided for annually on the straight-line method over the following periods:
|
Schedule of Finite-Lived Intangible Assets, Amortization Period
|
|
|
|
|
|
Amortization period
|
|
Ad Tech technology
|
|
5 years
|
|
Kidoz OS technology
|
|
3
years
|
|
Customer relationship
|
|
8 years
|
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 goodwill impairment test is used
to identify both the existence of impairment and the amount of impairment loss, and compares the fair value of a reporting unit with its
carrying amount and is based on discounted future cash flows, 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, 2020,
the Company determined there was no impairment of the goodwill.
|
|
(h)
|
New accounting pronouncements and changes in accounting policy:
|
In 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 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 Company concluded that the adoption did
not have a material impact on these unaudited interim condensed consolidated financial statements.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
2.
|
|
Summary of significant accounting policies (Continued):
|
|
|
(h)
|
New accounting pronouncements and changes in accounting policy: (Continued)
|
There have been no other recent accounting
standards, or changes in accounting standards, during the period ended June 30, 2021, as compared to the recent accounting standards described
in the Annual Report, that are of material significance, or have potential material significance, to us.
|
|
(i)
|
Financial instruments and fair value measurements:
|
(i) Fair values:
Fair value is the exchange price that
would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants on measurement date. The Company classifies assets and liabilities
recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable
inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally
developed market assumptions. The fair value measurements are classified under the following hierarchy:
Level 1—Observable inputs that
reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;
Level 2—Observable inputs, other
than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities,
quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets and liabilities; and
Level 3—Unobservable inputs
that are supported by little or no market activity that are significant to the fair value of assets or liabilities.
When available, we use quoted
market prices to determine fair value, and we classify such measurements within Level 1. In some cases where market prices are not
available, we make use of observable market based inputs to calculate fair value, in which case the measurements are classified
within Level 2. If quoted or observable market prices are not available, fair value is based upon valuations in which one or more
significant inputs are unobservable, including internally developed models that use, where possible, current market-based parameters
such as interest rates, yield curves and currency rates. These
measurements are classified within Level 3.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
2.
|
|
Summary of significant accounting policies (Continued):
|
|
|
(i)
|
Financial instruments and fair value measurements: (Continued)
|
Fair value measurements are classified
according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within
Level 3 even though there may be significant inputs that are readily observable.
Fair value measurement includes the
consideration of nonperformance risk. Nonperformance risk refers to the risk that an obligation (either by a counterparty) will not be
fulfilled. For financial assets traded in an active market (Level 1 and certain Level 2), the nonperformance risk is included in the market
price. For certain other financial assets and liabilities (certain Level 2 and Level 3), our fair value calculations have been adjusted
accordingly.
The fair value of accounts receivable,
accounts payable, accrued liabilities, and accounts payable and accrued liabilities - related party approximate their financial statement
carrying amounts due to the short-term maturities of these instruments and are therefore carried at historical cost basis.
The government CEBA loan is classified
as a financial liability and its fair value was determined using the effective interest rate method, and is carried at amortized cost.
Fair values determined by Level 3
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 1 inputs. Stock-based compensation and
derivative liability – warrants were measured using Level 2 inputs. Goodwill impairment was measured using Level 3 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.
The accounts
receivable as at June 30, 2021, is summarized as follows:
|
Schedule of Accounts, Notes, Loans and Financing Receivable
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
|
Accounts receivable
|
|
$
|
2,913,310
|
|
|
$
|
3,989,200
|
|
|
Expected credit losses
|
|
|
(55,273
|
)
|
|
|
(55,660
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net accounts receivable
|
|
$
|
2,858,037
|
|
|
$
|
3,933,540
|
|
The Company had bank accounts with the National
Bank of Anguilla. During the year ended December 31, 2016, the National Bank of Anguilla filed for chapter 11 protection. The Company
expensed the balance on account of $27,666 in fiscal 2016 as a doubtful debt. Additionally, the Company has a doubtful debt provision
of $27,607 for existing accounts receivable.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
Property, Plant and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
Cost
|
|
|
Accumulated
depreciation
|
|
|
Net book
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment and computers
|
|
$
|
152,125
|
|
|
$
|
135,267
|
|
|
$
|
16,858
|
|
|
Furniture and fixtures
|
|
|
14,787
|
|
|
|
9,119
|
|
|
|
5,668
|
|
|
|
|
$
|
166,912
|
|
|
$
|
144,386
|
|
|
$
|
22,526
|
|
|
December 31, 2020
|
|
Cost
|
|
|
Accumulated
depreciation
|
|
|
Net book
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment and computers
|
|
$
|
146,545
|
|
|
$
|
130,798
|
|
|
$
|
15,747
|
|
|
Furniture and fixtures
|
|
|
14,787
|
|
|
|
8,695
|
|
|
|
6,092
|
|
|
|
|
$
|
161,332
|
|
|
$
|
139,493
|
|
|
$
|
21,839
|
|
Depreciation expense was $2,079 (June
30, 2020 - $2,403) for the quarter ended June 30, 2021.
|
Schedule of Finite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
Cost
|
|
|
Accumulated
depreciation
|
|
|
Net book
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ad Tech technology
|
|
$
|
1,877,415
|
|
|
$
|
876,127
|
|
|
$
|
1,001,288
|
|
|
Kidoz OS technology
|
|
|
31,006
|
|
|
|
24,116
|
|
|
|
6,890
|
|
|
Customer relationship
|
|
|
1,362,035
|
|
|
|
397,260
|
|
|
|
964,775
|
|
|
|
|
$
|
3,270,456
|
|
|
$
|
1,297,503
|
|
|
$
|
1,972,953
|
|
|
December 31, 2020
|
|
Cost
|
|
|
Accumulated
amortization
|
|
|
Net book
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ad Tech technology
|
|
$
|
1,877,415
|
|
|
$
|
688,386
|
|
|
$
|
1,189,029
|
|
|
Kidoz OS technology
|
|
|
31,006
|
|
|
|
18,948
|
|
|
|
12,058
|
|
|
Customer relationship
|
|
|
1,362,035
|
|
|
|
312,133
|
|
|
|
1,049,902
|
|
|
|
|
$
|
3,270,456
|
|
|
$
|
1,019,467
|
|
|
$
|
2,250,989
|
|
Amortization expense was $139,018
(June 30, 2020 - $139,018) for the quarter ended June 30, 2021.
The changes in the carrying amount of goodwill for the period ended
June 30, 2021, and the year ended December 31, 2020 were as follows:
|
Schedule of Goodwill
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
|
Goodwill, balance at beginning of period
|
|
$
|
3,301,439
|
|
|
$
|
3,301,439
|
|
|
Impairment of goodwill
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill, balance at end of period
|
|
$
|
3,301,439
|
|
|
$
|
3,301,439
|
|
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
The Company’s annual goodwill impairment
analysis performed during the fourth quarter of fiscal 2020 included a quantitative analysis of Kidoz Ltd. reporting unit (consisting
of intangible assets (Note 5) and goodwill). The reporting unit has a carrying amount of $5,413,410 (December 31, 2020 - $5,552,428) as
at December 31, 2020. The Company performed a discounted
cash flow analysis for Kidoz Ltd. for the year ended December 31, 2020. These discounted cash flow models included management assumptions
for expected sales growth, margin expansion, operational leverage, capital expenditures, and overall operational forecasts. The Company
classified these significant inputs and assumptions as Level 3 fair value measurements. Based on the annual impairment test described
above there was no additional impairment determined for fiscal 2020.
|
7.
|
|
Content and software development assets:
|
Since
the year ended December 31, 2014, the Company has been developing software technology and content for our websites. This software technology
and content includes the development of Trophy Bingo, a social bingo game, the license and development of Garfield Bingo, a social bingo
game, the development of the Rooplay platform and the development of the Rooplay Originals games and the continued development of the
KIDOZ Safe Ad Network, the KIDOZ Kid-Mode Operating System, and the KIDOZ publisher SDK.
During the period ended June 30, 2021, the Company
has expensed the development costs of all its technology as incurred and has expensed the following software development costs.
|
Expense of Development Costs [Table Text Block]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
ended June 30,
2021
|
|
Six Months
ended June 30,
2020
|
|
Three Months
ended June 30,
2021
|
|
Three Months
ended June 30,
2020
|
|
|
|
|
|
|
|
|
|
|
|
Opening total software development costs
|
|
$
|
8,880,753
|
|
|
$
|
7,730,851
|
|
|
$
|
9,218,046
|
|
|
$
|
8,015,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software development during the period
|
|
|
703,339
|
|
|
|
525,853
|
|
|
|
366,046
|
|
|
|
241,130
|
|
|
Closing total Software development costs
|
|
$
|
9,584,092
|
|
|
$
|
8,256,704
|
|
|
$
|
9,584,092
|
|
|
$
|
8,256,704
|
|
During the year
ended December 31, 2020, the Company was granted a loan of $47,089 (CAD$60,000) under the Canada Emergency Business Account (CEBA) loan
program for small businesses. The CEBA loan program is one of the many incentives the Canadian Government put in place in response to
COVID-19. The loan is interest free and a quarter of the loan CAD$20,000 is eligible for complete forgiveness if CAD$40,000 is fully repaid
on or before December 31, 2022. If the loan cannot be repaid by December 31, 2022, it can be converted into a 3-year term loan charging
an interest rate of 5%.
During the quarter
ended March 31, 2021, the Company drew $200,000 from its line of credit with the Leumi Bank. The loan was repaid in full during the quarter
ended March 31, 2021 with interest costs of $987.
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.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
9.
|
|
Stockholders’ equity: (Continued)
|
|
(a)
|
|
Common stock issuances:
|
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 $5,162
(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 $0.78
(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.
There were no shares issued during the year ended
December 31, 2020.
A summary of warrant activity for the quarter
ended June 30, 2021 are as follows:
|
Schedule of warrant activity
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
options
|
|
|
|
Exercise price
|
|
|
Expiry date
|
|
Outstanding, December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
230,000
|
|
|
|
0.78
|
|
|
April 3, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding June 30, 2021
|
|
|
230,000
|
|
|
|
0.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30, 2021, the Company
granted 1,300,000 options at CAD$1.02 ($0.81)
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
9.
|
|
Stockholders’ equity: (Continued)
|
|
(c)
|
|
Stock option plans: (Continued)
|
During the quarter ended March 31, 2021, the Company
granted 1,075,000 options at CAD$0.50 ($0.39)
During the year ended December 31, 2020, the Company
granted 2,745,000 options at CAD$0.45 ($0.33).
|
Share-based Payment Arrangement, Option, Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
2,375,000
|
|
|
|
0.62
|
|
|
Exercised
|
|
|
(70,000
|
)
|
|
|
(0.45
|
)
|
|
Cancelled
|
|
|
(140,000
|
)
|
|
|
(0.35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding June 30, 2021
|
|
|
8,040,750
|
|
|
$
|
0.48
|
|
The aggregate intrinsic value for options as of
June 30, 2021 was $912,563 (December 31, 2020 - $137,250).
The following table summarizes information concerning
outstanding and exercisable stock options at June 30, 2021:
|
Share-based Payment Arrangement, Option, Exercise Price Range
|
|
|
|
|
|
|
Exercise
prices per share
|
|
Number
outstanding
|
|
Number
exercisable
|
|
Expiry date
|
|
CAD$0.45
|
|
2,645,000
|
|
147,896
|
|
June 30, 2025
|
|
CAD$0.50
|
|
1,031,600
|
|
131,600
|
|
February 1, 2026
|
|
CAD$0.54
|
|
570,000
|
|
570,000
|
|
December 20, 2021
|
|
CAD$0.54
|
|
506,150
|
|
481,450
|
|
November 8, 2022
|
|
CAD$0.54
|
|
713,000
|
|
713,000
|
|
June 4, 2023
|
|
US$0.50
|
|
1,275,000
|
|
1,275,000
|
|
June 4, 2023
|
|
CAD$1.02
|
|
1,300,000
|
|
78,000
|
|
April 6, 2026
|
|
|
|
8,040,750
|
|
3,396,946
|
|
|
During the quarter ended June 30, 2021, the Company
recorded stock-based compensation of $192,585 on the options granted and vested (June 30, 2020 – $9,849) and as per the Black-Scholes
option-pricing model, with a weighted average fair value per option of $0.48 (June 30, 2020 - $0.26).
Subsequent to the quarter ended June
30, 2021, a further 300,000 options were awarded where 2% vests per month thereafter, with an exercise price of CAD$0.66 ($0.53), expiring
on July 12, 2026.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
10.
|
|
Fair value measurement:
|
The following table sets forth the
fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier
fair value hierarchy.
|
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
|
Level 2
|
|
|
|
Level 3
|
|
|
|
Total
|
|
|
As at June 30, 2021
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,553,626
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,553,626
|
|
|
Long term cash equivalent
|
|
|
32,269
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,269
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability – warrants
|
|
|
-
|
|
|
|
(45,588
|
)
|
|
|
|
|
|
|
(45,588
|
)
|
|
Total net assets measured and recorded at fair value
|
|
$
|
1,585,895
|
|
|
($
|
45,588
|
)
|
|
$
|
-
|
|
|
$
|
1,540,307
|
|
|
|
|
|
Level 1
|
|
|
|
Level 2
|
|
|
|
Level 3
|
|
|
|
Total
|
|
|
As at December 31, 2020
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,226,045
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,226,045
|
|
|
Long term cash equivalent
|
|
|
31,392
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,392
|
|
|
Total assets measured and recorded at fair value
|
|
$
|
1,257,437
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,257,437
|
|
The Company leases office facilities in Vancouver,
British Columbia, Canada, The Valley, Anguilla, British West Indies and Netanya, Israel. These office facilities are leased under operating
lease agreements.
During the quarter ended March 31, 2019, the Company
signed a five year lease for a facility in Vancouver, Canada, commencing April 1, 2019 and ending March 2024. This facility comprises
approximately 1,459 square feet. The Company accounts for the lease in accordance with ASU 2016-02 (Topic 842) and has recognized a right-of-use
asset and operating lease liability.
The Netanya, Israel operating lease expired on
July 14, 2017 but unless 3 month’s notice is given it automatically renews for a future 12 months until notice is given. During
the year ended December 31, 2020, the lease was extended for a further 12 months. This facility comprises approximately 190 square metres.
The Company has accounted for this lease as a short-term lease.
The Anguillan operating lease expired on April
1, 2011 but unless 3 month’s notice is given it automatically renews for a further 3 months. The Company will account for the lease
in accordance with ASU 2016-02 (Topic 842) and will recognize a right-of-use asset and operating lease liability.
The minimum lease payments under these operating
leases are approximately as follows:
|
Lessee, Operating Lease, Liability, Maturity
|
|
|
|
|
|
2021
|
|
$
|
42,359
|
|
|
2022
|
|
|
50,046
|
|
|
2023
|
|
|
51,223
|
|
|
2024
|
|
|
12,879
|
|
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
11.
|
|
Commitments: (Continued)
|
The Company paid rent expense totaling $31,501
for the quarter ended June 30, 2021 (June 30, 2020 - $24,827).
The Company has a management consulting agreement
with T.M. Williams (Row), Inc., an Anguilla incorporated company, and Mr. T. M. Williams. During the year ended December 31, 2014, the
Company amended a previous agreement with Mr. T. M. Williams to provide for a consultancy payment of 2.5% of the monthly social bingo
business with a minimum of $11,000 and a maximum of $25,000 per month.
During the year ended December 31, 2014, the Company
entered into an agreement with Jayska Consulting Ltd. and Mr. J. M. Williams, Chief Executive Officer of the Company for the provision
of services of Mr. J. M. Williams as Chief Executive Officer of the Company. The Consulting agreement provides for a consultancy payment
of GBP£5,000 per month. In addition, during the year ended December 31, 2014, the Company entered into an agreement with LVA Media
Inc. and Mr. J. M. Williams, for the provision of services of Mr. J. M. Williams as Chief Executive Officer of the Company. The Consulting
agreement provides for a consultancy payment of 2.5% of the monthly social bingo business with a minimum of $7,500 and a maximum of $25,000
per month.
The Company
expensed the minimum guarantee payments over the life of the agreement and recognized license expense of $2,750 (June 30, 2020 - $10,121)
for the quarter ended June 30, 2021, and $11,564 (June 30, 2019 - $27,003) for the six months ended June 30, 2021.
There
is no discount rate implicit in the Anguilla office operating lease agreement, so the Company estimated a 5%
discount rate for the incremental borrowing rate for the lease. There is no discount rate implicit in the license agreement, so the Company
estimated a 12%
discount rate for the incremental borrowing rate for the licenses as of the adoption date, January 1, 2019.
Effective
April 1, 2019, we recognized lease assets and liabilities of $125,474,
in relation to the Vancouver office. We estimated a discount rate of 4.12%.
We
elected to not separate lease and non-lease components for all of our leases. For leases with a term of 12 months or less, our current
offices, we elected the short-term lease exemption, which allowed us to not recognize right-of-use assets or lease liabilities for qualifying
leases existing at transition and new leases we may enter into in the future, as there is significant uncertainty on whether the leases
will be renewed.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
12.
|
|
Right of use assets: (Continued)
|
The right-of-use assets are summarized as follows:
|
Schedule of Right-of-use Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
|
December 31, 2020
|
|
|
|
|
|
|
|
|
Opening balance for the period
|
|
$
|
106,315
|
|
|
$
|
134,914
|
|
|
Capitalization of additional license leases
|
|
|
-
|
|
|
|
25,472
|
|
|
Amortization of operating lease right-of use assets
|
|
|
(26,112
|
)
|
|
|
(54,071
|
)
|
|
Closing balance for the period
|
|
$
|
80,203
|
|
|
$
|
106,315
|
|
The operating lease as at June 30, 2021, is summarized
as follows:
|
Schedule of Lessee, Operating Lease
|
|
|
|
|
|
As at June 30, 2021
|
|
Operating lease-
Office lease
|
|
|
|
|
|
2021
|
|
$
|
16,948
|
|
|
2022
|
|
|
34,779
|
|
|
2023
|
|
|
35,956
|
|
|
2024
|
|
|
8,312
|
|
|
Total lease payments
|
|
$
|
95,995
|
|
|
Less: Interest
|
|
|
(4,010
|
)
|
|
Present value of lease liabilities
|
|
$
|
91,985
|
|
|
|
|
|
|
|
|
Amounts recognized on the balance sheet
|
|
|
|
|
|
Current lease liabilities
|
|
$
|
32,614
|
|
|
Long-term lease liabilities
|
|
|
59,371
|
|
|
|
|
|
|
|
|
Total lease payments
|
|
$
|
91,985
|
|
|
Schedule of Operating Lease Liability
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
Opening balance for the period
|
|
$
|
103,918
|
|
|
$
|
127,615
|
|
|
Payments on operating lease liabilities
|
|
|
(11,933
|
)
|
|
|
(23,697
|
)
|
|
Closing balance for the period
|
|
|
91,985
|
|
|
|
103,918
|
|
|
Less: current portion
|
|
|
(32,614
|
)
|
|
|
(30,083
|
)
|
|
Operating lease liabilities – non-current portion as at end of period
|
|
$
|
59,371
|
|
|
$
|
73,835
|
|
|
13.
|
|
Related party transactions:
|
The Company has a liability of $17,323 (December
31, 2020 - $10,968) to a company owned by a current director and officer of the Company for payment of consulting services rendered of
$52,800 (June 30, 2020 - $28,875) by the current director and officer of the Company.
The Company has a liability of $3,172
(December 31, 2020 - $nil) to a current director and officer of the Company for expenses incurred.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
13.
|
|
Related party transactions: (Continued)
|
The Company has a liability of $6,929
(December 31, 2020 - $6,098)
to a company owned by a current director and officer of the Company for payment of consulting services rendered of $20,985
(June 30, 2020 - No $nil) by the current director and officer of the Company.
The Company has a liability of $15,986 (December
31, 2020 - $7,500) to a company owned by a current director and officer of the Company for payment of consulting services rendered of
$48,111 (June 30, 2020 - $28,815) by the current director and officer of the Company.
The Company has a liability of $19,662 (December
31, 2020 - $12,519) to a current director and officer of the Company for payroll.
The Company has a liability of $5,500 (December
31, 2020 - $1,500), to independent directors of the Company for payment of directors’ fees. During the quarter ended June 30, 2021,
the Company accrued $2,000 (June 30, 2020 - $2,500) to the independent directors in director fees.
The Company has a liability of $24,955 (December
31, 2020 - $12,187), to an officer of the Company for payment of consulting services rendered and expenses incurred of $62,382 (June 30,
2020 - $23,502) by the officer of the Company.
The Company has a liability of No
$nil (December 31, 2020 - No $nil), to an officer of the Company for payment of consulting fees and expenses incurred of $47,305
(June 30, 2020 - $18,916)
by the officer of the Company.
In the quarter ended June 30, 2021, the
Company issued stock options to its directors, employees, and consultants. During the quarter ended June 30, 2021, the Company
incurred stock-based compensation expense of $69,932
(June 30, 2020 - No $nil) to related parties from this stock option grant.
The related party transactions are in the normal
course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related
party.
|
14.
|
|
Segmented information:
|
Revenue
The Company operates in reportable business segments,
the sale of Ad tech advertising and content revenue.
The Company had the following revenue by geographical
region.
|
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
ended June 30,
2021
|
|
Six Months
ended June 30,
2020
|
|
Three Months
ended June 30,
2021
|
|
Three Months
ended June 30,
2020
|
|
Ad tech advertising revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe
|
|
$
|
658,520
|
|
|
$
|
635,540
|
|
|
$
|
441,693
|
|
|
$
|
301,100
|
|
|
North America
|
|
|
2,820,068
|
|
|
|
814,121
|
|
|
|
1,600,366
|
|
|
|
305,127
|
|
|
Other
|
|
|
146,212
|
|
|
|
57,603
|
|
|
|
78,441
|
|
|
|
5,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ad tech advertising revenue
|
|
$
|
3,624,800
|
|
|
$
|
1,507,264
|
|
|
$
|
2,120,500
|
|
|
$
|
611,709
|
|
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
14.
|
|
Segmented information: (Continued)
|
|
|
|
Six Months
ended June 30,
2021
|
|
Six Months
ended June 30,
2020
|
|
Three Months
ended June 30,
2021
|
|
Three Months
ended June 30,
2020
|
|
Content revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe
|
|
$
|
44,106
|
|
|
$
|
53,257
|
|
|
$
|
22,122
|
|
|
$
|
26,855
|
|
|
Central, Eastern and Southern Europe
|
|
|
955
|
|
|
|
52,996
|
|
|
|
392
|
|
|
|
20,452
|
|
|
North America
|
|
|
29,439
|
|
|
|
75,063
|
|
|
|
11,127
|
|
|
|
56,432
|
|
|
Other
|
|
|
36,147
|
|
|
|
32,226
|
|
|
|
23,364
|
|
|
|
21,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total content revenue
|
|
$
|
110,647
|
|
|
$
|
213,542
|
|
|
$
|
57,005
|
|
|
$
|
125,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe
|
|
$
|
702,626
|
|
|
$
|
688,797
|
|
|
$
|
463,815
|
|
|
$
|
327,955
|
|
|
Central, Eastern and Southern Europe
|
|
|
955
|
|
|
|
52,996
|
|
|
|
392
|
|
|
|
20,452
|
|
|
North America
|
|
|
2,849,507
|
|
|
|
889,184
|
|
|
|
1,611,493
|
|
|
|
361,559
|
|
|
Other
|
|
|
182,359
|
|
|
|
89,829
|
|
|
|
101,805
|
|
|
|
26,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
3,735,447
|
|
|
$
|
1,720,806
|
|
|
$
|
2,177,505
|
|
|
$
|
736,827
|
|
Equipment
The Company’s equipment is located as follows:
|
Long-lived Assets by Geographic Areas
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
June 30, 2021
|
|
December 31, 2020
|
|
Anguilla
|
|
$
|
113
|
|
|
$
|
164
|
|
|
Canada
|
|
|
7,706
|
|
|
|
7,482
|
|
|
Israel
|
|
|
13,663
|
|
|
|
12,870
|
|
|
United Kingdom
|
|
|
1,044
|
|
|
|
1,323
|
|
|
|
|
$
|
22,526
|
|
|
$
|
21,839
|
|
Major customers
During the quarter ended June 30, 2021 and 2020,
the Company sold Ad tech revenue and content revenue including subscriptions on its site Rooplay, in-app purchases on its social bingo
sites, Trophy Bingo and Garfield’s Bingo and Rooplay Originals. During the quarter ended June 30, 2021, the Company had three Ad
tech customers: $769,797, $440,104 and $265,897 (June 30, 2020 – three customers: $266,338, $134,847, and $78,218 respectively)
who purchased more than 10% of the total revenue. The Company is reliant on the Google App, iOS App and Amazon App Stores to provide a
content platform for Rooplay, Trophy Bingo and Garfield’s Bingo to be played thereon and certain advertising agencies for the Ad
tech revenue.
Kidoz
Inc. and subsidiaries
(Expressed in United States Dollars)
Notes to Consolidated Financial Statements
Six Months ended June 30, 2021 and 2020
(Unaudited)
|
16.
|
|
Concentrations of credit risk:
|
Financial instruments that potentially subject
the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with high
quality financial institutions and limits the amount of credit exposure with any one institution.
The Company
currently maintains a substantial portion of its day-to-day operating cash balances at financial institutions. At June 30, 2021, the Company
had total cash and cash equivalents balances of $1,553,626 (December 31, 2020 - $1,226,045) at financial institutions, where $1,247,408
(December 31, 2020 - $970,453) is in excess of federally insured limits.
The Company has concentrations of credit risk
with respect to accounts receivable, the majority of its account’s receivable are concentrated geographically in the United States
amongst a small number of customers.
As of June 30, 2021, the Company had two customers,
totaling $1,595,727 and $440,104 who accounted for greater than 10% of the total accounts receivable. As of December 31, 2020, the Company
had two customers, totaling $1,618,244 and $807,346 respectively who accounted for greater than 10% of the total accounts receivable.
The Company controls credit risk through monitoring
procedures and receiving prepayments of cash for services rendered. The Company performs credit evaluations of its customers but generally
does not require collateral to secure accounts receivable.