FORWARD LOOKING STATEMENTS
Kidoz’s mobile products include the Kid Mode Operating System installed on millions of OEM tablets worldwide, Rooplay (www.rooplay.com) the cloud-based EduGame system for kids to learn and play, Garfield’s Bingo (www.garfieldsbingo.com) live on Android, and iOS; and Trophy Bingo (www.trophybingo.com), live across mobile platforms.
References in this document to “the Company,” “we,” “us,” and “our” refer to Kidoz Inc.
We consider the following accounting policies to be both those most important to the portrayal of our financial condition and require the most subjective judgment:
– Impairment of long-lived assets
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
2) Identify the performance obligations in the contract
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
5) Recognize revenue when or as the Company satisfies a performance obligation
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:
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 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 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.
b) 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
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) In App purchases – The Company generates revenue through in-application
purchases (“in-app purchases”) within its games; (i.e. 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 Android,
Amazon, iOS and Facebook Messenger (this was discontinued in fiscal 2021) 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
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.
The Company expensed all software development costs as incurred for the period ended June 30, 2022 and 2021. As at June 30, 2022 and 2021, all capitalized software development costs have been fully amortized and the Company has no capitalized software development costs.
Total software development costs were $11,720,294 as at June 30, 2022 (December 31, 2021 – $10,559,601).
Impairment of Long-lived Assets
During the year ended December 31, 2021, the Company deemed there was no impairment of the goodwill.
Selling and marketing expenses
We expect to incur increased sales and marketing expenses in selling the Ad tech advertising and to grow the Ad tech advertising revenue. There can be no assurances that these expenditures will result in increased traffic or significant additional revenue.
General and administrative expenses
Salaries, wages, consultants and benefits
Content and software development
Stock-based compensation expense
Our Adjusted EBITDA is reconciled as follows:
Three Months Three Months
ended June ended June
30, 2022 30, 2021
LIQUIDITY AND CAPITAL RESOURCES
We had cash of $1,729,653 and working capital of $3,773,961 at June 30, 2022. This compares to cash of $2,078,607 and working capital of $4,536,851 as at December 31, 2021.
© Edgar Online, source Glimpses
