Summary of significant accounting policies:

(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%
Shoal Media Inc.	Anguilla	100%
Shoal Games (UK) Plc	United Kingdom	99%
Rooplay Media Ltd.	British Columbia, Canada	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,

2016,

English Bay Office Management Limited changed its name to Shoal Media (Canada) Inc. During the year ended

December

31,

2016,

Rooplay Media Ltd. was registered in British Columbia, Canada. All inter-company balances and transactions have been eliminated in the consolidated financial statements.

Subsequent to the year ended

December

31,

2016,

Shoal Media UK Ltd. was incorporated under the laws of England and Wales.

(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 valuation of long-lived assets, the collectibility of accounts receivable and the valuation of deferred tax assets. Actual results

may

differ significantly from these estimates.

(c)

Revenue recognition:

Trophy Bingo and Garfield’s Bingo revenues have been recognized from the sale of in-game purchases, net of platform fees, at the time of purchase by the player. The revenue from in-game advertising is recognized when advertising is served to the player.

Advertising revenues, not generated in Trophy Bingo or Garfield’s Bingo, have been recognized when collection of the amounts are reasonably assured.

Rooplay revenue have been recognized when collection of the subscriptions are reasonably assured and the provision of service has occurred.

(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 net income. Revenues and expenses are translated at the rates of exchange prevailing on the dates such items are recognized in earnings.

(e) 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 payment processors 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,

2016,

was $nil

(2015

- $nil).

(f) 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 income or expenses as realized.

(g)

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. Commencing

January

2014,

the Company obtained technological feasibility and is amortizing the capitalized software development costs over a period of

years. The Company performs an annual review of the estimated economic life and the recoverability of such capitalized software costs, using a net realizable value test. The Company completed the amortization of the capitalized Trophy Bingo software development expenses on

December

31,

2016.

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.

Total software development costs for the development of all

three

games; Rooplay, Garfield’s Bingo and Trophy Bingo, were

$4,935,274

as at

December

31,

2016

(December

31,

2015

$3,857,636).

(h) 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

2016

totaled

$403,523

(2015

$549,534).

(i) Stock-based compensation:

The Company recognizes all stock-based compensation as an expense in the financial statements and that such cost be measured at the fair value of the award.

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:

	2016			2015
Expected dividend yield		-			-
Expected stock price volatility		78	%		-
Weighted average volatility		78	%		-
Risk-free interest rate		1.9	%		-
Expected life of options (years)		5			-
Forfeiture rate		0	%		-

(j) 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, game development assets, 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.

(k) 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. 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.

(l) 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

1,010,000

(2015

nil

) stock options were excluded as at

December

31,

2016.

The earnings per share data for the year ended

December

31,

2016

and

2015

are summarized as follows:

	2016			2015
Loss for the year from continuing operations	$	(3,156,302	)	$	(2,981,987	)
Income (loss) for the year from discontinued operations	$	-		$	16,305

Basic and diluted weighted average number of common shares outstanding		58,227,957			55,812,511

Basic and diluted (loss) earnings per common share outstanding
Continuing operations	$	(0.05	)	$	(0.05	)
Discontinued operations		-		$	0.00

(m) Domain name and intangible assets:

The Company had capitalized the cost of the purchase of the domain name Bingo.com and was amortizing the cost over

five

years from the date of commencement of operations. In

2002,

the Company suspended the amortization of the domain name cost in accordance with ASC

350,

where companies are no longer required to amortize indefinite life assets but instead test the indefinite intangible asset for impairment at least annually. The capitalized amount was based on the net present value of the minimum payments permitted under the terms of the purchase agreement. The domain name is tested for impairment by comparing the future cash flows of the domain name with its carrying value. The Company determined that as a result of level

unobservable inputs in accordance with ASC

820,

Fair Value Measurements and Disclosures, that the fair value of the domain name exceeded the carrying value and therefore no impairment existed for the years presented.

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

May

2014,

the FASB issued ASU No.

2014

09,

Revenue from Contracts with Customers and issued subsequent amendments to the initial guidance in

August

2015,

March

2016,

April

2016,

and

May

2016

within ASU

2015

04,

ASU

2016

08,

ASU

2016

10,

ASU

2016

and ASU

2016

12,

respectively. The guidance in this update supersedes the revenue recognition requirements in ASC

605,

Revenue Recognition, and most industry-specific guidance throughout the Codification. Additionally, this update supersedes some cost guidance included in ASC

605

35,

Revenue Recognition - Construction-Type and Production-Type Contracts. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, assets within the scope of ASC

360,

Property, Plant, and Equipment, and

intangible assets, within the scope of ASC

350,

Intangibles - Goodwill and Other) are amended to be consistent with the guidance on recognition and measurement in this update. The standard was to be effective for the Company as of

January

2018.

An entity can apply the revenue standard retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings (simplified transition method). The Company is currently assessing the impact of this update on its consolidated financial statements. The Company has not yet selected an adoption date, a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

June

2014,

the FASB issued ASU No.

2014

12,

Compensation-Stock Compensation. This guidance requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after

December

15,

2015

and can be applied either prospectively or retrospectively to all awards outstanding as of the beginning of the earliest annual period presented as an adjustment to opening retained earnings. Early adoption is permitted. The adoption of ASU

2014

did not have a material impact on our financial condition, liquidity or results of operations.

August

2014,

the FASB issued ASU No.

2014

15,

Presentation of Financial Statements - Going Concern (Subtopic

205

40):

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU

2014

15").

ASU

2014

provides guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and sets rules for how this information should be

disclosed in the financial statements. ASU

2014

is effective for annual periods ending after

December

15,

2016

and interim periods thereafter. Early adoption is permitted. The Company is evaluating the effect of ASU

2014

on our consolidated financial condition and results of operations.

November

2014,

the FASB issued ASU No.

2014

16,

Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. This standard requires an entity to “determine the nature of the host contract by considering all stated and implied substantive terms and features of the hybrid financial instrument, weighing each term and feature on the basis of the relevant facts and circumstances which the hybrid financial instrument was issued or acquired and the potential outcome of the hybrid financial instrument. ASU

2014

is effective for annual periods ending after

December

15,

2015

and interim periods thereafter. Early adoption is permitted. The adoption of ASU

2014

did not have a material impact on our financial condition, liquidity or results of operations.

January

2015,

the FASB issued ASU

2015

01,

which eliminates from GAAP the concept of extraordinary items. If an event or transaction meets the criteria for extraordinary classification, it is segregated from the results of ordinary operations and is shown as a separate item in the income statement, net of tax. ASU

2015

is effective for annual periods, and interim periods within those annual periods, beginning after

December

15,

2015.

Early adoption is permitted. The adoption of ASU

2015

did not have a material impact on our financial condition, liquidity or results of operations.

February

2015,

the FASB issued ASU

2015

02,

which provides guidance for reporting entities that are required to evaluate whether they should consolidate certain legal entities. In accordance with ASU

2015

02,

all legal entities are subject to reevaluation under the revised consolidation model. ASU

2015

is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after

December

15,

2015.

Early adoption is permitted. The adoption of ASU

2015

did not have a material impact on our financial condition, liquidity or results of operations.

April

17,

2015,

the FASB issued ASU No.

2015

03,

Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. Currently, debt issuance costs are recorded as an asset and amortization of these deferred financing costs is recorded in interest expense. Under the new standard, debt issuance costs will continue to be amortized over the life of the debt instrument and amortization will continue to be recorded in interest expense. The new standard is effective for the Company on

January

2016

and will be applied on a retrospective basis. The adoption of ASU

2015

did not have a material

impact on our financial condition, liquidity or results of operations.

The FASB has issued ASU

2015

05,

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic

350

40):

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in ASU

2015

provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic

350

will be accounted for consistent with other licenses of intangible assets. ASU

2015

is effective for public entities for annual periods, including interim periods within those annual periods, beginning after

December

15,

2015.

The adoption of ASU

2015

did not have a material impact on our financial condition, liquidity or results of operations.

September

2015,

the FASB issued ASU

2015

16,

Simplifying the Accounting for Measurement-Period Adjustments guidance to simplify the accounting for adjustments in a business combination. An acquirer should recognize adjustments to provisional amounts with a corresponding adjustment of goodwill, as well as the effect on earnings of changes in depreciation, amortization or other income effects, in the reporting period in which the adjustments are identified as if the accounting had been completed at the acquisition date. Disclosure is required, by line item, of the amount recorded in current period earnings that would have been recorded in previous reporting periods. This guidance is effective for fiscal years and interim periods beginning after

December

15,

2015,

and requires prospective application. Early adoption is permitted. The adoption of ASU

2015

did not have a material impact on our financial condition, liquidity or results of operations.

November

2015,

the FASB issued ASU

2015

17,

Income Taxes (Topic

740):

Balance Sheet Classification of Deferred Taxes , which requires deferred income tax liabilities and assets to be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. The guidance is effective for public entities for annual periods beginning after

December

15,

2016,

and interim periods within those annual periods with early adoption being permitted. The Company is still assessing the potential impact of ASU

2015

on its consolidated financial statements.

January

2016,

the FASB issued ASU

2016

01,

Financial Instruments - Overall (Subtopic

825

10):

Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU

2016

01”),

which requires that equity investments, except for those accounted for under the equity method or those that result in consolidation of the investee, be measured at fair value, with subsequent changes in fair value recognized in net income. However, an entity

may

choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. ASU

2016

also impacts the presentation and disclosure requirements for financial instruments. ASU

2016

is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after

December

15,

2017.

Early adoption is permitted only for certain provisions. The Company does not expect that the adoption of ASU

2016

will have a material effect on its consolidated financial statements.

February

2016,

the FASB issued ASU No.

2016

02,

Leases (Topic

842),

which requires lessees to recognize most leases on the balance sheet. This ASU requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than

months. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of

twelve

months or less. The ASU does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standard. Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. In addition, the ASU expands the disclosure requirements of lease arrangements. Lessees and lessors will use a modified retrospective transition approach, which includes a number of practical expedients. The provisions of this guidance are effective for annual periods beginning after

December

15,

2018,

and interim periods within those years, with early adoption permitted. Management is evaluating the requirements of this guidance and has not yet determined the impact of the adoption on the Company’s financial position or results of operations.

March

2016,

the FASB issued Accounting Standards Update No.

2016

09,

Compensation-Stock Compensation (Topic

718):

Improvements to Employee Share-Based Payment Accounting (“ASU

2016

09”),

which addresses how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize the income tax effects of awards in the statement of income when the awards vest or are settled, and to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The ASU also addresses such areas as an accounting policy election for forfeitures and the amount an employer can withhold to cover income taxes and still qualify for equity classification. The amendments in this ASU will be effective for annual periods beginning after

December

15,

2016

and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

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.

The Company is currently evaluating the impact of ASU No.

2016

on its financial position, results of operations and liquidity.

August

2016,

the FASB issued ASU No.

2016

15,

“Statement of Cash Flows (Topic

230)”.

The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU No.

2016

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

December

15,

2017.

Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company is currently evaluating the impact of ASU No.

2016

on its financial position, results of operations and liquidity.

October

2016,

the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016

16,

Income Taxes (Topic

740).

The standard improves the accounting for income tax consequences of intra-entry transfers of assets other than inventory. This pronouncement is effective for annual reporting periods beginning after

December

15,

2017.

The amendments in this ASU should be applied using a modified retrospective approach. The Company is currently evaluating the impact of ASU No.

2016

on its financial position, results of operations and liquidity.

November

2016,

the Financial Accounting Standards Board ("FASB") issued ASU No.

2016

(Topic

230)

Statement of Cash Flow: Restricted Cash. The pronouncement requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments of this ASU are effective for reporting periods beginning after

December

15,

2017,

with early adoption permitted. The standard must be applied retrospectively to all periods presented. The Company is currently evaluating the impact of adoption on the Consolidated Financial Statements.

There have been no other recent accounting standards, or changes in accounting standards, during the year ended

December

31,

2016,

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

(o) Financial instruments:

(i) Fair values:

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. Cash is carried at fair value using a level

fair value measurement.

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 was measured 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.