2.	Summary of significant accounting policies:

(a)

Basis of presentation:

These consolidated financial statements have been prepared in accordance with accounting prin

ciples 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%
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.

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.

During the year ended

December 31,

17,

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

All inter-company balances and transactions have been eliminated in the consolidated financial statement

(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 a

ssets 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 collectibility of accounts receivable, the valuation of promissory n

otes, stock-based compensation and the estimated market rate of

15%,

the derivative liability - warrants valuation and the valuation of deferred tax assets. Actual results

may

differ significantly from these estimates.

(c)

Revenue Recognition

Trophy Bingo and Garfield's Bingo r

evenues 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 i

n Trophy Bingo or Garfield's Bingo, have been recognized when collection of the amounts are reasonably assured.

Rooplay revenues 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 finan

cial 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 a

ssets and liabilities are included in operations. 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 fa

ce value less any provisions for uncollectible accounts considered necessary. Accounts receivable includes receivables from online platforms 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, 2017,

was

$nil

(

2016

$27,666

(f)

Equipment:

Equipment is recorded at cost less a

ccumulated 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 operation

s 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 feasi

bility 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 1, 2014,

the Company obtained technological feasibility and amortized 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 wr

itten 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

$5,768,476

as at

December 31, 2017 (

December 31, 2016 -

$4,935,274

(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

2017

totaled

$244,810

(

2016

$403,523

)

(i)

Stock-based compensation:

The Company recognizes all stock-based compens

ation 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 a

ssumptions:

	2017		2016
Expected dividend yield	-		-
Expected stock price volatility	25	%	78	%
Weighted average volatility	25	%	78	%
Risk-free interest rate	1.56	%	1.9	%
Expected life of options (in years)	5		5
Forfeiture rate	5	%	0	%

(j)

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

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

$123,284

was been estimated on the date of the subscription using the Binomial Lattice pricing model. During the year ended

December 31, 2017,

there was a gain on derivative

liability - warrants of

$78,712

and the derivative liability - warrants value reduced to

$44,572

with the following assumptions:

	December 31, 2017		June 16, 2017
			Subscription date
Average stock price	CAD$0.65		CAD$0.64
Expected dividend yield	-		-
Expected stock price volatility	93.74	%	33	%
Risk-free interest rate	1.66	%	0.71	%
Expected life of warrants (in years)	0.5		1

The average stock price is calculated

on the probability weighted average price of the exercise of the warrants.

(k)

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, Pla

nt 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, 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 e

xceeds 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.

(l)

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. The Company recognizes the income tax recovery from the receipt of tax credits upon receipt of funds. 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.

(m)

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

1,605,000

(

2016

1,010,000

) stock options and

5,219,163

(

2016

nil

) warrants were excluded as at

December 31, 2017.

The earnings per share data for the year ended

December 31, 2017

and

2016

are summarized as follows:

	2017			2016
Loss for the year	$	(1,741,951	)	$	(3,156,302	)

Basic and diluted weighted average number of common shares outstanding		61,730,928			58,227,957

Basic and diluted (loss) earnings per common share outstanding	$	(0.03	)	$	(0.05	)

(n)

New accounting pronouncements and changes in accounting policies:

May 2014,

the Financial Accounting Standard

s Board ("FASB") issued ASU

No.

2014

09,

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

August 2016,

March 2016,

April 2016,

and

May 2016

within ASU

2016

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 guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should also disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard was to be effective for the Company as of

January 1, 2017,

but in

August 2016,

the FASB delayed the effective date of the new revenue accounting standard to

January 1, 2019,

and would permit early adoption as of the original effective date. Earlier adoption is

not

otherwise permitted for public entities. 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 (modified retrospective method). The Company is currently assessing the impact of this update on its consolidated financial statements. The Company adopted ASC

2014

as of

January 1, 2018

using the modified retrospective method. The new standard will therefore be applied to all contracts

not

completed as of

January 1, 2018.

The Company does

not

believe the adoption of ASC

606

will have a material impact to its results of operations or cash flows.

January 2016,

the FASB issued ASU

2016

01,

Financial Instruments - Overall (Subtopic

825

): 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.

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 th

e 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 i

ssued 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 adopted ASC

2014

as of

January 1, 2018.

The impact of ASU

2016

will be the disclosure of the interest on the promissory note in the Statement of Cash Flows. The Company will reclassify

$11,289

(

2016

$811

) of interest relating to the principal portion of the promissory note from net cash used in operating activities to cash flows from financing activities. The Company does

not

expect ASU

2016

to have any other material impact on its consolidated financial statements.

October 2016,

FASB issued ASU

No.

016

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 adopted ASU

2016

January 1, 2018

and it did

not

have an impact on its consolidated financial statements.

May 2017,

the FASB issued ASU

2017

09,

Compensat

ion - Stock Compensation (Topic

718

): Scope of Modification Accounting. The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

718.

This pronouncement is effective for annual reporting periods beginning after

December 15, 2017

but early adoption is permitted. The Company adopted ASU

2017

January 1, 2018

and it did

not

have an impact on its consolidated financial statements.

August

2017,

the FASB issued ASU

2017

12,

Derivatives and Hedging (Topic

850

), the objective of which is to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. In addition, the amendments in this Update make certain targeted improvements to simplify the application and disclosure of the hedge accounting guidance in current general accepted accounting principles. This pronouncement is effective for public entities for fiscal years beginning after

December 15, 2018.

Early application is permitted in any period after issuance. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this Update. The amended presentation and disclosure guidance is required only prospectively. The Company is currently evaluating the impact of adopting this guidance on its financial position, results of operations and liquidity.

February 2018

, FASB issued Accounting Standards Update ("ASU")

2018

02,

"Income Statement - Reporting Comprehensive Income (Topic

220

): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" to address a narrow-scope financial reporting issue that arose as a consequence of the change in the tax law. On

December 22, 2017,

the U.S. federal government enacted a tax bill,

H.R.1,

An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year

2018

(Tax Cuts and Jobs Act of

2017

). The ASU permits a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the newly enacted federal corporate income tax rate. The amount of the reclassification would be the difference between the historical corporate income tax rate of

34%

and the newly enacted

21%

corporate income tax rate. ASU

2018

is effective for all entities for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years with early adoption permitted, including adoption in any interim period, for (i) public business entities for reporting periods for which financial statements have

not

yet been issued and (ii) all other entities for reporting periods for which financial statements have

not

yet been made available for issuance. The changes are required to be applied retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act of

2017

is recognized. The Company is currently evaluating the impact of adopting this guidance.

February 2018,

FASB issued ASU

2018

03,

"Technical Corrections and Improvements to Financial Instruments (Subtopic

825

) - Recog

nition and Measurement of Financial Assets and Financial Liabilities". This update was issued to clarify certain narrow aspects of guidance concerning the recognition of financial assets and liabilities established in ASU

No.

2016

01,

"Financial Instruments-Overall (Subtopic

825

): Recognition and Measurement of Financial Assets and Financial Liabilities". This includes an amendment to clarify that an entity measuring an equity security using the measurement alternative

may

change its measurement approach to a fair valuation method in accordance with Topic

820,

Fair Value Measurement, through an irrevocable election that would apply to that security and all identical or similar investments of the same issued. The update is effective for fiscal years beginning after

December 15, 2017

and interim periods within those fiscal years beginning after

June 15, 2018.

The Company is currently assessing the impact that adopting this new accounting standard will have on our consolidated financial statements.

There have

been

other recent accounting standards, or changes in accounting standards, during the year ended

December 31, 2017,

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 ide

ntical 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 l

iability, and included situations where there is little, if any, market activity for the asset. The Company's cash was measured using Level

inputs. Stock-based compensation and derivative liability - warrants were measured using Level

inputs.

The Company deemed a fair value of the

promissory notes by discounting the notes in a manner that reflects the entity's borrowing rate when interest cost is recognized in subsequent periods. The Company applied level

inputs by applying an estimated market rate of

15%

to the promissory notes. In doing so, the Company used the discounted cash flow approach to value the present value of the notes.

(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.