Recent accounting pronouncements:

Recent Accounting Pronouncements Adopted

January 1, 2018,

the Company adopted Accounting Standards Updates ("ASU")

No.

2017

01,

Business Combinations (Topic

805

): Clarifying the Definition of a Business

and ASU

2015

16,

Simplifying the Accounting for Measurement-Period Adjustments.

The adoption of these updates did

not

have a significant impact on the consolidated financial statements. We also adopted ASU

2014

and the impact of such adoption is described in more detail below.

ASU

2014

09:

Adoption of Revenue from Contracts with Customers (Topic

606

)

January

2018,

the Company adopted ASU

2014

using the modified retrospective method by recognizing the cumulative effect of initially applying ASU

2014

as an adjustment to the opening balance of equity as at

January 1, 2018.

The results for reporting periods beginning after

January

2018

are presented under ASU

2014

09,

while prior period amounts are

not

adjusted and continue to be reported in accordance with our historic accounting policy, under ASC

605,

Revenue Recognition (Topic

605

). The adoption of Topic

606

did

not

affect the Company’s cash flows from operating, investing, or financing activities. Furthermore, the impact on timing of revenue recognition was

not

material as the treatment of revenue for services rendered over time is consistent under Topic

606

and Topic

605.

The details of the significant changes and quantitative impact of the changes are set out below. For a more comprehensive description of how the Company recognizes revenue under the new revenue standard in accordance with its performance obligations, see note

10.

The Company previously recognized commission fees related to Ting Mobile, Ting Internet, eNom domain registration and eNom domain related value-added service contracts as selling expenses when they were incurred. Under ASU

2014

09,

when these commission fees are deemed incremental and are expected to be recovered, the Company capitalizes as an asset such commission fees as costs of obtaining a contract. These commission fees are amortized into income consistently with the pattern of transfer of the good or service to which the asset relates. The estimation of the amortization period for the costs to obtain a contract required judgement.

Under Topic

606,

the Company has applied the following practical expedients:

	a)	When the amortization period for costs incurred to obtain a contract with a customer is less than one year, the Company has elected to apply a practical expedient to expense the costs as incurred; and
	b)	For mobile and internet access services, where the performance obligation is part of contracts that have an original expected duration of one year or less (typically one month), the Company has elected to apply a practical expedient to not disclose revenues expected to be recognized in the future related performance obligations that are unsatisfied (or partially unsatisfied).

January 1, 2018

as a result of adopting ASU

2014

09,

the Company recorded a contract cost asset of

$1.4

million with a corresponding increase to opening retained earnings and deferred tax liability of

$1.1

million and

$0.3

million, respectively, due to the deferral of costs of obtaining contracts. The impact of the changes to the Company’s financial statements in the current period are as follows:

	March 31, 2018

						Balances without
Consolidated Balance Sheet	As reported		Adjustments			adoption of Topic 606

Assets

Contract Costs (note 11)	$	1,378,336	$	(1,378,336	)	$	-
Total assets		341,360,951	$	(1,378,336	)	$	339,982,615

Liabilities and Shareholders' Equity

Deferred tax liability (note 8)	$	20,116,385	$	(346,900	)	$	19,769,485
Retained earnings		47,418,839		(1,031,436	)		46,387,403
Total Liabilities and Shareholders' Equity	$	341,360,951	$	(1,378,336	)	$	339,982,615

	Three months ended, March 31, 2018

						Balances without
Consolidated Statements of Operations and Comprehensive Income	As reported		Adjustments			adoption of Topic 606

Expenses

Sales and marketing	$	8,364,787	$	(25,272	)	$	8,339,515
Income before provision for income taxes		4,926,610		25,272			4,951,882

Provision for income tax (note 8)		1,182,918		(6,134	)		1,189,052
Net income for the period	$	3,743,692	$	19,138		$	3,762,830

Recent Accounting Pronouncements

Not

Yet Adopted

February 2016,

the Financial Accounting Standards Board issued ASU

No.

2016

02,

Leases (Topic

842

)

(“ASU

2016

02”

). ASU

2016

requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. More specifically, ASU

2016

requires the recognition on the balance sheet of a lease liability to make lease payments by lessees and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance will also require significant additional disclosure about the amount, timing and uncertainty of cash flows from leases. The new guidance is effective for annual and interim reporting periods beginning after

December 15, 2018,

which begins on

January 1, 2019

for the Company. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company will adopt this guidance in the

first

quarter of fiscal

2019

and is in the process of evaluating the impact of the adoption of ASU

2016

will have on its consolidated financial statements.