Significant Accounting Policies

and Recent Accounting Pronouncements

The Company adopted the following accounting pronouncements during the

three

months ended

March

31,

2017:

November

2015,

the FASB issued Accounting Standards Update (“ASU”)

2015

17,

Income Taxes (Topic

740):

Balance Sheet Classification of Deferred Taxes

(“ASU

2015

17”),

which changes how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after

December

16,

2016,

and interim periods within those annual periods. The Company adopted ASU

2015

retrospectively on

January

2017,

which resulted in the reclassification of the

December

31,

2016

deferred tax assets-current balance of

$6,825

and non-current deferred tax assets of

$2,493

to long-term deferred tax liabilities in the amount of

$9,318.

March

2016,

the FASB issued ASU No.

2016

07,

Investments - Equity Method and Joint Ventures (Topic

323):

Simplifying the Transition to the Equity Method of Accounting

(“ASU

2016

07”).

ASU

2016

eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ASU

2016

instead specifies that the investor should add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and apply the equity method of accounting as of the date the investment became qualified for equity method accounting. ASU

2016

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

December

15,

2016

and should be applied prospectively. The Company adopted ASU

2016

January

2017.

The adoption of ASU

2016

had no impact on the Company’s financial statements or disclosures.

March

2016,

the FASB issued ASU No.

2016

09,

Compensation - Stock Compensation (Topic

718):

Improvements to Employee Share-Based Payment Accounting

(“ASU

2016

09”).

ASU

2016

is intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after

December

15,

2016,

and interim periods within those annual periods. The Company adopted ASU

2016

January

2017,

and elected to recognize forfeitures as they occur. As a result, the Company recorded a cumulative effect adjustment of

$850

to retained earnings as of

January

2017.

Upon adoption, all excess tax benefits and tax deficiencies related to employee share-based payments are recognized through income tax expense prospectively. For the

three

months ended

March

31,

2017,

the Company recorded excess tax benefits of

$210

as a reduction to the provision for income taxes. The Company excluded the related tax benefits when applying the treasury stock method for computing diluted shares outstanding on a prospective basis resulting in a decrease

in diluted weighted average shares outstanding of

1,378

shares for the

three

months ended

March

31,

2017.

The Company elected to apply the change in classification of cash flows resulting from excess tax benefits or deficiencies on a retrospective basis. This resulted in an increase in cash flows provided by operating activities of

$41

and an increase of

$41

in cash flows used in financing activities in the condensed consolidated statement of cash flows for the

three

months ended

March

31,

2016.

Additionally, ASU

2016

requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the consolidated statements of cash flows, which is how the Company has historically classified these amounts.

Updates to the recent accounting pronouncements as disclosed in the Company’s Form

-K for the year ended

December

31,

2016

are as follows:

May

2014,

the FASB issued ASU No.

2014

09,

Revenue from Contracts with Customers: Topic

606

(“ASU

2014

09”).

ASU

2014

introduced FASB Accounting Standards Codification Topic

606

(“ASC

606”).

ASC

606

will supersede ASC

605,

Revenue Recognition

and most of the industry-specific guidance on recognizing revenue. The FASB has since issued the following updates that clarify or supplement the guidance in ASU

2014

09:

●

December

2016,

the FASB issued ASU No.

2016

20,

Revenue from Contracts with Customers (Topic

606):

Technical Corrections and Improvements

(“ASU

2016

20”).

ASU

2016

makes several narrow-scope improvements or clarifications to ASC

606.

Most notably, ASU

2016

provides additional guidance on testing contract costs for impairment, applying the guidance on contract modifications, and determining the point at which a contract asset becomes a receivable. Additionally, ASU

2016

clarifies the information an entity should include in the disclosure of remaining performance obligations and provides an optional exemption from those disclosure requirements in situations in which an entity is not required to estimate variable consideration to recognize revenue.

●

May

2016,

the FASB issued ASU No.

2016

12,

Revenue from Contracts with Customers (Topic

606):

Narrow-Scope Improvements and Practical Expedients

(“ASU

2016

12”).

ASU

2016

clarifies how an entity should assess collectability, present sales taxes, measure noncash consideration and apply some aspects of the transition guidance in ASU

2014

09.

●

April

2016,

the FASB issued ASU No.

2016

10,

Revenue from Contracts with Customers (Topic

606):

Identifying Performance Obligations and Licensing

(“ASU

2016

10”).

ASU

2016

clarifies the guidance in ASU

2014

for identifying performance obligations and recognizing revenue for licenses of intellectual property.

●

March

2016,

the FASB issued ASU No.

2016

08,

Revenue from Contracts with Customers (Topic

606):

Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

(“ASU

2016

08”)

ASU

2016

clarifies the implementation guidance in ASU

2014

on principal versus agent considerations and whether an entity should report revenue on a gross or net basis.

Each of these ASUs are effective for public companies for annual reporting periods (and interim reporting periods within those annual reporting periods) beginning after

December

15,

2017

and permit entities to transition using either a full retrospective or modified retrospective methodology. The Company has developed an adoption plan, assembled a cross-functional project team and begun to assess the impacts of applying ASC

606

to the Company’s financial statements, information systems and internal controls. The Company has performed an initial detailed review of a significant number of its existing contracts with customers. These reviews have focused on several key considerations which could impact the Company's accounting and reporting under the new standard:

●

the effect of specified clauses on the term of many of the Company’s contracts with customers;

●

the nature of the promises in many of the Company’s contracts with customers to perform integrated services over a period of time;

●

the manner in which the Company will measure its progress towards fully satisfying its performance obligations; and

●

whether and how much variable consideration to include when determining the transaction prices for its contracts with customers.

Management’s assessment is ongoing; therefore, the Company has not yet determined with certainty the impact of applying ASC

606.

However, management does not believe the impact on its financial statements will be significant based on the procedures performed to date.

January

2017,

the FASB issued ASU No.

2017

01,

Business Combinations (Topic

805):

Clarifying the Definition of a Business

(“ASU

2017

01”).

ASU

2017

clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. ASU

2017

is effective for annual periods beginning after

December

15,

2017,

including interim periods within those periods. The Company is currently assessing the impact that adopting ASU

2017

will have on its consolidated financial statements and footnote disclosures.

January

2017,

the FASB issued ASU No.

2017

03,

Accounting Changes and Error Corrections (Topic

250)

and Investments - Equity Method and Joint Ventures (Topic

232)

(“ASU

2017

03”).

ASU

2017

expands required qualitative disclosures when registrants cannot reasonably estimate the impact that adoption of an ASU will have on the financial statements. Such qualitative disclosures would include a comparison of the registrant’s new accounting policies, if determined, to current accounting policies, a description of the status of the registrant’s process to implement the new standard and a description of the significant implementation matters yet to be addressed by the registrant. Other than enhancements to the qualitative disclosures regarding future adoption of new ASUs, adoption of the provisions of this standard is not expected to have any impact on the Company’s consolidated financial statements.

January

2017,

the FASB issued ASU No.

2017

04,

Intangibles-Goodwill and Other (Topic

350):

Simplifying the Test for Goodwill Impairment

(“ASU

2017

04”).

ASU

2017

removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step

two

of the goodwill impairment test. As a result, under ASU

2017

04,

an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective prospectively for fiscal years beginning after

December

15,

2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed after

January

2017.

The Company is currently assessing the impact of adoption.

There were no other significant updates to the new accounting guidance not yet adopted by the Company as disclosed in its Form

-K for the year ended

December

31,

2016.