Graph Blockchain (REGRF) Risk Factors

Hackers or other groups or organizations may attempt to interfere with the Graph Blockchain Solution or the availability of it in a variety of ways, including without limitation denial of service attacks, Sybil attacks, spoofing, smurfing, malware attacks, or consensus-based attacks.

The Issuer's bespoke Blockchain solutions are currently in the quality testing phase and are being tested by the internal research and development team. Substantial corporate resources will be expended on developing the Issuer's Graph Blockchain Solution into a commercialized product. The future success of the Issuer is therefore substantially dependent on a continued research and development effort. In addition to being capital intensive, research and development activities relating to sophisticated technologies, such as those of the Issuer, are inherently uncertain as to future success and the achievement of a desired result. If delays or problems occur during the Issuer's ongoing research and development process, important financial and human resources may need to be diverted toward resolving such delays or problems. Further, there is a material risk that the Issuer's research and development activities may not result in a functional, commercially viable product. Failure to successfully commercialize the Issuer's Graph Blockchain Solution may materially and adversely affect the Issuer's financial condition and results of operations. Further details regarding the Graph Blockchain solution may be found in Item 4.B "Business Overview".

The future success of the Issuer will depend, in large part, upon its ability to retain its key management personnel and to attract and retain additional qualified marketing, sales and operational personnel to form part of its technical and customer services support staff. The Issuer may not be able to enlist, train, retain, motivate and manage the required personnel. Competition for these types of personnel is intense. Failure to attract and retain personnel, particularly marketing, sales and operational personnel, could make it difficult for the Issuer to manage its business and meet its objectives. Failure to manage growth successfully may adversely impact the Issuer's operating results. The growth of the Issuer's operations places a strain on managerial, financial and human resources. The Issuer's ability to manage future growth will depend in large part upon a number of factors, including the ability to rapidly: a) build and train development, sales and marketing staff to create an expanding presence in the evolving marketplace for the Issuer's products;b) attract and retain qualified technical personnel in order to administer technical support required for customers located in Canada, the United States and other countries around the world;c) develop customer support capacity as sales increase, so that customer support can be provided without diverting resources from product sales efforts; and d) expand internal management and financial controls significantly, so that control can be maintained over operations as the number of personnel and size of the Issuer increases. Inability to achieve any of these objectives could harm the business and operating results of the Issuer.

The Issuer is highly dependent on a number of third party relationships to conduct its business and implement expansion plans, including its relationships with IBM, Rainbow Soft Co. Ltd. ("Rainbow") and the Issuer's development consultant, Bitnine Global Inc. ("Bitnine"), one of two joint venture partners who collectively founded Graph under the Joint Venture Agreement dated November 21, 2017 between Bitnine and Datametrex AI Limited ("Datametrex") establishing Graph as a joint venture (the "Joint Venture Agreement"). As of the date hereof, Rainbow is the Issuer's sole distributor and IBM accounts for materially all revenue contracts obtained to date. Furthermore, Bitnine is the Issuer's sole external development consultant, and historically the Issuer placed a material reliance on it to fulfill revenue contracts and to perform certain research and development activities. It cannot be assured that these relationships will turn out to be as advantageous as currently anticipated or that other relationships would not have proven to be more advantageous. More specifically, some of the risks include: assurance that such entity will perform their obligations as agreed, each company's ability to continue as an ongoing concern, and a termination of the relationship with the Issuer.

Graph is a start-up company with a limited history of sales and no record of profitability. If the Issuer is unable to achieve adequate revenue growth, its ability to become profitable may be adversely affected and the Issuer may not have adequate resources to execute its business strategy.

Stress in the global financial system may adversely affect the Issuer's finances and operations in ways that may be hard to predict or to defend against. Financial developments seemingly unrelated to the Issuer or to its industry may adversely affect the Issuer over the course of time. For example, material increases in any applicable interest rate benchmarks may increase the debt payment costs for any credit facilities. Credit contraction in financial markets may hurt its ability to access credit in the event that the Issuer identifies an acquisition opportunity or require significant access to credit for other reasons. A reduction in credit, combined with reduced economic activity, may adversely affect business. Any of these events may have a material adverse effect on the Issuer's business, operating results, and financial condition.

A significant portion of the Issuer's operations are and for the foreseeable future are anticipated to be conducted in South Korea. As such, the Issuer's operations may be adversely affected by changes in South Korean government policies and legislation, particularly with respect to Blockchain, or social instability and other factors which are not within the control of Issuer, including, but not limited to, recessions, expropriation, nationalization and limitation or restriction on repatriation of earnings, longer receivables collection periods and greater difficulty in collecting accounts receivable, changes in consumer tastes and trends, renegotiation or nullification of existing contracts or licenses, regulatory requirements or the personnel administering them, currency fluctuations and devaluations, exchange controls, economic sanctions and royalty and tax increases, risk of terrorist activities, revolution, border disputes, especially with North Korea, implementation of tariffs and other trade barriers and protectionist practices, taxation policies, including royalty and tax increases and retroactive tax claims, volatility of financial markets and fluctuations in exchange rates, difficulties in the protection of intellectual property (which is discussed in further detail below under "Protection of Intellectual Property Rights"), labour disputes and other risks arising out of South Korean governmental sovereignty over the areas in which Issuer's operations are conducted. The Issuer's operations may also be adversely affected by social, political and economic instability and by laws and policies affecting foreign trade, taxation and investment. If the Issuer's operations are disrupted and/or the economic integrity of its contracts is threatened for unexpected reasons, its business may be harmed. In the event of a dispute arising in connection with the Issuer's operations in South Korea, the Issuer may be subject to the exclusive jurisdiction of South Korean courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of Canada or enforcing Canadian judgments in such other jurisdictions. The Issuer may also be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. Accordingly, the Issuer's activities in South Korea could be substantially affected by factors beyond the Issuer's control, any of which could have a material adverse effect on the Issuer. Management of the Issuer is unable to predict the effect of additional corporate and regulatory formalities which may be adopted in the future including whether any such laws or regulations would materially increase the Issuer's cost of doing business or affect its operations in South Korea. The Issuer may in the future enter into agreements and conduct activities outside of South Korea, which expansion may present challenges and risks that the Issuer has not faced in the past, any of which could adversely affect the results of operations and/or financial condition of the Issuer.

The Issuer may become involved in litigation that may materially adversely affect it. From time to time in the ordinary course of the Issuer's business, it may become involved in various legal proceedings. Such matters can be time-consuming, divert management's attention and resources and cause the Issuer to incur significant expenses. Furthermore, because litigation is inherently unpredictable, the results of any such actions may have a material adverse effect on the Issuer's business, operating results or financial condition. More specifically, the Issuer may face claims relating to information that is retrieved from or transmitted over the Internet or through the solution and claims related to the Issuer's products. In particular, the nature of the Issuer's business exposes it to claims related to intellectual property rights, rights of privacy, and personal injury torts.

The markets for Blockchain-based technology and database management systems generally are highly competitive on a local, national and international level. There are no assurances that established companies in the Blockchain and database management industries, which may have greater financial, technical, and marketing resources than the Issuer does, will not choose to directly enter into the Issuer's niche market and complete with the Issuer's products and services. The Issuer's competitors may also have a larger installed base of users, longer operating histories or greater name recognition than the Issuer will.

The Issuer's products are highly technical and complex. The Issuer's products may now or in the future contain undetected errors, bugs, or vulnerabilities. Some errors in the Issuer's products may only be discovered after they have been released. Any errors, bugs, or vulnerabilities discovered in the Issuer's products after release could result in damage to the Issuer's reputation, loss of users, loss of revenue, or liability for damages, any of which could adversely affect the Issuer's business and financial results.