REGRF New World Solutions Inc (CE)

Part I

References in this Shell Company Report on Form 20-F to “we,” “our,” the “Company” and the “Issuer” refer to Graph Blockchain Inc. and its predecessor, Reg Technologies Inc., as applicable, individually and collectively with its subsidiaries as the context requires.

Brief Introduction

On November 6, 2018, the Issuer entered into an Amalgamation Agreement (the “Amalgamation Agreement”) among Reg Technologies Inc., 2659468 Ontario Inc., a wholly-owned subsidiary of the Issuer incorporated pursuant to the laws of the Province of Ontario, Canada (“Subco”) and Graph Blockchain Limited, a corporation incorporated under the laws of Ontario, Canada (“Graph”), whereby Subco and Graph amalgamated under the provisions of the Ontario Business Corporations Act (the “OBCA”), with Graph being the surviving entity of the amalgamation (the “Amalgamation”) and becoming a wholly-owned subsidiary of Reg Technologies Inc. A copy of the Amalgamation Agreement was attached to the Form 20-F filed by the Issuer on November 21, 2018 as Exhibit 4.3. The Amalgamation was consummated on November 6, 2018, Reg Technologies Inc. changed its name to Graph Blockchain Inc. and began conducting the principal business of Graph (the “Acquisition”).

Immediately prior to the Amalgamation, the Issuer did not operate a business and was a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Prior to becoming a shell company, the Issuer was principally a development stage company engaged in the business of developing and commercially exploiting an improved axial vane-type rotary engine known as the RadMax rotary technology used in the design of lightweight and high efficiency engines, compressors and pumps.

As a result of the Amalgamation, the Issuer consummated a “fundamental change” transaction and ceased to be a shell company. Pursuant to Rule 13a-19 under the Exchange Act, the Issuer filed a Form 20-F on November 21, 2018 to disclose the information that would be required to be disclosed if it were registering securities under the Exchange Act.

Financial Data of the Company

The following tables are a summary of selected financial information of the Company for the period from date of incorporation (November 22, 2017) to April 30, 2019 and as at April 30, 2019 and for the years ended April 30, 2018 and April 30, 2019. For accounting purposes the Acquisition was considered a reverse acquisition, pursuant to which Graph was the acquirer and Reg Technologies Inc. was the acquiree. Accordingly, the selected financial information below and the consolidated financial statements are presented as a continuation of the financial statements of Graph which has a financial year end of April 30 and a date of incorporation of November 22, 2017. The results of operations of Reg Technologies Inc. are included in the consolidated financial statements of the Company from the date of the Acquisition.

The audited financial statements of the Company for the years ended April 30, 2018 and April 30, 2019 are included as Exhibit 15.1 of this Form 20-F.

Currencies and Exchange Rates:

Unless otherwise indicated, all monetary references herein are denominated in Canadian Dollars. References to “$”, “CAD$” or “Dollars” are to Canadian Dollars and references to “US$” or “U.S. Dollars” are to United States Dollars.

The following tables set forth, for the periods indicated, the exchange rates based on the closing rates posted by the Bank of Canada. Such rates are the number of Canadian dollars per one (1) U.S. Dollar.

According to the Bank of Canada on April 30, 2019, the exchange rate was CAD$1.3423 for US$1.00 and as of September 5, 2019, the exchange rate was CAD$1.3228 for US$1.00. The high and low exchange rates during the previous six months was CAD$1.3527 and CAD$1.3038 for US$1.00.

Not Applicable.

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Not Applicable.

The Corporation is subject to a number of risks and uncertainties which are described in detail in its Management’s Discussion and Analysis (“MD&A”), attached hereto as Exhibit 15.2, under the section entitled “Risk Factors” which section is incorporated by reference in this annual report. The risks and uncertainties described in the MD&A are those the Issuer currently believe to be material, but they are not the only ones the Issuer faces. If any of the risks, or any other risks and uncertainties that have not yet been identified or that are currently considered not to be material, actually occur or become material risks, the Issuer’s business, financial condition, results of operations and cash flows and consequently, the price of the Issuer’s securities, could be materially and adversely affected.

General Development of the Business

Immediately prior to the Acquisition, the Issuer did not operate a business. Prior to such time, the Issuer was principally a development stage company engaged in the business of developing and commercially exploiting an improved axial vane-type rotary engine known as the RadMax rotary technology used in the design of lightweight and high efficiency engines, compressors and pumps.

In September 2016, the Issuer entered into the Sale Agreement with Regi, which was amended and restated on February 14, 2017. The consideration received was 51,757,119 common shares of Regi. The Issuer obtained shareholder approval for the transaction by special resolution at a special meeting of the shareholders on November 18, 2016. The transaction received approval from the TSX Venture Exchange on February 17, 2017. The Issuer’s shares were voluntarily delisted from the TSX Venture Exchange at such time. The Issuer subsequently issued its shareholdings in Regi as a dividend in kind to its shareholders following such delisting.

The Board of Directors of the Issuer announced on June 29, 2018 that the Company and Graph entered into a non-binding Letter of Intent (the “LOI”) pursuant to which the Issuer would acquire all of the issued and outstanding securities of Graph in a reverse takeover transaction and the resulting issuer would continue the current business of Graph. As described herein, Graph is a Blockchain development company that provides high performance Blockchain solutions that include graphic data analysis and consulting services, implementation of data mining analysis through the use of graph databases and speed enhancements of Blockchain control systems for corporations and government agencies. “Blockchain” refers to a distributed ledger technology comprised of blocks that serves as a historical transaction record of all past transactions and can be accessed by anyone with appropriate permissions, whereby the blocks are chained together using cryptographic signatures.

Shareholder approval for the consolidation (the “Consolidation”) of the issued and outstanding common shares of Reg Technologies Inc. on the basis of one new common share for every ten (10) common shares of Reg Technologies Inc. and the filing of articles of amendment pursuant to the BCBCA to change the name of the Issuer to “Graph Blockchain Inc.” was obtained at an annual and special meeting of the shareholders of the Issuer on September 17, 2018. The Consolidation was effective as of October 22, 2018

The Acquisition was approved by the shareholders of Graph at a special meeting held on September 4, 2018 and was approved by a majority of the shareholders of the Issuer by way of written resolution on October 17, 2018.

Pursuant to the terms of the Acquisition, each shareholder of Graph would receive one Common Share of the Issuer for each share of Graph held prior to completion of the Acquisition.

On November 6, 2018, Graph commenced a private placement of 3,354,866 units at $0.30 per unit for aggregate gross proceeds of $1,006,460 (each, a “Financing Unit”), each comprised of one share (a “Financing Share”) and one warrant (a “Financing Warrant”) that closed concurrently with the Acquisition (the “Concurrent Financing”). The Financing Shares and Financing Warrants issued in connection with the Concurrent Financing were subsequently exchanged for Common Shares and Warrants of the Company on completion of the Acquisition on a one for one basis. The Financing Warrants entitled the holder to acquire one Graph Share for each Financing Warrant held at a price of $0.40 per Graph Share for a period of 18 months from the closing of the Concurrent Financing, which were exchanged for Warrants of the Company with similar terms on a 1:1 basis at the closing of the Acquisition as described below.

In connection with the Acquisition and the Concurrent Financing, a fee equal to 0.5% of the pre-money valuation of Graph in Common Shares was paid to 514 Finance Inc. (the “Finder’s Fee” and such shares, the “Finder’s Fee Shares”) in accordance with Canadian securities laws.

The Acquisition

On November 6, 2018, the Issuer entered into the Amalgamation Agreement with Subco and Graph to carry out the Acquisition initially announced by the Issuer on June 29, 2018 following the signing of the LOI. The Acquisition was carried out by way of a three-cornered amalgamation in accordance with the provisions of the OBCA, pursuant to which, among other things:

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The Acquisition of Graph was an arm’s length reverse takeover transaction for the Issuer. No formal valuation was commissioned or received in connection with the Acquisition.

Current Operations

Effective on the closing of the Acquisition, the Company has been carrying on the business of Graph.

Graph is a private company incorporated under the laws of the Province of Ontario and is based in Toronto, Ontario. Graph is a Blockchain technology company that develops, markets and implements high performance private Blockchain database management solutions. “Blockchain” as used herein means a distributed ledger comprised of blocks that serves as a historical transaction record of all past transactions and can be accessed by anyone with appropriate permissions. Blocks are chained together using cryptographic signatures.

Graph was established as a joint venture company between Bitnine Global Inc. (“Bitnine”) and Datametrex AI Limited (“Datametrex”) on November 22, 2017. Datametrex is a reporting issuer in British Columbia, Alberta and Ontario listed on the TSX Venture Exchange that is focused primarily on collecting, analyzing and presenting structured and unstructured data using machine learning and artificial intelligence. Datametrex was incorporated under the OBCA on March 4, 2011 and is based in Toronto, Ontario, Canada. Bitnine is a private company incorporated in the State of California on November 12, 2015 that specializes in providing graph database management systems and data modelling solutions and is based in San Francisco, California. Most significantly, Bitnine developed the “AgensGraph” solution on which the Graph Blockchain Solution is substantially dependent, as is discussed in further detail below.

Pursuant to the terms of the Joint Venture Agreement, Datametrex was responsible for organizing the corporation and for arranging for its initial financing. Bitnine was in turn responsible for assisting in the development of the Graph Blockchain Solution prototypes and is also responsible for marketing and selling the product in South Korea, a jurisdiction in which Bitnine has a significant customer base.

At a high level, the Company’s business will revolve around its “Graph Blockchain Solution”, currently in the quality testing phase. The Graph Blockchain Solution enables users to replicate the full set of transactions of a peer in the Blockchain by modeling them in a graph database. In computing, a graph database is a database that gives equal importance to data and the relationships between data points. A key benefit of the graph structure is the ability to link data from a variety of different sources directly (in this case, separate blocks in the chain), and retrieve them with one operation. Specifically, the graph database modeling provides for a unique and more streamlined way of filtering through Blockchain based data, providing users with querying capabilities, data optimization, and advanced analytics. In addition to enhanced transaction speed, Graph Blockchain solution provides essential benefits such as time-to-market agility, visualization of data flows, and transparent transactions. Since the solution uses a hybrid of both graph and traditional relational databases, it offers flexibility in terms of development in situations where the applicable business environment continuously changes. As a complete end-to-end solution that is designed to integrate fully into an end user’s existing technical infrastructure, Graph offers customized business intelligence applications and dashboards for the end user, according to the client’s needs, giving users enhanced traceability and analytical insights. Please refer to Item 5.C “Research and Development, patents and licenses” for a more detailed breakdown of the existing and planned features and functionalities of the Graph Blockchain Solution.

As of the date hereof, the Company has not entered into any contracts with end users for its Graph Blockchain Solution. Rather, the Company, together with its development partner, Bitnine, has contracted with several large multinational entities to build scaled down prototypes to provide such entities with a proof of concept for the Graph Blockchain Solution. These scaled down prototypes are built on the basis of an earlier version of the Graph Blockchain Solution and provides users with only a fraction of the functionality that the Graph Blockchain Solution will offer. As part of this prototype building process, the Company has gained a considerable amount of feedback and

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insight on its product from both Bitnine, who built the scaled down prototype (on the basis of the core Blockchain engine provided by the Company) and from the end users. It is this technical knowledge transfer, insight and feedback that the Company intends to employ as it begins to market its Graph Blockchain Solution.

Despite its involvement in the Blockchain industry, the Company is not a cryptocurrency company and has no intention of holding cryptocurrencies or otherwise accepting cryptocurrencies as a method of payment for its Graph Blockchain Solution

Products and Services

1. Products

The Issuer’s principal product is the Graph Blockchain Solution, which is discussed above.

As of the date hereof, the Issuer already has a number of contracts in respect of the development of customized prototype Blockchain interfaces based on the underlying Graph Blockchain Solution, all of which, with the exception of a contract with Revive Therapeutics Ltd., are with customers in South Korea. All of the contracts discussed below have been fulfilled by the Issuer as of the date of this Form 20-F.

These prototype contracts are all independent from any future contracts for the development of the full-scale Graph Blockchain Solution and none of the customers below have any obligation to proceed with the purchase and integration of the Graph Blockchain Solution.

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Receipt of funds for prototype solutions by the Issuer are initially deferred, and are recognized as revenue upon the acceptance of the prototype solution.

2. Services

While the Graph Blockchain Solution is expected to be simple to install and is not expected to disrupt existing business intelligence systems, the Issuer’s business is anticipated to include an internal customer service team to assist users of the Graph Blockchain Solution with any customer service issues that may arise.

Business Strategy

1. Production

As of the date of this Form 20-F, the Issuer employs three full time research and development employees, who are located in South Korea and who are responsible for building, testing and integrating the Blockchain technology and the graph database that comprise the Graph Blockchain Solution. With the development of the Graph Blockchain Solution being completed and currently in the quality testing phase, the Issuer is moving all significant research and development activities inhouse to its development team in South Korea, and is expected to gradually phase out its reliance on external technical consulting from Bitnine. With respect to the prototype solutions discussed above, the Issuer relied extensively on the consulting and technical expertise of the development team at Bitnine for the prototypes’ development and outsourced a significant amount of its technical work to them. As a result of this significant outsourcing, the development of these prototypes resulted in prototypes earning the Company minimal operating margins. The Issuer has made significant progress towards, and intends to continue, enhancing the knowledge base of its technical team, largely through knowledge gained during the prototype development undertaken by Bitnine. In the future, the Issuer aims to only consult with Bitnine for certain highly technical prototype builds and to perform the remainder of its research and development work in house. The margins on any contracts for the fully integrated Graph Blockchain Solution itself are anticipated by the Issuer to be much higher.

2. Distribution and Target Markets

Under the terms of the Joint Venture Agreement, Bitnine shares responsibility with the Issuer for the marketing and sales of Graph’s products and solutions.

In addition, Graph currently has an agreement with Rainbow, a company with its head office and operations in the Republic Korea, dated February 26, 2018, to act as a non-exclusive distributor in South Korea of its Graph Blockchain Solution (including the prototypes). Pursuant to the terms of the distribution agreement, attached to the Form 20-F filed on November 21, 2018 as Exhibit 4.5, Rainbow has a non-exclusive right to market and distribute products for the Issuer in South Korea for a period of twenty-four months. This initial twenty-four month period may be renewed for a second twenty-four month period upon the prior mutual agreement of the parties. Under the terms of the agreement, once Rainbow has an order from a customer for the Issuer’s solution, Rainbow shall provide the same order to the Issuer and the Issuer will then prepare an invoice for the work requested and begin modifying the Graph Blockchain Solution according to the specifications requested. Rainbow will be responsible for liaising with the customer, delivering the solution to the customer, remitting all funds received from the customer to the Issuer and providing the Issuer with an inspection certificate once the product is accepted. As compensation for acting as a distributor, Rainbow earns a fee equal to 5% of the value of the contract to the Issuer.

As of the date hereof, almost all of the Issuer’s contracts for the development of prototype solutions have been procured by IBM. As Graph’s Blockchain Solution is based on IBM’s Hyperledger Fabric, IBM is able to offer the Issuer’s solution as a seamless add-on to existing technical solutions it is building for customers in a variety of industries. In other words, IBM is able to offer end users Graph’s Blockchain Solution as an integrated component of the larger software solutions it is building for companies like LG and Samsung.

To reduce its economic dependence on IBM and to initiate direct sales of its customized software solutions, on April 20, 2018, Graph established a South Korea branch office with a sales department. Through its Korean sales team, the Issuer intends to focus its sales efforts on engaging existing clients of Datametrex and Bitnine, including Samsung, LG Electronics and Lotte, and entering into agreements with such companies for the development of bespoke Blockchain solutions. As of the date of this Form 20-F, the Korean sales team has not procured any contracts for the Issuer. The Issuer also intends to build reseller and system integration (“SI”) partner networks, wherein the partners will incorporate the Issuer’s

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solutions as a complementary offering to their independent products. The ultimate objective is that these partners will conduct an assessment of the client’s needs and customize the Graph Blockchain Solution so that it is effectively integrated and functional for the client’s environment. The Issuer’s marketing and distribution strategy will consist of the combination of selling both directly and through partnerships, which is anticipated to increase the speed of market penetration. Graph has, and the Issuer plans to continue to sponsor trade shows, conferences, and meet-ups to get market recognition among the Blockchain developer community and to generate sales leads. The Issuer also plans to contribute to the Hyperledger open source community. Hyperledger is one of the leading open source frameworks initiated by the Linux Foundation, one of the largest non-profit organizations in the world dedicated to supporting open source technologies, to support the collaborative development of Blockchain-based distributed ledgers. As the Issuer further grows and develops, the Issuer intends to sell its solutions in North America, Europe and Asia through such channels. For greater certainty, the Issuer has no contracts in North America or Europe as of the date hereof.

The principal markets and industries for the solutions offered by the Issuer are expected to include, but are not limited to:

3. Sales and Marking

The Graph Blockchain Solution will be custom built and sold on an annual fee basis. This fee bundles costs such as solution, installation, initial setting, configuration, warranties and upgrades. The Issuer is analyzing options for unbundling some of these components, which would allow it to reduce the current sticker price of individual units where economies of scale can be achieved. As of the date of this Form 20-F, the Issuer has a dedicated sales team of 2 full time employees located in its Korean branch and 2 full time employee located in its Canadian head office. The team’s current role includes initiating and building relationships with other customers with the goal of closing direct sales, and building the reseller and SI program. As described in the business objectives above, the Issuer also plans on expanding the North American sales team

4. Specialized Skill and Knowledge

The Issuer has a team with significant software development, go-to-market, marketing and Blockchain experience, as is discussed in further detail below. This team is largely comprised of the Issuer’s employees and management, all of whom will be active in the day-to-day operations of the Issuer.

Moreover, since South Korean business environment in which the Issuer primarily operates is significantly different from that found in North America, the management of the Issuer has been structured with the appropriate experience and expertise for operating in South Korea. This will assist the board in identifying the specific risks associated with the Issuer in operating in Korea, and will ensure that the board’s governance and oversight responsibilities are properly discharged.

The Issuer’s board consists of individuals with a breadth of expertise, including capital markets, sales and marketing. For example, David Posner acted as Chief Executive Officer of Nutritional High International Inc. from May 2015 to July 2016, which is listed on the CSE. Prior to that, he had a twenty year career running privately held real estate funds both commercial and residential, based in Toronto.

Competition

The Company intends to operate in a niche market segment and focus on developing bespoke blockchain graph database management solutions for companies in a variety of industries.

While the Blockchain and database management markets are generally highly competitive with many established and emerging players, including a number of technology companies that develop private enterprise blockchains such as LeewayHertz, NEM, Quest Global Technologies, and Kaleido, there are few companies focusing on the specific market segment the Company has identified. Further, in the Company’s view, should the intellectual property protections the Company has applied for be approved, it will be difficult for other companies to offer products and services similar to that of the Company.

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The Company believes that the Graph Blockchain Solution has the following strengths that differentiate it from the other available Blockchain or database management systems on the market:

Transaction Speed

The Graph Blockchain Solution’s speed and efficiencies make it an ideal Blockchain platform for real-time transactions, specifically in the fintech, logistics, and real estate sectors.

Data Management

Utilizing its graph database platform, the Graph Blockchain Solution presents data to dashboards and user interfaces in real-time. Graph’s technology allows users to filter the data into transactional data and all the related data. This increases the solution efficiencies and is not otherwise available on the market to the Company’s knowledge. The Company’s research and development team will also customize a solution that provides access to data for timely strategic decisions.

Advanced Analytics

The Graph Blockchain Solution provides real-time advanced analytics. Graph’s approach provides access to business insights not available through traditional platforms. Management believes what differentiates this solution from others is its unique method of organizing data. This allows it to generate executable business insights.

Seasonality

Not applicable

Legal Proceedings

There are no legal proceedings to which the Issuer or its subsidiary is, or has been, a party or of which any of their property is, or has been, the subject matter. Additionally, to the reasonable knowledge of the management of the Issuer and its subsidiary, there are no such proceedings contemplated.

Material Effects of Governmental Regulations

As of the date of this Form 20-F, the Issuer operates primarily in South Korea. The Issuer anticipates its operations will be dependent on this emerging market for the near term future.

As part of operating in South Korea, the Issuer is subject to the evolving legal framework in South Korea with respect to Blockchain technology. To the knowledge of management of the Issuer, while cryptocurrency exchanges and other aspects of the digital currency industry have been curtailed by the Korean government and regulators, no restrictions or conditions have been imposed by the Korean government and regulatory authorities on the ability of the Issuer to operate in Korea in the manner in which its business is presently conducted.

While there are risks to the Issuer associated with changes in the existing legal framework with respect to Blockchain, generally, Korea’s legal system, which is a civil law based system, has experienced political and economic stability for many years, despite ongoing military tensions with North Korea. Nevertheless, given the constantly evolving nature of the Issuer’s industry, the Issuer intends to work closely with Korean legal advisors to ensure it is continually able to conduct its business as intended as the legal framework develops. Management and the board of the Issuer will revisit the risks associated with operating in Korea to the extent there are changes to the legislative framework and adjust its business and governance practices accordingly.

Due to the nature of its business, the Issuer is also subject to the legal regime in South Korea with respect to intellectual property. The Issuer’s strategy to protect any intellectual property rights it may have in the Graph Blockchain Solution is to rely on a combination of intellectual property protections, including patent applications, license, employment and confidentiality agreements and software security measures to further protect its technology and brand. South Korea has been a World Trade Organization (WTO) member since 1995. WTO member nations must include certain intellectual property protection standards in their national laws, including with respect to patents, copyrights and trademarks. South Korea is also a signatory to a number of international intellectual property agreements. Management believes the standard of intellectual property protection in such jurisdiction to be of a reasonably high standard and thus does not view intellectual property infringement to be a material risk as it relates to its operations in South Korea.

The Issuer currently owns no real property in South Korea and does not anticipate any local laws and customs regarding rights and ownership to property to impact its business. The Issuer is not aware of any restrictions on the ownership of property which might impact its business.

As the Issuer will use South Korean distributors to facilitate the payment to the Issuer from the sale of its Graph Blockchain Solution to end user customers, the Issuer will also need to rely on and understand banking customs in South Korea. From their prior experience in operating in Korea, management of the Issuer believes that Korea’s banking system and standards for professional services are comparable to that of North American countries. Further, according to the Korea Financial System Stability Assessment by the International Monetary Fund in 2014: “Korea has a well-developed payment, clearing and settlement infrastructure, but there is room to increase compliance with international standards”. In addition, to the knowledge of the Issuer, there is no currency transfer limit in Korea. Korea has liberalized foreign exchange controls in line with OECD

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benchmarks. Foreign firms may remit profits to Canadian banks provided that the foreign firm complies with the notification requirements of applicable legislation.

In terms of corporate structure, management of the Issuer will engage with and supervise local management of the Korean office. Pursuant to Korean law, a branch office is distinct from a subsidiary and is treated as a separate taxable entity that is able to operate as a revenue generating entity. Sales and manufacturing activities are allowed and there is no minimum capital requirement at establishment. Further, branch offices do not maintain their own board of directors. As such, the Issuer maintains responsibility for overseeing the operations of the employees in Korea.

Finally, management believes that an appropriate legal framework exists for the enforcement of Canadian judgements in South Korea. The enforcement of foreign judgments in Korea is governed by the Korean Civil Procedure Act. A court may enforce a Canadian judgment provided it satisfies certain requirements of that act including that (i) the international jurisdiction of the foreign court is recognized under legislation or treaties, (ii) the defendant has received under a lawful method, service with sufficient time to reply, (iii) the foreign judgment does not violate public policy – being the ‘good morals and other social order’ of Korea and (iv) there is reciprocity between Korean and the foreign jurisdiction in which the judgment was rendered. As of the date hereof, Ontario, where the Issuer’s management and board of director reside, has already been recognized as a reciprocal jurisdiction. However, as Korea is not a party to the HCCH Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971 (Hague Foreign Judgments Convention) or any other bilateral or multinational treaties for the reciprocal recognition and enforcement of foreign judgments, there is a risk that legislative or judicial changes may prevent the recognition of Canadian judgements in South Korea.

The Company has one wholly-owned subsidiary: Graph Blockchain Limited.

The Company does not own any real property. The Company leases office space in Seoul, South Korea, measuring approximately 83.25 square meters for sales and technology development and support.

The Issuer also intends to protect any rights it may in hold in the Graph Blockchain Solution by attempting to ensure that any intellectual property rights that may otherwise be owned by or attributable to its developers in South Korea are transferred to the Issuer. More specifically, all developers currently have assignment of intellectual property clauses in their employment contracts.

Finally, the contracts that the Issuer has with its distributors, and will have with the ultimate end-users of its solutions, also provide that the ownership of all intellectual property pertaining to the Issuer or its subsidiary and their products, including trademarks, trade names and copyright, remains with the Issuer or its subsidiary.

For a discussion of the risks relating to the Issuer’s intellectual property, please refer to Item 3.D Risk Factors.

Please refer to the MD&A, attached hereto as Exhibit 15.2.

The Company is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Company’s financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

See “Forward Looking Statements” in the MD&A, attached hereto as Exhibit 15.2.

Notes:

Each of our directors will serve until the next annual meeting of our shareholders. None of our directors have service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment.

The Company’s Audit Committee consists of David Posner and Jeff Stevens.

The Board may from time to time establish additional committees.

Set forth below is certain biographical information furnished to us by our directors and executive officers. There are no family relationships among any of our current directors or executive officers. No director or executive officer was appointed as a director or executive officer of the Company pursuant to any arrangement or understanding with any major shareholder, customer, supplier or other person.

Jeff Stevens – Chief Executive Officer and Chairman

Jeff Stevens brings over 18 years of professional experience in the Canadian capital markets, largely focusing on raising capital for micro-cap and small cap companies. He currently sits on the board of two public companies assisting with project selection and financing. He has worked on the retail, buy, and sell sides of the industry, having held positions as Assistant Investment Advisor, Arbitrage Trader, as well as having been the head of two Sales and Trading desks for a US-based investment bank in Toronto. During his tenure Jeff was involved in raising in excess of $500M for public and private companies with a client base including Institutional Money Managers, Hedge Funds, Mutual Funds and Family Offices in Canada, US and Europe.

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Steve Kang – Chief Financial Officer and Corporate Secretary

Steve Kang is a seasoned finance and accounting professional. Steve has acquired a wealth of finance expertise and experience over 25 years from working at Honeywell, LG Electronics, and various accounting firms and public companies in Canada. He served as a VP in Finance at Loyalist Group Limited. Most recently, as CFO and VP finance, he spearheaded Datametrex Ltd.’s qualifying transaction with Everfront Ventures Corp. (currently Datametrex AI Limited) in June 2017 and Datametrex is now a listed company on the TSX Venture Exchange. He has attained a B.A. in Economics from Korea University and has obtained Certified Management Accountant (USA) and Chartered Professional Accountant, CGA (Ontario) designations.

Mr. Kang intends to devote approximately 50% of his time to the Company. As an employee, Mr. Kang has non-competition, non-solicitation and non-disclosure obligations with respect to the Company pursuant to his employment contract.

Adam Morrison – Chief Operating Officer

Throughout the past 15 years, Adam Morrison has served as CTO and COO for various technology based companies whose primary focuses have been based in the entertainment, video game, and esports industries. Adam Morrison is the co-founder & president of Esports Capital Corp. Prior to that, Mr. Morrison served as the Chief Technology Officer of Millennial Esports Corp. since October 2016. Mr. Morrison has garnered an unparalleled amount of experience and insight into the exploding industry of professional competitive gaming. Mr. Morrison’s addition to Graph Blockchain equips the company with the valuable insight and toolset required to fully capitalize on the newly entered business vertical of competitive video gaming.

David Posner – Director

David Posner has been a consultant to Quinsam Capital Corp. since December 27, 2017. Mr. Posner served as Chief Executive Officer and President of Nutritional High International Inc. (formerly, Sonoma Capital Inc.) from July 7, 2014 until July 25, 2016. Mr. Posner served as an Acquisitions Manager of Stonegate Properties Inc., where he managed real estate properties and brokered deals in Canada and Oklahoma. He served as the Managing Director of Sales & Acquisitions for Maria Chiquita Development Company from 2005 to 2012. From 2004 to 2007, he was a partner in a private investment group involved in the acquisition, re-zoning and re-positioning for sale of land holdings in Costa Rica and Panama. He brought “Hempen Gold”, the first hemp-infused beer to Canada. He imported and created marketing and branding initiatives for various other alcoholic products in Canada. He has been the Chairman of Nutritional High International Inc. since July 25, 2016. He has been a Director of Nutritional High International Inc. since July 2014. Mr. Posner is a director of The Lineage Grow Company Ltd., Capricorn Business Acquisitions Inc. and Aura Health Corp. He served as a Director at The Tinley Beverage Company Inc. from October 2, 2015 to February 28, 2017. Mr. Posner holds a Bachelor of Arts degree from York University.

Mr. Posner intends to devote approximately 5% of his time to the Company. Mr. Posner has not entered into any non-competition or non-agreement in connection with serving as a director of the Issuer.

Todd Shapiro – Director

Todd Shapiro has been a Toronto radio show host and a familiar voice on Canada’s airwaves for over 18 years. Todd has also worked with a range of companies as a brand ambassador, including Chrysler/Dodge/Jeep, Pizza Pizza, Sony Pictures, Subway Restaurants, Huggies Pull-Ups, Intact Insurance, Mene Jewelry and E & J Gallo Winery.

Todd Shapiro currently serves as an Honorary Chair for the Road Hockey To Conquer Cancer for the Princess Margaret Cancer Foundation.

Mr. Shapiro intends to devote approximately 5% of his time to the Company. Mr. Shapiro has not entered into any non-competition or non-agreement in connection with serving as a director of the Issuer.

There is no family relationship between directors or officers. Please refer to Item 7.B. – Related Party Transactions.

There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management.

The Company’s Named Executive Officers (“NEO”) for the most recently completed financial year (as of April 30, 2019) were Jeff Stevens, CEO and Steve Kang, CFO.

Compensation Discussion and Analysis

Overview, Philosophy and Objectives

The Issuer does not have a formal compensation program. The board of directors of the Issuer meet to discuss and determine management compensation, without reference to formal objectives, criteria or analysis. The general objectives of the Issuer’s compensation strategy are to: (a) compensate management in a manner that encourages and rewards a high level of performance and outstanding results with a view to increasing long-term shareholder value; (b) align management’s interests with the long-term interests of shareholders; (c) provide a compensation package that was commensurate with other Blockchain technology companies to enable the Issuer to attract and retain talent; and (d) ensure that the total compensation package was designed in a manner that took into account the constraints that the Issuer is under by virtue of the fact that it is a technology development company without a history of earnings.

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Elements of Compensation Program

The executive compensation program consisted of a combination of base salary and performance bonuses.

Base salary was used to provide the NEOs with a set amount of money during the year with the expectation that each NEO will perform his responsibilities to the best of his ability and in the best interests of the Issuer.

Base Salary

The base salary review of each NEO takes into consideration the current competitive market conditions, experience, performance, and the particular skills of the NEO. Base salary is not evaluated against a formal “peer group”. The board of directors relied on the general experience of its members in setting base salary amounts.

Performance Bonuses

The bonus for each NEO was determined on a case by case basis. The factors considered in assessing the bonus amounts include, but are not limited to, the position of the NEO and expense control.

Compensation Risk

The board of directors has not proceeded to an evaluation of the implications of the risks associated with the Issuer’s compensation policies and practices. the Issuer has not adopted a policy forbidding directors or officers from purchasing financial instruments that are designed to hedge or offset a decrease in market value of the Issuer’s securities granted as compensation or held, directly or indirectly, by directors or officers. The Issuer is not, however, aware of any directors or officers having entered into this type of transaction.

Link to Overall Compensation Objectives

Each element of the executive compensation program has been designed to meet one or more objectives of the overall program.

The fixed base salary of each NEO combined with the performance bonuses has been designed to provide total compensation that the Board believes is competitive with that paid by other companies of comparable size engaged in similar business in appropriate regions.

Summary Compensation Table

The following table sets forth all direct and indirect compensation paid, payable, awarded, granted, given or otherwise provided, directly or indirectly, by the Issuer to the NEOs, collectively, including, for greater certainty, all plan and non-plan compensation, direct and indirect pay, remuneration, economic or financial award, reward, benefit, gift or perquisite paid, payable, awarded, granted, given or otherwise provided to the NEO for services provided and for services to be provided, directly or indirectly, to the Issuer, for the Issuer’s most recently completed financial year. Based on Canadian public reporting rules applicable to the Issuer and applicable stock exchange rules, disclosure is not required on an individual basis and the Issuer does not otherwise make individual disclosures public.

Incentive Plan Awards

There was no stock option based award granted to the directors and NEOs during the year ended April 30, 2019.

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Value Vested or Earned

The following table sets out the value vested or earned by the NEOs under our equity and non-equity incentive plans during the most recently completed financial year. Based on Canadian public reporting rules applicable to the Issuer and applicable stock exchange rules, disclosure is not required on an individual basis and the Issuer does not otherwise make individual disclosures public.

Pension Plan Benefits

The Issuer does not have a defined benefit pension plan or a defined contribution plan and does not at this stage intend to adopt one.

Termination and Change of Control Benefits

During the most recently completed financial year ended April 30, 2019, there were no employment contracts, agreements, plans or arrangements for payments to a NEO, at, following or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of the Issuer or a change in NEO’s responsibilities.

Director Compensation

The following table sets forth information with respect to all amounts of compensation provided to the directors of the Issuer (other than the NEOs) for the most recently completed financial year. Based on Canadian public reporting rules applicable to the Issuer and applicable stock exchange rules, disclosure is not required on an individual basis and the Issuer does not otherwise make individual disclosures public.

As of the date of this Form 20-F, the board of directors of the Issuer consists of Jeff Stevens, David Posner and Todd Shapiro. The term of each director expires on the date of the next annual general meeting in 2019, unless his or her office is earlier vacated or he or she is removed in accordance with the Issuer’s articles and the BCBCA. Each of these executive officers and directors serves in the identical capacity with respect to the Issuer’s wholly owned subsidiary, Graph. Peter Kim was Chairman and a member of the board of directors of the issuer from the date of the Acquisition until the date of his resignation on February 15, 2019. Andrew Ryu replaced Mr. Kim as director and chairman on February 15, 2019. Mr. Ryu was replaced by Jeff Stevens as chairman and director on May 2, 2019.

The Board has established an Audit Committee. The Issuer’s audit committee consists of David Posner and Todd Shapiro, each of whom is a director and financially literate in accordance with Canadian public company requirements. David Posner and Todd Shapiro are independent, as defined under relevant Canadian standards.

Audit Committee

The Issuer’s audit committee is responsible for the financial reporting process on behalf of the board of directors and for overseeing the adequacy of the Issuer’s system of internal accounting controls. This includes oversight responsibility for financial reporting and continuous disclosure, oversight of external audit activities, oversight of financial risk and financial management control. As of the date of this Form 20-F, the Issuer’s audit committee is composed of two members, all of whom are financially literate and two of whom are independent. The members of the Issuer’s audit committee have considerable experience reviewing financial statements, including in respect of reporting issuers.

A member of the audit committee is independent if the member has no direct or indirect material relationship with the Company. A material relationship means a relationship which could, in the view of the Board, reasonably interfere with the exercise of a member’s independent judgment.

A member of the audit committee is considered financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company.

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As the Company expands its activities, it is probable that it will hire additional employees, especially in connection with its operations upon completion of the Acquisition

The following table sets forth, as of the date of this Form 20-F: (a) the names of each beneficial owner of more than five percent (5% ) of our Common Shares known to us, the number of Common Shares beneficially owned by each such person, and (b) the names of each director and officer, the number of Common Shares beneficially owned, and the percentage of our Common Shares so owned, by each such person, and by all of our directors and executive officers as a group. Each person has sole voting and investment power with respect to the Common Shares, except as otherwise indicated. Beneficial ownership consists of a direct interest in the Common Shares, except as otherwise indicated. Individual beneficial ownership also includes Common Shares that a person has the right to acquire within 60 days from the date of this Form 20-F.

The directors and executive officers of the Issuer as a group, directly or indirectly, beneficially own or exercise control or direction over 8,138,012 Common Shares, representing 5.92% of the issued and outstanding Common Shares.

Dividend Distributions

We did not declare or pay any dividends to our shareholders in the year ended April 30, 2019. The actual timing, payment and amount of dividends paid on our Common Shares is determined by our Board, based upon things such as our cash flow, results of operations and financial condition, the need for funds to finance ongoing operations and such other business considerations as our Board considers relevant.

Please refer to “Item 4: Information on the Company – A. History and Development of the Company” for a discussion of significant events that have occurred after April 30, 2018.

Our Articles provide for the election of directors at each annual general meeting. Each director holds office until the next annual general meeting of our shareholders or until his successor is elected or appointed, unless his office is earlier vacated in accordance with our Articles or with the provisions of the BCBCA.

An annual meeting of shareholders must be held at such time in each year that is not later than 15 months after the last preceding annual meeting and at such place as our Board may from time to time determine. The quorum for the transaction of business at any meeting of shareholders is two persons who are entitled to vote at the meeting in person or by proxy and who hold in aggregate at least 5% of the issued shares entitled to be voted at the meeting. Only persons entitled to vote, our directors and auditors and others who, although not entitled to vote, are otherwise entitled or required to be present, are entitled to be present at a meeting of shareholders.

Other than not specifically providing a mechanism for shareholders to call a special meeting, our Articles do not contain any provisions that would have an effect of delaying, deferring or preventing a change in control of our Company. Our Articles also do not contain any provisions that would operate only with respect to a merger, acquisition or corporate restructuring of our Company.

Our Articles do not contain any provisions governing the ownership threshold above which shareholder ownership must be disclosed.

Except for contracts entered into in the ordinary course of business, the only material contracts entered into by the Issuer are the following:

Distribution Agreement

The Issuer has an agreement with Rainbow, a company with its head office and operations in the Republic Korea, dated February 26, 2018, to act as a non-exclusive distributor in South Korea of its Graph Blockchain Solution (including the prototypes). Pursuant to the terms of the distribution agreement, attached to the Form 20-F filed on November 21, 2018 as Exhibit 4.5, Rainbow has a non-exclusive right to market and distribute products for the Issuer in South Korea for a period of twenty-four months. This initial twenty-four month period may be renewed for a second twenty-four month period upon the prior mutual agreement of the parties. Under the terms of the agreement, once Rainbow has an order from a customer for the Issuer’s solution, Rainbow shall provide the same order to the Issuer and the Issuer will then prepare an invoice for the work requested and begin modifying the Graph Blockchain Solution according to the specifications requested. Rainbow will be responsible for liaising with the customer, delivering the solution to the customer, remitting all funds received from the customer to the Issuer and providing the Issuer with an inspection certificate once the product is accepted. As compensation for acting as a distributor, Rainbow earns a fee equal to 5% of the value of the contract to the Issuer.

Escrow Agreement

In accordance with CSE rules and policies and relevant Canadian securities regulations all Common Shares held by certain Principals (as such term is defined in Canada National Instrument 46-201) as of the date of the CSE listing are subject to escrow restrictions contained in the Escrow Agreement and will be released in accordance with the release schedule specified therein. A summary of the terms of the Escrow Agreement can be found under Item 10 of the Issuer’s Form 20-F filed on November 21, 2018.

There are no laws, decrees or regulations in Canada relating to restrictions on the export or import of capital, or affecting the remittance of interest, dividends or other payments to non-resident holders of our shares of Common Stock, other than as described below in Item 10.E.

Canadian Federal Income Tax Information for United States Residents

The following is a discussion of material Canadian federal income tax considerations generally applicable to holders (“U.S. Residents”) of our common shares who, for purposes of the Income Tax Act (Canada) and the regulations thereunder (the “Canadian Tax Act”):

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TAX MATTERS ARE VERY COMPLICATED AND THE CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR COMMON SHARES WILL DEPEND UPON THE STOCKHOLDER’S PARTICULAR SITUATION. THE SUMMARY OF MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS INTENDED TO PROVIDE ONLY A GENERAL SUMMARY AND IS NOT INTENDED TO BE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES.

THIS DISCUSSION DOES NOT INCLUDE A DESCRIPTION OF THE TAX LAWS OF ANY PROVINCE OR TERRITORY WITHIN CANADA. ACCORDINGLY, HOLDERS AND PROSPECTIVE HOLDERS OF OUR COMMON SHARES ARE ENCOURAGED TO CONSULT WITH THEIR OWN TAX ADVISERS ABOUT THE TAX CONSEQUENCES TO THEM HAVING REGARD TO THEIR OWN PARTICULAR CIRCUMSTANCES, INCLUDING ANY CONSEQUENCES OF PURCHASING, OWNING OR DISPOSING OF OUR COMMON SHARES ARISING UNDER CANADIAN FEDERAL, CANADIAN PROVINCIAL OR TERRITORIAL, U.S. FEDERAL, U.S. STATE OR LOCAL TAX LAWS OR TAX LAWS OF JURISDICTIONS OUTSIDE THE UNITED STATES OR CANADA.

This summary is based on the current provisions of the Canadian Tax Act, proposed amendments to the Canadian Tax Act publicly announced by the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”), and the provisions of the Convention as in effect on the date hereof. No assurance can be given that the Proposed Amendments will be entered into law in the manner proposed, or at all. No advance income tax ruling has been requested or obtained from the Canada Revenue Agency to confirm the tax consequences of any of the transactions described herein.

This summary is not exhaustive of all possible Canadian federal income tax consequences for U.S. Residents, and other than the Proposed Amendments, does not take into account or anticipate any changes in law, whether by legislative, administrative, governmental or judicial decision or action, nor does it take into account Canadian provincial, U.S. or foreign tax considerations which may differ significantly from those discussed herein. No assurances can be given that subsequent changes in law or administrative policy will not affect or modify the opinions expressed herein.

Sale of Shares

A U.S. Resident who disposes or is deemed to dispose of our common shares will not be liable to tax under the Canadian Tax Act in respect of any capital gain realized on the disposition unless such shares constitute “taxable Canadian property” at the time of disposition for purposes of the Canadian Tax Act and no relief is available under the Convention.

Provided our common shares are not otherwise deemed to be taxable Canadian property of a U.S. Resident and are listed on a “designated stock exchange”, as defined in the Canadian Tax Act (which currently includes the CSE), at the time of disposition, our shares will not constitute taxable Canadian property of a U.S. Resident at that time, unless, at any time in the 60 month period preceding the disposition, the following two conditions were met concurrently: (a) 25% or more of the issued shares of any class of the capital stock of the issuer were owned by any combination of (i) the U.S. Resident, (ii) persons with whom the U.S. Resident did not deal at arm’s length and (iii) partnerships in which persons referred to in (i) or (ii) hold a membership interest (directly or indirectly through one or more partnerships); and (b) more than 50% of the fair market value of our common shares was derived from, directly or indirectly, any combination of (w) real or immovable property situated in Canada, (x) “Canadian resource properties” (as defined in the Canadian Tax Act), (y) “timber resource properties” (as defined in the Canadian Tax Act), and (z) options in respect of, or an interest in, the property described in (w) to (y), whether or not such property exists.

If our common shares constitute taxable Canadian property of a U.S. Resident, a capital gain arising on the disposition of such securities may be exempt from tax in Canada pursuant to the Convention provided that the value of such securities is not derived principally from “real property situated in Canada” within the meaning of the Convention (a “Treaty Exempt Property”). The Convention would generally not be available to a holder of our shares that is a U.S. resident limited liability company (a “LLC”) which is not subject to tax in the U.S. However, the Convention may apply to exempt from tax in Canada the portion of a capital gain realized on a disposition of Treaty Exempt Property by such a U.S. Resident fiscally transparent LLC that is attributable to one or more members of the LLC that are U.S. Residents. Such U.S. Residents should consult their tax advisors about their particular circumstances.

Dividends

Dividends paid or credited, or deemed to be paid or credited, to a U.S. Resident generally will be subject to Canadian withholding tax at a rate of 25% of the gross amount of the dividend, unless the rate is reduced under the Convention. Currently, under the Convention the rate of Canadian non-resident withholding tax will generally be reduced to: 5% of the gross amount of dividends if the beneficial owner is a company that is resident in the U.S. and that owns at least 10% of our voting shares; or 15% of the gross amount of dividends if the beneficial owner is some other U.S. Resident eligible for benefits under the Convention.

The Convention would generally not be available to a holder of our shares that is a U.S. resident LLC which is not subject to tax in the U.S. However, the Convention may afford reduced withholding tax rates in respect of the portion of the dividends paid on our common shares that are

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received by a U.S. Resident fiscally transparent LLC to the extent such dividends are attributable to one or more members of the LLC that are U.S. Residents. Such U.S. Residents should consult their tax advisors about their particular circumstances.

United States Federal Income Tax Information for United States Holders

The following is a general discussion of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from the ownership and disposition of Common Shares. This discussion is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder as a result of the ownership and disposition of Common Shares. In addition, this discussion does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty. Accordingly, this discussion is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any particular U.S. Holder. In addition, this discussion does not address the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, or non-U.S. tax consequences of the ownership and disposition of Common Shares. Except as specifically set forth below, this discussion does not address applicable tax reporting requirements. Each U.S. Holder should consult its own tax advisor regarding all U.S. federal, U.S. state and local and non-U.S. tax consequences of the ownership and disposition of Common Shares.

No opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the ownership and disposition of Common Shares. This discussion is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, any position addressed in this discussion. In addition, because the authorities upon which this discussion is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions addressed in this discussion.

Scope of This Discussion

Authorities

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, the Canada-U.S. Tax Convention, and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date hereof. Any of the authorities on which this discussion is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this discussion. This discussion does not address the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of Common Shares that is for U.S. federal income tax purposes:

Non-U.S. Holders

For purposes of this discussion, a “non-U.S. Holder” is a beneficial owner of Common Shares that is not a partnership (or other “pass-through” entity) for U.S. federal income tax purposes and is not a U.S. Holder. This discussion does not address the U.S. federal income tax consequences applicable to non-U.S. Holders arising from the ownership and disposition of Common Shares. Accordingly, a non-U.S. Holder should consult its own tax advisor regarding all U.S. federal, U.S. state and local, and non-U.S. tax consequences (including the potential application of and operation of any income tax treaties) relating to the ownership and disposition of Common Shares.

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This discussion does not address the U.S. federal income tax considerations of the ownership and disposition of Common Shares by U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following: (a) tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) broker-dealers, dealers, or traders in securities or currencies that elect to apply a “mark-to-market” accounting method; (d) U.S. Holders that have a “functional currency” other than the U.S. dollar; (e) U.S. Holders that own Common Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquire Common Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold Common Shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); and (h) U.S. Holders that own directly, indirectly, or by attribution, 10% or more of the outstanding stock of the

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Company. This discussion also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are U.S. expatriates or former long-term residents of the United States. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisors regarding all U.S. federal, U.S. state and local, and non-U.S. tax consequences (including the potential application and operation of any income tax treaties) relating to the ownership and disposition of Common Shares.

If an entity or arrangement that is classified as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds Common Shares, the U.S. federal income tax consequences to such partnership and the partners (or other owners) of such partnership of the ownership and disposition of the Common Shares generally will depend on the activities of the partnership and the status of such partners (or other owners). This discussion does not address the U.S. federal income tax consequences for any such partner or partnership (or other “pass-through” entity or its owners). Owners of entities and arrangements that are classified as partnerships (or other “pass-through” entities) for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of Common Shares.

Ownership and Disposition of Common Shares

Distributions on Common Shares

Subject to the “passive foreign investment company” (“PFIC”) rules discussed below (see “Tax Consequences if the Company is a PFIC”), a U.S. Holder that receives a distribution, including a constructive distribution, with respect to Common Shares will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the Company, as computed for U.S. federal income tax purposes. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the Common Shares and thereafter as gain from the sale or exchange of such Common Shares (see “Sale or Other Taxable Disposition of Common Shares” below). Dividends received on the Common Shares generally will not be eligible for the “dividends received deduction” available to U.S. corporate shareholders receiving dividends from U.S. corporations. If the Company is eligible for the benefits of the Canada-U.S. Tax Convention or its shares are readily tradable on an established securities market in the U.S., dividends paid by the Company to non-corporate U.S. Holders generally will be eligible for the preferential tax rates applicable to long-term capital gains, provided certain holding period and other conditions are satisfied, including that the Company not be classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.

Sale or Other Taxable Disposition of Common Shares

Subject to the PFIC rules discussed below, upon the sale or other taxable disposition of Common Shares, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash plus the fair market value of any property received and such U.S. Holder’s tax basis in the Common Shares sold or otherwise disposed of. Such capital gain or loss will be long-term capital gain or loss if, at the time of the sale or other taxable disposition, the Common Shares have been held for more than one year. Preferential tax rates apply to long-term capital gains of non-corporate U.S. Holders. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code. A U.S. Holder’s tax basis in Common Shares generally will be such U.S. Holder’s U.S. dollar cost for such Common Shares.

PFIC Status of the Company

If the Company is or becomes a PFIC, the preceding sections of this discussion may not describe the U.S. federal income tax consequences to U.S. Holders of the ownership and disposition of Common Shares. The U.S. federal income tax consequences of owning and disposing of Common Shares if the Company is or becomes a PFIC are described below under the heading “Tax Consequences if the Company is a PFIC.”

A non-U.S. corporation is a PFIC for each tax year in which (i) 75% or more of its gross income is passive income (as defined for U.S. federal income tax purposes) (the “income test”) or (ii) on average for such tax year, 50% or more (by value) of its assets either produces or is held for the production of passive income (the “asset test”). For purposes of the PFIC provisions, “gross income” generally includes sales revenues less cost of goods sold, plus income from investments and from incidental or outside operations or sources, and “passive income” generally includes dividends, interest, certain rents and royalties, and certain gains from commodities or securities transactions. In determining whether or not it is a PFIC, a non-U.S. corporation is required to take into account its pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value).

Under certain attribution and indirect ownership rules, if the Company is a PFIC, U.S. Holders will generally be deemed to own their proportionate shares of the Company’s direct or indirect equity interests in any company that is also a PFIC (a “Subsidiary PFIC”), and will be subject to U.S. federal income tax on their proportionate share of (a) any “excess distributions,” as described below, on the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of the stock of a Subsidiary PFIC by the Company or another Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC. In addition, U.S. Holders may be subject to U.S. federal income tax on any indirect gain realized on the stock of a Subsidiary PFIC on the sale or disposition of Common Shares. Accordingly, U.S. Holders should be aware that they could be subject to tax even if no distributions are received and no redemptions or other dispositions of the Company’s Common Shares are made.

There can be no assurance that the Company will or will not be determined to be a PFIC for the current tax year or any prior or future tax year, and no opinion of legal counsel or ruling from the IRS concerning the status of the Company as a PFIC has been obtained or will be requested. U.S. Holders should consult their own U.S. tax advisors regarding the PFIC status of the Company.

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Tax Consequences if the Company is a PFIC

If the Company is a PFIC for any tax year during which a U.S. Holder holds Common Shares, special rules may increase such U.S. Holder’s U.S. federal income tax liability with respect to the ownership and disposition of such shares. If the Company meets the income test or the asset test for any tax year during which a U.S. Holder owns Common Shares, the Company will be treated as a PFIC with respect to such U.S. Holder for that tax year and for all subsequent tax years, regardless of whether the Company meets the income test or the asset test for such subsequent tax years, unless the U.S. Holder elects to recognize any unrealized gain in the Common Shares or makes a timely and effective QEF Election or Mark-to-Market Election.

Under the default PFIC rules:

A U.S. Holder that makes a timely and effective “mark-to-market” election under Section 1296 of the Code (a “Mark-to-Market Election”) or a timely and effective election to treat the Company and each Subsidiary PFIC as a “qualified electing fund” (a “QEF”) under Section 1295 of the Code (a “QEF Election”) may generally mitigate or avoid the PFIC consequences described above with respect to Common Shares.

A timely and effective QEF Election requires a U.S. Holder to include currently in gross income each year its pro rata share of the Company’s ordinary earnings and net capital gains, regardless of whether such earnings and gains are actually distributed. Thus, a U.S. Holder could have a tax liability with respect to such ordinary earnings or gains without a corresponding receipt of cash from the Company. If the Company is a QEF with respect to a U.S. Holder, the U.S. Holder’s basis in the Common Shares will be increased to reflect the amount of the taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction of basis in the Common Shares and will not be taxed again as a distribution to a U.S. Holder. Taxable gains on the disposition of Common Shares by a U.S. Holder that has made a timely and effective QEF Election are generally capital gains. A U.S. Holder must make a QEF Election for the Company and each Subsidiary PFIC if it wishes to have this treatment. To make a QEF Election, a U.S. Holder will need to have an annual information statement from the Company setting forth the ordinary earnings and net capital gains for the year. In general, a U.S. Holder must make a QEF Election on or before the due date for filing its income tax return for the first year to which the QEF Election will apply. Under applicable Treasury Regulations, a U.S. Holder will be permitted to make retroactive elections in particular circumstances, including if it had a reasonable belief that the Company was not a PFIC and filed a protective statement. If a U.S. Holder owns PFIC stock indirectly through another PFIC, separate QEF Elections must be made for the PFIC in which the U.S. Holder is a direct shareholder and the Subsidiary PFIC for the QEF rules to apply to both PFICs.

A Mark-to-Market Election may be made with respect to stock in a PFIC if such stock is “regularly traded” on a “qualified exchange or other market” (within the meaning of the Code and the applicable Treasury Regulations). A class of stock that is traded on one or more qualified exchanges or other markets is considered to be “regularly traded” for any calendar year during which such class of stock is traded in other than de minimis quantities on at least 15 days during each calendar quarter. If the Common Shares are considered to be “regularly traded” within this meaning, then a U.S. Holder generally will be eligible to make a Mark-to-Market Election with respect to its shares. A Mark-to-Market Election may not be made with respect to the stock of any Subsidiary PFIC because such stock is not marketable. Hence, a Mark-to-Market Election will not be effective to eliminate the application of the default rules of Section 1291 of the Code, described above, with respect to deemed dispositions of Subsidiary PFIC stock or excess distributions with respect to a Subsidiary PFIC.

A U.S. Holder that makes a timely and effective Mark-to-Market Election with respect to Common Shares generally will be required to recognize as ordinary income in each tax year in which the Company is a PFIC an amount equal to the excess, if any, of the fair market value of such shares as of the close of such taxable year over the U.S. Holder’s adjusted tax basis in such shares as of the close of such taxable year. A U.S. Holder’s adjusted tax basis in the Common Shares generally will be increased by the amount of ordinary income recognized with respect to such shares. If the U.S. Holder’s adjusted tax basis in the Common Shares as of the close of a tax year exceeds the fair market value of such shares as of the close of such taxable year, the U.S. Holder generally will recognize an ordinary loss, but only to the extent of net mark-to-market income recognized with respect to such shares for all prior taxable years. A U.S. Holder’s adjusted tax basis in its Common Shares generally will be decreased by the amount of ordinary loss recognized with respect to such shares. Any gain recognized upon a disposition of the Common Shares generally will be treated as ordinary income, and any loss recognized upon a disposition generally will be treated as an ordinary loss to the extent of net mark-to-market income recognized for all prior taxable years. Any loss recognized in excess thereof will be taxed as a capital loss. Capital losses are subject to significant limitations under the Code.

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Foreign Tax Credit

A U.S. Holder that pays (whether directly or through withholding) Canadian income tax in connection with the ownership or disposition of Common Shares may be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all creditable foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” Generally, dividends paid by a non-U.S. corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a non-U.S. corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code. However, the amount of a distribution with respect to the Common Shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation is calculated separately with respect to specific categories of income. The foreign tax credit rules are complex, and each U.S. Holder should consult its own U.S. tax advisor regarding the foreign tax credit rules.

Special rules apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC. Subject to such special rules, non-U.S. taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit. The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complex, and a U.S. Holder should consult its own tax advisor regarding their application to the U.S. Holder.

Receipt of Foreign Currency

The amount of any distribution or proceeds paid in Canadian dollars to a U.S. Holder in connection with the ownership of Common Shares, or on the sale or other taxable disposition of Common Shares, will be included in the gross income of a U.S. Holder as translated into U.S. dollars calculated by reference to the exchange rate prevailing on the date of actual or constructive receipt of the payment, regardless of whether the Canadian dollars are converted into U.S. dollars at that time. If the Canadian dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the Canadian dollars equal to their U.S. dollar value on the date of receipt.

Any U.S. Holder who receives payment in Canadian dollars and engages in a subsequent conversion or other disposition of the Canadian dollars may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method with respect to foreign currency. Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of Canadian dollars.

Information Reporting; Backup Withholding

Under U.S. federal income tax law, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a non-U.S. corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of “specified foreign financial assets” includes not only financial accounts maintained in non-U.S. financial institutions, but also, if held for investment and not in an account maintained by certain financial institutions, any stock or security issued by a non-U.S. person, any financial instrument or contract that has an issuer or counterparty other than a U.S. person and any interest in a non-U.S. entity. A U.S. Holder may be subject to these reporting requirements unless such U.S. Holder’s Common Shares are held in an account at certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns on IRS Form 8938, and, if applicable, filing obligations relating to the PFIC rules, including possible reporting on IRS Form 8621.

Payments made within the U.S. or by a U.S. payor or U.S. middleman of (a) distributions on the Common Shares, and (b) proceeds arising from the sale or other taxable disposition of Common Shares generally will be subject to information reporting. In addition, backup withholding, currently at a rate of 24% for the 2018 to 2025 tax years (increasing to 28% for tax years after 2025), may apply to such payments if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on IRS Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding. Certain exempt persons generally are excluded from these information reporting and backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner. The information reporting and backup withholding rules may apply even if, under the Canada-U.S. Tax Convention, payments are exempt from the dividend withholding tax or otherwise eligible for a reduced withholding rate.

The discussion of reporting requirements set forth above is not intended to constitute an exhaustive description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax, and, under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.

THE ABOVE DISCUSSION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE OWNERSHIP AND DISPOSITION OF COMMON SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.

23

Note applicable

Not applicable

We filed a registration statement on Form 20-F filed the Securities and Exchange Commission in Washington, D.C. (Registration No. 000-30084) on June 15, 1994, which became effective August 15, 1994 and a shell company report on Form 20-F on November 21, 2018 in connection with the Acquisition. The Registration Statement and the Shell Company Report contains exhibits and schedules. Any statement in this Form 20-F about any of our contracts or other documents is not necessarily complete. If the contract or document is filed as an exhibit to the Registration Statement or the Shell Company Report, the contract or document is deemed to modify the description contained in this Form 20-F. You must review the exhibits themselves for a complete description of the contract or documents.

We file annual reports and furnish other information with the SEC. You may read and copy any document that we file at the SEC’s Public Reference Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission at (http://www.sec.gov). We also file information with the Canadian Securities Administrators via SEDAR (www.sedar.com).

The Issuer’s only subsidiary is Graph Blockchain Limited. Refer to Item 4 of this Form 20-F for more information about our subsidiary.