Playground Ventures Inc. - Management Reports 2021

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

For the three and nine months ended September 30, 2021

Management’s discussion and analysis (MD&A) is current to November 26, 2021 and is management’s assessment of the operations and the financial results together with future prospects of Playground Ventures Inc. (“Playground”, “Company”, or the “Company”). This MD&A should be read in conjunction with our audited financial statements and related notes for the years ended December 31, 2020 and condensed interim consolidated financial statements for the three and nine months ended September 30, 2021 prepared in accordance with International Financial Reporting Standards (“IFRS”). All figures are in Canadian dollars unless stated otherwise.

Forward Looking Information

This MD&A contains certain forward-looking statements and information relating to the Company that is based on the beliefs of its management as well as assumptions made by and information currently available to the Company. When used in this document, the words "may", "will", "anticipate", "plan", "intend", "estimate", "project", "continue", "believe", "estimate", "expect" and similar forward-looking terminology, as they relate to the Company or its management, are intended to identify forward-looking statements. This MD&A contains forward-looking statements relating to, among other things, regulatory compliance, the sufficiency of current working capital and the estimated cost and availability of funding for the continued operation of the Company. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.

Although management believes that the expectations reflected in such forward-looking statements are reasonable, all forward-looking statements address matters that involve known and unknown risks, uncertainties and other factors and should not be read as guarantees of future performance or results. Accordingly, there are or will be a number of significant factors which could cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual future results, performance or achievements to differ materially include, but are not limited to, our limited operating history, our reliance on key personnel, future capital needs, dependence on proprietary technology and limited protection thereof and general economic trends and international risk. The Company is subject to significant risks and any past performance is no guarantee of future performance. The Company cannot predict all of the risk factors, nor can it assess the impact, if any, of such risk factors on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. This MD&A offers a brief overview of some of the risk factors to be considered in relation to the Company's business. This list may not be exhaustive and new risk factors may emerge from time to time. Please see the section "Risks and Uncertainties" for further information. We disclaim any intention or obligation to publicly update or revise any forward-looking statements after distribution of this MD&A, whether as a result of new information, future events or other circumstances, except as may be required pursuant to applicable securities laws.

BUSINESS OVERVIEW AND CORPORATE UPDATE

The Company was incorporated under the British Columbia Business Corporations Act (“BCBCA”) on October 30, 2014. Previously known as BlocPlay Entertainment Inc., the Company changed its name to Playground Ventures Inc. on April 30, 2021. The Company’s shares trade on the Canadian Securities Exchange under the symbol “PLAY”.

On May 7, 2021, the Company signed an agreement to invest $350,000 into TinyRex Games Inc. (“TinyRex”). TinyRex is a Vancouver based mobile games studio. The founders plans to develop and release three idle genre mobile games which will leverage their recent partnership with East Side Games Inc. The investment gives the Company right to certain shares in the capital of TinyRex.

The Company has entered into a share purchase agreement dated May 31, 2021, with 1281750 B.C. Ltd. (“B.C Ltd.”) and the shareholders of B.C. Ltd., pursuant to which the Company has agreed to acquire one hundred percent (100%) of the issued and outstanding common shares of B.C. Ltd. B.C. Ltd. is a private company formed under the laws of British Columbia, that creates, develops and publishes software related to mobile games and applications. The acquisition is subject to receipt of all necessary regulatory approvals, thus no financial impact to date.

On June 9, 2021, the Company completed a joint venture with Ludare Games Group Inc. (“Ludare Games”) by acquiring a 40% interest in MotionPix Game Studio Inc (“MotionPix”). MotionPix is a Vancouver based company that has the exclusive rights to a mobile game project licensed with a major movie franchise. The mobile game is fully developed and scheduled for global launch in tandem with a highly anticipated blockbuster movie release in Q2 2022. As consideration for the Acquisition, the Company issued 1,670,000 common shares in the capital of the Company to Ludare Games and an investment in the amount of $300,000 into the project.

On July 7, 2021, the Company made an investment in GG Hub, an Italian media gaming corporation, pursuant to which the Company shall invest up to an aggregate of €1,000,000 into GG Hub to acquire up to a 60% interest in GG Hub. The Company has made the initial payment of €200,000 to GG Hub and as a result, the Company has acquired a 20% interest in GG Hub.

SELECTED QUARTERLY FINANCIAL INFORMATION

The following table reflects the summary of quarterly and year to date results for the periods set out:

Three Months Ended Nine Months Ended	Three Months Ended Nine Months Ended
Sept 30, 2021 Sept 30, 2020 Sept 30, 2021	Sept 30, 2020
$ $ $	$
Total revenue Nil Nil Nil Net income (loss) (322,567) (55,479) (1,616,366) Net income (loss) per share – basic (0.01) (0.01) (0.05) Net income (loss) per share-diluted (0.01) (0.01) (0.04)	Nil (53,649) (0.01) (0.01)
Total assets 4,505,362 24,124 4,505,362 Long-term liabilities Nil Nil Nil Dividends per share Nil Nil Nil	24,124 Nil Nil

SUMMARY OF QUARTERLY REPORTS

Results for the past eight quarters for selected financial statement amounts are presented below. The Company's quarterly operating results have varied in the past and may vary substantially in the future. Accordingly, the information below is not necessarily indicative of results for any future quarter.

	Q3-2021 $	Q2-2021 $	Q1-2021 $	Q4-2020 $
Total revenue	-	-	-	-
Net income (loss)	(322,567)	(329,983)	(963,815)	(95,614)
Basic & diluted loss per share	(0.01)	(0.01)	(0.03)	(0.01)
	Q3-2020 $	Q2-2020 $	Q1-2020 $	Q4-2019 $
Total revenue	-	-	-	-
Net income (loss)	(55,479)	70,454	(68,624)	241,491
Basic & diluted loss per share	(0.01)	0.01	(0.01)	0.03

OVERALL PERFORMANCE

Three Months ended September 30, 2021 and 2020

The Company incurred a loss of $322,567 or $0.01 per share for the three-months ended September 30, 2021 compared with a loss of $55,479 or $0.01 a share for the comparable period in 2020 and a loss of $95,614 or $0.01 per share in Q4 2020. The Company had minimal operations in 2020, with a large gain on reversal of trade payables & accrued liabilities offsetting expenses incurred. In Q3 2021 there were increased business activities through investments in GG Hub and a private placement completed.

Consulting and management fees were $165,108 during the three-months ended September 30, 2021 compared to $60,000 in the previous year. Professional fees during the three-months ended September 30, 2021 was $91,702 compared to 13,907 in the three-months ended September 30, 2020. The Company has increased consulting and professional fees to ramp up their investments and digital portfolio leading to higher costs in the quarter versus prior year and the prior period.

General and administrative expenses during the three-months ended September 30, 2021 was $34,890 compared to $1,183 in the three-months ended September 30, 2020. This current level of expenses are expected to be nominal for the foreseeable future in the normal due course of the business.

The Company incurred a loss of $36,750 from the settlement of debts through the issuance of common shares during the three-months ended September 30, 2021 (three months ended September 30, 2020 – nil).

During the three-month period ended September 30, 2021, the Company earned interest income of $8,734 (three months ended September 30, 2020 - $nil) on its demand promissory note of $1,333,233 to Countervail Games.

The Company recorded a 40% share of the loss of MotionPix of $440 during the three months ended September 30, 2021 (three months ended September 30, 2020 – nil).

Nine Months ended September 30, 2021 and 2020

The Company incurred a loss of $1,616,366 or $0.05 per share for the nine-months ended September 30, 2021 compared with loss of $53,649 or $0.01 per share for the comparable period in 2020. The Company had minimal operations in 2020, with a large gain on reversal of trade payables & accrued liabilities offsetting expenses incurred. During 2021, business activities increased due to investments, equity issuances and private placements completed.

Consulting and management fees were $449,414 during the nine-months ended September 30, 2021 compared to $180,000 in the previous year. Professional fees during the nine-months ended September 30, 2021 was $207,404 compared to $32,563 in the nine-months ended September 30, 2020. The Company has increased consulting and professional fees to ramp up their investments and digital portfolio leading to higher costs in the current year versus prior year and the prior period.

General and administrative expenses during the nine-months ended September 30, 2021 was $68,429 compared to $7,407 in the nine-months ended September 30, 2020. This current level of expenses are expected to be nominal for the foreseeable future in the normal due course of the business.

The Company incurred $666,227 expense related to equity issuance in the nine-months ended September 30, 2021 ($nil in the nine-months ended September 30, 2020). This relates to the stock options granted during the year.

The Company incurred a loss of $163,580 from the settlement of debts through the issuance of common shares during the nine-months ended September 30, 2021 (nine-months ended September 30, 2020 – nil).

During the nine-months ended September 30, 2021, the Company earned interest income of $16,419 (ninemonths ended September 30, 2020 - $nil) on its demand promissory note of $1,333,233 to Countervail Games.

The Company incurred a loss on share settlement of $74,880 during the nine-months ended September 30, 2021 (nine-months ended September 30, 2020 – nil). The Investment in MotionPix is valued based on the acquisition value of the common shares $700,000 and the $300,000 cash investment into the project. As the common shares were issued at a value of $774,880, a loss on share settlement is recognized of $74,880. The Company recorded their 40% share of the loss of MotionPix of $440.

Company Directors and Officers

As at the date of this report, the directors and officers of the Company were:

Chris Irwin Chief Executive Officer and Director Jon Gill Director Harrison Reynolds Director Nidhi Kumra Chief Financial Officer

LIQUIDITY AND CAPITAL RESOURCES

The Company is in the early stage of operations and requires additional capital to achieve its strategic objectives. As at September 30, 2021, the Company had working capital of $1,486,829 (December 31, 2020 - $212,635). Playground is currently not generating operating cash flows and has significant cash requirements to continue its development of its video games and investments in video game developers. In order to meet future expenditures and development costs, the Company may need to raise additional financing and there can be no assurance that adequate funding will be available in the future, or available under terms favourable to the Company. Any future equity raises would be dilutive to current equity holders. Whether and when the Company can attain profitability and positive cash flows is uncertain at this time. These uncertainties represent significant risks to the Company’s ability to continue as a going concern. Management believes there is sufficient working capital to meet its current operating needs. Management is exploring various financing alternatives, which includes equity and debt offerings, to continue to execute its strategy within the digital gaming industry.

	Note Nine Months Ended September 30, 2021	Nine Months Ended September 30, 2020
Operating activities Loss for the period Adjustments to reconcile net loss to cash used in operating activities: Equity issuance expense Loss on settlement of debt Reversal of trade payable & accrued liabilities Loss on share settlement Share of Associate Net change in working capital: HST receivable Prepaid expenses Trade payables and accrued liabilities	$ (1,616,366) 666,227 10 163,580 - 8 74,880 8 440 (13,547) 7 (3,290) (27,529)	$ (53,649) - - 166,325 - - (922) - (135,045)
Cash provided from (used in) operating activities	(755,605)	(23,291)
Investing activities Advances on demand promissory note Investment in MotionPix Investment in TinyRex Investment in GG Hub	7 (1,183,233) (200,000) (232,667) (301,140)	- - -
Cash provided from investing activities	(1,917,040)	-
Financing activities Receipts on options exercised Receipts of common share & warrant issuances Share issuance costs	10 184,875 10 2,731,198 10 (135,230)	- - -
Cash provided from financing activities	2,780,842	-
Increase (decrease) in cash Cash, beginning of period	108,197 148,449	(23,291) 44,719
Cash, end ofperiod	256,646	21,428

Operating Activities

During the nine months ended September 30, 2021, the Company used $755,605 on operating activities (September 30, 2020 - $23,291). The Company has incurred higher consulting and management fees, as the Company positions to scale the business through growth of the Company’s portfolio of digital assets through strategic investments including MotionPix, TinyRex and GG Hub.

Investing Activities

No investing activities occurred during the nine months ended September 30, 2020.

As at September 30, 2021, the Company had advanced $1,333,233 (December 31, 2020 - $150,000) to Countervail Games Ltd. (“Countervail”) as a demand promissory note in connection with an exclusivity agreement between the Company and Countervail with respect to a potential investment, with terms to be defined and subject to due diligence. The demand promissory note bears 3% interest and due on demand. For the nine months ended September 30, 2021, the Company invested into MotionPix, with a portion paid out in cash ($200,000), TinyRex ($232,667) and GG Hub ($301,140).

Financing Activities

No financing activities occurred in the nine months ended September 30, 2020.

On January 20, 2021, the Company issued 2,141,450 common shares through non-brokered private placement financing at a price of $0.11 per common share for gross proceeds of $235,560.

On March 7, 2021, the Company closed a non-brokered private placement financing for gross proceeds of $563,948 through the issuance of 3,759,658 units in the capital of the Company (the “Units”) at a price $0.15 per Unit. Each Unit is comprised of one common share and one common share purchase warrant. Each warrant entitles the holder to purchase one common share at a price of $0.20 per common share for a period of three years form the date of issuance. Costs related to the share issuance were $20,468.

On June 29, 2021, the Company closed a non-brokered private placement of 4,938,214 units at a price of $0.35 per unit for gross proceeds of $1,728,375. Each unit consisted of one common share of the Company and one half of one whole common share purchase warrant. Each warrant entitles the holder to purchase one half common share of the Company at an exercise price of $0.70 for a period of 18 months. Costs related to the share issuance were $112,148.

On August 19, 2021 the Company closed a non-brokered private placement of 580,900 units at a price of $0.35 per unit for gross proceeds of $203,315. Each unit consisted of one common share of the Company and one half of one whole common share purchase warrant. Each warrant entitles the holder to purchase one half common share of the Company at an exercise price of $0.70 for a period of 18 months. Using the relative fair value method, $27,898 was allocated to the attached warrants. Costs related to the share issuance were $2,615.

During the nine months ended September 30, 2021, 1,075,000 options were redeemed for $184,875. No options were exercised in 2020.

ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT REVENUE

As the Company has not had significant revenue from operations, the table below provides a breakdown of material components of expensed research and development costs, in accordance with Section 5.3 of National Instrument 51-102 – Continuous Disclosure Obligations:

Nine Months Ended:	September 30, 2021	September 30, 2020
Operating expenses	$ 1,391,474	$ 219,970
Loss on share settlement	74,880	-
Loss on debt settlements	163,580	-
Loss on foreign exchange	2,411	4
Interest Income	16,419	-
Gain on reversal of trade payable & accrued liabilities	-	166,325
Total assets	4,505,362	24,124
Total liabilities	244,281	703,053
Operating expenses – Nine Months Ended:	September 30, 2021	September 30, 2020
Consulting fees	$ 449,414	$ 180,000
Office and administrative expenses	68,429	7,407
Professional fees	207,404	32,563
Equityissuance expense	666,227	-

FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES

(a) Capital Management:

The Company's objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

The Company includes equity, comprised of issued Common Shares, in the definition of capital. The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund the identification and evaluation of potential acquisitions. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity or by securing strategic partners.

(b) Risk Disclosures and Fair Values:

The Company's financial instruments, consisting of cash. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

SHARE CAPITAL

As at the date of this report, the Company has the following issued and outstanding:

Common shares– issued and outstanding	55,402,237
Stock options – vested	2,550,000
Warrants	11,519,215

TRANSACTIONS WITH RELATED PARTIES

The transactions are in the normal course of business and have been valued at the exchange amount which is the amount of consideration established and agreed to by the related parties.

Key management includes the Company's directors, officers and any employees with authority and responsibility for planning, directing and controlling the activities of an entity, directly or indirectly. Compensation awarded to key management includes the following:

Nine Months Ended September 30,	2021	2020
	$	$
Short-term employee benefits	172,955	180,000
Total compensation to key management	172,955	180,000

Included in trade payables and accrued liabilities as at September 30, 2021 are amounts of $15,176 (December 31, 2020 -$129,950) due to directors and former directors of the Company and companies with common directors. The amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

Per an agreement, the Company has an amount of $79,445 in prepaid expenses to a company whose director is also a director of the Company. In addition, under this agreement, the Company is committed to a monthly consulting fee of $15,000 per month until December 1, 2023.

During the nine months ended September 30, 2021, the Company issued 1,155,682 common shares to settle $127,125 of debt to a company whose director is also a director of the Company, resulting in a loss on the settlement of $92,455.

COMMITMENTS

The Company has a commitment to pay GG Hub four monthly payments of €100,000 from October 2021 to January 2022. At each monthly payment, the Company will obtain an incremental 5% interest in GG Hub. Subsequent to these payments, the Company has an option to invest an additional €400,000 in GG Hub.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

RISKS AND UNCERTAINTIES

Given the speculative nature of the business of the Company, an investment in the Common Shares should only be considered by those persons who can afford a total loss of their investment. The risks presented below should not be considered exhaustive and may not represent all of the risks that the Company may face. It is believed that these are the factors that could cause actual results to be different from expected and historical results. Additional risks and uncertainties not presently known to the Company or that the Company currently deems immaterial may also impair the Company’s business operations. If any of the risks described below occur, the Company’s business, financial condition, liquidity and results of operations could be materially harmed.

Coronavirus (COVID-19)

On January 30, 2020, the World Health Organization declared the coronavirus outbreak (COVID-19) a “Public Health Emergency of International Concern” and on March 11, 2020, declared COVID-19 a pandemic. The current COVID-19 pandemic is significantly impacting the global economy and commodity and financial markets. The full extent and impact of the COVID-19 pandemic is unknown and to date has included extreme volatility in financial markets, a slowdown in economic activity, extreme volatility in commodity prices and has raised the prospect of an extended global recession. As well, as efforts are undertaken to slow the spread of the COVID-19 pandemic, the operation and development of projects may be impacted as governments have declared a state of emergency or taken other actions. If the operation of the Company is suspended, it may have a material adverse impact on the Company’s profitability, results of operations, and financial condition. The broader impact of the COVID-19 pandemic on investors, businesses, the global economy or financial and commodity markets may also have a material adverse impact on the Company’s profitability, results of operations and financial conditions. The extent to which the coronavirus impacts the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others.

Limited Operating History and Sales

The Company has a limited operating history on which to base an evaluation of its business, financial performance and prospects. As such, the Company's business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in the early stage of development. As the Company is in an early stage and is introducing new products, the Company's revenues may be materially affected by the decisions, including timing decisions, of a relatively consolidated customer base. In addition, it is also difficult to evaluate the viability of the Company's video games because the Company has had limited experience to address the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets such as the Company's target markets. There can be no assurance that the Company will be successful in addressing these risks, and the failure to do so in any one area could have a material adverse effect on the Company's business, prospects, financial condition and results of operations.

No Assurance of Profitability

The Company cannot give assurances that it will not incur net losses in the future. The limited operating history makes it difficult to predict future operating results. The Company is subject to the risks inherent in the operation of a new business enterprise in an emerging business sector, and there can be no assurance that the Company will be able to successfully address these risks.

Future Capital Needs; Uncertainty of Additional Funding

The Company may not be able to fully implement and execute its business strategy without additional financing. There can be no assurance that such additional financing will be available, and if available, there can be no assurance that the cost of obtaining such financing will be on favourable or reasonable commercial terms or that financing will not result in substantial dilution to the Company's shareholders.

Dependence on Key Personnel

The Company's future success depends on its ability to retain key employees and attract, train, retain and successfully integrate new talent into its management team. The Company’s success is highly dependent on its continuing ability to identify, hire, train, motivate and retain appropriate personnel. Competition for these personnel can be intense, and the Company cannot provide assurance that it will be able to attract or retain them. To do so, it may be necessary for the Company to materially increase the compensation it pays.

Management of Growth

The Company may experience a period of significant growth in the number of personnel that will place a strain upon its management systems and resources. Its future will depend in part on the ability of its officers and other key employees to implement and improve financial and management controls, reporting systems and procedures on a timely basis and to expand, train, motivate and manage the workforce. The Company's current and planned personnel, systems, procedures and controls may be inadequate to support its future operations.

Competition

Competition in the gaming industry as it relates to video games is increasing. While the Company is targeting smaller niche sites with higher expected revenues per subscriber, there can be no assurances that competitors will not adopt a similar strategy and attempt to enter the markets that the Company has targeted.

Dependence on Proprietary Technology and Limited Protection Thereof

The Company will be relying on a combination of trademark, copyright, patent and trade secret law, as well as confidentiality restrictions contained in certain confidentiality agreements, to establish and protect the Company's proprietary rights in its intellectual property. As a result, the Company may not be able to adequately prevent a competitor, business partner or customer from creating or obtaining an illegal copy of its software or otherwise using it for inappropriate purposes such as reverse-engineering.

General Economic Trends

The worldwide economic slowdown and tightening of credit in the financial markets may impact the business of the Company's customers, which could have an adverse effect on the Company's business, financial condition, or results of operations. Adverse changes in general economic or political conditions in any of the major countries in which the Company does business could also adversely affect the Company's operating results.

Asset Location and Legal Proceedings

Substantially all of the Company's assets are located in Canada where intellectual property is generally enforced. Video gaming is global in nature, and the Company expects to have subscribers and assets located outside of Canada. Accordingly, the Company may be subject to legal proceedings and judgments in foreign jurisdictions.

Risk Associated with Foreign Operations in Developing Countries

The Company's primary revenues are expected to be achieved initially in North America. However, the Company may expand to markets outside of North America, and become subject to risks normally associated with conducting business in a developing country. The Company cannot predict government positions on such things as foreign investment, intellectual property rights or taxation. A change in government positions on these issues could adversely affect the Company's business.

Market Acceptance

The Company's ability to gain and increase market acceptance of its games depends upon its ability to establish and maintain its brand name and reputation. In order to do so, substantial expenditures on market research, product development, product testing, strategic relationships and marketing initiatives may be required.

Rapid Technological Change

The video gaming industry is characterized by rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions embodying new technologies and emergence of new industry standards and practices that could render the Company's existing products and systems obsolete and can exert price pressures on existing products. It is critical to the Company’s success that it be able to anticipate and react quickly to changes in technology or in industry standards and successfully develop and introduce new, enhanced and competitive products on a timely basis. The Company cannot give assurance that it will successfully develop new products or enhance and improve its existing products, that new products and enhanced and improved existing products will achieve market acceptance or that the introduction of new products or enhanced existing products by others will not render the Company’s products obsolete. The process of developing new technology is complex and uncertain, and, if the Company fails to accurately predict customers' changing needs and emerging technological trends, its business could be harmed. The Company must commit significant resources to developing new products before knowing whether its investments will result in products the market will accept. To remain competitive, the Company may be required to invest significantly greater resources than currently anticipated in research and development and product enhancement efforts, and result in increased operating expenses.

Product Defects and Reputation

The Company will continue developing source code for its platform. Such source code and related products may contain errors or hidden defects that may significantly impact the user experience. The Company may not be able to correct the defects in a timely manner, and may lead to a loss of or a delay in market acceptance. In addition, such errors or hidden defects could cause adverse damage to its reputation and impair its ability to acquire new users. In addition, the Company may need to make significant expenditures to eliminate defects from its products. As well, errors and defects could lead to claims for liability or other claims involving costly litigation.

Risks Associated with Acquisitions

As part of the Company's overall business strategy, the Company may pursue select strategic acquisitions that would provide additional product or service offerings, additional industry expertise, and a stronger industry presence in both existing and new jurisdictions. Future acquisitions may expose it to potential risks, including risks associated with: (a) the integration of new operations, services and personnel; (b) unforeseen or hidden liabilities; (c) the diversion of resources from the Company's existing business and technology; (d) potential inability to generate sufficient revenue to offset new costs; (e) the expenses of acquisitions; or (f) the potential loss of or harm to relationships with both employees and existing users resulting from its integration of new businesses. In addition, any proposed acquisitions may be subject to regulatory approval.

Electronic Communication Security Risks

A significant potential vulnerability of electronic communications is the security of transmission of confidential information over public networks. Anyone who is able to circumvent the Company's security measures could misappropriate proprietary information or cause interruptions in its operations. The Company may be required to expend capital and other resources to protect against such security breaches or to alleviate problems caused by such breaches.

Insurance Coverage

The Company will require insurance coverage for a number of risks, including business interruption, environmental matters and contamination, personal injury and property damage. Although the Company believes that the events and amounts of liability covered by its insurance policies will be reasonable, taking into account the risks relevant to its business, and the fact that agreements with users contain limitations of liability, there can be no assurance that such coverage will be available or sufficient to cover claims to which the Company may become subject. If insurance coverage is unavailable or insufficient to cover any such claims, the Company's financial resources, results of operations and prospects could be adversely affected.

Tax Risk

The Company will be considered to have been carrying on business in Canada for purposes of the Income Tax Act (the " Tax Act "). However, the Company will be operating in the video gaming space, a new and developing industry that has had historically low regulations and tax compliance. There is risk that foreign governments may look to increase their tax revenues or levy additional taxes to level the playing field for perceived disadvantages to the traditional brick and mortar business. While the Company does not foresee any adverse tax affects, there is no guarantee that governments will not impose such additional adverse taxes in the future.

Risks in Foreign Jurisdictions

Video gaming is a global phenomenon, and the Company anticipates that a significant user base will be located outside Canada. International business activities entail additional risks such as uncertainty as to the protection and use of intellectual property, partnership risks, political risks, legal and regulatory risks, the risk of increase in taxes (including value added taxes) and trade barriers. Furthermore, as profits of foreign subsidiaries are taxable under foreign income tax legislation, revenues from foreign operations could be adversely impacted.

Currency Fluctuations

Due to the Company's present operations, and its intention to in the future operate in jurisdictions outside Canada, the Company is expected to be exposed to significant currency fluctuations in the future. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. A substantial portion of the Company’s revenue could be earned in US dollars, but a substantial portion of its operating expenses are incurred in Canadian dollars. Fluctuations in the exchange rate between the US dollar and other currencies, such as the Canadian dollar, may have a material adverse effect on the Company’s business, financial condition and operating results. The Company intends to continue to expand operations globally so it may be subject to additional gains and losses against additional currencies. The Company does not currently have a foreign exchange hedging program in place. However, in the future, it may establish a program to hedge a portion of its foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if the Company develops a hedging program, it may not hedge its entire exposure to any one foreign currency and it may not hedge its exposure at all with respect to certain foreign currencies.

Fluctuations in Quarterly Results

The Company’s quarterly operating results may fluctuate significantly in the future depending on factors such as the popularity of video games, the ability to attract users, progress on implementation of projects and upgrades, the number, timing and significance of new product announcements by the Company and its competitors, the ability to license and develop new software, introduce and market new and enhanced versions of products on a timely basis, changes in operating expenses, and general economic factors, among others. A significant portion of the Company’s expenses are based on expectations of future revenue and, therefore, is relatively fixed in the short-term. Accordingly, if revenue levels are below expectations, operating results are likely to be adversely affected. As quarterly revenue is dependent upon building a significant user base, and the ability to monetize that user base, the inability to build and monetize the user base could cause the Company to plan or budget inaccurately, and those variations could adversely affect its financial results.

Officer and Director Conflicts

The Company’s officers and directors may have certain interests and arrangements that are different from, or in addition to the Company’s shareholders. Executive officers and directors may have rights to indemnification including directors’ and officers’ liability insurance that will survive consummation of their agreements.

Subsequent events

Countervail

The Company entered into a share purchase agreement dated September 27, 2021 with Countervail to acquire all the issued and outstanding common shares in the capital of Countervail (the “Transaction”). As consideration for the Transaction, the Company issued 16,000,000 common shares in the capital of the Company. The effective date of the Transaction is October 1, 2021. Countervail is a mobile game developer with a focus on generating an innovative user experience through a never seen before patent pending technology that integrates live video content with digital game play. This will be combined with an exclusive in-game advertising and brand sponsorship technology application. In partnership with a high-profile game developer in the action sports genre, Countervail has the exclusive rights to a mobile game project licensed with the largest online skateboarding community in the world.