A Review of Risks

Risk Assessment

Any participation in SuperOne is subject to elements of risks. Prospective stakeholders in SuperOne should carefully consider the risks reviewed in this section and also take into account how SuperOne is responding to these risks.

SuperOne operates with innovative new products at the forefront and intersection of several fast growing, developing and unregulated global markets where there are little or no adequate and proven frameworks.

We believe we have a good overview of the inherent risks related to our operations, and we do not believe that we face substantial unknown risks. However, this section should not be treated as a set of complete descriptions of the risk factors. We cannot exclude the possibility that there will be adverse effects from risks and uncertainties currently unknown to SuperOne.

Regulatory Risks

In certain jurisdictions there is no directly applicable legislation. In these jurisdictions, SuperOne does not operate within a regulatory framework. In other jurisdictions where SuperOne does operate within a regulatory framework, there might be conflicting laws and/or regulations, conflicting interpretations, divergent approaches by enforcement agencies and/or inconsistent enforcement policies.

Moreover, the regulations of skill games and cryptocurrencies are subject to uncertainties. These may arise from differing approaches by jurisdictions to the question of determining where the gaming or cryptocurrency activities are taking place and to the question of determining which authorities have jurisdiction over the activities and those who participate in them and facilitate them.

SuperOne operates a measured and prudent approach to regulatory compliance in all jurisdictions. This informs our decision-making when it comes to whether or not we permit users in a given jurisdiction to access any one or more of SuperOne’s products.

This measured and prudent approach also informs SuperOne's decision-making on whether or not to engage in different types of marketing activity and user contact.

Despite our best efforts, there is a risk that SuperOne's assessment of these factors may not always accurately predict the likelihood of one or more jurisdictions taking enforcement or adverse action against SuperOne, its users or its suppliers. This in turn may result in the activity undertaken by SuperOne, its users or its third party suppliers, being established as illegal.

If SuperOne is found by a court to be acting unlawfully in carrying out marketing activities, providing gameplay and/or other services to users located in certain jurisdictions it may have to desist from doing so. This would have an adverse effect on SuperOne operations and financial performance. In addition, civil, criminal or regulatory proceedings may be brought against SuperOne as a result. Any such proceedings would potentially have resource and reputational implications, and could potentially have a material adverse effect on the operations, financial performance and prospects of SuperOne.

SuperOne depends on third party suppliers such as app stores, payment processing, exchanges, technology, banking, advertising and other service providers. The ability of suppliers to provide their services in full to SuperOne may be affected by their assessment of the legality of their provision of services to SuperOne, of SuperOne's business or the gaming and cryptocurrency sectors, and by political or other pressure that they might be subjected to. Adverse changes in law or regulation in any jurisdiction may make the provision of vital services to SuperOne unlawful in such jurisdictions. To the extent that third party suppliers are unable to provide services to SuperOne in full, this may have an adverse impact on the operations, financial performance and prospects of SuperOne.

The introduction of legislation or regulations restricting financial transactions for skill gaming and cryptocurrency operators and/or other prohibitions or restrictions on the use of credit cards and other banking instruments for skill gaming and cryptocurrency transactions, may limit SuperOne's ability to accept payment from its users. These restrictions may be imposed as a result of concerns related to fraud, payment processing, anti-money laundering or other issues regarding the provision of gaming and cryptocurrency services.

Some issuing banks or credit card companies may from time to time reject attempts to make payments to SuperOne by their users. Should restrictions and rejections of payment processing become significant, gaming and cryptocurrency activities by SuperOne's users could be adversely affected. This would in turn have a material adverse effect on the operations, financial performance and prospects of SuperOne.

The introduction of legislation or regulations requiring Internet Service Providers in any jurisdiction to block access to SuperOne's websites and products may restrict the ability of SuperOne's users to access products offered by SuperOne. Such restrictions, should they be imposed, could have a material adverse effect on the operations, financial performance and prospects of SuperOne.

If regulated, the provision of skill gaming and cryptocurrency services is subject to extensive laws, regulations, and – where relevant – licensing requirements. These laws, regulations and licensing requirements vary from jurisdiction to jurisdiction but typically address the responsibility, financial standing and probity of the owners, directors, and operators. Many of the laws, regulations and licensing requirements have been recently introduced and are subject to change at any time. Relevant regulatory authorities may change their interpretation or the laws, regulations and licensing requirements at any time. The compliance costs associated with these laws, regulations, and licensing requirements are significant.

Failure to comply with applicable laws, regulations, and licensing requirements may lead to penalties, sanctions or ultimately the revocation of operating licenses in a certain jurisdiction.

In general terms, any adverse changes to the regulation of gaming and cryptocurrencies, the interpretation of these laws, regulations and licensing requirements by relevant regulators or the revocation of any future operating licenses could materially adversely affect the operations, financial performance and prospects of SuperOne.

At the same time, certain jurisdictions whose laws currently prohibit or restrict gaming or cryptocurrencies or the marketing of those services, may implement changes to open their markets through the adoption of competitive licensing and regulatory frameworks. Such changes will provide potential growth opportunities for SuperOne but the profitability of the opportunity will depend on the specifics of the new regulatory regime. The new regime may for example impose onerous conditions, such as particular licensing requirements together with enforcement sanctions for breaching it, it may impose taxation liabilities that make the market unattractive to SuperOne, or impose restrictions that limit SuperOne's ability to offer certain of its key products or to sell its products in the way it would prefer. Moreover, the opening of new markets and the clarification of restrictions surrounding skill gaming and cryptocurrencies in other markets where the legal position is currently unclear may encourage new entrants to the gaming and cryptocurrency sectors or strengthen the position of existing gaming and cryptocurrency operators. If the new regulatory regime deliberately encourages new entrants or strengthens existing gaming and cryptocurrency operators, this may have a material adverse effect on SuperOne's operations, financial performance, and prospects.

SuperOne’s unique gaming model is based on skill and knowledge, as opposed to chance, which significantly reduces the regulatory risk in many jurisdictions. We have significant in-house expertise and advisors that allow us to accurately monitor and assess regulatory environments.

As is well understood by our in-house expertise and by the gaming and cryptocurrency industries more generally, the regulation and legality of skill games and cryptocurrencies varies from jurisdiction to jurisdiction. Naturally, SuperOne closely monitors developments and always adapts to changing conditions. We have the technology to restrict our offerings and the expertise to determine what we can and can’t do. However, regulatory environments are by their very nature unpredictable and therefore represent an inherent potential risk to our business.

Cryptocurrency Regulations

As the regulatory landscape of crypto assets is currently in a maturing phase, SuperOne must continuously update itself and monitor any developments in, and the adoptions of new regulations.

In particular, SuperOne monitors whether the crypto assets currently used on SuperOne's platform will change its categorisation and be regarded as "financial instruments". Whether or not a crypto asset is to be regarded as a "financial instrument", depends on the functions of the relevant type of crypto asset. The kind of functions a crypto asset has, will in turn impact the type of risks associated with that relevant type of crypto asset. If the risks associated with a crypto asset is similar to those risks associated with "financial instruments" it should be regulated as a "financial instrument" and the other way around

There is a risk that one or several of the crypto assets currently used on SuperOne's platform will be regarded as a "financial instrument" as further defined in Directive 2014/65/EU on Markets in Financial Instruments and amended Directive 2002/92/EC and Directive 2011/61/EU ("MiFID II"). If so, SuperOne may need to obtain permission to operate a multilateral trading facility or an organized trading facility in order to maintain services related to offering and trading such crypto assets. Should SuperOne choose to maintain its services related to offering and trading in such crypto assets and obtain such permission, this will potentially increase the costs of SuperOne substantially, and may have a material adverse effect on SuperOne's operations, financial performance, and prospects.

Alternatively, SuperOne may choose to discontinue its services and not to offer or provide trading in crypto assets that are regarded as financial instruments. The agreements entered into with users generally allow for discontinued offering and trading in crypto assets that are regarded as financial instruments. Should SuperOne choose to discontinue any offering or trading services this must be expected to have a negative effect on the revenues and results of operations for SuperOne, and, subject to the extent of new regulations and what crypto assets that in the future are regarded as financial instruments the negative effects for SuperOne may be material.

Stakeholders should carefully consider that regulation of crypto assets are subject to ongoing consideration for new regulations in many jurisdictions that may impact SuperOne, its operations and financial performance. There can be no guarantees that SuperOne will be able to maintain its offering and trading services for any specific crypto asset.

Macroeconomic Conditions

SuperOne relies on its users having sufficient disposable income or capital to spend on gaming and cryptocurrencies. In those jurisdictions most severely affected by it, an economic downturn may adversely impact user activity levels and the size of user deposits.

A worsening of general economic conditions could significantly affect SuperOne’s user activity levels and could therefore materially adversely affect the operations, financial performance and prospects of SuperOne.

While macroeconomic conditions are out of SuperOne’s control, SuperOne’s technological platform and business concept and model puts us in a position where we can adapt its offering to lower disposable incomes.

Competition

If SuperOne is unable to compete effectively, it may lose users and may not be able to attract new customers. The gaming and cryptocurrency industries are increasingly competitive, and SuperOne may be unable to predict, or adequately plan for, the strategies of its competitors. SuperOne may be unable to respond quickly or appropriately to the changes in the industry brought on by new products and technologies, the availability of products on other technology platforms and marketing channels, the introduction of new features and functionality or new marketing and promotional efforts by SuperOne's competitors or new competitors and new technology.

SuperOne also expects to be subject to continual challenges from new and existing competitors who may have larger user bases and greater brand recognition. Also, SuperOne is at risk from consolidation in the industry, which might lead to the appearance of a very significant competitor to whom SuperOne might lose market share. Other competitors may have significantly greater financial, technical, marketing and other resources than SuperOne and may be able to secure greater liquidity than SuperOne. A loss of market share and, in particular, a loss of liquidity in the number of users could have a considerable adverse effect on SuperOne’s business.

At the same time, as the gaming and cryptocurrency industries become increasingly competitive, the success of SuperOne depends on the maintenance, development and enhancement of the SuperOne brand.

If SuperOne is unable to maintain, develop and enhance its brand, its ability to implement its strategic goals may be adversely affected and in turn SuperOne's operating results may be adversely affected. Also, increased competition may require more management time and resource and greater levels of expenditure to maintain, develop and enhance the SuperOne brand, which may have a material adverse effect on SuperOne's operations, financial performance, and prospects.

While SuperOne may experience competition when the market is defined broadly, the risk of competitors offering a product which is equivalent or closely resembles SuperOne’s offering has been minimized. This is partly because SuperOne vigorously protects its intellectual property. More importantly, it is also because SuperOne has built its own technological platform from scratch. This means the barriers to entry for copycat operations are very high both in terms of cost and risk of failure.

Taxation

The jurisdictions in which SuperOne operates may impose taxes and duties on skill gaming and cryptocurrency activities. Adverse changes in the taxation of skill gaming or cryptocurrency, or the imposition of new such taxes, or adverse changes to statutory levies or other duties or charges in the jurisdictions where SuperOne operates could materially and adversely affect the operations, financial performance and prospects of SuperOne.

SuperOne operates a streamlined corporate structure that is optimized for tax purposes. However, future taxation environments are by their very nature unpredictable and therefore represent an inherent potential risk to our business.

Service Providers

SuperOne has fundamental contractual relationships with a number of third parties including suppliers, partners, banks, exchanges and payment processors. In particular, SuperOne relies on the primary suppliers to carry on its operations. The failure of one or more of these third parties may have an adverse impact on the financial and operational performance of SuperOne. Similarly, the failure of one or more of these third parties to fulfil its obligations to SuperOne for any other reason may also cause significant disruption and have a material adverse effect on its operations, financial performance, and prospects.

SuperOne takes a cautious risk-minimizing approach to selecting partners. We only work with world-leading brands with strong reputations. However, SuperOne cannot rule out the risk that any of the service providers will at times fail to deliver.

Payment Processing

The provision of convenient, trusted, fast and efficient payment processing services to SuperOne's users is a critical aspect of SuperOne's business. If there is any deterioration in the quality of the payment processing services provided to SuperOne's users or any interruption to those services, or if such services are only available at an increased cost to SuperOne or its users, or are terminated and no timely and comparable replacement services are found, SuperOne's users may be deterred from using SuperOne's products. Any such occurrences may have a material adverse effect on SuperOne's operations, financial performance, and prospects.

SuperOne has put in place systems and controls to block payments from users in jurisdictions where SuperOne has decided not to offer some or all of its services. These systems and controls could fail or otherwise be found to be inadequate, either currently or as a result of future technological developments. That may result in violations of applicable laws or regulations. Any claims in respect of any such violations could have cost, resource, and reputational implications, as well as effects on the ability of SuperOne to retain or expand its operations. This may have a material adverse effect on the operations, financial performance and prospects of SuperOne.

To mitigate this risk, SuperOne has put in place secure, customized technological systems and controls to block payments from customers from those jurisdictions. We take our responsibility in this area very seriously and closely monitor all payments and we will continue utilizing the latest technological systems. However, because of rapidly changing technological environments and reliance on third parties, this aspect of our business carries an inherent risk.

Anti-Money Laundering

SuperOne is subject to and exposed to the risk of breaching governing Anti-Money Laundering and Terrorist Financing Acts, by which SuperOne is obligated to continually assess and uphold internal procedures to ensure a satisfactory level of compliance. SuperOne’s obligations pursuant to these laws include, for example, user due diligence measures, monitoring of user relationships, duties to conduct further examinations on the basis of suspicious findings, and duties to report and disclose such findings to the relevant authorities. The failure to uphold these obligations may subject SuperOne or its employees to fines, injunctions and penalties. Further, any such development may expose SuperOne to additional costs and liabilities and require it to change the manner in which it conducts its business or otherwise have a material adverse effect on SuperOne's operations, financial performance, and prospects.

Furthermore, the risk that cryptocurrency service providers and electronic money institutions will be subjected to or used for money laundering has increased worldwide. The turnover of employees can create challenges in consistently implementing related policies and technology systems. The risk of future incidents in relation to money laundering always exists for financially oriented enterprises. Any violation of anti-money laundering rules, or even the suggestion of violations, may have severe legal and reputational consequences for SuperOne and may, as a result, adversely affect SuperOne's business and/or prospects.

Marketing

Customer acquisition and retention, and therefore SuperOne's business, financial condition and results of operations, depend significantly upon the effectiveness of its marketing activities. There are limitations to and, in some cases, prohibitions on the online and offline marketing channels available to SuperOne as a result of applicable law and regulation. Further restrictions, or the loss of marketing channels that are currently available, may have a material adverse effect on SuperOne's operations, financial performance, and prospects. Also, any ineffective marketing activity undertaken by SuperOne may also have a material adverse effect on the operations, financial performance and prospects of SuperOne.

SuperOne’s dependence on marketing has informed our decision to put referral marketing and an active business community at the heart of our strategy. Our bonus models are initially proven at scale, performance based and designed as low-risk and high-return, but as relatively new and innovative features these should still be considered to be in an early phase and might require changes.

Product Development

SuperOne's success will, to a large extent, be driven by its ability to consistently develop and launch new user products and new and innovative technologies. There can be no certainty that SuperOne will continue to be able to develop its technology to stay up to date with developments across the gaming and cryptocurrency sectors and, in particular, to launch such products or new technologies promptly or at all. Also, there can be no certainty that such products will be popular with users or that such products or new technologies will be reliable, robust and not susceptible to viruses or failure. Any of these factors could have a material adverse effect on SuperOne's operations, financial performance, and prospects.

SuperOne has the right in-house expertise and technological platform to launch new products. Our native business community model allows us to market these at little additional cost. However, because the products are new and innovative, they should be regarded as relatively untested and therefore inherently carry an element of risk.

Technology

The integrity, reliability and operational performance of SuperOne's systems are critical to SuperOne's operations. SuperOne's systems may be damaged or interrupted by increases in usage, human error, unauthorized access, natural hazards or disasters, and/or other disruptive events. Furthermore, SuperOne's current systems may be unable to support an unexpectedly large increase in traffic or increased user numbers. Any failure of SuperOne's infrastructure or the telecommunications and other third party infrastructure on which SuperOne relies could lead to significant costs, disruption, reduced revenue and or reputational harm and in turn have a material adverse effect on the operations, financial performance and prospects of SuperOne.

Also, SuperOne's controls may not be effective in detecting any intrusion or other security breaches, or safeguarding against sabotage, hackers, viruses and cyber-crime. Any failure in these protections could harm SuperOne's business reputation and have a material adverse effect on SuperOne’s operations, financial performance and prospects.

SuperOne may at any time be required to expend significant capital or other resources (including staff and management time and resources) to protect SuperOne against network or technology failure or disruption or unauthorized access, including the replacement or upgrading of its existing business continuity systems, procedures and security measures. If replacements, expansions, upgrades and other maintenance are not implemented successfully or completed efficiently, or if there are operational failures, the quality of SuperOne's products and services experienced by its users will be adversely impacted. If, as a result, users were to reduce or stop their use of SuperOne's products and services, this could have a material adverse effect on SuperOne's operations, financial performance, and prospects.

SuperOne has invested in the best in-house technology and uses the best available partners to reduce this risk. However, because the technology evolves at a rapid pace, there is an inherent risk that SuperOne’s protection in the future may become weaker. There is also an inherent risk that the technological landscape of the future will mean that SuperOne needs to increase the investment in protecting SuperOne against network failure and other disruption.

Intellectual Property

SuperOne may not be able to sufficiently protect its intellectual property rights and third parties may claim that SuperOne's use of intellectual property rights is a violation of their intellectual property rights.

SuperOne relies heavily on unregistered intellectual property, and SuperOne's business and business strategy are tied to its intellectual property rights. No assurances can be given as to the adequacy of the protection of SuperOne's intellectual property rights. SuperOne operates in business segments that makes it dependable on software, hardware, copyright, trademark, industrial design, trade secret and other related laws and confidentiality procedures and contractual provisions to protect, maintain and enforce its proprietary technology and intellectual property rights and will rely on such in all jurisdictions where it will operate in the future. SuperOne's failure to process, obtain or maintain adequate protection of its intellectual property rights for any reason in any jurisdictions, may have a material adverse effect on SuperOne's operations, financial performance, and prospects.

Further, SuperOne may be exposed to claims that its technology infringes the intellectual property rights of third parties. Although SuperOne is not aware of any allegation that its products infringes the intellectual property rights of any third party, there can be no assurance that such allegations will not be made or that such claims will not be successfully pursued against SuperOne.

Privacy Protection

SuperOne’s business requires the processing and storage of personal data relating to its customers, employees and others and is therefore subject to complex data protection laws and regulations. For example, SuperOne is subject to the General Data Protection Regulation (EU) 2016/679 (the "GDPR") as well as relevant national implementing legislation. Currently, SuperOne has certain privacy policies and documentation regarding its personal data processing activities which satisfies statutory requirements.

Ensuring compliance with data protection laws and regulations is an ongoing process which involves substantial costs, and SuperOne may be required to implement additional measures in the future to facilitate compliance, in addition to measures which are already subject to ongoing work and implementation.

Despite SuperOne’s ongoing efforts, it is possible that governmental authorities or third parties will assert that SuperOne’s business practices fail to comply with data protection laws and regulations, now or in the future. If its operations are found to be in violation of any of such laws and regulations, SuperOne may be subject to civil, criminal and administrative liabilities, as well as reputational harm, which could have a material adverse effect on SuperOne's operations, financial performance, and prospects.

Key Personnel

SuperOne is dependent upon having a highly qualified team and is therefore reliant on key personnel and the ability to retain and attract new, qualified personnel. There is no assurance that SuperOne will be able to recruit the required new key personnel in the future. Any failure to retain or attract such personnel could result in SuperOne not being able to successfully implement its plans which could have a material adverse effect on SuperOne's operations, financial performance and prospects.

The shortage of and competition for relevant management personnel and highly qualified technology professionals with experience and relevant skill sets within the gaming and blockchain technologies is expected to continue to increase, particularly due to the increasing trend of cryptocurrency and blockchain technology the last years. The loss of one or more key persons, or the inability to recruit relevant personnel, might impede the achievement of SuperOne’s development and commercial objectives. SuperOne has a lean organization and is therefore sensitive to losing key employees and management. Any loss of key employees and members of the management team could have a material adverse effect on SuperOne's operations, financial performance and prospects.

SuperOne’s key personnel are also likely to be subject to competing employment offers that are attractive for SuperOne’s competitors and may also establish competing business. SuperOne’s employees are to a best possible degree subject to restrictive covenants such as non-compete or non-solicitation undertakings in their employment agreements, and SuperOne’s competitors may therefore - to a certain extent - be hindered in recruiting and hiring one or more key persons, including members of SuperOne’s management personnel.

SuperOne’s founder and principal owner Andreas Christensen, including related entities, owns, controls and beneficially represents a supermajority of the issued share capital of SuperOne. As a result, he possesses sufficient voting power to have a significant influence over SuperOne, including the election of directors, appointment of management and approval of corporate transactions.

All team members, including the founder and principal owner Andreas Christensen, have strong long-term incentives to do everything they can to make SuperOne a success. None of the directors or key personnel are entitled to any benefits arising from the cessation of their appointments.

COVID-19

The current outbreak of COVID-19 has severely impacted companies and markets globally. It is not possible to predict all the consequences for SuperOne, its business partners, and the countries in which SuperOne operates, or global business and markets – other than the expectations of material adverse negative effects that may be long-term. The additional risks stemming from COVID-19 may cause SuperOne to implement a stricter assessment protocol and thereby potentially reduce the extent of SuperOne operations. In addition, given the uncertainty related to COVID-19, SuperOne's users may seek to reduce their spendings, and thereby reduce the revenue for SuperOne's services. As a result, the COVID-19 may have a material adverse effect on SuperOne's operations, financial performance, and prospects.