[March 18, 2024]

Ether Capital Corporation Reports 2023 Q4 and Annual Financial Results

Ether Capital Corporation ("Ether Capital" or the "Company") (Cboe CA: ETHC) announces the reporting of its audited consolidated financial results for the year ended December 31, 2023.

During the year, the Company:

• Increased its Staked Ether from 20,512 to 45,440 Ether units, representing approximately 98% of its Ether unit balance.

• Began staking its Ether on its proprietary in-house infrastructure, which at December 31, 2023 was 64% of all staked Ether.

• Earned staking rewards of 1,843 Ether, equating to Staked Ether Rewards (yield) of $4,496,102, compared to $2,445,369 in Fiscal 2022. During the year ended December 31, 2023, the gross yield was 4.94% p.a. (5.13% for 2022).

• Implemented a reduction in employee-related and other operating overhead expenses of $0.8 million on an annualized basis.

• Repurchased 726,400 shares under its Normal Course Issuer Bid Program (the "NCIB") at a weighted average share price of $2.00 per share, for a total cash consideration of $1,430,359. Total shares repurchased represent a reduction of 2.9% of the public float of issued and outstanding shares from the time the NCIB program was commenced in June 2023. The earnings per share impact of the NCIB was $0.04.

We believe these actions have helped position the Company for continued positive Operating Profit (a non-IFRS measure defined as Revenue less Operating Expenses before Impairment and Revaluation Expenses).

Highlights of our financial results include:

• The total value of digital assets held by the Company was $140.3 million as at December 31, 2023 versus $73.1 million as at December 31, 2022; a 91.9% year-over-year increase. The increase was primarily the result of the 86.5% increase in the value of Ethereum, to $3,022 at the end of 2023 ($1,620 in 2022).

• Total revenue in fiscal 2023 was $5.2 million versus $3.7 million in fiscal 2022, representing an increase of 39.5%.

• The Company incurred Operating Expenses before Impairment and Revaluation Expenses ("Operating Expenses") in fiscal 2023 of $3.7 million, a 6.1% decrease from fiscal 2022's level of $3.9 million.

• Revenue in Q4 2023 increased 78% to $1.4 million versus $0.8 million in Q4 2022, due in part to an increase in the market price of Ether in Q4 2023 versus Q4 2022. Operating Expenses in Q4 decreased by 16% to $0.8 million from $0.9 million for Q4 2022.

• Fiscal 2023 generated a positive Operating Profit of $1.5 million, compared with an Operating Loss in fiscal 2022 of $0.2 million. The improvement was attributable to higher Staked Ether Rewards due to the staking strategy outlined above and lower Operating Expenses resulting from the cost reduction initiatives noted above.

• Shareholders' Equity as at December 31, 2023 was $134.6 million compared to $75.6 million a year ago; an increase of 78.0%. Shareholders' Equity per share also increased, from $2.24 per share at the end of fiscal 2022 to $4.02 per share at the end of fiscal 2023. The increases in fiscal 2023 were primarily attributable to the 91.9% increase in the value of the digital assets in 2023.

Revenue Highlights

The Company's strategy to implement a leaner operating model and increase its staking resulted in a positive Operating Profit for fiscal 2023 of $1.5 million, compared to an Operating Loss of $0.2 million in fiscal 2022. See the table below for a reconciliation of this non-IFRS measure back to Revenue (the most closely comparable IFRS measure).

Ether and Staking Results

The Company earned Staked Ether Rewards revenue of $4.5 million for the year ended December 31, 2023 (compared to $2.4 million for 2022). The year-over-year increase was attributed to (i) the increased level of Ether treasury being staked, (ii) a full year of earning yield generated from Execution Layer Rewards (versus 3.5 months in fiscal 2022), and (iii) to a lesser extent the increase in the price of Ether during fiscal 2023. Annualized staking yield in fiscal 2023 was 4.94% (5.13% in fiscal 2022). Current yields are approximately 3.84% as at March 14^th (unaudited).

"Our staking strategy, which was executed on over fiscal 2023, proved to have had a positive impact. The Company increased its staked Ether to 45,440 units by the end of 2023, an increase of 121.5% from December 2022. At year end, the Company was staking 64% of its Staked Ether using its internal, lower cost infrastructure," said Jillian Friedman, COO and interim CFO. The Company plans to continue to migrate its Staked Ether to the internal infrastructure in the first half of fiscal 2024, which is expected to yield additional cost savings, pending the outcome of the strategic review.

Assets, Liabilities, and Equity

Over the 2023 fiscal year, the trading price of Ether increased by approximately 88% and thus impacted the valuation of the Company's digital assets. The Company's Ether, valued at $73.1 million on December 31, 2022, increased to $140.3 million on December 31, 2023. The price of Ether as at December 31, 2022, was CAD$1,620 versus CAD$3,022 as at December 31, 2023.

The total cryptocurrency market capitalization saw an impressive increase in 2023, reflecting renewed positive sentiment across the industry in the second half of the year. The anticipated Shanghai Upgrade took place in April 2023 and facilitated the withdrawal of Staked Ether.

Operating Expenses

In June 2023, the Company implemented the 2023 Restructuring, which primarily impacted Operating Expenses. Operating Expenses decreased in the second half of fiscal 2023, to $1.6 million; a 25.0% decline from the first half of fiscal 2023. Expenses were $3.7 million in the current fiscal year, comparing favourably with the prior year's amount of $3.9 million. On a quarterly basis, fourth quarter Operating Expenses in 2023 declined by 15.9% from the comparable period in fiscal 2022. These decreases were primarily attributable to reduced employee compensation (salaries, benefits, and share-based compensation expenses). The full effect of the employee reductions on Operating Expenses are expected to be visible in the first quarter of 2024 and on a go-forward basis. During the year ended December 31, 2023, the Company incurred $131,000 in severance costs related to the restructuring (Q4 - nil).

NCIB

On June 15, 2023, the Company announced it had received approval to implement a NCIB with Cboe Canada (formerly known as the NEO Exchange) for the purchase of up to 7.5% of its Common Shares. Pursuant to the NCIB, the Company may purchase up to a maximum of 2,566,662 Common Shares. During the year ended December 31, 2023, 726,400 shares were purchased and cancelled for a cost of $1,437,704 including commissions, at a weighted average share price of $2.00 per share.

Strategic Review

In December 2023, the Company announced that it was initiating a strategic review to determine the best path forward for the Company's development. The strategic review is ongoing. The Company is continuing to focus on maximizing operational efficiency and yield generation as it undertakes the strategic review process.

Supplementary Information

The following supplementary financial and other data is provided for information purposes, noting that it is unaudited and dated as at March 14^th 2024:

- 46,203 total Ether, including 45,408 staked Ether.

- $1.06 million cash.

- 33,060,020 shares issued and outstanding.

- Staking yield (31-day average) at 3.84%.

From January 1 to February 29, 2024, the Company purchased an additional 356,000 shares at a cost of $1,103,093.

The Company sold 391 units of Ether on January 23, 2024, for a value of $1,161,923, and on March 8, 2024, sold 156 units of Ether for a value of $810,248. The funds are used to provide cash for the NCIB and operations.

About Ether Capital Corporation

The Company's mission is to be the premier access point in the public markets for investment in Ethereum's native token, Ether. The Company generates yield on its Ether treasury through staking, a process that allows Ether holders to participate in securing the Ethereum network and earn rewards in the form of additional Ether tokens.

The Company's strategy is to hold and stake Ether, build intellectual property related to staking and Ethereum infrastructure in general, and supplement staking income with consulting and sub-advisory mandates in the digital asset sector. For more information, please visit http://ethcap.co.

The content of this document is for informational purposes only and is not being provided in the context of an offering of any securities described herein, nor is it a recommendation or solicitation to buy, hold or sell any security. The information is not investment advice, nor is it tailored to the needs or circumstances of any investor. Information contained in this document is not, and under no circumstances is it to be construed as, an offering memorandum, prospectus, advertisement, or public offering of securities. No securities commission or similar regulatory authority has reviewed this document and any representation to the contrary is an offence. Information in this press release is current only as of the date provided and Ether Capital is under no obligation to update this information, other than in accordance with applicable securities laws.

Non-IFRS Measures

The Company's condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The Company refers to "Operating Profit", which is defined as Revenue less Operating Expenses before Impairment and Revaluation Expenses, which is a non-IFRS financial measure. This non-IFRS financial measure is not defined by IFRS, does not have a standardized meaning and may not be comparable with similar measures presented by other issuers. The Company believes that this non-IFRS financial measure provides information that is useful to investors in understanding the Company's performance and facilitates comparison of quarterly and year-to-date results from period to period. Non-IFRS measures should not be considered as alternatives to the information set out in the Company's financial statements. A reconciliation to the nearest IFRS measure, being Revenue, is included above in a table within this press release.

Forward-Looking Information

This press release contains forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Such forward-looking statements include, but are not limited to, statements regarding: the Company's future objectives and business operations, the Company's ongoing strategic review, the prospects for blockchain technology, the Ethereum protocol and platform, the future trading supply of the digital asset Ether, the timing and implications of the Ethereum network's upgrades, the potential for Ether Capital to earn an Ether-denominated return on the portion of its Ether holdings that it devotes to staking and its plans in respect thereof, the market for digital assets and the potential for mainstream adoption of the Ethereum platform. The Company cautions the reader not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Often, but not always, forward-looking statements can be identified by the use of words or phrases such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", "believes", "will help position", and similar expressions or state that certain actions, events or results "may", "could", "would", "should", "might", or "will" be taken, occur or be achieved.

Forward-looking statements are based on information available to management at the time they are made, management's current plans, estimates, assumptions, judgments and expectations. These estimates, assumptions, judgments and expectations include the ongoing strategic review, annualized savings from cost reduction and internalization initiatives implemented, a view on general global economic conditions and their impact on individual and corporate activity and profits, that Ethereum 2.0 upgrades will occur on the timelines anticipated and will contain the functionality expected by management, that there will be no material changes in the legislative, regulatory or operating framework for the Company's existing and anticipated business that cannot be reasonably managed, investors' appetite for risky assets, and other matters discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time. Forward-looking statements are also subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to: general business, economic, competitive, geopolitical, technological and social uncertainties; uncertainties in regard to the development and acceptance of blockchain technology and the Ethereum platform (including Ethereum network upgrades), uncertainties pertaining to regulatory changes in various jurisdictions that may impact the adoption of digital assets and corporate business models, uncertainties regarding the outcome of the Company's strategic review process and the Company's going-concern risk in the event that there is a decline in the price of Ether. Additional information identifying risks and uncertainties relating to the Company's business are described under the heading "Risk Factors" in the Company's most recently filed Annual Information Form ("AIF") which is available online at www.sedarplus.ca.

Although the forward-looking information contained in this press release is based on assumptions that the Company believes to be reasonable at the date such statements are made, there can be no assurance that the forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. In addition, the Company cautions the reader that information provided regarding the Company's outlook on certain matters, is provided in order to give context to the nature of some of the Company's future plans and may not be appropriate for other purposes. Accordingly, readers are cautioned not to place undue reliance on forward-looking information. The Company does not undertake to update or revise any forward-looking information, except in accordance with applicable securities laws.

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