Mr. Brian Mosoff reports

ETHER CAPITAL CORPORATION REPORTS 2023 Q3 AND YTD FINANCIAL RESULTS

Ether Capital Corp. has released its unaudited interim consolidated financial results for the three-month and nine-month periods ended Sept. 30, 2023.

In June 2023, the Company announced its commitment to a more efficient operating model marked by three key strategies:

Significantly reducing operating expenses, particularly through streamlining employee numbers and focusing on essential business functions.

Focused efforts to maximize returns from its Ether treasury by allocating approximately 98% of its holdings to yield-generating staking activities and by transitioning these activities from third-party vendors to the company's own in-house proprietary infrastructure at a lower cost and with great intellectual property retention, and;

The initiation of a Normal Course Issuer Bid (NCIB) to use the company's balance sheet to buy back shares, delivering immediate value to shareholders.

By way of update, during the quarter ended September 30, 2023, the Company:

Announced an increase in Staked Ether from 36,000 to 39,520 Ether units.

Began to stake its Ether on its proprietary in-house infrastructure. The amount of Ether staked on its in-house infrastructure during Q3 was 3,520 Ether or 8.9% of all units of Ether staked.

Earned year to date staking rewards of 1,372.5 Ether equal to $3.2 million.

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

Repurchased 318,600 shares under its NCIB at a weighted average share price of $1.84 per share, for a total cash consideration of $587,646. Total shares repurchased represent a reduction of 1.4% of the public float of issued and outstanding shares from the time the NCIB program was commenced in June 2023.

As at November 10, 2023, the Company:

Had a treasury of 46,393 Ether (staked and non-staked), valued at approximately $133.7 million.

Allocated an additional 5,920 Ether to staking, for a total of 45,440 Ether staked.

Begun transitioning from its third-party provider's staking infrastructure to its internal infrastructure, with 22% of the Company's staked Ether staked on its internal infrastructure.

Repurchased 553,600 shares under its NCIB, for a total cash consideration of $1,011,658.

Management Commentary

"The execution of our strategy has had a positive impact on our financial results. We believe these actions will help position the Company for continued positive net income after tax and to generate positive cashflow (or cash equivalent, specifically digital assets) provided by operating activities," said Jillian Friedman, COO and interim CFO.

Highlights of our financial results include:

Total revenue was $1.2 million ($0.7 million in Q3 2022) an increase of 68%, and $3.8 million ($3.0 million in 2022) for the three- and nine-month periods ended September 30, 2023.

The Company incurred Operating Expenses of $0.76 million versus $1 million in Q3 2022, a 26% decrease, and for the nine-month period ended September 30, 2023 operating expenses were $2.9 million versus $3 million, a 3% decrease.

The Company was cash-flow positive, with Revenue less Operating Expenses before Impairment and Revaluation Expenses of $0.4 million, and $1 million respectively for the three- and nine-month periods ended September 30, 2023 (versus ($0.3) million, and $7 thousand for the same periods in 2022).

The total value of digital assets held by the Company was $105 million as at September 30, 2023 versus $73 million on December 31, 2022, a 44% increase over the nine month period.

The shareholders' equity as at September 30, 2023 was $104.5 million compared to $75.6 (December 31, 2022), an increase of 38%. The shareholders' equity per share also increased from $2.24 per share to $3.08 per share during this nine-month period.

Staking Developments

Over the last quarter the Company staked an additional 3,520 Ether, representing 9% of its treasury, bringing its total staking ether exposure to 39,520. In-house infrastructure was deployed for all new ether staked from its treasury over the quarter and subsequent to the quarter end. The Company invested approximately $22,000 in equipment for its staking infrastructure during the quarter and continues to build intellectual property by retaining its technical team. The Company incurred staking provider fees during the quarter of $44,231.

Restructuring

In June 2023, the Company announced a restructuring intended to manage the Company's operating expenses in response to the ongoing market conditions impacting the digital asset economy in order to optimize the net profitability of the Company. The intention was to reduce annual cash operating expenses materially by an estimated reduction of more than 45% over projected cash operating expenses for the current fiscal year, largely achieved through reductions of staff and anticipated new development expenses. The full effects of the new operating cost structure are expected to be in effect by the first quarter of fiscal year 2024.

Over the quarters ended June 30 and September 30, the Company completed the staff reduction component of the restructuring, resulting in a reduction in employee-related expenses of $0.8 million on an annualized basis.

The Company does not expect to incur any additional charges in connection with the 2023 Restructuring and the cash payments of approximately $130,000 associated with this restructuring were completed during the third quarter of 2023.

NCIB

On June 15, 2023, the Company announced that it had received approval to implement a Normal Course Issuer Bid (the "NCIB") with the NEO Exchange for the purchase of up to 7.5% of its Common Shares. During Q3 2023, 318,600 shares were purchased and cancelled for a cost of $587,647 including commissions.

Revenue Highlights

The Company's Revenue increased 68% in Q3 2023 compared to Q3 2022, $1.2 million versus $0.7 million in Q3 2022. For the nine-month period ended September 30, 2023, the Company's revenue was 29% higher than the comparable period in 2023, $3.8 million ($3.0 million in 2022).

Total Staked Ether Rewards Revenue was $1.1 million in Q3 2023 vs. $0.5 million in Q3 2022, a 130% increase. For the nine-month period ended September 30, 2023, the Staked Ether Rewards Revenue was $3.2 million compared to $1.9 million in 2022, an increase of 72%.

The amount of Staked Ether, which was generating a yield, was much higher at the end of Q3 2023 (39,520 ETH) compared to the end of Q3 2022 (20,512 ETH). This is a major factor contributing to the increase in revenue in the three- and nine-month periods ending September 30, 2023.

The staking yield for the Company was 4.94% for the three-month period ended September 30, 2023 (4.72% in Q3 2022) and 5.3% for the nine-month period ended September 30, 2023 (4.8% in Q3 2022). The Staked Ether generated Execution Layer Rewards from September 15, 2022 onwards and this increased the overall Staking Rewards yield in the 2023 period compared to the 2022 period.

Additionally, the Company earned Consulting Fees for the three-month period ended September 30, 2023 of $0.09 million (2022 Q3 - $0.2 million). Consulting Fee revenue is based on an agreement with Purpose Investments Inc. ("Purpose"), a related party. The Consulting Fees varied materially on a quarterly basis due to the volatility of prices for Bitcoin and Ether and by net sales/redemption activity in the ETFs. This quarter was also affected by the new terms of consulting agreement with Purpose Investments. The fee reduction is different for each ETF and the blended reduction is estimated between 75% and 80%. In general, net sales of the ETFs are positive during periods when digital assets are in favour and have price momentum. The table below includes the revenue by quarter and the average daily AUM within the family of crypto currency ETFs at Purpose each quarter.

Operating Expenses

Operating Expenses decreased 26% in the quarter in Q3 2023 to $0.8 million primarily due to reduced salaries, benefits and share-based compensation expenses relative to the comparable period in 2022 ($1.0 million) as a result of the previously discussed cost optimization efforts. Ether Capital was assessing the launch of new products and business lines during Q1 and Q2 2023. In June 2023, the Company reoriented towards a lean and efficient operating model focused on maximizing staking exposure. As at September 30, 2023, there were 4 full time employees and 2 part time contractors compared to 8 full time employees and 1 full time contractor, and 2 part time contractors on June 30, 2023.

The full effects of the employee reduction on operating expenses are expected to be visible in the next quarter and on a go forward basis.

For the nine-month period ended September 30, 2023, Revenue less Operating Expenses before Impairment and Revaluation expenses was $1.0 million ($0.007 million in 2022).

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.

We seek Safe Harbor.