HyperBlock to Convert CAD$3.6M of Debt to Equity at Substantial Premium to Market Price; Offers Limited Private Placement Units up to CAD$7M

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HyperBlock

/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

Company Heads Into 2019 with Newly-Launched, Insured Institutional Custodial Product, Leaner Operations and Expanding US Datacenter

TORONTODec. 17, 2018 /CNW/ – HyperBlock Inc. (CSE: HYPR) — one of North America’s largest publicly traded diversified crypto asset enterprises — announced today that it intends to convert approximately CAD$3.6M of acquisition-related debt into HyperBlock equity, at a substantial premium to current market price, pending approval of the Canadian Securities Exchange (the “Exchange”) and of its minority shareholders — and will offer up to CAD$7M non-brokered private placement of HyperBlock units, pending approval of the Exchange.

CEO Signals Confidence in HyperBlock’s Future
In a strong show of confidence in the company’s future growth potential, HyperBlock CEO Sean Walsh confirmed he will subscribe for a minimum of USD$1.5M (CAD$2.01M) in the placement.

“You can pick your own cliché, but here’s the current reality of crypto-asset investing — much of the world has turned away in discouragement, but the fundamental thesis remains well intact. This is exactly the type of market where profound value is created, and I believe this placement is pivotal in strengthening HyperBlock for the future,” says Walsh, a cryptocurrency veteran and sector thought leader who created HyperBlock’s original innovative revenue model. HyperBlock now offers five differentiated crypto products: cryptocurrency mining, hash rate sales (Mining-as-a-Service), server hosting, hardware sales, and HyperVault, its recently announced  proprietary, crypto custodial storage service for institutional investors.

Project Spokane to Convert Debt to HyperBlock Equity
In conjunction with the private placement, HyperBlock also announced it intends to convert CAD$3.6M debt owed to Project Spokane (a company founded by Walsh and acquired by HyperBlock in July 2018) to equity at CAD$0.20 per share. Walsh says he agreed to above market pricing to reflect his belief that HyperBlock is undervalued and in the company’s potential to build long-term value. The proposed conversion remains subject to the approval of both the Company’s minority shareholders and the Exchange.

Private Placement Details
The company priced each unit offered at CAD$0.05.  Each unit includes one HyperBlock common share and one whole common share purchase warrant. Each warrant has a term of 24 months and is exercisable for one HyperBlock common share at a price of CAD$0.15 per warrant. Canaccord Genuity remains the company’s financial advisor.

HyperBlock Growth Drivers: Expanding US Datacenter, Custodial Storage Solution
USD$2.65M of 5-year debt for project financing has been committed by one of the company’s banking partners to allow HyperBlock to complete electrical system upgrades required to expand its US power capacity.* The company is in the final stages of a datacenter reorganization that it expects to reduce monthly operating costs. In November 2018, HyperBlock announced the launch of its proprietary, insured crypto custody storage solution, HyperVault.

Focus on Efficiency
“HyperBlock operates with a focus on efficiency and a unique and diversified revenue stream that helps the company withstand the volatility of the crypto market,” explains Walsh. “That operational structure gives the company a strong foundation to build on — and will allow us to optimize our growth and performance as market conditions improve,” he says.

Related Party Transaction
The proposed conversion of HyperBlock debt into HyperBlock equity as described above constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions (“MI 61-101“). As such, HyperBlock intends to seek minority shareholder approval in accordance with the requirements of MI 61-101 at the Company’s next annual general meeting, which is expected to be held in the third quarter of 2019. In addition, the completion of the proposed conversion remains subject to the approval of the Exchange.

*Datacenter Expansion Financing Details
As previously announced, HyperBlock has received a commitment of $2.65M in project financing from one of its banking partners to help fund a major expansion which will allow the company to triple its operating capacity — from 20MW to 60MW — at its Project Northwest datacenter. The financing terms to complete electrical infrastructure upgrades on the property carries a 5-year repayment term at an attractive interest rate of prime + 2.99%. Work is underway on-site and the company will provide further market updates as expansion milestones are achieved.

About HyperBlock Inc.
HyperBlock is one of North America’s largest publicly traded diversified crypto-asset enterprises. The company operates one of North America’s largest and most efficient cryptocurrency datacenters and provides five complimentary product offerings focused on helping people and businesses createsafeguardmanage and grow crypto-assets. HyperBlock profit centers include cryptocurrency mining, Mining-as-a-Service (MAAS), server hosting, server hardware sales and a proprietary custodial vault product.  Learn more at www.hyperblock.co

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