Industry Consolidator Makes First Public Acquisition
Forms Diversified Leader to Create, Manage and Safeguard Crypto
21,000+ Mining Servers; 28 MW Power Consumption; 5 Product Offerings

TORONTO, April 3, 2018 /CNW/ - CryptoGlobal Corp. ("CryptoGlobal" or the "Company") CPTO and HyperBlock Technologies Corp. ("HyperBlock") are pleased to announce that they have entered into a definitive arrangement agreement (the "Arrangement Agreement") dated April 3, 2018 pursuant to which HyperBlock will acquire all of the issued and outstanding common shares of CryptoGlobal by way of an acquisition arrangement (the "Transaction"). Pursuant to the Transaction, the parties will apply to list the combined company, which will operate under the name HyperBlock Technologies Corp., on the Canadian Securities Exchange on closing. The parties intend to promptly call the required meetings of shareholders of both HyperBlock and CryptoGlobal with the goal of completing the Transaction by the end of May 2018, subject to the satisfaction of customary conditions to closing.

The Transaction has been unanimously approved by the board of directors of each of CryptoGlobal and HyperBlock, and is supported by the management teams as well as the significant shareholders of both companies. Under the Transaction, HyperBlock will acquire all of the issued and outstanding shares of CryptoGlobal by issuing 0.4229 of a common share of HyperBlock for each CryptoGlobal common share, valuing each CryptoGlobal common share at $0.74, which represents a 48% premium to the closing price of $0.50 of CryptoGlobal's common shares on March 29, 2018, and a 31% premium to the 10-day VWAP of CryptoGlobal's common shares, on the TSX Venture Exchange (the "TSXV"). The implied value of CryptoGlobal's equity under the Transaction is approximately $106 million.

A Leading Diversified Consolidator to Create, Manage and Safeguard Crypto Assets
HyperBlock is a leading private company that is focused on strategic consolidation within the North American Cryptocurrency space — and on building direct-to-consumer Cryptocurrency products and services. 

The company recently completed the major acquisition of one of North America's largest US-based Crypto mining and hosting facilities — and this acquisition, combined with the agreement to acquire CryptoGlobal is a significant step toward its goal to build a leading North American Crypto company.

HyperBlock founder and industrial Cryptocurrency mining veteran Sean Walsh will become the CEO of the combined company.  CryptoGlobal co-founders Rob Segal, James Millership — and Blockchain Dynamics Founder Chris McGarrigle — will join with Walsh to lead the combined company. Segal will also join the board of directors of the combined company. 

"Combining HyperBlock's large-scale Mining-as-a-Service model with CryptoGlobal's existing mining, custodial storage and crypto trading businesses, creates a strong foundation for both organic growth and growth through acquisition. We are poised to become a global leader and consolidator in Cryptocurrency mining and asset management," stated Hyperblock CEO Sean Walsh. 

The Combined Company at a Glance

• 21,000+ combined operational mining servers
• 28 MW of existing utilization with ability to grow to over 90 MW
• Diversified business model and vision for an integrated Crypto ecosystem that includes:
• Mining-as-a-Service hashrate rentals
• Server hosting
• Self-mining
• Server sales
• Crypto custodial storage, and trading
• SaaS-based Crypto Insights platform
• Experienced management team with significant share ownership

Acquisition Background and Rationale

Diversified Revenue Streams 

• HyperBlock generates positive cash flow through four distinct profit centers: Mining-as-a-Service (hashrate rental), server hosting, self-mining and server resale. CryptoGlobal derives most of its existing revenue from mining and is in the process of expanding its revenue streams — through the acquisition of Blockchain Dynamics — to include: an SaaS-based Insights platform, specialized Crypto custodial storage and trading services.

Combined Scale and Power 

• The combined company will have a portfolio of over 21,000 servers (miners) on 28 MW of current operating power across multiple locations in the USA and Canada.
  
  
• HyperBlock currently operates a 20 MW mining facility in the North West United States, which has expansion capacity to 80 MW. HyperBlock's existing facility is powered by hydro-electric energy that represents some of the lowest power consumption rates in North America at under USD$0.04 per KW/h. CryptoGlobal currently operates across multiple facilities in Canada, representing 8 MW of power.

Experienced and Complementary Management Team

• Sean Walsh, current HyperBlock CEO and CEO of the combined company, will be the largest shareholder, owning approximately 16.7% of the combined company. Rob Segal and James Millership will collectively own approximately 9.5% of the combined company.
  
  
• As the founder of one of North America's largest industrial Cryptocurrency mining data centers, Walsh is an internationally renowned Cryptocurrency thought leader and advocate. Walsh has been involved in commercial-scale Bitcoin mining since 2013 and has been interviewed by Bloomberg, Forbes, CNBC, Reuters, TheStreet.com and others.
  
  
• Rob Segal — a leading North American marketing executive and entrepreneur — and James Millership — an early stage investor and operational expert — co-founded CryptoGlobal along with engineers Roozbeh Ebbadi and Jacob Shultis. Chris McGarrigle (founder of Blockchain Dynamics, which was recently acquired by CryptoGlobal) — an encryption and crypto security expert — will also join the leadership team of the combined company.

Cost and Revenue Synergies

• The combined company also intends to generate cost and revenue synergies by leveraging HyperBlock's relationship with Bitcoin.com to drive hashrate rental from CryptoGlobal's portfolio of servers, and by further increasing its consumer footprint through offering additional services by CryptoGlobal, including trading and custodial services.

Transaction Summary
Under the terms of the Arrangement Agreement, HyperBlock will acquire all of the issued and outstanding common shares of CryptoGlobal (on a fully-diluted basis) for consideration of $0.74 per CryptoGlobal common share, representing a total equity value of CryptoGlobal of approximately $106 million.

CryptoGlobal shareholders will receive 0.4229 of a HyperBlock common share for each CryptoGlobal common share held which, based on HyperBlock's recently completed subscription receipt financing of $1.75 per subscription receipt, equates to $0.74 of value per CryptoGlobal common share.  The Transaction consideration of $0.74 per CryptoGlobal common share represents a 48% premium to the closing price of $0.50 of CryptoGlobal's common shares on March 29, 2018, and a 31% premium to the 10-day VWAP of CryptoGlobal's common shares, on the TSXV. 

HyperBlock expects to issue up to approximately 60.4 million HyperBlock common shares to CryptoGlobal shareholders in connection with the Transaction. Upon closing of the Transaction, CryptoGlobal shareholders will own approximately 25.2% of the combined company.

The Transaction is expected to be accretive to HyperBlock's cash flow over the next 12-month period.

The closing of the Transaction remains subject to the satisfaction of certain customary closing conditions, including approval of the shareholders of both CryptoGlobal and HyperBlock, approval of the Transaction by the Ontario Superior Court of Justice, conditional listing approval of the combined company's common shares on the Canadian Securities Exchange and delisting of CryptoGlobal's common shares from the TSXV.

HyperBlock has secured irrevocable hard lock-up agreements to vote in favour of the Transaction from CryptoGlobal shareholders representing approximately 58% of the currently issued and outstanding CryptoGlobal common shares. CryptoGlobal has secured irrevocable hard lock-up agreements to vote in favour of the Transaction from HyperBlock shareholders representing approximately 50% of the currently issued outstanding HyperBlock common shares.

The Arrangement Agreement provides for, among other things, a non-solicitation covenant on the part of CryptoGlobal, as well as a provision that entitles CryptoGlobal to consider a superior proposal in certain circumstances, and a right in favour of HyperBlock to match any superior proposal. CryptoGlobal is not permitted to terminate the Arrangement Agreement as a result of a superior proposal. If the Arrangement Agreement is terminated in certain circumstances, including if CryptoGlobal enters into a definitive agreement with respect to a superior proposal, HyperBlock is entitled to a termination payment of $4.0 million.

To the knowledge of CryptoGlobal, no non-arm's length party to CryptoGlobal has any direct or indirect interest in HyperBlock.  To the knowledge of HyperBlock, no non-arm's length party to HyperBlock has any direct or indirect interest in CryptoGlobal.  Neither party is aware of any relationship between their respective non-arm's length parties.

Board of Director Recommendations
The board of directors of CryptoGlobal unanimously recommends that CryptoGlobal shareholders vote in favour of the resolution to approve the Transaction, which is expected to be subject to a special meeting of CrytpGlobal shareholders to be held in May 2018. In conjunction with the Transaction, an independent special committee of the board of directors of CryptoGlobal received a fairness opinion from Clarus Securities Inc., its independent financial advisor, that as of April 2, 2018, and subject to the assumptions, limitations and qualifications set out therein, the Transaction consideration is fair, from a financial point of view, to CryptoGlobal shareholders.

The board of directors of HyperBlock unanimously recommends that HyperBlock shareholders vote in favour of the resolution to approve the Transaction, which is expected to be subject to a special meeting of HyperBlock shareholders to be held in May 2018.

The Transaction is currently expected to close at the end of May 2018, subject to the satisfaction of customary conditions to closing. Holders of subscription receipts of HyperBlock pursuant to the subscription receipt offering that closed in March 2018 will receive common shares of the combined company on conversion of their subscription receipts, subject to the terms and conditions of the definitive documentation relating thereto.

Further information regarding the transaction will be included in the joint management information circular to be mailed to CryptoGlobal and HyperBlock shareholders in advance of the special meetings of CryptoGlobal and HyperBlock shareholders expected to be held in May 2018, and in CryptoGlobal's material change report in respect of the announcement of the Transaction, each of which will be filed with the Canadian securities regulators and will be available at www.sedar.com.

CryptoGlobal Pending Acquisition and Debt Offering
Under the terms of the Transaction, CryptoGlobal has extended the due diligence period related to its agreement to acquire BitCity Inc. to April 30, 2018. CryptoGlobal has also cancelled its previously announced $15.0 million debt financing agreement.

Financial and Legal Advisors
Canaccord Genuity Corp. acted as financial advisor and Stikeman Elliott LLP acted as legal counsel to HyperBlock. Bennett Jones LLP acted as legal counsel and Clarus Securities Inc. provided a fairness opinion to the board of directors of CryptoGlobal.

About HyperBlock
HyperBlock is one of North America's leading diversified blockchain companies, which includes one of the largest cryptocurrency mining facilities in the U.S. HyperBlock operates across multiple revenue channels including Mining-as-a Service (MAAS), self-mining, server hosting, and server hardware sales. HyperBlock was incorporated under the laws of the Province of Ontario on October 10, 2017. Further information about HyperBlock is available on its website at www.hyperblock.co.

About CryptoGlobal – We Power the Blockchain
CryptoGlobal is a leading Canadian blockchain and financial technology company built on a strong core of diversified cryptocurrency mining. Currently, CryptoGlobal focuses on mining Bitcoin, DASH, Ether and Litecoin — using a mix of custom-tuned mining technologies. Learn more at cryptoglobal.io.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain information in this news release constitutes forward-looking statements under applicable securities laws.  Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements.  Forward looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend" or the negative of these terms and similar expressions. Forward-looking statements in this news release include, but are not limited to, statements with respect to accretive earnings, anticipated revenue and costs synergies associated with the acquisition of CryptoGlobal, statements with respect to internal expectations, estimated margins, expectations for future growing capacity, costs and opportunities, the effect of the transaction on the combined company and its strategy going forward, expectations for receipt of licenses to cultivate, process or distribute medical cannabis in Federally legal markets, the completion of any capital project or expansions, the timing for the completion of the Transaction and expectations with respect to future production costs, the anticipated timing for the special meetings of CryptoGlobal and HyperBlock shareholders and closing of the transaction; the consideration to be received by shareholders of CryptoGlobal, which may fluctuate in value due to HyperBlock common shares forming the consideration; the satisfaction of closing conditions including, without limitation: (i) required CryptoGlobal and HyperBlock shareholder approvals; (ii) necessary court approval in connection with the plan of arrangement, (iii) certain termination rights available to the parties under the Arrangement Agreement; (iv) HyperBlock obtaining the necessary approvals from the Canadian Securities Exchange for the listing of its common shares in connection with the Transaction; and (vi) other closing conditions, including, without limitation, the operation and performance of the CryptoGlobal business in the ordinary course until closing of the Transaction and compliance by CryptoGlobal and HyperBlock with various covenants contained in the Arrangement Agreement. In particular, there can be no assurance that the Transaction will be completed.  Forward looking statements are based on certain assumptions regarding CryptoGlobal, including expected growth, results of operations, performance, industry trends and growth opportunities.  While CryptoGlobal considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements also necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; future legislative and regulatory developments involving cryptocurrency; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cryptocurrency industry in Canada generally, income tax and regulatory matters; the ability of HyperBlock to implement its business strategies; competition; currency and interest rate fluctuations and other risks. Any forward-looking statements or facts (including financial information) related to CryptoGlobal discussed or disclosed herein are derived from information obtained directly from CryptoGlobal and publicly available sources and has not been independently verified by CryptoGlobal.

Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur.  Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.

Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. CryptoGlobal and HyperBlock disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.  This news release has been approved by the Board of Directors of each of HyperBlock and CryptoGlobal.  Factors that could cause anticipated opportunities and actual results to differ materially include, but are not limited to, matters referred to above and elsewhere in CryptoGlobal's fiscal 2017 annual MD&A and the material change report filed that will be filed in respect of this Transaction, which are, or will be, available on www.sedar.com.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.

SOURCE CryptoGlobal Corp.

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