TORONTO / Jan 31, 2024 / Business Wire / Tokens.com Corp. (Cboe Canada: COIN)(Frankfurt Stock Exchange: 76M) (OTCQB US: SMURF) (“Tokens.com” or the “Company”), a web3 technology company that owns an inventory of cryptocurrencies, reports its financial results for the fiscal year ended September 30, 2023 (“FY2023”). All dollar figures are in United States dollars (“USD”), unless otherwise stated.

Strategic Review Update:

On November 8th, 2023, the Company announced that it had commenced a strategic review. The Company is also exploring acquisitions, sales of its domain names and the sale of its operating businesses and digital assets. As part of this strategic process to enhance shareholder value, on January 29, 2024, the Company entered into a definitive agreement to sell the assets of Metaverse Group and Hulk Labs to StoryFire Inc. (“StoryFire”), which is primarily a transfer of its workforce and contractors. All capital within Metaverse Group will remain at Tokens.com.

Tokens.com will receive a consideration of $4 million for the sale that consists of a 15.3% ownership of StoryFire and $500,000 of its native Blaze cryptocurrency token. The transaction is expected to close on March 1, 2024.

Metaverse Group and Hulk Labs revenue was not forecasted to exceed operating costs and reach profitability for several years. In addition, the funding required by these businesses would require Tokens.com to carry significant cash flow losses. To finance these operations, the Company would need to sell some or all of its cryptocurrency inventory or look to raise dilutive new equity capital. After careful review of all alternatives, management and the board made the decision to de-risk Tokens.com by selling the assets of Metaverse Group and Hulk Labs to a buyer that has a strategic fit and capital to bring the businesses to profitability faster. Tokens.com retains the upside in the combined businesses through our 15.3% equity participation. Tokens.com also is in a position to retain its cryptocurrencies without the requirement to fund the other businesses. Management believes the sale of the businesses results in a win-win scenario and has eliminated an estimated $1.5M of overhead annually. Removing the overhead associated with these assets gives the company additional flexibility in pursuing another acquisition or as an acquisition target as a leaner structure.

Subsequent to the closing of the StoryFire transaction on March 1st, 2024, Tokens.com’s key assets will be its cryptocurrency inventory, cash, a 15.3% ownership in StoryFire, as well as a portfolio of domain names. Operating overhead will be significantly lower, making operations more efficient.

2023 Highlights:

• Year-end September 2023 cash balance of $3.5 million or CAD$4.7 million;
• Digital assets / cryptocurrency and NFTs balance of $6.0 million or CAD$8.0 million;
• Total year-end digital assets and cash of $9.5 million, or CAD$12.7 million; and
• Cryptocurrency holding as of September 30, 2023 and January 30, 2024:

• Total revenue for FY2023 of $740k, compared to the nine months ended September 30, 2022 (“FY2022”) of $678k:
  • Staking revenue for FY2023 of $268k, compared to $552k for FY2022, primarily due to lower yield overall and liquidation of previously staked tokens such as ROSE and ANKR.
  • Metaverse consulting and lease revenue of $468k, compared to $121k for FY2022, primarily due to revenue recognition upon completion of projects signed in prior year.
• Operating expenses for FY2023 of $4.0 million, compared to FY2022 of $2.7 million. The increase was primarily due to:
  • Increased professional fees paid to contractors during the majority of the fiscal year for expansion of the Metaverse Group and Hulk Labs teams, of $1.6 million for FY2023 compared to $807k for FY2022. This is partially offset by lower audit and legal fees incurred by the Company throughout the year.
  • General and administrative fees increased to $1.0 million during FY2023, compared to $355k during FY2022.
  • Investor relations and marketing fees reduced to $358k during FY2023 compared to $743k from FY2022, due to a pause of many non-essential capital market services throughout the year.
• Digital assets activities include:
  • Loss on disposition of digital assets of $172k, compared to FY2022 loss of $1.7 million.
  • Gain on revaluation of digital assets - cryptocurrency of $483k, compared to FY2022 loss of $17.6 million, of which, $3.5 million, net of tax of $1.1 million, is recorded to other comprehensive income.
  • Loss on impairment of NFTs of $2.6 million, compared to FY2022 loss of $3.8 million.
  • Reclassification of certain cryptocurrencies being held by Genesis Global Capital LLC (“Genesis”) to a separate line item on the Statement of Financial Position. These cryptocurrencies were then written down to a fair value of $125k, which is the exact amount owed to Genesis by the Company, resulting in an impairment loss of $828k (September 30, 2022 - $nil).
• Operating loss of $5.5 million, compared to FY2022 loss of $19 million, primarily due to improvement of cryptocurrency prices compared to a significant price depreciation during FY2022.
• The Company also reviewed and performed impairment testing on certain intangible assets and investments at year end, and has determined the following:
  • Impairment of goodwill related to the Metaverse Group acquisition of $1.1 million (September 30, 2022 - $nil), as the Company expected Metaverse Group to incur negative operating cash flows over the next few years.
  • Impairment of intellectual property acquired from CocoNFT of $548k (September 30, 2022 - $nil) due to uncertainty of future cash flow generation via operation or a sale.
  • Impairment of domain names of $1.6 million (September 30, 2022 - $nil) due to uncertainty of future cash flow generation.
• Net loss and comprehensive loss of $9.7 million, attributable to owners of Tokens.com, compared to FY2022 net loss of $3.8 million and comprehensive loss of $7.3 million.
• Net loss per share, attributable to owners of Tokens.com, of $0.09 per share, compared to loss of $0.04 during FY2022.

A complete financial reporting package, including the Audited Consolidated Financial Statements and Management’s Discussion & Analysis, is available on our corporate website (www.tokens.com), and the SEDAR+ website (www.sedarplus.ca).

An investor call has been scheduled to discuss the Company’s 2023 financial results, hosted by CEO Andrew Kiguel, starting at 5:00 pm ET on January 31st, 2024.

Conference Call Details:
Date: January 31, 2024
Time: 5:00 p.m. ET
Webinar link: https://us06web.zoom.us/webinar/register/WN_PQBaEAJJRMmzd7HKm-2CRg

To join the webinar, register using the link provided above. Upon registration a Zoom link will be emailed to the registered email address. The webinar will be available via computer, tablet, and smartphone devices. In addition, a dial-in phone number will be provided in the email upon registration. Callers dialing in using a telephone will automatically be placed in a listen only mode. The question period will not be available to dial-in callers.

About Tokens.com

Tokens.com is a web3 that also owns an inventory of cryptocurrency, digital real estate, and a collection of top ranked crypto related domain names.

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Forward-Looking Statements

This news release includes certain forward-looking statements as well as management’s objectives, strategies, beliefs and intentions. Forward looking statements are frequently identified by such words as “may”, “will”, “plan”, “expect”, “anticipate”, “estimate”, “intend” and similar words referring to future events and results. Forward-looking statements in this news release include statements relating to the strategic review process and the work of the Committee; whether a strategic change, transaction or any outcome will result from or be consummated or implemented as a result of the strategic review process; and whether any transaction resulting from the strategic review process, if any, will ultimately enhance shareholder or stakeholder value in the long term.

Forward-looking statements are based on the current opinions and expectations of management. All forward-looking information is inherently uncertain and subject to a variety of assumptions, risks and uncertainties, including the speculative nature of cryptocurrencies, as described in more detail in our securities filings available at www.sedar.com. Actual events or results may differ materially from those projected in the forward-looking statements and we caution against placing undue reliance thereon. We assume no obligation to revise or update these forward-looking statements except as required by applicable law.