DC Two : March 2022 Quarterly Report and Appendix 4C

DC TWO REPORTS 27% QUARTER ON QUARTER RECURRING REVENUE GROWTH

Highlights;

• • Fifth consecutive quarter of recurring revenue growth, increasing 27% to a record A$884,000.

• • A$905,000 revenue achieved for Q3 FY22, a 19% increase over Q2 FY22.

• • Undertaking a capital raise to fund a strategic shift in operations that will focus on improving cost efficiencies, bolstering and incentivising teams, identifying margin rich revenue opportunities, and maximising revenue from current assets.

• • Awarded VMware Cloud Verified status, placing DC Two at the forefront of the Australian data centre and cloud market with a highly competitive offering that provides customers with optimised performance features.

• • Commissioned the Mid-west data centre site, and sold the entire 2MW of data centre capacity to customers. DC Two estimates that full revenue generation for the site will translate into approximately ~$2.4m of recurring revenue per year.

2 May 2022: DC Two Limited (ASX: DC2) ("DC Two" or the "Company"), a vertically integrated revenue generating data centre, cloud and software business, is pleased to provide its quarterly report and Appendix 4C cash flow statement for the period ended 31 March 2021.

Recurring revenue grows 27%

Total Q3 FY22 revenue increased 19% to A$905,000, driven by the continued focus to grow sales and increase data centre utilisation. Recurring revenue increased 27% to a record A$884,000 over Q2 FY222, and represents a 104% increase over the previous year sales for the corresponding period. Non-recurring revenue consisted of A$21,000 for Q3 FY22 - Much of this relates to hardware sales directly related to DC

Two's regional modular data centres.

This result marks the fifth consecutive quarter of recurring revenue growth, driven by the migration of customers into the Bibra Lake data centre, a fully utilised Mid-West regional data centre, and an expanding sales team who have secured a number of new customers.

DC Two ended the quarter with A$466,000 cash on hand. As announced today, the Company has received binding commitments for a Convertible note offering which provides robust funding of $1.75m across two Tranches; A$502,500 for Tranche 1 and an additional A$1.25m in Tranche 2 commitments, subject to shareholder approval. The funds will be utilised for a strategic shift in operations to accelerate its growth trajectory, and to formalise its aspirations to become a major data centre, cloud and professional services provider with a national footprint.

DC Two becomes VMware Cloud Verified

DC Two achieved VMware Cloud Verified status, joining a select group of cloud providers that have made the investment toward reaching this milestone. VMware (NYSE: VMW) is a US$53Bn market cap company and a leading provider of multi-cloud services for all apps, enabling digital innovation with enterprise control. VMware's software underpins DC Two's cloud and data centre infrastructure.

The verification places DC Two at the forefront of the Australian data centre and cloud market with a highly competitive offering that provides existing and new customers with a wide range of performance features so they can precisely optimise their ideal cloud service. Collaboration with VMware is a pivotal step in our mission to ensure an industry-leading customer experience. It further strengthens DC Two as a global leader of best-in-class technology solutions.

Mid-West data centre at full utilisation

During the quarter, DC Two commissioned its Mid-west data centre site, and shortly afterwards successfully sold the entire 2MW of data centre capacity to customers. DC Two estimates that full revenue generation for the site will translate into approximately ~$2.4m of recurring revenue per year, and is expected to provide a stable, predictable revenue stream for the Company.

It is estimated that approximately 1250kw will be utilised from initial fixed term contracts signed in June 2021 for a minimum of $926,376 including GST over a 5-year term, and an additional contract signed in August 2021 for $1,775,358 inc GST over a 36-month period. The remaining capacity has been sold to a number of smaller customers under a range of fixed term and month-to-month contracts.

Due to increasingly strong demand for hosting of cryptocurrency mining equipment, DC Two will now focus on developing its 1.4MW regional data centre located at a Bio-gas site in Victoria. Currently under a Non-Binding MoU, the Company aims to install its propriety modular data centre units at the site and offer local customers based in Victoria with a low cost, eco-friendly data centre and cloud service. The site is estimated to be online during H2 CY22.

Financial Summary

The attached Appendix 4C provides details on the cashflows for the quarter ended 31 March 2022. As at 31 March 2022 the Company had a cash balance of A$0.47m. The Company's net cash used in operating activities for the quarter amounted to $481k and included expenditure on product manufacturing and operating costs (A$745k), advertising and marketing (A$33k), staff costs (A$498k), and administration & corporate costs including leased asset expenditure (A$162k).

Use of Funds and Related Party Transactions

In accordance with ASX Listing Rule 4.7C.2, The Company's use of funds statement is at Annexure A.

In accordance with ASX Listing Rule 4.7C.3, payments in the March 2022 quarter to related parties of approximately $68k included at Item 6 in the attached Appendix 4C comprised salaries and fees paid to executive and non-executive directors and their associated entities.

This announcement has been approved for release by the Board of DC Two.

For more information please contact:

Shane Wee

Non-Executive Chairman DC Two Limited 1300 331 [e-mail]

ABOUT DC TWO

Established in 2012, DC Two offers a suite of vertically integrated services covering every part of the data centre and cloud technology stack. The Company offers a number of managed and integrated cloud services delivered from datacentres in Perth and Darwin and is currently rolling out DC Modular - a containerised "data centre in a box" innovation. DC Two also develops software assets to support our internal operations and provide enhanced control and flexibility, through automation and self-service, to our customers and technology partners, wherever they are.

ABOUT DC MODULAR

Use of Funds	Prospectus	Actual to Date (6 Nov 2020 - 31 Mar 2022)
Expenses of offers Cloud platform expansion Data centre expansion Growth of DC soft business Growth of DC modular business Loan repayment Administration costs Working capital	$ 604,666 $ 584,900 $ 1,800,000 $ 300,000 $ 800,000 $ 130,000 $ 300,000 $ 1,113,205	$ 563,934 $ 2,493,453 $ 3,246,948 $ 186,557 $ 2,775,327 $ 126,009 $ 782,733 $ 1,036,879
Total Expenditure	$ 5,632,771	$ 11,136,693

DC Two have developed a high density and transportable data centre that enables quick and easy deployment in any location. Based on durable ISO standard sea containers and non-ruggedized insulated variants, the transportable data centre only requires power and data connectivity and is suitable for high performance or supercomputing specific workloads.

FORWARD-LOOKING STATEMENTS

Statements contained in this release, particularly those regarding possible or assumed future performance, revenue, costs, dividends, production levels or rates, prices, or potential growth of DC

Two Limited, are, or may be, forward-looking statements. Such statements relate to future events and expectations and, as such, involve known and unknown risks and uncertainties. Actual results may differ materially from those expressed or implied by these forward-looking statements depending on various factors.

ANNEXURE A - USE OF FUNDS STATEMENT

DC Two was admitted to the official list of the ASX on 6 November 2020 following completion of an IPO raising of $5.5m. The March 2022 quarter is included in a period covered by a use of funds statement in the IPO prospectus lodged with ASX under Listing Rule 1.1 condition 3.

A comparison of the Company's actual admission to 31 March 2022 against the estimated expenditure in the use of funds statement is set out below as required by ASX Listing Rule 4.7C.2.

The Company notes:

1. That since admission, the Company has received total cash receipts of approximately $4.30m, which include the total cash receipts of approximately $957k for the March 2022 quarter. Of the total cash received since admission, approximately $2.5m relate to the cloud platform. Additionally, the Company received $356k of director loan funds funds during the quarter.

• 2. In line with the unprecedented demand for digital currency, the Company has continued to focus on expanding its DC modular regional sites which includes approximately $494k cash expended during this March 2022 quarter. The Company will continue to accelerate and expand the deployment of these sites as these opportunities arise.

• 3. The Company has also continued with its data centre expansion with approximately $702k cash expended during this March 2022 quarter, which includes existing data centre costs.

• 4. The development of the cloud platform expansion resulted in approximately $186k cash expended during this March 2022 quarter, which includes existing cloud platform costs.

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