DC Two : Quarterly Activities/Appendix 4C Cash Flow Report

DC TWO REPORTS 14.7% QUARTER ON QUARTER RECURRING REVENUE GROWTH

Highlights;
only	• Sixth consecutive quarter of recurring revenuegrowth, increasing 14.7% to a record
use
	A$1,014,110.
• A$1,733,215 total revenue achieved for Q4 FY22, a 95% increase over Q3 FY22.
• DC Two's Bibra Lake data centre was officially awarded Tier III Design Certification,
	marking one of the most significant milestones in the Company's history.
personal	• Signed a Fixed Term Agreement to provide co-location services at our Victoria based regional
	data centre, estimated to generate revenue of A$1,010,800 per year.
•	upcoming general meeting.
	Strategic Alliance (SA) with Attained Group Pty Ltd, that will see Attained and DC Two cross

selling each other's products and services.

• Mr Blake Burton appointed as DC Two's new Managing Director, to focus on revenue growth and manage the Company's capital market facing responsibilities to ensure sustainable shareholder value.

• Additional funding to be provided by the second tranche convertible notes following an

28 July 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 30 June 2022.

ForQuarterly recurring revenue grows 14.7%

Total Q4 FY22 revenue increased 95% to A$1,733,215, with recurring revenue increasing 14.7% to a recordA$1,014,110 over Q3 FY222 - representing a 114% increase over the previous year's recurring revenue for the corresponding period. Notably, total revenue for the quarter is almost equal to DC Two's entire FY21

result of A$1,740,063, further illustrating the company's encouraging growth trajectory.

Today's result marks the sixth consecutive quarter of recurring revenue growth, and can be related to a number of initiatives implemented during the quarter to improve cost efficiencies, bolster and incentivise the sales team, and maximise revenue from current assets.

Non-recurring revenue consisted of A$719,104 for Q4 FY22. Much of this relates to service fees directly associated to DC Two's regional modular data centres, with A$482,396 being recognised from the sale of

onlyan individual modular data centre unit to project partner Joule Energy (LMS) in September 2021.

The Company also ended the quarter with A$603,000 cash on hand, and has received commitments for Second Tranche Convertible Note offering which is expected to provide further growth capital in the near term. Second tranche convertible notes funding is expected to be secured following shareholder approvalat DC Two's upcoming general meeting, expected to be held in the very near term. DC Two also received ~$150k as an R&D grant in June 2022, in relation to the development of our PDUs and DC Portal software.

usepersonalDC Two Managing Director Blake Burton said; "Todays result marks the sixth quarter of sequential recurring revenue growth, and is testament to the team's ability to convert our growing pipeline of Forpotential customers into paying clients. Importantly, we continue to evaluate and implement cost

reduction measures and operational efficiencies that will ensure the company has the financial capability to support its strategic requirements and execute its growth plans. Encouraging progress was also made towards identifying compelling partnerships and acquisition opportunities, which could potentially supercharge revenue growth and accelerate our path towards cash flow positive."

Bibra Lake awarded Tier III Design Certification

After a diligent assessment and evaluation by expert teams from global data centre authority The Uptime Institute, DC Two's Bibra Lake data centre was officially awarded Tier III Design Certification. This marked one of the most important milestones in the Company's history, and puts DC Two in an elite group of Australian companies to have achieved the prestigious certification.

Importantly, the accreditation is expected to provide a competitive edge when tendering for mid-marketonlyand enterprise customers requiring Tier III compliance, security and access accreditations, and DC Two is

now the only provider in Western Australia with its own Tier III design accredited data centre and ISO 27001 ISMS accredited cloud platform.

usepersonalDC Two's Tier III Design Accredited data centre - Bibra Lake

Co-location agreement secured for A$1,010,800

In late June, DC Two secured a Fixed Term Agreement to provide co-location services at its Victoria based regional data centre, estimated to generate revenue of A$1,010,800 over a 12-month period. Under the terms of the agreement, the Customer will purchase an estimated 763kw of power over the 12-month period, with revenue expected to commence in Q3 CY22.

ForThe Victoria site is expected to be online by mid-August 2022, and will have an initial capacity of 800kw via DC Two's module, with total site capacity expected to increase to 1.2MW as DC Two seeks an agreement to access and sell space in Joule Energy (LMS) module.

This agreement follows the recent successful 2MW utilisation of DC Two's Mid-West regional data centre, which is fully operational and generating approximately $2.4m of recurring revenue per year. Combined, both the Victoria and Mid-West regional data centre sites will generate approximately $3.4m in revenue per year under current agreements.

Strategic Alliance with Attained

onlyDC Two signed a Strategic Alliance (SA) with Attained Group Pty Ltd, one of Perth's leading managed service providers. The SA will see Attained and DC Two cross selling each other's products and services, and allows DC Two to offer additional Professional Services - an area which will fill a gap in the Company's offering.

Al ng with the joint sales effort, the SA will explore opportunities around efficiencies and new service synergies to create cost savings and maximise returns. The agreement forms part of DC Two's strategy to identify potential revenue opportunities within complementary IT sectors, that provide bigger reach to

usemore and diversified clients currently not targeted. DC Two's Managing Director, Mr Blake Burton, is a shareholder and director of Attained Group Pty Ltd.

New Managing Director & Chief Technology Officer appointed

Previous Executive Director, Mr Blake Burton was appointed as DC Two's new Managing Director, effective 1 July 2022. Mr Burton has been a Director of the Company since its IPO, has been an instrumental

member of the board, and brings extensive experience within the IT industry to DC Two. personalAs Managing Director, Mr Burton will use his in-depth understanding of the DC Two business to focus on

revenue growth and manage the Company's capital market facing responsibilities to ensure sustainable shareholder value is achieved. Mr Burton has had tremendous success with his own company and his skill set will be of value as we look to grow the business and increase shareholder value.

As part of this transition, DC Two's previous Managing Director, Mr Justin Thomas will take on the role of Chief Technology Officer. As a co-founder of DC Two, Mr Thomas has a deep understanding of the company's technology and engineering requirements. He will lead the development of critical policies and p ocedures, and enhance DC Two's products and services to serve external customers.

Growth capital update

DC Two provided an update to its capital raising announcement dated 2 May 2022, whereby it announced a capital raising of $1,751,000 via the issue of 1,751,000 convertible notes with a face value of $1.00 per note ("Convertible Notes"). The Convertible Notes convert at a 20% discount to the 20-day volume

Forweighted average price of the Company's shares ("Conversion Price"). The Conversion Price is subject to price and ceiling floors.

Given the recent deterioration in market conditions and the associated fall in the Company's share price (to a price below the proposed price floor), the Company has amended the floor and ceiling price

of the Convertible Notes as follows:

• the floor price be amended from $0.05 to $0.025; and
• the ceiling price be amended from $0.15 to $0.08.

The Company expects that the reduction in price and ceiling floors to better reflect recent market conditions and facilitate the equitable treatment of holders of the Tranche 1 and Tranche 2 Convertible

onlyNotes.

As the Tranche 1 Convertible Notes have already been issued, the amendments to the floor and ceiling prices of the Tranche 1 Convertible Notes will be subject to shareholder approval pursuant to Listing Rule 6.23.4, which the Company will seek at the upcoming general meeting of shareholders.

Financial Summary

useThe attached Appendix 4C provides details on the cashflows for the quarter ended 30 June 2022. As at 30 June 2022 the Company had a cash balance of A$603,000 which does not include the second tranche convertible note funding. The Company's net cash used in operating activities for the quarter amounted to $375k and included expenditure on product manufacturing and operating costs (A$1,259,000), advertising and marketing (A$37k), staff costs (A$504k), and administration & corporate costs including leased asset expenditure (A$76k).

As announced on the 2 May 2022, the Company will enter into the cryptocurrency sector. No expenditure personalh s been incurred to date and the Company have not yet purchased their own miners. It is still the

company's intention to investigate the commercial viability of mining crypto currency once the crypto market stabilises.

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 June 2022 quarter to related parties of approximately $66k included at Item 6 in the attached Appendix 4C comprised salaries and fees paid to xecutive and non-executive directors and their associated entities.

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

For more information please contact:

ForBlake Burton Managing Director DC Two Limited 1300 331 [e-mail]