Arcario : Annual report 2022

Annual Report 2022

BOARD OF DIRECTOR'S REPORT

The Board and CEO of Arcario AB hereby publish the Annual Report and group accounting for the financial year 2022.

The Annual Report is in Swedish Krona, SEK. Unless stated otherwise, all amounts are given in Thousands Kronor (kSEK). Information in brackets refers to the previous financial year.

Information on operations

Arcario AB is listed on Nasdaq First North Growth Market since 11 January 2022 when the current corporate structure was created. Current business areas have been operational since 2018 through subsidiaries. The group have local offices in Stockholm and Oslo.

Arcario have two wholly owned business units, K33 and Green Data. K33 develops and provides a platform where users can Learn, Trade with, and Invest in Digital Assets. K33 consists of Markets (Kaupang Krypto), Invest (Arcane Assets) and Research (Arcane Research).

Green Data (Arcane Green Data), operates Bitcoin mining in northern Norway.

Arcario also have minority interests in Puremarkets Ltd, that develops an inter-bank marketplace for digital assets, and ITOAM Sarl (LN Markets), that operates a platform for derivatives trading based on the Bitcoin Lightning Network.

The company is registered in Stockholm.

Significant events during the financial year

It was a turbulent year for crypto currencies and digital assets. During the year, BTC traded between USD 16 787 and USD 47 686. The total BTC trading volume decreased by 10% compared to 2021. The average BTC price decreased from USD 47 436 for 2021 to USD 27 143 for 2022, causing a significant decrease in the BTC trading volume measured in USD. This also impacted K33 Markets (Kaupang Krypo) which saw a drop in trading volumes from 2021 to 2022 in line with the market.

Russia's invasion of Ukraine caused elevated energy prices during the year. Increased electricity prices in southern Norway proved challenging for Green Data's bitcoin mining. To ensure stable access to cheaper and renewable energy, the bitcoin mining operation were relocated to northern Norway.

To clarify our integrated platform offering, where our customers can Learn, Trade and Invest in digital assets in one place, it was decided to merge Kaupang Krypot, Arcane Assets and Arcane Research under the common K33 name. As s an effect of the K33 launch, 100% of the shares in Ijort Invest AB (Trijo) were divested.

An earn-out consideration amounting to NOK 10.5M was paid for Kaupang Krytpo which has been a wholly owned subsidiary since March 2021. The earn-out was settled through the issuance of 58.5M Arcario shares.

In December, K33 announced a cooperation between K33 Research and Bloomberg. K33's research is now available for 325 000 Bloomberg terminal users. An important step to improve K33's reach.

During the year, the company raised 15 212 kSEK through the issuance of new shares.

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BOARD OF DIRECTOR'S REPORT

Shareholders

As of 31 December 2022, there were 25 467 shareholders holding 8 768 877 823 shares in Arcario.

During the year 4 935 106 172 shares were traded at an average price of 0.069 SEK per share, total turn-over were in excess of 338 MSEK.

The then largest shareholders as of 31 December 2022

See Accounting and valuation principles for definitions of KPIs.

Group revenue decreased from 332 239 kSEK to 287 838 kSEK driven by lower volumes from K33 Markets (Kaupang Krypto). Lower trading volumes were primarily due to lower crypto currency prices during the year. Ijort Invest AB (Trio) was sold during the year and is included in consolidated accounts until 31 August 2022.

The result for the year improved from -163 440 kSEK to -94 201 kSEK. The result for the year includes amortisation of goodwill for Trijo with 27 250 kSEK and an earn-out consideration for Kaupang Krypto of 10 899 kSEK fully settled by issuance of Company shares.

Note that LN Markets is not consolidated into Arcario's accounts as the shareholding is less than 20%. Puremarket is accounted from according to the equity method.

During the second quarter, a long-term loan with a repayment term of 42 months, increased the Company's cash by 15 000 kSEK. Share issurances during the year increased the equity by 15 212 kSEK. The group equity amounted 71 240 kSEK by 31 December compared to 148 949 kSEK the year before.

The Company intends to continue its investment in and development of the K33 platform. To keep the desired development pace the Company is dependent on raising external capital. The board is engaged in discussions with potential investor, with a focus on ensuring long term funding within the coming months. Failure to secure long term funding could imply a significant uncertainty on the company ability to keep operating. Short term cashflow needs are secured through 90 days rolling credit facility from the Company's two largest shareholders.

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BOARD OF DIRECTOR'S REPORT

Changes in equity (kSEK)

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GROUP INCOME STATEMENT

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