Arcario : Interim Report Q1 2024 Report

Quarterly Report Q1

Q1 2024 JANUARY - MARCH

Arcario AB

556668-3933

INTRODUCTION

Arcario sees massive growth in revenue and has become cash flow positive.

Q1 has been a historic quarter for both K33and Arcario. K33 is experiencing solid growth and increased revenue as the Arcario subsidiary continues to winn market shares in the Nordic market for trading crypto.

" With K33 leading the charge, a profitable quarter behind us,

and a new bull market brewing, I firmly believe that Arcario is ready for a solid turnaround. The future looks bright and we expect plenty of great news that we will share with you in the upcoming quarters.

- Torbjørn Bull Jenssen, CEO of Arcario & K33

Arcario AB | Quarterly Report | Q1 2024 JANUARY - MARCH

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INTRODUCTION

First quarter of 2024

Compared to first quarter 2023

• Group revenue increased to 148,892 kSEK (38,551)
• EBITDA amounted to 4,189 kSEK (-6,951)
• EBIT amounted to 2,007 kSEK (-11,372)
• The result for the period amounted to 5,538 kSEK (-25,188)
• Earnings per share before dilution amounted to SEK 0.001 (-0.003)
• Earnings per share after dilution amounted to SEK 0.001 (-0.003)

Financial overview kSEK

Revenue by quarter kSEK

Arcario AB | Quarterly Report | Q1 2024 JANUARY - MARCH

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MAIN EVENTS

Main Events

Main events during Q1 2024

• On January 16, Arcario announced the completion of the Vanir Finance AS acquisition.
• On February 8, K33 expanded its crypto trading offering by adding support for 7 new tokens
• On March 14, Arcario announced the sale of an 11% stake in ITOAM SAS raising USD 1.9M.

After the end of the period

• On April 17, K33 reduced its cost of trading crypto in major fiat currencies by more than 60% to outperform global exchanges like Coinbase and Kraken
• On May 23, Arcario announced the postponement of the AGM to 28 June.
• On May 30, Arcario disclosed material differences for 2023 Q4 numbers between the interim report and the annual report.

Arcario AB | Quarterly Report | Q1 2024 JANUARY - MARCH

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Commentary

Torbjørn Bull Jenssen

CEO of Arcario & K33

CEO Letter Q1 2024

Dear Shareholders

Q1 has been a historic quarter for both K33 and Arcario. K33 is experiencing solid growth and increased revenue, while Arcario successfully achieved a cash flow positive status in Q1, as anticipated.

It should not be to anyone's surprise that K33 is the main driver, and strategically, Arcario has decided to focus primarily on the ecosystem surrounding K33, recognizing its strong potential for further growth. To further strengthen our liquidity and invest in accelerating K33's growth, we are considering divesting other assets.

With the best prices in the Nordics, institutional-grade infrastructure, and a focus on larger clients, both private and corporate, we believe that K33 is well-positioned to not only capture local market share but also take market share from the international giants.

K33 has been working diligently to optimise its trading operations to offer the best prices and liquidity to end clients. In April, these efforts culminated in K33 being able to reduce the cost of trading crypto by over 60% for trades in USD, USDT, USDC, DAI, and EUR, while maintaining a healthy margin.

This initiative is part of our strategy to outperform global exchanges like Coinbase and Kraken, to win market shares and volume, and K33 now offers better prices than both. This achievement is a testament to K33's lean operations, highly efficient technology, and its setup as a broker.

Unlike an exchange where your trade must be matched with another's in the opposite direction, which can be

challenging for larger orders and often results in worse execution prices, K33 operates	. Every client
trades directly with us while we source liquidity from large providers in the	setup allows K33 to
quote extremely competitive prices for both small and large orders.

Looking ahead, I remain very optimistic about both the sector and our momentum for crypto and digital assets.

With K33 leading the charge, a profitable quarter behind us, and a new Arcario is ready for a solid turnaround. The future looks bright and we share with you in the upcoming quarters.

Sincerely,

Torbjørn Bull Jenssen

Arcario AB | Quarterly Report | Q1 2024 JANUARY - MARCH

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Portfolio development

K33

K33 generated 138,227 kSEK of revenue in the first quarter of the year, compared to 34,467 kSEK for the same period prior year.

Revenue stems from 132,677 kSEK in K33 Markets, compared to 33,676 kSEK generated in Q1 2022. K33 Assets generated 462 kSEK in Q1 2024 compared to 513 kSEK generated by Arcane Assets in Q1 2023. K33 Research generated 345 kSEK revenue this quarter compared to 278 kSEK revenue from Arcane Research for the same period last year.

Total assets under management amounted to 8.6 MUSD compared to 5.4 MUSD for the previous quarter.

Gross trading volume kSEK

Assets Under Management, kSEK

Green Data

Green Data operates bitcoin mining in northern Norway through a hosting agreement with Exanorth. Revenue decreased to 5,596 kSEK for the fourth quarter compared to 5,889 kSEK for the prior quarter.

The bitcoin halving on 19 April 2024 has made Green Data's bitcoin mining operations with the current setup unviable. The bitcoin mining equipment has been written down to a value corresponding to the expected resale value, the impairment charge is included in Q4 2023.

LN Markets

LN Markets is a trading platform built on the Bitcoin Lightning Network, that uses bitcoin, paid and settled over the Lightning Network, as collateral for derivatives trading.

Following the closure of a successful funding round raising USD 3M from Ego Death Capital, Lemniscap and Timechain in Q1 2024, Arcario's stake was reduced to 13.4%. Due to the strong interest from external investors, Arcario decided to sell an 11% stake in LN Markets, raising USD 1.9M resulting in a gain of SEK 3.7M

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Portfolio development

Vanir Finance

Vanir is a FinTech company developing a platform to facilitate crypto collateralised lending, integrating both traditional and decentralised finance.

The acquisition of all shares in Vanir was completed in January 2024. Vanir is fully consolidated into group accounts from January 2024. Vanir generated a profit of 4,544 kSEK for the quarter.

Finpeers

During 2023, the Swiss startup Finpeers was integrated into Arcario's growing roster, epitomising the calibre and potential of future investments.

Venturing into the burgeoning domain of tokenizing real-world assets, they've established a unique position, cementing robust partnerships both in Europe and the UAE. As they navigate the complex regulatory terrain, an endorsement from FINMA for their utility token sale was attained, and their Security Token Offering (STO) infrastructure has been readied.

Finpeers generated 130 kCHF revenue in Q1 2024 and were cash flow positive.

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Organization as of March 31, 2023

Arcario owns 2.4% of LN Markets and 3% of Finpeers, all other legal entities are wholly owned

Arcario AB | Quarterly

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Financials

The financial statements have been prepared in accordance with the company accounting policies, aligned with BFNAR Annual Reports and Consolidated Financial Statements (K3) and the Annual Accounts Act (Sw. årsredovisningslagen).

Revenue generated by Kaupang is from cryptocurrency accounted for according to the Norwegian accounting principle for goods (NRS 1). When selling cryptocurrency to customers, the acquisition cost is expensed as the cost of goods and the sales value of the cryptocurrency is recognized as sales revenue. When Kaupang acquires cryptocurrencies from a customer and off-sets the trade by exchanging the cryptocurrencies with another counterparty, the off-setting trade is classified as sales revenue while purchase from the customer is classified as cost of goods.

Comments January - December 2024

Income statement

The revenue increased for the quarter. This is mainly driven by trading volumes from K33 Markets. The trading volume reflects overall market activity for the broader crypto market. The gross margin increased from 4.5% for the same period last year to 9% for 2024. This is mainly due to the inclusion of Vanir from 2024.

Compared to the corresponding period last year, Personnel expenses for the quarter decreased from 5,129 kSEK to 4,010 kSEK. This reflects a lower head count as adjustments were made to reduce expenses to off-set lower trading volumes.

Other operating income is mainly a realised gain on K33 Assets' claim on FTX that were sold during the quarter.

Balance Sheet

The increase in intangible assets stems from Goodwill of 20,446 kSEK as a result of the Vanir acquisition.

The decrease in financial assets reflects the sale of the Group's stake in LN Markets.

Reduction of current liabilities are due to the repayment of a convertible loan from Cowa and an off-set issue to clear debts that arose due to short term funding needs last year.

Cash flow

Adjustments for items that are not included in the cash flow consists of items such as deprecations and unrealised losses.

Arcario AB | Quarterly Report | Q1 2024 JANUARY - MARCH

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The Share and Shareholders

As of March 31, 2024, there were 17,910 shareholders holding 12,178,525,260 shares in Arcario available for trade. During the quarter 1,815,341,588 shares were traded at an average price of 0.02 SEK per share, a total traded value of over 33 MSEK.

Total Volume		Average price

Top 10 shareholders, 31 March 2024

Arcario AB | Quarterly Report | Q1 2024 JANUARY - MARCH

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