Arcane Crypto : Q4 2021 report

Year-endReport

Q4 2021 | January - December

2 | Highlights

Year-end Report Q4 2021

A strong quarter with record revenue

Q4 has been a good quarter for Arcane with record revenue and improved result. We increased net sales by 83% compared to the previous quarter and our gross profit increased by 67% also compared to the previous quarter.

On the tech front, we have made important progress and launched Research, the first application in live beta on our new platform. On the mining front, we received the second delivery of our mining machines and are now running at a capacity of close to 80 PH/s.

Torbjørn Bull Jenssen, CEO Arcane Crypto

Fourth quarter of 2021

- compared to fourth quarter 2020 -

• Group revenue increased to 148,930 kSEK (1,224)
• EBITDA amounted to -3,383 kSEK (-10,358)
• EBIT amounted to -11,737 kSEK (-10,373)
• The result for the period amounted to -12,568(-9,533)
• Earnings per share before dilution amounted to SEK -0.002(-0.018)
• Earnings per share after dilution amounted to SEK -0.001(-0.018)

Full year 2021

- compared to full year 2020 -

• Group revenue increased to 332,625 kSEK (2,103)
• EBITDA amounted to -21,969 kSEK (-17,812)
• EBIT amounted to -33,468 kSEK (-17,878)
• The result for the period amounted to -163;440 kSEK (-16,876)
• Adjusted result for the period amounted to -36,487 kSEK (-16,876)
• Earnings per share before dilution amounted to SEK -0.021 SEK (-0.031)
• Earnings per share after dilution amounted to SEK -0.019 SEK (-0.031)

Financial overview	Q4	Q4	Full year	Full year
kSEK	2021	2020	2021	2020
Revenue	148,930	1,224	332,625	2,103
Operating expenses	-152 313	-11,582	-354,594	-19,915
EBITDA	-3,383	-10,358	-21,969	-17,812
Total assets	181,044	41,243	181,044	41,243
Total liabilities	32,096	9,041	32,096	9,041
Equity	148,948	32,202	148,948	32,202

Revenue by quarter

kSEK 150,000

125,000

100,000
75,000
50,000
25,000
0	Q4	Q1	Q2	Q3	Q4
Q3
2020		2021

Please note that neither LN Markets, Alphaplate nor Puremarkets are consolidated into Arcane's accounts. These associated companies are instead accounted for in accordance with the equity method and Arcane's share of ownership.

3 | Main events

Year-end Report Q4 2021

Main events

Main events during Q4 2021

• On October 4, Linus Jönsson was appointed as the new	• On December 9, an extraordinary general meeting
Group CFO of Arcane Crypto. Linus assumed his role	elected two new members to the Board of Arcane.
on January 10th, 2022, replacing Interim CFO Per-Olov	Michael Jackson was elected Chairman of the Board
Östberg.	and Sïmon Saneback was elected Member of the Board.
• On October 19, Arcane Green Data announced it had	• On December 14, Arcane Crypto's partner Valour
partnered with Luxor Technology Corporation and had	received approval from the Swedish Financial Super-
gone live with the current hosting capacity of miners.	visory Authority on its Base Prospectus, which includes
• On October 26, Arcane Green Data announced a pur-	an Exchange-Traded Product based on Arcane Assets'
cryptocurrency fund.
chase agreement for 360 Antminer s19 Pro (100 TH/s).
The purchase agreement represents a total of 36,000
Terra Hash (TH) of computing power and the total cost
amounts to approximately SEK 28 million. The machines
were delivered in Q1 2022 and Arcane Green Data's total
hosting capacity doubled to 2.5 MW.
• On November 12, Arcane Crypto's wholly owned sub-
sidiary Ijort Invest AB ("Trijo") announced that Arcane
Crypto's CEO Torbjørn Bull Jenssen would become CEO
of Trijo and thereby replace Totte Löfström.

After the end of the year

• On January 13, Arcane Crypto's wholly-owned subsidi- ary Kaupang Krypto AS entered into a collaboration with NFT AS and curator Sam Farao, to facilitate acquisitions of Bjarne Melgaard's first crypto art collection The Light- bulb Man.

• On February 1, Anna Svahn informed Arcane Crypto AB that she would have to resign from the board due to other professional obligations.

4 | Message from the CEO

Year-end Report Q4 2021

Message from the CEO

Dear shareholders,

Q4 has been a good quarter for Arcane with record revenue and improved result. We increased net sales by 83% compared to the previous quarter and our gross profit increased by 67% also compared to the previous quarter.

On the tech front, we launched Research in live beta on our new platform. On the mining front, we received the second delivery of our mining machines and are now running at a capacity of close to 80 PH/s.

Our portfolio company LN Markets has continued to set new records in trading activity, benefitting from increasing adoption of Lightning. Pure Digital continues to see strong interest from tier one banks, driven by the underlying client demand from institutional investors.

Arcane Crypto has now been listed for one year and operational for a little more than three. When we started out, our initial plan was to position the Company as a centre of gravity and build a portfolio of businesses, spanning the value chain of financial services for digital assets. Our goal has been to bring these services together and become the leading full service digital finance platform in Europe.

To this end, we are now ready for the next phase, shifting our main focus from investments to product and tech, putting all our efforts into building out a unified brand and tech platform for our users to learn, trade and invest in digital assets. This way we can reap the full benefits of the synergies between our existing services and develop the best possible user experience.

As part of this transition, we have developed an updated mission statement and strategy, the highlights of which are presented on page 5.

In brief, our mission is to enable the adoption of digital assets worldwide. To achieve this mission, we will continue to engage with companies, regulators and institutions to build trust in digital assets, while building the infrastructure necessary to make it easy, safe and reliable to access the digital assets' ecosystem.

As a part of this transition, we are now sharpening our focus, putting the users at the core of everything we do. This will ensure that we succeed in creating real value, enabling us to bring in millions of users on the platform. Furthermore, we are setting up a highly scalable infrastructure on Google Cloud, which in addition to securing a great user experience for our own users, will enable us to scale through offering all our services to third parties through open APIs.

With an experienced team backing me, a strong investor base and a sharpened focus, I am looking forward to an exciting journey over the next few years as we bring in millions of users to the digital assets space through our infrastructure.

Torbjørn Bull Jenssen

CEO, ARCANE

5 | Vision, mission & strategy

Year-end Report Q4 2021

Vision, mission & strategy

The global financial system is currently slow, expensive and exclusionary. We envision a world where the adoption of digital assets changes not only the nature of the financial system, but also the way in which financial services are offered, thereby helping realize the potential of a truly global and open financial system, unleashing innovation and driving inclusion worldwide.

Our mission is to enable the adoption of digital assets worldwide.

Our strategy is twofold:

1. Position Arcane as an organization that regulators and institutions can trust to manage digital assets
2. Build the infrastructure necessary to make it easy, safe and reliable to access the global digital assets ecosystem

Our plan has four main steps:

1. Invest in and acquire companies with key capabilities within the digital assets ecosystem. 4
2. Create a unified Arcane brand and platform for users to learn, trade, and invest in digital assets, all from the same account.
3. Build trust and distribution through our market leading research content.
4. Expose everything as an API to enable third parties to build their own products, using our technology, and to sell their products to our users.

Guiding principles

Make something people want

In Arcane we will follow the mantra of "Build Product. Get Feedback. Repeat". By doing so, we will embed a product mindset deeply within Arcane, maximizing our chances of making something people actually want. 1)

Think global

Our mission is to enable the adoption of digital assets worldwide. Everyone in Arcane shall have a global mindset, and all of our products, along with the unified software architecture they're built on, will be able to serve customers globally.

Simple first, then powerful

Our products will be simple to start with and grow more powerful over time. Our key focus is to quickly identify those features that solve a real problem for users and double down on them, while quickly removing those that don't, all while hiding complexity from the user.

Earn trust

We will be incredibly transparent about how we manage our user's privacy, security, and above all the digital assets they hold with us. We will be proactive rather than reactive when it comes to risk and regulation.

Build in public

Our main codebase will be open source, enabling permis- sionless discovery and integration of Arcane APIs. Further- more, our changelog will be public. This will encourage us to ship constantly, show our users the product is getting better, and show progress to our investors.

What success looks like

Millions of users on the Arcane platform

Whether it is readers of our research, high net worth individuals checking how their investment fund is performing, or traders looking for world class execution across multiple exchanges, we will be helping millions of users access digital assets every month.

1,000's of businesses using our SaaS products

We believe in a future where every financial institution has a digital asset offering, not because they built it themselves, but because they entered into partnerships.

We will be the preferred partner for financial institutions, initially in Europe, by offering the best set of APIs and by embracing the highest standards of regulatory compli- ance, thereby providing the most reliable infrastructure.

Unicorn valuation, with revenue to match

We aim to become a multi-billion-dollar Company with revenue and profit to support that valuation. By leveraging scalable software, making smart choices in terms of where to compete, and hiring a small but incredibly talented and focused team, we believe we can make this a reality.

1. The most successful businesses in the world today (ex. Apple, Amazon, Square, Stripe) are product led. From top to bottom, they know and under- stand their users deeply, and are obsessed with identifying and solving real problems for them by delivering software and hardware products that keep engagement high, churn low, and generate incredible revenue.