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DJ KR1 plc Final Results

 
TIDMKR1 
 
KR1 Plc 
 
                           ("KR1" or the "Company") 
 
                             Audited Final Results 
 
Managing Director's Report 
 
For the year ended 31 December 2019 
 
We are pleased to present the audited final results of the Company for the 
twelve months ended 31 December 2019. 
 
Financial markets tend to explore the boundaries of an asset's value, spiking 
upwards to test highs, and capitulating downwards at moments of deep 
uncertainty. These last few years in the crypto markets have seen both ends of 
the spectrum in full force. The one constant has been the ever expanding number 
of credible and exciting startup projects launching new disruptive systems 
using blockchain and decentralised technologies. KR1 has been continuously 
investing in these new projects through this market volatility cycle. We 
continued to add new investments to the portfolio, knowing full well that, with 
the increased number of decentralised platforms finding real product market 
fit, the markets would soon return to a more favourable outlook. Currently we 
are seeing many of our earliest investments in the decentralised finance (DeFi) 
space gaining huge traction and recognition as the market catches up with the 
leap forward that the technology has made. 
 
The last year saw a major step change for KR1 as we became income generating 
and we are pleased to report GBP241,633 in income from the Company's staking 
activities, mainly resulting from our participation in the Cosmos Network 
during the 2019 financial year. Going into 2020 and beyond, staking activities 
are becoming an evermore important area, as further promising portfolio 
projects such as Polkadot, Dfinity and Ethereum turn on their Proof-of-Stake 
blockchains. On top of our staking success, we undertook active advisory work 
with one of our portfolio companies, Vega Protocol, resulting in revenues of GBP 
180,748 in their native token. All of these activities combined with our 
successful track record of investing, have made 2019 another successful year 
for KR1, resulting in an unrealised profit of GBP2,053,608 reflecting the gain in 
fair value on our digital assets investments with a realised profit on disposal 
of digital assets of GBP693,665 for the Company. 
 
Since December 2019, we have entered some very turbulent and uncertain times in 
the global economy, the catalyst being the recent Covid19 pandemic outbreak. 
Yet even before the virus swept across the globe, there was an ever growing 
unease at the weaknesses within the global financial system, the unfairness and 
inequality the system creates, and the staggering size of the debt that burdens 
the world's largest economies. Bitcoin's growth is in direct correlation to 
these now critical and unsustainable weaknesses, and is seen as a hedge against 
the untrammeled fiat currency printing by the world's central banks. Respected 
investor and fund manager Paul Tudor Jones of the Tudor Investment Company 
recently allocated a portion of his fund into Bitcoin, joining a long list of 
influential traders and investors in this momentum shift to Bitcoin and the 
crypto markets. 
 
In March 2020, Bitcoin and all crypto assets saw massive volatility, mirroring 
the wider market panic on the expected economic damage from Covid19, but 
subsequently weathered the storm. KR1 experienced no operational or structural 
portfolio issues in these challenging times, as the Company is not exposed to 
unnecessary risks and has a modest cost-basis. The fear and uncertainty in the 
global economy has set a new backdrop on which Bitcoin is poised to take its 
place next to gold as a safe haven asset, with Bitcoin acting as the 
'bellwether' or 'blue chip' asset in the crypto markets. This is potentially 
very positive for KR1 which holds a solid position in both leading 
cryptocurrencies, Bitcoin ("BTC") and Ethereum ("ETH"), in its portfolio. 
 
KR1 specialises in seed and early stage investments into projects that use 
decentralised technologies to create innovative products and services to 
disrupt current systems. More recently, it is DeFi that has come into the 
spotlight with billions of funds flowing into that ecosystem. KR1 was one of 
the earliest investors in the DeFi movement, investing into Melon Protocol in 
2017, which was when we first realised the potential for programmable money to 
upend the financial system. Since then we have continued to add more DeFi 
projects to the portfolio including Acala, Argent, Nexus Mutual, Vega Protocol 
and Union to name a few. Each project aims to solve a different aspect of the 
DeFi puzzle, from uncollateralized lending through to stablecoins, 
decentralised exchanges and insurance. We have further balanced the portfolio 
with meaningful stakes in important infrastructure blockchains, including 
Polkadot, Cosmos and Dfinity as well as a wide range of disruptive projects in 
other areas such as privacy, scalability and staking. 
 
The big bang of decentralised money and applications continues to expand at an 
ever increasing speed and at every corner of the blockchain ecosystem we are 
seeing increased adoption; from the amount of transactions on-chain through to 
hash rates, active wallet addresses, billions of value locked up in DeFi and 
more. At KR1 we are fully involved in experimenting and using these new DeFi 
platforms in our day to day operations, all of which are being built on the 
Ethereum protocol. The fly in the ointment for Ethereum is that it is creaking 
under the weight of its own success, resulting in high transaction fees and 
network congestion. These issues will be addressed by the long awaited release 
of Ethereum 2.0, but the road to launch of a fully featured version remains 
unclear. In the meantime, newer, more advanced layer one protocols will seek to 
take advantage of these pain points in the coming years, opening the door to 
Ethereum competitors. While we are huge proponents of everything Ethereum has 
delivered to drive this space forward and believe it will dominate the 
decentralised space for years to come, we have major positions in relevant 
Ethereum competitors, who will drive forward experimentation and innovation and 
promise a universe of many blockchains. 
 
One of these innovative blockchain projects is the Cosmos Network, which has 
become a major position in KR1's portfolio since Cosmos' launch in March 2019. 
Cosmos is positioned as a critical hub that will route transactions between 
different blockchains, analogous to the TCP/IP messaging protocol on the World 
Wide Web. KR1 participated in the first Cosmos funding round in 2017 and, as 
mentioned above,  staking revenue from our Cosmos staking activities started to 
flow into KR1's balance sheet ever since the network's launch in March 2019. To 
blow our own trumpets for a moment, KR1 was one of the first institutions to 
recognise the compelling potential of 'Proof-of-Stake' blockchain networks, 
where the early investments are not only seeing great appreciation in the 
crypto markets, but are also proving to be profitable yield bearing crypto 
assets. 
 
Similar to the above, two other highly anticipated yet-to-launch 
'Proof-of-Stake' blockchain networks in the Company's portfolio are Polkadot 
and Dfinity, which are the largest investments that KR1 has made to date. 
Polkadot is in the middle of its launch process as we write and Dfinity 
recently unveiled the first parts of its project, which they executed in 
stealth, gearing up for a launch process starting as early as later this year. 
 
Since the Initial Coin Offering (ICO) fervour diminished in early 2018, KR1 has 
been at the forefront of participating in newer token distribution methods and 
models. The need for crypto networks and protocols to distribute tokens to 
active participants who add value in order to be fully decentralised in nature 
has not disappeared, rather it became more important than ever. One of the most 
compelling new token distribution mechanisms, called a 'Lockdrop', was 
pioneered by the Commonwealth Labs and Edgeware team, which saw a huge influx 
of funds. Buoyed by this success, KR1 is participating in more lockdrops and 
distribution mechanisms, prime examples being the Plasm Network and 
aforementioned Edgeware lockdrop, but there are many more projects in the 
pipeline. 
 
For much of 2020, Bitcoin has been sitting 'still' under the $10k resistance 
level with low volatility. However, this has changed recently with a major 
break to the upside. Ethereum has also seen a strong price surge, which, given 
the massive success of DeFi projects in generating economic activity on 
Ethereum, was an expected move. These are all very encouraging developments and 
we are in an excellent position to take full advantage of this. 
 
While maximising staking yields and the utilization of our portfolio assets has 
become an important area for us, our focus has always been and continues to be 
researching the bleeding edge of this transformative ecosystem, backing the 
brightest and best teams to help build out the new decentralised world of Web 
3.0 and beyond. 
 
George McDonaugh and Keld Van Schreven, KR1 
 
Managing Directors 
 
Date: 31 July 2020 
 
Statement of Comprehensive Income 
 
For the year ended 31 December 2019 
 
                                                                         Restated 
                                                            2019             2018 
                                                                        (Note 13) 
 
                                           Note                GBP                GBP 
 
Income 
 
Realised gain on disposal of digital                     693,665        2,354,118 
investments 
 
Staking yields                                           241,633                - 
 
Advisory fees                                            180,748                - 
 
Unrealised (loss)/gain on investments                (1,080,599)          636,693 
 
Unrealised gain/(loss) on digital                      2,053,608     (12,714,187) 
investments 
 

(MORE TO FOLLOW) Dow Jones Newswires

July 31, 2020 09:42 ET (13:42 GMT)

DJ KR1 plc Final Results -2-

Unrealised (loss)/gain on loan issued                    (8,088)            1,665 
 
                                                       2,080,967      (9,721,711) 
 
Expenses 
 
Administration expenses                                (117,364)        (102,794) 
 
Advisory fees                                           (37,397)        (136,947) 
 
Audit fees                                              (14,706)         (19,800) 
 
Bank charges and trading commissions                    (11,122)         (57,188) 
 
Branding and promotional expenses                       (81,300)        (107,675) 
 
Commission                                                     -         (15,850) 
 
Escrow fees                                              (2,500)                - 
 
Foreign exchange loss                                    (2,233)          (6,842) 
 
Insurance                                                (6,798)          (1,129) 
 
Legal and professional                                  (36,313)         (89,703) 
 
Loss on share buy back                                   (6,000)                - 
 
Office rental                                           (13,671)         (39,317) 
 
Provision against receivable                            (32,466)                - 
 
Staff costs                                 3          (268,584)        (455,997) 
 
Other expenses                                           (8,711)                - 
 
Travel expenses                                         (84,136)        (102,959) 
 
                                                       (723,301)      (1,136,201) 
 
Taxation                                    5           (23,778)        2,519,393 
 
Profit/(loss) for the year                             1,333,888      (8,338,519) 
 
Other comprehensive income                                     -                - 
 
Total comprehensive income/(loss) for                  1,333,888      (8,338,519) 
the year 
 
Earnings per share expressed in pence 
per share: 
 
Basic and diluted                           6               1.02           (6.95) 
 
The notes contained in the Company's Annual Report form part of these financial 
statements. 
 
Statement of Financial Position 
 
For the year ended 31 December 2019 
 
                                                                         Restated 
                                                            2019             2018 
                                                                        (Note 13) 
 
                                           Note                GBP                GBP 
 
Assets 
 
Fixed asset investments                     8          7,403,708        5,100,393 
 
Cash at bank                                             179,243           87,387 
 
Cash held on trading platforms                           100,130          618,150 
 
Debtors                                     7             28,607          819,247 
 
                                                       7,711,688        6,625,177 
 
Creditors 
 
Amounts falling due within one year         11         (237,865)        (508,172) 
 
Net current assets                                     7,473,823        6,117,005 
 
Capital and reserves 
 
Called up share capital                     12           720,076          718,843 
 
Share premium                                          3,056,443        3,034,746 
 
Profit and loss account                                3,697,304        2,363,416 
 
Shareholders' funds                                    7,473,823        6,117,005 
 
The notes contained in the Company's Annual Report form part of these financial 
statements. 
 
The financial statements were approved by the Board of Directors on 31 July 
2020 and were signed on its behalf by: 
 
George McDonaugh                                                    Simon Nicol 
 
Director 
 Director 
 
The financial information set out in this announcement does not constitute 
statutory accounts. This financial information has been extracted from the 
audited full accounts of the Company for the year ended 31 December 2019. The 
Company does not declare a dividend for the period. 
 
The full Annual Report of the Company will be available on the Company's 
website: https://www.kryptonite1.co/. 
 
The Directors of the Company accept responsibility for the contents of this 
announcement, 
 
For further information please contact: 
 
KR1 PLC 
George McDonaugh                            +44 (0)16 2467 6716 
Simon Nicol                                 simon@KR1.io 
 
Peterhouse Capital Limited (AQSE Corporate 
Adviser)                                    +44 (0)20 7469 0930 
Mark Anwyl 
 
Allie Feuerlein 
 
Nominis Advisory Ltd (PR Adviser) 
Angus Campbell                              pr@KR1.io 
 
ENDS 
 
Notes to Media 
 
About KR1 plc 
 
KR1 is a leading digital asset investment company supporting early-stage 
decentralised and open source blockchain projects. Founded in 2016 and publicly 
listed in London (NEX:KR1), KR1 has built a notable reputation for generating 
significant returns by investing in key projects that will power the 
decentralised platforms and protocols that form the emerging Web3 
infrastructure. 
 
www.KR1.io 
 
Market Abuse Regulation (MAR) Disclosure 
 
The information contained within this announcement is deemed by the Company to 
constitute inside information as stipulated under the Market Abuse Regulation 
(EU) No. 596/2014. Upon the publication of this announcement via a Regulatory 
Information Service, this inside information is now considered to be in the 
public domain. 
 
 
 
END 
 

(END) Dow Jones Newswires

July 31, 2020 09:42 ET (13:42 GMT)