ICONOMI Financial Report — Q1 2018

Ending Q1 2018 on a high note, we finished preparing for one of the most important milestones so far: the blockchain audit by Deloitte. With this achievement, we set a new standard for trust in the blockchain industry.

Overall, 2018 had a strong start. The robust demand in the crypto-economy from the end of 2017 remained for the first few weeks, after which the market correction tested many investors’ fortitude. Despite the correction, Q1 had many positive developments for ICONOMI. Though the market was less active in the last month of Q1, we witnessed a 32% increase in new users. Our book value in Q1 was $150,921,961.

Eleven new team members joined us in Q1, and we hosted events in Vienna and London. In Q2 we hosted events in Madrid and Amsterdam, with future events planned for Singapore, Hong Kong, Australia, Paris, Frankfurt, and Ljubljana, as well as repeat visits to London and Madrid.

With a clear vision and well-defined long-term goals, we have the momentum to achieve continued profitable growth.

Department Overviews

• Legal
• Customer Support
• DAA Managers
• Marketing and Communications
• Development
• Human Resources

Revenues

Revenues in Q1 were US$114,632, representing 289.138453 ETH earned from Digital Asset Array (DAA) fees. Q1 revenues were lower than in Q4 2017 due to the market correction and the fact that no performance fees were collected because we did not sell any CCP positions.

Expenditures

Expenditures in Q1 totalled $945,348. The three biggest expenditures were:

• Salaries: $454,405
• Services: $181,580
• Traveling, marketing, PR: $160,357

Columbus Capital Pinta (CCP) Transactions

On March 31, the assets under management for CCP totaled US$66,996,045 (a 54% decrease compared to Q4 2017). During Q1, CCP invested 4,300 ETH into Futourist and two other projects that we will disclose in the near future. CCP also invested $397,500 in 265,000 ICN. A more detailed report will be published by Columbus Capital.

Repayment Program and Treasury Management

We continued our repayment program by buying and burning 578,711 ICN tokens using 1,342.61 ETH. The total amount of ICN tokens outstanding at the end of the quarter is thus 99,157,321. The token burn smart contract can be viewed here.

Note: Do not send tokens to this address. Tokens sent to this address are permanently locked in the smart contract and cannot be recovered.

In Q2 2018 we are continuing with our repayment program using revenues generated in Q1, which amounted to US$114,632, or 289.138453 ETH.

Our treasury increased by 265,000 ICN due to a significant difference between our book value and ICN market value. Our treasury management will remain active in the future.

Continue reading for a detailed breakdown of Q1 activities by department.

Legal

We started the year in full force, mainly focusing on the regulatory and compliance aspects of the ICONOMI platform. We pursued existing contacts and established new ones with financial market regulators in the EU. There has been significant progress with some of them, but it is too early to disclose more information.

A large part of our focus was also on other areas, mainly human resources and entering new markets. With regard to the latter, we are always monitoring global trends and developments, either directly or through our partners. We strive to provide our services in as many markets as possible.

Highlights

• Malta

As has been previously disclosed to the community, we have been present in Malta since August 2017 and registered a company there in November 2017. What caught our interest was Malta’s track record of adopting and promoting regulatory frameworks for innovative and emerging sectors such as e-gaming, maritime, and financial services.

• Building Relationships

Over the past months, we have established solid working relationships with authorities and regulators with the objective of explaining the business and legal components of the ICONOMI platform and contributing to discussions of interest in the emerging international fintech community. We believe that a robust regulatory framework can only be developed through open discussion and informed flows of information between regulators and operators. This is essential to the establishment of trusted and future-proof regulatory frameworks, which is the stated objective of the Malta authorities.

• Designing a Regulatory Framework

We have been particularly proactive in providing expert feedback on issues relating to the preparation of a legal framework for fintech businesses connected to digital assets in Malta.

This includes consultation on the “Proposed Regulation of Collective Investment Schemes investing in Virtual Currencies” in November 2017; the “Discussion Paper on Initial Coin Offerings, Virtual Currencies and Related Service Providers” in January 2018; the “Virtual Finances Act” in March; and the “Consultation Document on the Framework for the Certification of Distributed Ledger Technology Platforms and Related Service Providers,” also published in March.

We are optimistic that our ongoing technical discussions with Maltese authorities will contribute to a framework that can bring the ICONOMI platform to full regulation.

• Fiat Ramp-Up

The fiat ramp-up service will be a plug-in for our platform and will be offered to the first group of customers in Q2. We made huge progress in this area in Q1 and opened accounts with multiple banks. It is crucial for the ramp-up service that we have strong, transparent relationships with banks because this significantly improves trust while also providing improved safety with regard to anti-money laundering and general compliance. We are also in the process of obtaining registration from a competent authority in the EU, which will allow us to offer the fiat ramp-up service—initially offered only for high-value transactions—to more of our users.

• Platform Compliance

As stated in our previous Financial Report, at the beginning of 2018, our legal team was joined by a dedicated compliance officer with an exemplary track record in his field.

With his help, KYC, AML, and CFT processes have been further developed. Our aim is to show that through knowledge of DLT technology and the application of proper legal principles, a resilient AML policy can be set up that mitigates risks to the furthest extent possible.

• Improving Corporate Governance

We have also been busy improving corporate governance in relation to the companies supporting the ICONOMI platform, all with the aim of providing best practices to this field, with future regulation and compliance in mind.

Focus for Q2 2018

GDPR Compliance in Final Stages: On May 25, 2018, the General Data Protection Regulation (GDPR) comes into force in the EU. We are concluding an overhaul of our Privacy Policy and supporting systems on the platform to achieve full compliance.

Regulation of the ICONOMI Platform: We are happy with the progress we have made in this area, which pushes the ICONOMI platform closer to regulation in the field of digital assets and digital asset management. We will focus heavily on Malta and continue to build on the progress we have made there. At the same time, we are watching other jurisdictions that are showing interest in regulating this field. The progress we made in Q1 and prior has given us a very solid base to continue building on.

Customer Support

We used the beginning of Q1 to review all existing articles in our Knowledge Base, optimizing existing ones as well as adding new ones that will help our users find answers to their questions. In Q1 alone, our users made more than 45,000 searches in our Knowledge Base, and our support team solved more than 3,000 support requests.

Highlights

• The ICONOMI Android app has been upgraded, and you can now verify for Tier 1 directly from the app!
• Users experiencing difficulties with the Tier 1 verification process will find helpful tips and pointers in our Knowledge Base.

• Support for fourteen new countries for Tier 2 verification was added in Q1: Angola, Australia, Bolivia, Dominican Republic, Honduras, India, Indonesia, Malaysia, Namibia, Pakistan, Philippines, Senegal, Taiwan, and Thailand.

Common Questions

• Similar to Q4 2017, the most common questions we received in Q1 concerned lost two-factor authentication details, DAA manager applications, and verification issues.
• The most-read articles in our Knowledge Base include: How can I make a deposit to my account?, What is ICONOMI and how does it work?, and Interested in becoming a DAA Manager?

Focus for Q2 2018

One of our main focuses for Q2 will be complying with EU data protection laws and the GDPR in relation to our Zendesk support service. We will also be preparing content and processes for the upcoming fiat ramp-up and related topics.

We onboarded new support team members in Q1 and will continue to do so in Q2, ensuring the support team scales with the user base. We will also be further updating our Knowledge Base, automating solutions for the most common support requests, and optimizing the process of solving tickets.

DAA Managers

We started the quarter with 18 DAAs and onboarded 8 new ones by the end of the quarter. Four new countries were added to our DAA manager map, and we now have 26 DAA managers from 16 different countries.

Because of the bear market, some of our candidates decided to wait for more favorable market conditions to create their DAAs. As a result, we have a significant number of DAA managers who we expect to onboard in the near future.

Highlights

• Since we expect a lot of interest in DAA creation during the next bull run, we have been optimizing the onboarding process and the background checks we perform for each of our DAA managers.
• To meet the demand and make sure our DAA managers have our support at any given time, we also welcomed two new employees to our department.
• We took over the DAA creation process and part of the rebalancing process to make sure our developers can focus on developing the platform.
• We organized Meet The Managers events in Vienna and London. These events help our DAA managers promote their DAAs and establish new connections in both the crypto-economy and the traditional economy.

Focus for Q2 2018

Moving forward, we will continue interviewing prospective DAA managers and adding them to our platform. In addition, we will be lowering the minimum seed amount required for creating DAAs, and we will be introducing fees payable in ICN tokens. To make DAA management even more convenient, in Q2 we will be introducing an interface for DAA structure rebalancing.

We will continue to organize Meet The Managers events and strive to make them even better. In Q2, we plan to host our first Meet the Managers events in Asia, where we hope to meet with potential DAA managers and investors.

Marketing and Communications

We expect marketing activities to increase in the coming quarters due to platform development, new feature launches, and our website redesign, which will begin in Q3. Our marketing and communications team recently attended sessions with a specialized agency to continue developing ICONOMI’s marketing and branding strategy. While this is an ongoing process, we are laying the foundation for long-term functional and sustainable marketing activities. With a clear marketing strategy and a well-defined roadmap in line with our business strategy, we will achieve even better results.

Highlights

• The new events page we released in Q1 makes it easy to keep up with all past and upcoming events hosted by ICONOMI. Read our Vienna, London, and Madrid event reports for a sense of what to expect from upcoming events.
• We are working closely with our development team and our DAA department to cater to our users and DAA managers and to deliver new features (user experience improvements) on a regular basis.
• We introduced Weekly Updates and redesigned Monthly Reports. Our Weekly Updates on Medium have been very well received by the community and are a great way to stay informed about ICONOMI developments and the latest industry buzz.
• Our most viewed blog post in Q1 was New Digital Assets on the Block: Starting 2018 with Five New Digital Assets. Our Q4 2017 Financial Report received the most fans, and the most read interview in our DAA Manager Insights series was with William Mougayar, who has been described as the most sophisticated blockchain business thinker.

• In the past three months, our Twitter account reached 43.5 million tweet impressions and gained 9,045 new followers. We are very close to achieving the 50k Twitter followers milestone, for which we are planning a small giveaway — so stay tuned!
• Even though the crypto market faltered in Q1, we appeared in more than 78 articles. We are working diligently with our PR agency to prepare and execute planned publicity, releasing communications in leading business, financial, and cryptocurrency publications around the world.
• We successfully migrated from Slack to Rocket.Chat. Ten DAA managers from eight different DAAs have signed up so far. To join the conversation, visit our channel!

Focus for Q2 2018

• In Q2 2018, we will continue to leverage ICONOMI’s brand to introduce our platform to new users. Collaboration with our DAA managers is essential to spreading the ICONOMI brand.
• Together with our DAA department, we will organize more DAA manager events to connect industry experts, influencers, and anyone interested in learning more about digital asset management and the crypto-economy.
• We will review existing content and produce new content targeted toward different segments to introduce ICONOMI to an even wider audience.
• We will move toward more structured and consistent daily activity in our primary social channels.

Development

During Q1, we spent a lot of time on back-office improvements, which are aspects of the platform that are not visible publicly but enable us to work better operationally and decrease dependence on developers for some operational tasks.

In March, we published our first Development Overview for Q1 2018. These quarterly overviews provide more fine-grained insight on our progress on the goals we laid out in our ICONOMI in 2018 blog post.

Highlights

• One of our main focuses in Q1 was preparing for the blockchain audit conducted by Deloitte. View the results or read our technical overview of the process. The blockchain audit was conducted on April 5, 2018.
• We launched several minor feature upgrades, such as additional DAA metrics (volatility, maximum drawdown, and return, including all-time return).
• To make it easy to track vital DAA statistics, we published a one-page DAA list section on our website.
• For DAA managers, we enabled exportable reports, and implemented separate 2FA for withdrawals, as planned in our Q4 2017 Financial Report.
• We added support for 14 new countries for Tier 2 verification and implemented the ability to verify for Tier 1 directly from the ICONOMI Android app.

Focus for Q2 2018

Q2 will be focused on more big-ticket items, including delivering the fiat ramp-up for all users and releasing the first version of our API. Fees payable in ICN will also be implemented, as planned. We will also be adding support for more tokens and continuing to enhance our state-of-the-art cold storage system.

Human Resources

We believe the business success of ICONOMI lies in the hands of our most important resource: our employees. This is why ICONOMI rapidly expanded during Q1 2018, as in the last quarter of 2017.

Highlights

• Expanding Team, with an Emphasis on Growing Our Development Team

We onboarded 11 new ICONOMI team members overall: 7 in the development department, 2 in the DAA manager department, and 2 in customer support. Most newcomers are senior-level in their fields (such as software architects and senior developers) with 10+ years of professional experience in an international business environment. We have no doubt they will inspire us as well as build our internal business environment, co-create future strategy, and have a crucial impact on ICONOMI’s future business performance and success.

• Building Group Cohesiveness

When a company is growing, structural and tangible changes occur, but also intangible changes, which are difficult to describe and even more difficult to control or manage. Internal culture is at the top of this fuzzy, qualitative list. Peter Drucker once famously said: “Culture eats strategy for breakfast.” The impact of organizational culture on business success is vital and must not be overlooked.

Keeping this in mind, we take to heart the fact that the quantity and brilliance of our team members alone cannot be sufficient to achieve our ambitious business plans. This is why we have started to systematically focus on building internal cohesion and encouraging team spirit. So far, we have implemented this through events with different focuses, from less formal events like having lunch and dinner together and various outdoor activities (hiking, sledding, etc.) to more formal events like strategic marketing workshops.

Focus for Q2 2018

We will continue focusing our efforts on strengthening cohesiveness and nurturing our internal culture through different activities. Of course, this is a long-term process. Building on leadership competences and bringing out an awareness of our common core values and the impact they have on our everyday organizational life and business success will be the mainstays of our HR department.

Past quarterly reports are always available in the Financial Reports section of our Medium blog.

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