5. Equipment

Equipment as of September 30, 2017 consisted of the following:

6. Other Assets

Pursuant to a Note Purchase Agreement dated as of March 27, 2017 by and between the Company and Rimrock Gold Corp, (“Rimrock”), the Company agreed to fund up to $300,000 to settle outstanding convertible debt of and accounts payable by and on behalf of Rimrock and to pay certain ongoing accounting expenses, for the ultimate acquisition of Rimrock, a public company located in Las Vegas, Nevada with limited operations. The Company expects to consummate the acquisition in 2018 and does not currently have plans for future operations of Rimrock. No definitive agreements have been entered into and no assurance can be given that we will successfully complete and close the proposed acquisition or business combination. For the period from Inception to September 30, 2017, the Company advanced $108,250 on behalf of Rimrock to settle the aforementioned liabilities.

7. Common Stock

For the period from Inception through June 6, 2017, Crypto Sub issued 477,867 shares of common stock of Crypto Sub for aggregate proceeds of $2,661,036, net of financing costs, of capital, to fund its operations. On March 9, 2017, Crypto Sub issued (i) 125,000 shares of its common stock in exchange for consulting services, valued at $200,000, and (ii) 125,000 shares of its common stock for investments in cryptocurrency, valued at $100,000. The shares were issued in a transaction that was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder inasmuch as the securities were offered and sold solely to accredited investors and Crypto Sub did not engage in any form of general solicitation or general advertising in making the offering.

On June 7,January 16, 2018, pursuant to an Equity Purchase Agreement (the “CoinTracking Purchase Agreement”) entered into on December 22, 2017, Crypto Sub’s shareholders receivedby and among the Company, CoinTracking, Kachel Holding GmbH, an aggregateentity formed under the laws of the Republic of Germany (“Kachel Holding”), and Dario Kachel, an individual, CoinTracking purchased from Kachel Holding 12,525 shares of CoinTracking GmbH, an entity formed under the laws of Germany (“CoinTracking GmbH”), representing 50.1% of the equity interests in CoinTracking GmbH, for a purchase price of (i) 10,918,007 shares of common stock of Croe$4,736,400 in connection with the Stock Dividend issued by Crypto Sub,cash, and (ii) 7,026,614 shares of common stock of Croe in exchange for all of the outstanding shares of common stock of Crypto Sub (noted above) in connection with the Share Exchange. As part of the Transaction, Crypto Sub retained 316,993 shares of common stock of its parent company, Croe.

On June 13, 2017, the Company issued to four accredited investors an aggregate of 47,500473,640 shares of common stock of the Company, atpar value $0.001 per share, subject to adjustment as provided in the CoinTracking Purchase Agreement (the “CoinTracking Acquisition”). The CoinTracking Acquisition was consummated on January 26, 2018.

On December 28, 2018, CoinTracking agreed on the purchase and assignment of shares, agreements on a purchase price of $2.00 per sharethe loan agreement and a compensation agreement, with Kachel Holding and CoinTracking GmbH pursuant to which, on January 2, 2019, CoinTracking sold 12,525 shares of equity interest in CoinTracking GmbH, representing 50.1% of the outstanding equity interests in CoinTracking GmbH and CoinTracking’s entire equity ownership stake in CoinTracking GmbH, to Kachel Holding in exchange for aggregate proceeds$2,200,000, of $95,000.which (i) $1,000,000 was paid in cash to CoinTracking and (ii) $1,200,000 was applied toward the repayment of an outstanding loan of $1,500,000 from CoinTracking GmbH to CoinTracking under the CoinTracking Note (the “CoinTracking Disposition”).

In 2019, the Company had holdings of cryptocurrency from its investment segment, and therefore has classified those assets as assets held for sale in its consolidated balance sheets, and reports current operating results as discontinued operations in the consolidated statements of operations for the year ended December 31, 2019. The balance of cryptocurrency assets on our balance sheet as of March 31, 2020, and December 31, 2019, was zero.

NOTE 5 – NOTE PAYABLE

In 2018, CoinTracking entered into a Loan Agreement (the “Loan Agreement”) with CoinTracking GmbH, which provided for total borrowings of up to $3,000,000. During 2018, CoinTracking borrowed $1,500,000 in exchange for three promissory notes (the “CoinTracking Note”) in the amounts of $300,000, $700,000 and $500,000, respectively. On June 14, 2017, Crypto Sub transferredDecember 31, 2018, the CoinTracking Note was still outstanding. On January 2, 2019, the Company sold its equity ownership stake in CoinTracking GmbH, and $1,200,000 of the sales proceeds were applied toward repayment of the $1,500,000 outstanding loan amount under the CoinTracking Note. The remaining balance of $300,000 is outstanding as of March 31, 2020, with a due date of March 31, 2021. The Note bears interest at 3%, which is payable quarterly, in arrears for additional information.

Interest expense was $26,752 and $2,290 for the three months ended March 31, 2020, and March 31, 2019, respectively.

NOTE 6 – CONVERTIBLE NOTES

In February 2020, the Company issued three Convertible Notes (“Notes”) to three accredited investors for an aggregate amount of 129,238$22,500. The Notes mature on February 2025, unless earlier converted. The Notes bear interest at a rate of 5% per year. The Notes will automatically convert into shares of common stock on the earlier to occur of its parent company Croe, helda) a qualified equity financing, with the conversion price equal to 50% of the common stock price paid by Crypto Sub,the purchasers of the equity, or b) on the maturity date, at a price per share equal to certain officersthe fair market value of the Company’s common stock on that date. If a change in control occurs before either of the automatic conversion events, the holders of the Notes will have the option to convert the Notes at a price per share equal to the fair market value of the common stock at the time of such conversion. The Company can prepay the principal and consultants of Crypto Subinterest, in exchange for their servicescash, at any time without any premium or penalty. The Notes have no voting rights, do not participate in dividends, and are unsecured. The Company believes it is more likely than not that the Notes will not be automatically converted in connection with the Transaction. Accordingly,a qualified equity financing prior to either prepayment or automatic conversion on maturity.

On September 23, 2019, the Company recordedissued two Convertible Notes (“Notes”) to two accredited investors for an expenseaggregate amount of $166,717 based$75,000, of which $50,000 was funded after March 31, 2020. The Notes mature on September 23, 2024, unless earlier converted. The Notes bear interest at a rate of 5% per year. The Notes will automatically convert into shares of common stock on the earlier to occur of a) a qualified equity financing, with the conversion price equal to 50% of the common stock price paid by the purchasers of the equity, or b) on the maturity date, at a price per share equal to the fair market value of the Company’s common stock on that date. If a change in control occurs before either of the automatic conversion events, the holders of the Notes will have the option to convert the Notes at a price per share equal to the fair market value of the common stock at the time of such conversion. The Company can prepay the principal and interest, in cash, at any time without any premium or penalty. The Notes have no voting rights, do not participate in dividends, and are unsecured. The Company believes it is more likely than not that the Notes will not be automatically converted in connection with a qualified equity financing prior to either prepayment or automatic conversion on maturity.

The Company reviewed ASC 815 – Derivatives and Hedging, to determine if the embedded feature in the Notes, specifically the equity conversion feature, should be accounted for as a derivative instrument. The Company considered whether the Notes included net settlement, either explicitly by the terms of the Notes or by other means, such as through the resale of the shares obtained on conversion in the public markets. The Company determined that the Notes do not contain a net settlement option. Also, conversion to cash through the public markets is unlikely, as only 3% of the Company’s outstanding shares are in public float, and the Company’s shares are listed on the OTC grey market, resulting in limited trades of insignificant volume. The Company cannot determine when, or if, its shares will be listed on an active exchange, and if shares available to trade will increase.

In connection with the Notes, the Company issued 75,000 warrants to purchase the Company’s common stock at a warrant price of $0.01 per share. The warrants expire in three years. The Company determined the fair value of the shares onwarrants utilizing the measurement date.

AsBlack-Scholes model, resulting in an expense of September 30, 2017, Crypto Sub retained 187,755 shares$22,500, included in interest expense in the company’s consolidated statements of common stock of its parent company Croe, at a historical cost of $8,473, which has been eliminated in consolidation.

On September 8, 2017,operations for the Company issued to eleven accredited investors an aggregate of 437,488 shares of common stock of the Company at a price of $2.00 per share for aggregate proceeds of $874,975.

On September 20, 2017, the Company issued to two accredited investors an aggregate of 62,500 shares of common stock of the Company at a price of $2.00 per share, payable in digital currency equal to aggregate proceeds of approximately $125,000.

On September 25, 2017, the Company issued to nine accredited investors (i) an aggregate of 672,500 shares of common stock of the Company at a price of $2.00 per share, and (ii) three-year warrants to purchase an aggregate of 168,125 shares of common stock of the Company at an exercise price of $2.00 per share, for aggregate proceeds of $1,345,000.

The shares issued on September 8, 2017, September 20, 2017 and September 25, 2017 were issued in transactions that were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder inasmuch as the securities were offered and sold solely to accredited investors and the Company did not engage in any form of general solicitation or general advertising in making the offering.three months ended March 31, 2020.

Warrants for Common StockNOTE 7 – WARRANTS FOR COMMON STOCK

As of September 30, 2017,March 31, 2020, outstanding warrants to purchase shares of the Company’s common stock were as follows:

The warrants issued in 2017 expire on the third anniversary of their respective issuance dates. The exercise price of the warrants is subject to adjustment from time to time, as provided therein, to prevent dilution of purchase rights granted thereunder. The warrants are considered indexed to the Company’s own stock and therefore no subsequent remeasurement is required.

8. Summary of Stock OptionsNOTE 8 - SUMMARY OF STOCK OPTIONS

On July 21, 2017, the Company’s board of directors adopted theThe Crypto Company 2017 Equity Incentive Plan (the “Plan)“Plan”), which was approved by its stockholders on August 24, 2017. The Plan is administered by the board of directors (the “Administrator”). Under the Plan, the Company may grant equity awards to eligible participants which may take the form of stock options (both incentive stock options and non-qualified stock options) and restricted stock awards. Awards may be granted to officers, employees, nonemployeenon-employee directors (as defined in the Plan) and other key persons (including consultants and prospective employees). The term of any stock option award may not exceed 10 years and may be subject to vesting conditions, as determined by the Administrator. Options granted generally vest over eighteen to thirty-six months. Incentive stock options may be granted only to employees of the Company or any subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Internal Revenue Code.

During the three months ended March 31, 2020, the Company did not issue any options.

5,000,000 shares of the Company’s common stock are reserved for issuance under the Plan. As of September 30, 2017,the period ended March 31, 2020, there are no outstanding stock option awards issued from the Plan covering a total of 887,512and there remains reserved for future awards 5,000,000 shares of the Company’s common stockstock.

The Company recognized a reduction in expense of $0 and there remain reserved$$-0- for future awards 4,112,488 shares of the Company’s common stock. The weighted average exercise price of the outstandingshare-based compensation related to stock options is $1.38 per share,for the three months ended March 31, 2020, respectively. See “Note 15 – Discontinued Operations” for share-based compensation related to our former cryptocurrency investment segment and CoinTracking GmbH for the remaining contractual term is 9.7 years.three months ended March 31, 2019.

Activity underThere were no options exercised for the Plan is as follows:three months ended March 31, 2020.

The aggregate intrinsic value reflectsCompany did not grant any restricted stock awards during the difference between the exercise price of the underlying stock optionsthree months ended March 31, 2020, and the Company’s closing share price as of September 30, 2017.2019, respectively.

As of September 30, 2017, the Company had not granted any restrictedMarch 31, 2020, there was $0 of unrecognized compensation costs related to stock awards.options issued to employees and nonemployees.

9. CommitmentsThe determination of the fair value of share-based compensation awards utilizing the Black-Scholes model is affected by the Company’s stock price and Contingenciesa number of complex and subjective assumptions, including stock price, volatility, expected life of the equity award, forfeitures rates if any, risk-free interest rates and expected dividends. Volatility is based on the historical volatility of comparable companies measured over the most recent period, generally commensurate with the expected life of the Company’s stock options, adjusted for future expectations given the Company’s limited historical share price data.

Operating leaseThe range of assumptions used for the three months ended March 31, 2020, are as follows:

NOTE 9 - RELATED PARTY TRANSACTIONS

The Company previously had a services agreement with Full Stack Finance for chief financial officer and accounting outsource services. Ivan Ivankovich, the Company’s CFO until he resigned effective December 6, 2019, is the Co-Managing Director of Full Stack Finance. The Company did not incur expenses in the current year. As of March 31, 2020, and December 31, 2019, there was a balance due to Full Stack Finance of $78,130 and $133,834, respectively, which is included in accounts payable and accrued expenses on the accompanying consolidated balance sheets.

On April 3, 2018, CoinTracking entered into a Loan Agreement (the “Loan Agreement”) with CoinTracking GmbH, pursuant to which CoinTracking GmbH was to provide a loan (the “CoinTracking Loan”) of up to $3,000,000 to CoinTracking, to be advanced to CoinTracking in one or more tranches, at such times and in such amounts as requested by CoinTracking from time to time, on or before the tenth anniversary of the Loan Agreement. The Company was deemed obligor of CoinTracking’s obligations under the Loan Agreement for United States Federal income tax purposes. Interest on the CoinTracking Loan accrued at a rate per annum of the greater of (i) three percent (3%), or (ii) the interest rates published monthly by the United States Internal Revenue Service and in effect under section 1274(d) of the Internal Revenue Code in effect as of the date of issuance of any promissory note under the CoinTracking Loan, and payable quarterly. During the year ended December 31, 2018, pursuant to the Loan Agreement, CoinTracking GmbH advanced $1,500,000 to CoinTracking in exchange for three promissory notes (the “CoinTracking Note”) in the amounts of $300,000, $700,000 and $500,000, respectively, which were still outstanding as of December 31, 2018. CoinTracking and CoinTracking GmbH are consolidated entities, as such, the loan and advances are intercompany transactions and are eliminated in consolidation. On January 2, 2019, the Company sold its equity ownership stake in CoinTracking GmbH, and $1,200,000 of the sale proceeds were applied toward repayment of the $1,500,000 outstanding loan amount under the CoinTracking Note, leaving a remaining balance of $300,000. See “Note 5 – Note Payable” for additional details.

Effective May 15, 2017,14, 2018, Michael Poutre, former Chief Executive Officer and director of the Company resigned from all of his then-current roles with the Company. Mr. Poutre remained a consultant until November 2018. In connection with Mr. Poutre’s resignation, the Company entered into a lease agreement with Gregory Hannley or Soba Living, LLC for the rental of office space. The agreement,Separation and Consulting Agreement and General Mutual Release (the “Separation and Consulting Agreement”), which had a term of three months is a month to month lease, provides for monthly rent of $6,000, and commencedwas executed on May 15, 2017.

Effective June 7, 2017,9, 2018, and approved by the Board of Directors on May 14, 2018. The Separation and Consulting Agreement was not effective until May 17, 2018, following the end of the revocation period. The Separation and Consulting Agreement provided that the Company terminated the sublease agreement between Croe, Inc.pay Mr. Poutre a lump-sum cash payment of (i) his earned but unpaid base salary, (ii) his accrued but unpaid vacation time, and Acadia Properties(iii) any outstanding requests for the subleaseexpense reimbursements that are approved pursuant to Company policy. Mr. Poutre served as a consultant of office space in Draper, Utah.

Legal

From time to time, the Company may become subject to legal proceedings, claims,for six months at a rate of $30,000 per month, payable in two separate tranches. The Separation and litigation arisingConsulting Agreement contained other standard provisions contained in the ordinary courseagreements of business. The Company is not currentlythis nature including non-disparagement and a party togeneral release of any material legal proceedings, nor isand all claims. During 2018, the Company awarepaid Mr. Poutre $90,000 of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows, or financial condition should such litigation be resolved unfavorably.

Indemnities and guarantees

During the normal course of business, the Company has made certain indemnities and guarantees under which it may be required to make payments$180,000 due in relation to certain transactions. These indemnities include certain agreements with the Company’s officers and directors, under which the Company may be required to indemnify such persons for liabilities arising out of their respective relationships. In connection with its facility lease, the Company has indemnified the lessor for certain claims arising from the use of the facility. The duration of these indemnitieshis Separation and guarantees varies and, in certain cases, is indefinite. The majority of these indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make significant payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheet.

10. Related Party TransactionsConsulting Agreement.

On March 9, 2017, Crypto Sub issued 125,000January 15, 2019, the Company entered into a settlement agreement with Mr. Poutre, whereby the Company agreed to pay Mr. Poutre $40,000 as settlement of all amounts outstanding in connection with his Separation and Consulting Agreement

NOTE 10 – DISCONTINUED OPERATIONS

On December 28, 2018, the Company entered into the Agreement with Kachel Holding and CoinTracking GmbH to sell its controlling interest in CoinTracking GmbH. CoinTracking GmbH was acquired by the Company on January 26, 2018. On January 2, 2019, pursuant to the Agreement, the Company sold 12,525 shares of common stockequity interest in CoinTracking GmbH, representing 50.1% of Crypto Subthe equity interests in CoinTracking GmbH and 100% of CoinTracking’s holdings in CoinTracking GmbH, to an employee of Crypto Sub,Kachel Holding in exchange for $2,200,000, of which (i) $1,000,000 was paid in cash to CoinTracking and (ii) $1,200,000 was applied toward the repayment of an initial investment madeoutstanding loan in the formamount of cryptocurrency, valued at $100,000, based on$1,500,000 from CoinTracking GmbH to CoinTracking under the fair value of the investment on the date of such investment. On June 7, 2017, the employee received (i) 1,875,000 shares of common stock of Croe in connection with the Stock Dividend issued by Crypto Sub, and (ii) 1,125,000 shares of common stock of Croe in exchange for all of the employee’s shares of Crypto Sub in connection with the Share Exchange.CoinTracking Note.

On March 9, 2017, Crypto Sub issued 300,000 shares of common stock of Crypto Sub to James Gilbert, the President of theThe Company retained no ownership in exchange for $200,000. On June 7, 2017, Mr. Gilbert received (i) 4,500,000 shares of common stock of Croe in connectionCoinTracking GmbH and has no continuing involvement with the Stock Dividend issued by Crypto Sub, and (ii) 2,700,000 shares of common stock of Croe in exchange for all of his shares of Crypto Sub in connection with the Share Exchange.

On March 9, 2017, Crypto Sub issued (i) 125,000 shares of common stock of Crypto Sub to Redwood Fund LP (“Redwood”) in exchange for $200,000; and (ii) 125,000 shares of common stock of Crypto Sub to Imperial Strategies, LLC (“Imperial Strategies”) in exchange for certain services rendered, valued at $200,000,CoinTracking as of the date of such issuance. Michael Poutre, the Chief Executive Officersale.

A reconciliation of the Company, and Ron Levy, the Chief Operating Officeroperations of the Company, are Chief Executive Officercryptocurrency investment segment and Chief Operating Officer, respectively,CoinTracking GmbH to the consolidated statements of Ladyface Capital, LLC, the General Partner of Redwood, and, as a result, had an indirect material interestoperations is shown below:

Included in the shares owned by Redwood. Mr. Poutrenet income for the three months ended March 31, 2020, and March 31, 2019, is $-0- and $14,166 respectively, from the sole member of MP2 Ventures,cryptocurrency investment segment.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

The Company rents, on a month to month basis, for $344 per month its corporate office from Regus Management Group, LLC, a member of Imperial Strategies,located at 22809 Pacific Coast Highway, Malibu, CA 90265. Facility rent expense was $837 for the three months ended March 31, 2020, and as of September 1, 2017, Mr. Poutre and Mr. Levy are Chief Executive Officer and Chief Operating Officer, respectively of Imperial Strategies and, as a result, have an indirect material interest in$1,501 for the shares owned by Imperial Strategies. three months ended March 31, 2019, respectively.

NOTE 12 – SUBSEQUENT EVENTS

On June 7, 2017, each of Redwood and Imperial StrategiesApril 28, 2020, the Company received (i) 1,875,000 shares of common stock of Croe$22,500 in connection with the Stock Dividend issued by Crypto Sub, and (ii) 1,125,000 shares of common stock of Croe in exchange for all of their shares of Crypto Sub in connection with the Share Exchange.

As of September 30, 2017, the Company pre-paid consulting fees of $60,000 reflected in prepaid expenses to MP2 Ventures, LLC, of which Michael Poutre, the Chief Executive Officer of the Company, is the sole member, for his services rendered as Chief Executive Officer.

11. Subsequent Eventsits Notes.

On October 3, 2017, the Company filed Articles of Conversion with the Utah Secretary of State and the Nevada Secretary of State to effectively change its state of Incorporation to Nevada, and filed Articles of Incorporation with the Nevada Secretary of State to change its name toMay 8, 2020, The Crypto Company.Company (the “Company”) entered into a promissory note (the “Promissory Note”) with First Bank, a Missouri banking corporation, which provides for a loan of $53,492 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The ArticlesPPP Loan has a two-year term and bears interest at a rate of Incorporation authorize1.0% per annum. Monthly principal and interest payments are deferred for six months after the issuancedate of 50,000,000 sharesdisbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains events of common stock, par value $0.001 per share,default and no sharesother provisions customary for a loan of preferred stock.this type.

On OctoberJune 10, 2020, the Registrant received a loan from the Small Business Administration of $12,100 (the “SBA Loan”). The SBA Loan bears interest at 3.75% per annum and is payable over 30 2017,years with all payments of principal and interest deferred for the Company’s Board of Directors approved the grant, to a consultant, of an option to purchase 25,000 shares of common stock at a price of $2.00 per share, subject to vesting, pursuant to the Company’s 2017 Equity Incentive Plan.

On November 6, 2017, the Company’s Board of Directors approved the grant, to a consultant, of an option to purchase 25,000 shares of common stock at a price of $6.00 per share, subject to vesting, pursuant to the Company’s 2017 Equity Incentive Plan.

There were no other events subsequent to September 30, 2017 through the date of this filing, other than those described in these financial statements and in the Current Reports on Form 8-K filed by the Company with the Securities and Exchange Commission from time to time, that would require disclosure in these financial statements.

first 12 months.

ItemITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and with our audited consolidated financial statements, including the notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 8-K/AAnnual Report on Form 10-K for the period from inception, March 9, 2017, through June 7, 2017,fiscal year ended December 31, 2019 (the “2019 Annual Report”), as filed with the U.S. Securities and Exchange Commission on August 25, 2017.(“SEC”). In addition to historical condensed consolidated financial information, the following discussion containsand analysis contain forward-looking statements that reflect our plans, estimates, and beliefs.beliefs and involve risks and uncertainties. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan” and similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from those discussedanticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report, particularlyas well as risks referenced in our other filings with the SEC, including Part II,I, Item 1A. “Risk Factors.”Factors” of the 2019 Annual Report.

Overview of Our Business

In the discussion below, when we use the terms “we”, “us” and “our”, we are referring to The Crypto Company and its wholly-owned subsidiary, Crypto Sub, Inc.

We are engaged in the business of advising regarding, investing in, tradingproviding consulting services and developing proprietary source codeeducation for distributed ledger technologies (“blockchain”), for the managementbuilding of digital assets. Our core services includetechnological infrastructure and enterprise blockchain technology solutions. We currently generate revenues and incur expenses solely through these consulting operations. We have disposed of our entire ownership interest in CoinTracking GmbH and advice to companies regarding investment and trading in the digital asset market. We also invest in technologies and tokens in a manner that diversifies exposure to the growing class of digital assets.

From time to time, we may seek strategic acquisitions either by integrating third party teams and technology with our core business or by funding third party teams in which we may have interest.

Technology

We are developing proprietary technology, including trading management and auditing software, tools and processes, to assist both our own operations and traditional companies, from start-up businesses to well-established companies. We may consider using our technology to build additional units around our existing platform, or selling or licensing our technology to third party institutions for a fee.

Consulting

We offer various consulting services to a variety of clients, including the following:

Media and Ongoing Education

We will engage in public discourse on an ongoing basis and regularly host roundtable webinars to educate the public about the cryptocurrency market. We intend to distribute a monthly newsletter and actively engage in social media, speaking and panel events and other opportunities to educate and work with the public and with government regulators.

Recent Events

The Crypto Company (the “Company”, “Crypto” or “Croe”) was incorporated in the State of Utah on December 2, 2013 under the name Croe, Inc. On October 3, 2017, the Company filed Articles of Conversion with the Utah Secretary of State and the Nevada Secretary of State to effectively change its state of Incorporation to Nevada, and filed Articles of Incorporation with the Nevada Secretary of State to change its name to The Crypto Company.

On June 7, 2017 (the “Transaction Date”), as a result of the Stock Sale, the Stock Dividend and the Share Exchange, each as hereinafter described, (i) Crypto Sub, Inc., a Nevada corporation formerly known as The Crypto Company (“Crypto Sub”), became a wholly owned subsidiary of Croe; (ii)divested substantially all of theour cryptocurrency assets owned by our former shareholders of Crypto Sub became shareholders of Croe, on a pro-rata basis; and (iii) the operations of Croe solely consisted of the operations of Crypto Sub.

The Transaction was treated as a reverse acquisition of Croe, and Crypto Sub is treated as the acquirer, for financial accounting and reporting purposes, while Croe is treated as the acquired entity. As of the effective date of the Transaction, the acquired entity had no liabilities or obligations.

As a result of the Transaction, Crypto Sub and its parent company, The Crypto Company, shall collectively be referred to as (the “Company”, “we”, “our”, or “us”) herein.

Stock Sale

On June 7, 2017, the Company entered into (i) a Share Purchase Agreement (the “Restricted Share Purchase Agreement”) with Crypto Sub, and John B. Thomas P.C., in its sole capacity as representative for certain shareholders of the Company; and (ii) a Share Purchase Agreement (the “Free Trading Share Purchase Agreement”, and together with the Restricted Share Purchase Agreement, the “Share Purchase Agreements”) with Crypto Sub, Uptick Capital, LLC (“Uptick Capital”) and John B. Thomas P.C., in its sole capacity as representative for certain shareholders of the Company. Pursuant to the Share Purchase Agreements, the shareholders of the Company sold an aggregate of 11,235,000 shares of common stock of the Company to Crypto Sub and 100,000 shares of common stock of the Company to Uptick Capital, representing an aggregate of 100% of the issued and outstanding common stock of the Company as of such date, for aggregate proceeds of $411,650, including escrow and other transaction related fees equal to $1,525, to the selling shareholders (the “Stock Sale”). A portion of the acquisition cost equal to $399,300 is expensed as general and administrative expense in the accompanying statement ofcryptocurrency investment segment, which has ceased operations.

10,000,000 shares held by Deborah Thomas, the former Chief Executive Officer, principal accounting and financial officer and directorComparison of the Company, representing approximately 88.22% ofthree months ended March 31, 2020, and the outstanding common stock of the Company immediately prior to the Stock Sale, were sold at a price of $0.031 per share, and an aggregate of 1,335,000 shares held by the remaining shareholders of the Company were sold at a price of $0.075 per share.

In connection with the Stock Sale, effective as of June 7, 2017, (i) Deborah Thomas resigned as Chief Executive Officer, principal accounting officer and director of the Company and Elliott Polatoff resigned as Secretary and director of the Company; and (ii) Michael Poutre was appointed Chief Executive Officer and sole director of the Company, James Gilbert was appointed President of the Company and Ron Levy was appointed Chief Operating Officer of the Company.

three months March 31, 2019

Stock Dividend

On June 7, 2017, Crypto Sub issued to its shareholders a stock dividend (the “Stock Dividend”) of 10,918,007 shares of common stock of the Company acquired through the Stock Sale, distributed on a pro-rata basis, such that the shareholders of Crypto Sub received fifteen shares of common stock of the Company for each share of common stock of Crypto Sub held as of June 6, 2017.

Immediately following the consummation of the Stock Sale and the distribution of the Stock Dividend, Crypto Sub held 316,993 shares, representing 4.26% of the issued and outstanding shares of common stock of the Company, and the shareholders of Crypto Sub, collectively, held 10,918,007 shares, representing 94.40% of the issued and outstanding shares of common stock of the Company. The 316,993 shares held by Crypto Sub were retired in June 2017 with 129,238 shares issued to certain officers and consultants of Crypto Sub.

Revenue

Share Exchange

On June 7, 2017, the Company, entered into a Share Exchange Agreement (the “Exchange Agreement”) with Michael Poutre, in his sole capacity as representative for the shareholders of Crypto Sub, pursuant to which each issued and outstanding share of common stock of Crypto Sub was exchanged for shares of common stock of the Company (the “Share Exchange”), resulting in the aggregate issuance of 7,026,614 shares of common stock of the Company, on a pro-rata basis, as provided on the Exchange Agreement, to the shareholders of Crypto Sub, in exchange for 727,867 shares of common stock of Crypto Sub.

For the period from inception through June 6, 2017, Crypto Sub issued 477,867 shares of common stock of Crypto Sub for aggregate proceeds of $2,661,036, of capital, to fund its operations. On March 9, 2017, Crypto Sub issued 125,000 shares of common stock of Crypto Sub in exchange for consulting services, valued at $200,000. In addition, Crypto Sub issued another 125,000 shares of common stock of Crypto Sub on March 9, 2017 for investments in cryptocurrency, valued at $100,000. The shares were issued in a transaction that was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder inasmuch as the securities were offered and sold solely to accredited investors and Crypto Sub did not engage in any form of general solicitation or general advertising in making the offering.

On June 7, 2017, Crypto Sub’s shareholders received an aggregate of (i) 10,918,007 shares of common stock of the Company in connection with the Stock Dividend issued by Crypto Sub, and (ii) 7,026,614 shares of common stock of the Company in exchange for all of the outstanding shares of common stock of Crypto Sub (Noted Above) in connection with the Share Exchange. As part of the Transaction, Crypto Sub held 316,993 shares of common stock of its parent company, Croe.

On June 13, 2017, the Company issued to four accredited investors an aggregate of 47,500 shares of common stock of the Company at a purchase price of $2.00 per share for aggregate proceeds of $95,000.

On June 14, 2017, Crypto Sub transferred an aggregate of 129,238 shares of common stock of its parent company Croe, held by Crypto Sub to certain officers and consultants of Crypto Sub in exchange for their services in connection with the Transaction. Accordingly, the Company recorded an expense of $166,717 based on the fair value of the shares on the measurement date.

As of September 30, 2017, Crypto Sub retained 187,755 shares of common stock of its parent company Croe, at a historical cost of $8,473, which has been eliminated in consolidation.

On September 8, 2017, the Company issued to eleven accredited investors an aggregate of 437,488 shares of common stock of the Company at a price of $2.00 per share for aggregate proceeds of $874,975.

On September 20, 2017, the Company issued to two accredited investors an aggregate of 62,500 shares of common stock of the Company at a price of $2.00 per share, payable in digital currency equal to aggregate proceeds of approximately $125,000.

On September 25, 2017, the Company issued to nine accredited investors (i) an aggregate of 672,500 shares of common stock of the Company at a price of $2.00 per share, and (ii) three-year warrants to purchase an aggregate of 168,125 shares of common stock of the Company at an exercise price of $2.00 per share, for aggregate proceeds of $1,345,000.

The shares issued on September 8, 2017, September 20, 2017 and September 25, 2017 were issued in transactions that were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder inasmuch as the securities were offered and sold solely to accredited investors and the Company did not engage in any form of general solicitation or general advertising in making the offering.

Plan of Operation

As the digital currency industry continues to grow, management believes that companies in a wide range of businesses will increasingly adopt digital currencies as part of their business. As such, consumers, entrepreneurs and the general public will seek investment in the industry. Our mission is to provide investors with a diversified exposure to cryptocurrency markets. Our core areas of focus are as follows:

Results of Operations

Revenue

We recorded realized gains of $481,692Revenues for the three months ended September 30, 2017March 31, 2020, and $564,332March 31, 2019, were $2,500 and $3,975, respectively. Revenues consisted of fees received for the period from inception to September 30, 2017. Since the inception of Crypto in March 2017, the realizedblockchain training, consulting, and unrealized gains weresoftware development, primarily from our investment in cryptocurrency. We also recorded $6,000 of consulting revenue for the three months ended September 30, 2017 and for the period from inception to September 30, 2017. In addition to consulting, we continue to seek opportunities through educational services and our development of proprietary source code.a single customer.

General and administrative expenses and share-based compensation

For the three months ended September 30, 2017, we incurred $1,688,941March 31, 2020, our general and administrative expenses were $112,092, a decrease of 68.3% compared to $353,618 for the period ended March 31, 2019. General and administrative expenses consist primarily of costs relating to professional services, payroll, and payroll-related expenses, and depreciation and amortization expenses. Professional services included in general and administrative expenses which primarily consisted of costs relating to the Transaction totaling $399,300, professional fees totaling $552,728, and share-based compensation expense valued at $1,083,224 in exchange for services relating to the development of cryptocurrency operations, which Crypto commenced in March 2017, in addition to marketing costs and staff salaries related to such development.

Professional services included in the general and administrative expenses consistedconsist primarily of contracting fees, consulting fees, and accounting fees, and legal costs. These fees are associated with the initial start-up costs to further our source code development, consulting and advising, and educational developments.

Net unrealized appreciation/depreciation on investment

We recorded an unrealized depreciation of $303,805 on our investment in cryptocurrencyfees. Management has significantly reduced all expenses for the three months ended September 30, 2017. ForMarch 31, 2020, in particular, payroll and payroll-related expenses and contracting and consulting fees until it can generate significant revenues from its consulting businesses.

Liquidity, Going Concern and Capital Resources

The Company’s consolidated financial statements are prepared using the period from inceptionaccrual method of accounting in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has incurred significant losses and experienced negative cash flows since inception. As of March 31, 2020, the Company had cash of $5,728, compared to September 30, 2017, we recorded an unrealized appreciation$1,611 as of $85,266.December 31, 2019. In addition, to the unrealized loss/gains, we recognized realized gains on investment in cryptocurrency of $481,692Company’s net loss was $136,344 for the three months ended September 30, 2017,March 31, 2020. The Company’s working capital was negative $2,063,447 as of March 31, 2020. During 2019, the Company liquidated a majority of its investments in cryptocurrency. As of March 31, 2020, the accumulated deficit amounted to $30,401,514. As a result of the Company’s history of losses and $564,332 forfinancial condition, there is substantial doubt about the period from inceptionability of the Company to September 30, 2017.continue as a going concern.

Unrealized and realized appreciation and depreciation of our holding in cryptocurrency are driven primarily by fluctuationsThe ability to continue as a going concern is dependent upon us generating profitable operations in the market prices of our holdings as well asfuture and/or obtaining the mix in the various cryptocurrency that comprises our portfolio.

Liquidity and Capital Resources

For the Period from Inception, March 9, 2017, through September 30, 2017

Liquidity is our ability to generate sufficient cash flows from operating activitiesnecessary financing to meet our obligations and commitments. In addition, liquidity includes the abilityrepay our liabilities arising from normal business operations when they come due. Management is evaluating different strategies to obtain appropriate financing to fund our expenses and achieve a level of revenue adequate to support our current cost structure. Financing strategies may include but are not limited to, private placements of capital stock, debt borrowings, partnerships, and/or collaborations. There can be no assurance that any of these future-funding efforts will be successful, that we will be able to raise capital. We have funded our operations since inception throughreplace the revenues lost as a result of the sale of our securities. To date, we have not generated sufficient cash flows from operating activities to meet our obligations and commitments, and we anticipateCoinTracking GmbH in early 2019, or that we will continueachieve our projected level of revenues in 2020 and beyond. The consolidated financial statements do not include any adjustments relating to incur lossesthe recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

The following table summarizes the primary sources and uses of cash for the foreseeable future.periods presented below:

However, our principal sources of cash have been from private placements of common stock, which has resulted in aggregate proceeds of $4,976,011 in cash from financing activities for the period from inception, March 9, 2017, through September 30, 2017.

As of September 30, 2017, the Company had working capital of $3,433,848 with cash and cash equivalents of $2,591,404.

Operating Activities

OperatingNet cash used in operating activities used $2,241,030 in cash and cash equivalentswas $18,384 for the period from inceptionthree months ended March 31, 2020, compared to September 30, 2017. This primarily consisted of professional fees and contracting as well as payroll costs, including prepaid consulting fees from a related party equal to $60,000. Other prepaid expenses were attributed to prepaid insurance of $19,349 and prepaid rent equal to $6,000. Additionally, general and administrative costs totaled $3,359,414$521,222 for the period from inception,three months ended March 9, 2017, through September 30, 2017, which31, 2019. The decrease in net cash used in operating activities was primarily consistsdue to a decline in our net loss to $136,344 for the three months ended March 31, 2020, compared to $336,638 for the three months ended March 31, 2019. Partially offsetting this decrease was a reduction in non-cash stock compensation expense of wages and professional fees, including consulting costs and legal fees in relation$0 for the three months ended March 31, 2020, compared to an expense of $58,792 for the commencement of the new cryptocurrency operations.

prior-year period.

Investing Activities

Net cash used infrom investing activities for the three months ended March 31, 2020, was $0, compared to $1,000,000 for the three months ended March 31, 2019. The prior-year period from inception, March 9, 2017, through September 30, 2017 was $143,577. Netincluded the sale of CoinTracking GmbH for $2,200,000, net of acquired cash was primarily used for an investment of $108,250 in connection with a potential business combination, as well as $1,500 for trademark fees and equipment for $33,827.$1,000,000.

Financing Activities

Net cash provided byfrom financing activities for the period from inception,three months ended March 9, 2017, through September 30, 201731, 2020, was $4,976,011 which was primarily resulted from aggregate proceeds of $2,661,036 from the issuance of 477,867 shares of common stock of Crypto prior$22,500, compared to the Transaction, $95,000 from issuance of 47,500 shares on June 13, 2017, and from aggregate proceeds of $2,219,975 from the issuance of 1,109,988 shares of common stock of the Company during$0 for the three months ended September 30, 2017.March 31, 2019.

Trends, Events, and Uncertainties

The blockchain technology market is dynamic and unpredictable. Although we will undertake compliance efforts, including efforts with commercially reasonable diligence, there can be no assurance that there will not be a new or unforeseen law, regulation or risk factor which will materially impact our ability to continue our business as currently operated or raise additional capital to foster our continued growth.

We cannot assure you that our consulting business will develop as planned, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, since we have no committed source of financing, we cannot assure you that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease our operations.

Other than as discussed elsewhere in this Quarterly Report and our 2019 Annual Report, we are not aware of any trends, events, or uncertainties that are likely to have a material effect on our financial condition.

Critical Accounting Policies and Estimates

The discussion and analysispreparation of the financial condition and results of operations of the Company is based upon our condensed consolidated financial statements which have been prepared in conformity with accounting principles generally accepted inrequires us to make estimates that affect the United Statesreported amounts of America (“US GAAP”). Certain accounting policiesassets, liabilities, revenue and estimates are particularly important toexpenses, and the understandingrelated disclosure of contingent liabilities. We base our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period by economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are basedjudgments on our historical operations, our future business plansexperience and projected financialon various other assumptions that we believe are reasonable under the circumstances, the results of which form the termsbasis for making estimates about the carrying value of existing contracts, observance of trends in the industry, information provided by our customersassets and information availableliabilities that are not readily apparent from other outside sources,sources. Actual results may differ from these estimates under different assumptions or conditions. We have no material changes to our Critical Accounting Policies and Estimates disclosure as appropriate.filed in our 2019 Annual Report.

ORecent Accounting Pronouncements

ff-Balance

See Note 3 to the consolidated financial statements for a discussion of recent accounting pronouncements.

Off-Balance Sheet Transactions

We do not have any off-balance sheet transactions.

ItemITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

ItemITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintainOur management, including our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, (asas defined in RulesRule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2020. Based upon that evaluation, our principal executive officer and 15d-15(e) under the Exchange Act)principal financial officer concluded that are designed our disclosure controls and procedures were effective as of March 31, 2020,to ensureprovide reasonable assurance that information we are required to be discloseddisclose in our reports filedthat we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and forms and that such information is(ii) accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervisiondisclosures.In designing and with the participation of management, including our principal executive officer and principal financial and accounting officer, of the effectiveness of the design and operation ofevaluating our disclosure controls and procedures, as of September 30, 2017, the end of the period covered by this Quarterly Report. Based upon the evaluation of our disclosuremanagement recognized that any controls and procedures, asno matter how well designed and operated, can provide only reasonable assurance of September 30, 2017,achieving their desired control objectives, and our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer) concluded that, asmanagement is required to apply its judgment in evaluating the cost-benefit relationship of such date, management identified certain deficiencies that were determined to be material weaknesses.

A material weakness is a deficiency, or a combination of deficiencies, in disclosurepossible controls and procedures, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Because of the material weaknesses described below, management concluded that our disclosure controls and procedures were ineffective as of end of the period covered by this report to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules.procedures.

The specific material weaknesses identified by the Company’s management as of end of the period covered by this report include the following:

Despite the material weaknesses reported above, our management believes that our financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented and that this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. In an effort to remedy any material deficiencies, management intends to segregate duties and controls among different officers and other key employees, whereby each officer is expected to have distinct responsibilities implementing checks and balances over the control of assets to protect the Company against any possibility of misstatement.

Changes in Internal Control over Financial Reporting

NoThere have been no changes in the Company’sour internal control over financial reporting have come to management’s attention during the Company’s last fiscal quarterthree months ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.

PART II-OTHER INFORMATION

ITEM 1. Legal Proceedings.

See the discussion of legal proceedings in Note 11 (Commitments and Contingencies) to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report, which is incorporated by reference into this Item 1 of Part II.

Item 1. Legal Proceedings.ITEM 6. Exhibits.

We are not currently a party to any legal proceedings, and we are not aware of any pending or potential legal actions.

Item 1A. Risk Factors.

An investment in our securities involves certain risks relating to our business and operations. You should carefully consider these risks, together with all of the other information included in this prospectus, before you decide whether to purchase shares of the Company. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. If that happens, the trading price of our common stock could decline and you may lose all or part of your investment.

Risks Related to our Business

Because our directors and executive officers are among our largest stockholders, they can exert significant control over our business and affairs, and have actual or potential interests that may depart from those of investors.

Certain of our executive officers and directors own a significant percentage of our outstanding capital stock. As of the date of this Memorandum, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates, directly and indirectly, beneficially own over 83% of our outstanding voting stock. The interests of such persons may differ from the interests of our other stockholders, including investors. As a result, in addition to their board seats and offices, such persons will have significant influence over and control all corporate actions requiring stockholder approval, irrespective of how the Company’s other stockholders, including investors, may vote, including the following actions:

This concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for the common stock that in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

We have not voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or the Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors’ independence, and audit committee oversight. We have not yet adopted any of these corporate governance measures and, since our securities are not yet listed on a national securities exchange, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

The elimination of personal liability against our directors and officers under Nevada law and the existence of indemnification rights held by our directors, officers and employees may result in substantial expenses.

Our Articles of Incorporation and our Bylaws limit the personal liability of our directors and officers for damages for breach of fiduciary duty as a director or officer to the extent permissible under applicable state law. Further, our Articles of Incorporation and our Bylaws provide that we are obligated to indemnify each of our directors or officers to the fullest extent authorized by applicable state law and, subject to certain conditions, advance the expenses incurred by any director or officer in defending any action, suit or proceeding prior to its final disposition. Those indemnification obligations could expose us to substantial expenditures to cover the cost of settlement or damage awards against our directors or officers, which we may be unable to afford. Further, those provisions and resulting costs may discourage us or our stockholders from bringing a lawsuit against any of our current or former directors or officers for breaches of their fiduciary duties, even if such actions might otherwise benefit our stockholders.

If we are unable to retain our staff, our business and results of operations could be harmed.

Our ability to identify, consult regarding and trade in cryptocurrencies and develop our business is largely dependent on the services of Rafael Furst, our Chief Investment Officer, and other employees and contractors which assist him in management and operation of the business. If we are unable to retain Mr. Furst’s services and to attract other qualified senior management and key personnel on terms satisfactory to us, our business will be adversely affected. We do not have key man life insurance covering the life of Mr. Furst and, even if we are able to afford such a key man policy, our coverage levels may not be sufficient to offset any losses we may suffer as a result of Mr. Furst’s death, disability, or other inability to perform services for us.

We may acquire businesses and enter into joint ventures that will expose us to increased operating risks.

As part of our growth strategy, we intend to enter into joint venture arrangements intended to complement or expand our business and will likely continue to do so in the future. These joint ventures are subject to substantial risks and liabilities associated with their operations, as well as the risk that our relationships with our joint venture partners do not succeed in the manner that we anticipate.

Risks Related to the Ownership of our Common Stock

There is a limited trading market for our common stock, which may make it difficult for to sell shares of our common stock.

Our common stock is quoted on the OTC Pink Market on the OTC Markets Group, Inc. and has had limited trading activity since inception. An active trading market for our shares may never develop or be sustained. As a result, investors in our common stock must bear the economic risk of holding those shares for an indefinite period of time. We do not now, and may not in the future, meet the initial listing standards of any national securities exchange. As a result, our stockholders may find it difficult to obtain an accurate determination as to the market value of their shares of our common stock, and may find few buyers to purchase their stock. As a result of these and other factors, it may not be possible to resell shares of our common stock at or above the price for which they were purchased, or at all. Further, an inactive market may also impair our ability to raise capital by selling additional equity in the future, and may impair our ability to enter into strategic partnerships or acquire companies or products by using shares of our common stock as consideration.

We have no plans to pay dividends.

To date, we have paid no cash dividends on our common stock. For the foreseeable future, earnings generated from our operations will be retained for use in our business and not to pay dividends. As a result, capital appreciation, if any, of our common stock will be the sole resource of gain for stockholders for the foreseeable future. Investors seeking cash dividends should not purchase our common stock.

We may issue more shares in a future financing which could result in substantial dilution.

Any future merger or acquisition effected by us would result in the issuance of additional securities and the substantial dilution in the percentage of our common stock held by our then existing stockholders. Moreover, the common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing stockholders. Our board of directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock are issued in connection with and following a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of common stock might be materially and adversely affected.

We may become subject to penny stock regulations and restrictions, in which case, you may have difficulty selling shares of our common stock.

The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock may become a “penny stock”, in which case, we would become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, if applicable, this rule may affect the ability of broker-dealers to sell our common shares and may affect the ability of purchasers to sell any of our common shares in the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

If our common stock becomes subject to the Penny Stock Rule, we do not anticipate that it will qualify for an exemption therefrom. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period under Rule 144, or shares issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and, in anticipation of which, the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

In general, under Rule 144, a non-affiliated person who has held restricted shares of our common stock for a period of six months may sell into the market all of their shares, subject to the Company being current in our periodic reports filed with the Commission. A significant portion of our outstanding shares will become eligible for sale in the public market prior to the end of 2017.

As of November 14, 2017, there were approximately 168,125 shares subject to outstanding warrants, 937,512 shares subject to outstanding options and an additional 4,062,488 shares reserved for future issuance under our 2017 Equity Incentive Plan, all of which will become eligible for sale in the public market to the extent permitted by any applicable vesting requirements or Rule 144 under the Securities Act.

Risks Related to the Cryptocurrency Market

The further development and acceptance of Digital Asset systems, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of cryptocurrency may adversely affect an investment in the Shares.

A Digital Asset such as cryptocurrency may be used, among other things, to buy and sell goods and services. Digital Asset networks are a new and rapidly evolving industry. The growth of the Digital Asset industry is subject to a high degree of uncertainty. The factors affecting the further development of the Digital Asset industry include:

A decline in the popularity or acceptance of Digital Assets may harm the price of the Shares. There is no assurance that any service providers necessary to accommodate the cryptocurrency network will continue in existence or grow. Furthermore, there is no assurance that the availability of and access to Digital Asset service providers will not be negatively affected by government regulation or supply and demand of cryptocurrency.

Currently, there is relatively limited use of cryptocurrency in the retail and commercial marketplace in comparison to relatively extensive use by speculators, thus contributing to price volatility that could adversely affect an investment in the Shares.

As relatively new products and technologies such as cryptocurrency have only recently become selectively accepted as a means of payment for goods and services by many major retail and commercial outlets, and use of cryptocurrency by consumers to pay such retail and commercial outlets remains limited. Banks and other established financial institutions may refuse to process funds for cryptocurrency transactions; process wire transfers to or from cryptocurrency exchanges, cryptocurrency-related companies or service providers; or maintain accounts for persons or entities transacting in cryptocurrency. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short- or long-term holding of cryptocurrency. Price volatility undermines cryptocurrency’s role as a medium of exchange as retailers are much less likely to accept it as a form of payment. Market capitalization for cryptocurrency as a medium of exchange and payment method may always be low. A lack of expansion by cryptocurrency into retail and commercial markets, or a contraction of such use, may result in increased volatility, which could adversely impact an investment in the Shares.

The SEC issued a Report of Investigation concluding that virtual coins, tokens or other digital assets may be deemed securities and subject to the federal securities laws, including registration under the Securities Act and the Investment Company Act of 1940 (the “Investment Company Act”).

A Report of Investigation by the SEC during the second quarter of 2017 found that tokens offered by a virtual organization were securities and therefore subject to the federal securities laws, and further concluded that issuers of distributed ledger or Blockchain technology-based securities must register offers and sales of such securities under the Securities Act unless they are exempt from such registration. Additionally, securities exchanges providing for trading in these securities must register unless they are exempt. As a result, the Company may be required to register and comply with additional regulation under the Investment Company Act, including additional periodic reporting and disclosure standards and requirements and the registration of the Company as an investment company. Such additional registration may result in extraordinary, nonrecurring expenses of the Company, thereby materially and adversely impacting the Shares. Whether a particular investment transaction involves the offer and sale of a security, regardless of the terminology or technology used, will depend on the facts and circumstances, including the economic realities of the transaction. Thus, it is uncertain how various digital assets will be classified by the SEC, and the level of regulation, if any, will be applied as a result. Further, regulation over securities exchanges in the United States may incentivize the Company to invest, and to advise its clients to invest, solely in digital assets traded on foreign exchanges.

If regulatory changes or interpretations require the regulation of cryptocurrency under the Commodity Exchange Act of 1936, as amended (the “CEA”) by the U.S. Commodity Futures Trading Commission, an independent agency with the mandate to regulate commodity futures and option markets in the United States (the “CFTC”), the Company may be required to register and comply with such regulations.

Current and future legislation, CFTC rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which cryptocurrency is treated for classification and clearing purposes. In particular, cryptocurrency may not be excluded from the definition of “commodity future” by such future CFTC rulemaking or interpretation. As of the date of this prospectus, the Company is not aware of any rules or interpretations that have been proposed to regulate cryptocurrency as commodity futures. The Company cannot be certain as to how future regulatory developments will impact the treatment of cryptocurrency under the law.

To the extent that cryptocurrency is deemed to fall within the definition of a commodity future pursuant to subsequent rulemaking by the CFTC, the Company may be required to register and comply with additional regulation under the CEA, including additional periodic report and disclosure standards and requirements. Moreover, the Company may be required to register as a commodity pool operator. Such additional registration may result in extraordinary, nonrecurring expenses, thereby materially and adversely impacting the Shares.

Recent exposure by the SEC of initial coin offerings used by certain issuers as a means to generate oversized returns and the SEC’s limited experience regulating the digital currency market indicates a possibility that the Company may unintentionally invest in a fraudulent coin offering which the SEC may not detect until after we have sustained significant losses.

The Company invests in various digital currencies. Although we conduct due diligence and take reasonable measures to make prudent investments and coin offerings are subject to heightened oversight and scrutiny by the SEC, coin offerings are highly susceptible to fraud and regulators have limited experience in the growing digital currency market. The SEC may not yet have adequate controls and review procedures to detect a fraudulent coin offering before significant losses are sustained.

The recent ruling of the United States Commodities Futures Trading Commission (CFTC) designating bitcoin as a commodity gives authority to the CFTC to police fraudulent activities on exchanges where bitcoin is traded.

The CFTC recently designated bitcoin as a commodity, which makes exchange markets on which bitcoin is traded subject to enforcement action by the CFTC. Although the CFTC has suggested it is not particularly focused on pursuing such enforcement at this time, and in fact there may be some limits on its ability to do so without a specific connection to commodities derivatives markets, in the event that the CFTC does pursue such enforcement and ultimately shuts down an exchange on which cryptocurrencies in which we invest are traded, it may have a significant adverse impact on our investment portfolio.

Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds.

Unregistered Sales of Securities

On September 8, 2017, the Company issued to eleven accredited investors an aggregate of 437,488 shares of common stock of the Company at a price of $2.00 per share for aggregate proceeds of $874,975.

On September 20, 2017, the Company issued to two accredited investors an aggregate of 62,500 shares of common stock of the Company at a price of $2.00 per share, payable in digital currency equal to aggregate proceeds of approximately $125,000.

On September 25, 2017, the Company issued to nine accredited investors (i) an aggregate of 672,500 shares of common stock of the Company at a price of $2.00 per share, and (ii) three-year warrants to purchase an aggregate of 168,125 shares of common stock of the Company at an exercise price of $2.00 per share, for aggregate proceeds of $1,345,000.

The shares issued on September 8, 2017, September 20, 2017 and September 25, 2017 were issued in transactions that were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder inasmuch as the securities were offered and sold solely to accredited investors and the Company did not engage in any form of general solicitation or general advertising in making the offering.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

+ This document is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.