United States securities and exchange commission logo
July 9, 2020
Andre De Castro
Chief Executive Officer
Blockchain of Things, Inc.
747 3rd Avenue
New York, NY 10017
Re: Blockchain of
Things, Inc.
Form 10-12G
Filed June 1, 2020
File No. 000-56170
Dear Mr. De Castro:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response and any amendment you may file in
response to these
comments, we may have additional comments.
Form 10-12G filed June 1, 2020
Explanatory Note, page 3
1. Please delete the use
of the term rescission throughout the registration statement and
instead refer to it as
the Claims Process, consistent with the terms of the settlement.
Initial Coin Offering and SEC Order, page 4
2. Please add a new
section here that describes the claims process for investors, and please
revise the header for
this section to include the claims process. In preparing the section,
please consider putting
it in question-and-answer format, and please consider addressing
the following investor
questions:
What is the claims
process?
Why are you
engaging in the claims process?
Who is entitled to
make a claim?
Andre De Castro
FirstName
BlockchainLastNameAndre
of Things, Inc. De Castro
Comapany
July 9, 2020NameBlockchain of Things, Inc.
July 9,2 2020 Page 2
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What will I receive if I make a claim?
How is the price at which I purchased tokens determined?
How was the interest rate determined?
When does the claims process terminate?
What do I need to do if I want to participate in the claims
process?
What do I need to do if I do not want to participate in the claims
process?
What happens to my tokens if I do not participate in the claims
process?
May I participate in the claims process solely with respect to a
portion of my tokens?
Can I change my mind after I have sent in my claim form?
When, how and in what form will payment be made?
Who can help answer my questions and what is their contact
information?
In addition, at the end of the section please include a
cross-references to the claims
process disclosure beginning on page 30.
Description of Business and Principal Products or Services, page 5
3. We note your disclosure that, at the time of the Offering, the Catenis
platform functioned
in a "beta" or pilot stage. Please update this disclosure to clarify
whether the Catenis
platform currently is operational. If you need additional funds to
further advance the
development or relaunch of the platform, please explain the key steps
in that process and
any quantify the funding necessary. If lack the necessary additional
funding, please
disclose this.
4. Please revise the description of your products and services to explain
in plain English
what they are and what they do. In doing so, please minimize the use
of technical and
marketing language.
5. Please refer to the second paragraph. We note the disclosure that
consumed tokens
convert into real Bitcoin blockchain value (actual bitcoins). Please
explain what this
means and how it works. In doing so, please explain, for each consumed
BCOT Token,
how the conversion value is determined.
6. Please briefly expand to explain how Catenis Enterprises works with
the Bitcoin
blockchain to simplify peer-to-peer message, digital asset control and
recording of
immutable data, how it is globally accessible and how it is designed
to improve upon
existing blockchain technology. Please also explain what is meant by
running on edge
networks.
7. Please tell us the basis for the following statements you make in the
noted locations within
the registration statement:
In the second paragraph on page 6, the statement that the
Company has developed
the world s first globally accessible blockchain enabled
application network.
In the fifth paragraph on page 6, the statement [t]he Company
s management team
has invested time, energy and talent carefully developing these
solutions to become
the industry leader in leveraging blockchain technology cost
effective for highly
secure, peer device communications, and support for governance
solutions across the
Andre De Castro
FirstName
BlockchainLastNameAndre
of Things, Inc. De Castro
Comapany
July 9, 2020NameBlockchain of Things, Inc.
July 9,3 2020 Page 3
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FirstName LastName
globe.
Revenue Model, page 6
8. Please expand your description of your proposed revenue model to
explain in detail how
you propose to generate revenue. In doing so, please expand your
description of the five
offering tiers and explain how they tie to the monthly subscription
fees that you are
proposing. In addition, please clarify to what extent you have tested
this revenue model
and state whether or not it is proven. Finally, please clarify how the
professional, support
and educational services you propose to offer fit within your revenue
model. In doing so,
please clarify the current status of these services and your
expectations for revenue from
these services.
Item 1A. Risk Factors, page 11
9. Please clarify in the second, third and fourth risks factors that
because claimants are
entitled to seek the return of the full amount you received from them,
subject to certain
adjustments, pursuant to the terms of the settlement, you are
potentially liable to the
claimants for up to approximately $12 million.
Currency exchange rate fluctuations may disrupt our business, page 18
10. Please briefly expand to explain why you expect a substantial amount
of your future
revenue from foreign net sales.
We have business systems that do not have full redundancy, page 21
11. Please briefly clarify which core business systems that you are
referring to that do not
have redundancy so that investors can assess the risk.
Specific Risks Related to Owning BCOT Tokens, page 25
12. Please add a new risk factor that describes the risks associated with
the BCOT Tokens
currently having negligible utility and that the anticipated
functionality described in
the registration statement may never be available. Please include a
cross-reference to
the Description of Registrant s Securities to be Registered section
beginning on page 42.
Risks Related to Our Rescission Offer, page 27
13. We note the risk factor at the top of page 28 stating that the Company
issued BCOT
Tokens to certain vendors during 2017 for services rendered in
connection with your
initial coin offering ("ICO"), which were accounted for at that time
at approximately $12
million. Please explain your accounting treatment (and disclose your
accounting policy in
the notes to the consolidated financial statements) for those tokens
issued to vendors and
cite the authoritative guidance you used to support your account
treatment (i.e., initial
recognition, measurement, and remeasurement, as applicable).
Andre De Castro
FirstName
BlockchainLastNameAndre
of Things, Inc. De Castro
Comapany
July 9, 2020NameBlockchain of Things, Inc.
July 9,4 2020 Page 4
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FirstName LastName
Risks Related to Our Rescission Offer, page 27
14. Please add a new risk factor that describes the risk to claimants that
you may not have
sufficient funds to satisfy their claims. The risk factor should
address your existing assets,
limitations on your ability to satisfy claims, your plans to address
any shortfall in your
ability to satisfy claims, as well as the current value of the digital
assets (e.g., Ether,
Bitcoin) you received from claimants as payment for the BCOT Tokens.
Management s Discussion and Analysis of Financial Condition and Results of
Operations, page
28
15. Please revise this section to disclose the following:
Why for 2018 you took an $8,865,798 impairment of your digital
assets.
How you used the approximately $12 million in proceeds you
received from the sale
of BCOT Tokens.
There is no assurance that you will be successful in obtaining
funding or generating
revenues sufficient to satisfy claims submitted pursuant to the
Claims Process.
Your plans for satisfying claims submitted pursuant to the Claims
Process, including
how you would address circumstances in which you do not have
sufficient liquidity
to both grow your business and satisfy all of the claims.
Recission Offer, page 30
16. Please clarify whether you will pay claims in cash, in U.S. Dollars,
or in digital assets. To
the extent a claimant used digital assets to purchase BCOT Tokens,
please explain how
you will value the digital assets for purposes of satisfying the
claimant's claim.
17. In the third paragraph, please clarify the maximum aggregate amount
you could pay in
satisfaction of claims if you liquidated all the digital assets you
currently have on hand.
Please value the digital assets as of the most recent practicable
date, and disclose the date.
Item 15. Financial Statements and Exhibits, page 47
18. Please revise to include updated interim financial statements; refer
to Article 8 of
Regulation S-X.
Note 11 - BCOT Tokens, page F-16
19. We note your disclosure stating that the Company accounted for the
sale of tokens in
accordance with ASC 606 and that you determined the counterparties to
be customers.
Please revise your disclosure to clarify how the accounting
conclusions described here are
consistent with the policy on page F-7 which states that you are
accounting for the token
issuances as a research and development arrangement in accordance with
ASC 730-20.
Exhibits
20. Please file as exhibits to the registration statement the Claim Form
and the original token
Andre De Castro
Blockchain of Things, Inc.
July 9, 2020
Page 5
offering agreement.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Robert Klein at 202-551-3847 or Hugh West at
202-551-3872 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Susan Block at 202-551-3210 or Dietrich King at 202-551-8071 with any
other
questions.
FirstName LastNameAndre De Castro Sincerely,
Comapany NameBlockchain of Things, Inc.
Division of
Corporation Finance
July 9, 2020 Page 5 Office of Finance
FirstName LastName