Part II - INFORMATION REQUIRED IN OFFERING CIRCULAR
An offering statement pursuant to Regulation A relating to these shares
has been filed with the U.S. Securities and Exchange Commission (the
"Commission"). Information contained in this preliminary offering
circular is subject to completion or amendment. These shares may not be
sold nor may offers to buy be accepted before the offering statement filed
with the Commission is qualified. This preliminary offering circular shall
not constitute an offer to sell or a solicitation of an offer to buy or sell any
of these shares in any state in which such offer, solicitation or sale would
be unlawful before registration or qualification under the laws of any such
state. We may elect to satisfy our obligation to deliver a final offering
circular by sending you a notice within two business days after the
completion of our sale to you that contains the URL where the final
offering circular or the offering statement in which such final offering
circular was filed may be obtained.
Preliminary Offering Circular
October 14th, 2020
Subject to Completion
DECENTRALIZED CRYPTO FINANCIAL INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
85-2718015
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification Number)
4795 Meadow Wood Lane, #200
Chantilly, Virginia 20151
(703) 594-6840
www.Decryptofi.com
Nicholas Scherling
Chief Executive Office
Decentralized Crypto Financial Inc. ("DeCryptoFi")
4795 Meadow Wood Lane, #200
Chantilly, Virginia 20151
(703) 594-6840
Up to
150,000,000 shares of Common Stock
This is an initial public offering of our common stock. The offering
price is $0.10 per share.
The offering consists of 150,000,000 shares of our common stock
comprised of (a) up to 25,000,000 newly issued shares of our common
stock ("Shares") in our Initial Public Offering ("IPO"), and up to (b)
125,000,000 shares for non-cash consideration pursuant to our "Work
Compensation" program.
In the event all of the Offering Shares are sold, we may, in our
discretion, sell up to 50,000,000 additional authorized, but currently
unissued shares ("Additional Shares" and/or "Reserve Shares") in the
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offering currently held in reserve.
300,000,000 shares are currently owned by the CEO of DeCryptoFi,
Nicholas Scherling ("Company insider" and/or "Holder"). In connection
with the initial public offering of the Company's securities, the Holder
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company held
immediately prior to the effectiveness of the registration statement for
such offering (other than those included in the registration), for such
period of time (not to exceed 180 days or such longer period of time as
may be required to comply with Rule 2711 of the Financial Industry
Regulatory Authority, Inc. (or any successor rule thereto)) two days
following the effective date of such registration statement ("lock-up
period"). Further, following the lock-up period, the Holder will be limited
to selling 12.5% of his holdings per year. This not only protects against
over-diluting the market share value, but also preserves the integrity of the
Company.
There is no minimum number of Offering Shares that we must sell in
order to conduct a closing in this offering. The offering will commence
within six weeks after this offering circular has been qualified by the
Commission. The offering will exist until the date on which the offering
of any additional stock would cause the aggregate offering price or
aggregate gross sales in this offering, as those terms are defined under
Rule 251(a) of the Securities Act, to exceed $50,000,000.00.
The Commission does not pass upon the merits of or give its approval to
any shares offered hereby or the terms of the offering, nor does it pass
upon the accuracy or completeness of any offering circular or other
solicitation materials. The Offering Shares are being offered pursuant to
an exemption from registration with the Commission; however, the
Commission has not made an independent determination that the Offering
Shares offered are exempt from registration.
Price to Public Underwriter Proceeds
Proceeds
Per Share Discounts To Issuer
to other Persons
$0.10 $0.0 $0.10
$0.0
Total Min1 N/A N/A N/A
N/A
Total Max. $0.10 N/A $15M
N/A
Investing in an IPO is speculative and involves substantial risks.
You should purchase stock only if you can afford a complete loss of your
investment. See "Risk Factors" to read about the more significant risks
you should consider before buying our stock. Please see subsection "Risk
Factors," beginning on page 9 of this offering circular.
This is a Regulation A+ Tier 2 offering. The Company may
decide, either concurrently with this offering (potentially commencing
prior to its qualification) or on a date subsequent to the qualification of
this offering, to sell between 0 and 25 million shares of stock to non-U.S.
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persons in a private placement exempt from the registration requirements
of the Securities Act under Regulation S promulgated thereunder
("Regulation S"). The stock in any potential concurrent or subsequent
Regulation S offering will be considered a restricted security and will be
sold for delayed delivery and subject to a transfer restriction for ranging
from 40 days to one year.
THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE
ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS
OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY
OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER
SELLING LITERATURE. THESE SECURITIES ARE BEING
OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION WITH THE COMMISSION; HOWEVER, THE
COMMISSION HAS NOT MADE AN INDEPENDENT
DETERMINATION THAT THE SECURITIES OFFERED
HEREUNDER ARE EXEMPT FROM REGISTRATION.
Generally, no sale may be made to you in this offering if the
aggregate purchase price you pay is more than 10% greater of your annual
income or net worth. Different rules apply to accredited investors and
non-natural persons. Before making any representation that your
investment does not exceed applicable thresholds, we encourage you to
review Rule 251(d)(2)(i)(C) of Regulation A. We deem this limitation on
investment not to apply to the non-cash consideration for which stock is
received through our Work Compensation plan, and therefore to not limit
the number of shares that may be received through the Work
Compensation Plan. Prior to this offering, there has been no public market
for our common stock. For general information on investing, we
encourage you to refer to www.investor.gov.
Initially, DeCryptoFi stock will not trade on a stock exchange, securities
exchange, or other trading market. This means that it may be difficult to
sell your shares of stock.
IMPORTANT INFORMATION ABOUT THIS OFFERING
CIRCULAR
Please carefully read the information in this offering circular and any
accompanying offering circular supplements, which we refer to
collectively as the "preliminary offering circular." You should rely only on
the information contained in this offering circular. We have not authorized
anyone to provide you with different information. This offering circular
may only be used where it is legal to sell these securities. You should not
assume that the information contained in this offering circular is accurate
as of any date later than the date hereof or such other dates as are stated
herein or as of the respective dates of any documents or other information
incorporated herein by reference.
This preliminary offering circular is part of an offering statement that
we filed with the SEC, using a continuous offering process, and is still
pending approval. Periodically, as we make material developments, we
will provide an offering circular supplement that may add, update or
change information contained in this offering circular. Any statement that
we make in this offering circular will be modified or superseded by any
subsequent statement made by us in a subsequent offering circular
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supplement.
We are following the "Offering Circular:
disclosure format under Regulation A
The date of this preliminary offering circular is
October 14th, 2020
TABLE OF CONTENTS
SUMMARY 4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS 5
RISK FACTORS 7
TERMS OF THIS OFFERING 12
USE OF PROCEEDS 13
DESCRIPTION OF BUSINESS 14
DESCRIPTION OF COMMON STOCK 15
REGULATORY CONSIDERATIONS 15
CHANNELS FOR DISCLOSURE OF INFORMATION AND PLAN OF
DISTRIBUTION
DILUTION 18
CONCURRENT OR SUBSEQUENT REGULATION S (REG S)
OFFERING 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 21
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
EMPLOYEES 22
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 24
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITY HOLDERS 24
SHARES ELIGIBLE FOR FUTURE SALE 25
FINANCIAL INFORMATION SECTION 25
EXHIBITS
Offering Circular
We have not authorized anyone to provide any information or to make any
representations other than those contained in this offering circular or in
any free writing prospectuses we have prepared. We take no responsibility
for and can provide no assurance as to the reliability of, any other
information that others may give you. The information contained in this
preliminary offering circulars current only as of its date.
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You should rely only on the information contained in this offering
circular. We have not authorized anyone to provide you with different
information. The information in this offering circular assumes that all the
shares offered are sold and we have not taken advantage of our option to
sell any Additional Shares as described herein.
SUMMARY
This offering summary highlights certain information appearing
elsewhere in this offering circular. Because it is a summary, it may not
contain all the information that is important to you. To understand this
offering fully, you should read the entire offering circular carefully,
including the "Risk Factors" section, before making a decision to invest in
our stock. Unless the context requires otherwise, in this offering the terms
"we," "us" and "our" refer to DeCryptoFi, the issuer of the common
shares of stock. For a more complete understanding of this offering, you
should read the entire offering circular carefully, including the risk factors
and the financial statements.
Who we Are. We are an early-stage financial technology company.
Our company, DeCryptoFi, has identified a glaring and persistent
issue that many privately held businesses face; the ability for small and
medium sized companies to raise additional capital. When businesses
need capital, typically they must go through the arduous process of
seeking a loan from a bank or lending company. It is extremely difficult
for small and medium sized companies to access public markets where
they may receive the same or better terms in return for capital. When a
small business is approved for a loan by a bank (or other lending
provider), these institutions will often require from the business a form of
hard asset collateral, and most require a personal guarantee from its
owner, regardless of the company's financial stability. W2 employees,
working for a successful business, would never personally guarantee a
business loan just to keep their job, so why should legitimate business
owners?
If businesses are turned away from financial institutions, there seems
to be few alternatives except for these businesses to seek additional
capital from Merchant Cash Advance firms, or some form of lending
company that charges usurious interest rates. These types of lending
institutions tend to benefit from the borrower's company failing rather
than succeeding, which then puts people out of jobs and facing massive
debts that need to be repaid.
As a result, many business owners are unable to secure the capital
they need to scale their business and those that are able to get a good loan
at a low rate may still be unwilling to do so due to personal guarantee
requirements. No employee or business owner wants to personally secure
business loans with their personal finances regardless of how well their
business is performing.
Our Solution.
The reality is that there are numerous additional ways that companies can
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raise capital, but they simply lack the knowledge, expertise, or personnel
to facilitate alternative capital-raising offerings.
DeCryptoFi has created a technology-driven software that will allow
small and mid-sized companies to understand and be fully compliant with
the public and private offering processes. Our main goal can be summed
up in one word... simplification. Our goal is to tap into this market and
assist small and medium size companies that want to pursue a public
offering or an alternative acceptable private offering and remain fully
compliant with SEC regulations. We strive to make the overlooked
alternative methods of raising capital easy to achieve, easy to
comprehend, and for many aspects of the process, completely automated.
The SEC has long struggled with how to assist small and medium size
businesses get access to the public market; we are here to help!
By answering a series of questions specific to their company,
including, but not limited to, how much capital the company seeks to
raise, who the company's target investors will be, current and past
revenue, profitability, growth rate, what its organizational structure is like,
etc., businesses will be able to streamline the structuring of a potential
business capitalization and the regulatory safeguards associated with these
capital raising options. DeCryptoFi's patented software will provide a list
of currently available offerings to our customers, as well as a list of
offerings that are just within their grasp. Once the business owner fully
comprehends the types of offerings available to them and decides which
to pursue, DeCryptoFi's software will assist in automating all relevant
SEC filings, state filings, investor notifications, disclosures, offering
circulars, registration statements, offering memoranda, prospectuses,
dividend payments, proxy statements, and much more.
Strategy. We will pursue the following strategies:
Continue to attract top talent. To grow our business, we recognize the
need to attract experienced professionals in technology, legal, accounting,
and so forth. While we already have a strong team of employees and
advisors with the relevant expertise (discussed in greater detail below), we
plan to supplement key roles as we ramp up our operations.
Scale our business to become a national leader in our sector. We are
focused on growing our national and international footprint and are
testing business development and marketing efforts in multiple channels.
Increased awareness of our products and services will enable us to scale
and attract a whole assortment of different types of businesses that
previously did not fall under the SEC's purview, but will now be a fully
compliant reporting company or exempt reporting company, thereby
increasing investor protection across broad range of market tiers.
Corporate Information. We are a Delaware corporation (C-Corp)
organized on August 20, 2020 Our principle place of business address is
4795 Meadow Wood Lane # 200, Chantilly, VA 20151, our telephone
number is (703) 594-6840, and our website is www. DeCryptofi.com.
Except for this offering circular and our other public filings with the
SEC pursuant to the requirements of SEC regulation A, information found
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on, or accessible through our website is not a part of, and is not
incorporated into this offering circular, and you should not consider it part
of this offering circular. We consider these facilities adequate for our
current operations.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
The statements contained in this offering circular that are not purely
historical are forward-looking statements. Forward-looking statements
include, but are not limited to, statements regarding expectations, hopes,
beliefs, intentions, or strategies regarding the future. In addition, any
statements that refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intend," "may," "might,"
"plan," "possible," "potential," "predicts," "project," "should," "would"
and similar expressions may identify forward-looking statements, but the
absence of these words does not mean that a statement is not
forward-looking. Forward-looking statements in this offering circular may
include, for example, statements about our:
o limited operating history and ability to maintain or increase profitability.
o reliance on third parties for production and distribution.
o results of operations.
o ability to manage growth.
o ability to minimize our production and distribution costs by utilizing
funding sources provided by others.
o regulatory or operational risks.
o success in retaining or recruiting, or changes required in, our officers,
key employees or directors.
o capital structure.
o ability to obtain additional financing when and if needed; and
o liquidity and trading of our securities.
The forward-looking statements contained in this offering circular are
based on current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future
developments will be those that have been anticipated. These
forward-looking statements involve a number of risks, uncertainties (some
of which are beyond our control) or other assumptions that may cause
actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks
and uncertainties include, but are not limited to, those factors described
under the heading "Risk Factors." Should one or more of these risks or
uncertainties materialize, or should any of our assumptions prove
incorrect, actual results may vary in material respects from those projected
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in these forward-looking statements. We undertake no obligation to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required
under applicable securities laws.
These statements involve risks, uncertainties, assumptions, and other
factors that may cause actual results, levels of activity, performance, or
achievements to be materially different from the information expressed or
implied by these forward-looking statements. Although we believe that we
have a reasonable basis for each forward-looking statement contained in
this offering circular, we caution you that these statements are based on a
combination of facts and factors currently known by us and our
projections of the future, about which we cannot be certain.
In determining the current price in the general offering, DeCryptoFi
has relied on preliminary oral indications of interest from potential
investors, both institutional and retail, that we received in compliance
with Rule 255 under the Securities Act. As noted on the cover page to this
offering circular, DeCryptoFi does intend to seek additional input on this
price by seeking pre- qualification indications of interest from potential
investors pursuant to Rule 255 under the Securities Act. The offering
price of the DeCryptoFi Stock, however, bears no relationship to
DeCryptoFi's book or asset values or likelihood of repayment or to any
other established criteria for valuing securities. This price may not be
indicative of the market price of the DeCryptoFi Stock at such time as a
secondary trading market does develop, if ever, or the proceeds that you
would receive upon a commercial sale of the DeCryptoFi Stock; the
offering price may be significantly more than either such price.
Prior to this offering there has been no public market for any of our
securities. The public offering price of our shares was determined on a
number of factors. Factors considered in determining the prices and terms
of the Shares (and the Additional Shares) offered hereby include:
o The history and prospects of companies similar to our company
o Prior offerings of those companies
o Our prospects
o Our capital structure
o Our software
o An assessment of our management
o General conditions of the securities markets at the time of the offering;
and
o Other factors as were deemed relevant
However, although these factors were considered, the determination
of the offering prices is more arbitrary than the pricing of securities for an
established operating company.
Following this offering, the price of our common stock may vary
significantly due to general market or economic conditions as well as
other factors. Furthermore, an active trading market for the securities may
8
never develop or, if developed, may not be sustained. You may be unable
to sell your securities unless a market can be established and sustained.
RISK FACTORS
The SEC requires that we identify risks that are specific to our
business and financial condition. We are still subject to all the same risks
that all companies in our business, and all companies in the economy, are
exposed to. These include risks relating to economic downturns, political
and economic events, and technological developments (such as hacking
and the ability to prevent hacking). Additionally, early-stage companies
are inherently riskier than more developed companies. You should
consider general risks as well as specific risks when deciding whether to
invest.
An investment in the securities offered by this offering circular
involves a high degree of risk. You should carefully consider all the
material risks described below, together with the other information
contained in this offering circular, before making a decision to invest in
DeCryptoFi. There can be no assurance that any purchaser will achieve
his or her investment objective or avoid substantial losses by investing in
DeCryptoFi. All investments entail a high degree of risk, and purchasers
may lose some or all their investment.
Risks associated with our business
1. We do not have a long operating history on which to evaluate our
company. We face all the risks faced by newer companies in similar
industries, including significant competition from existing and emerging
capital raising platforms many of which may be significantly more
established, larger, and better financed than our company. However, we
believe that what we are offering is incredibly unique and the market we
are entering should be far less saturated.
2. There is considerable uncertainty about the asset class's long-term
viability, which could be affected by a variety of factors, including many
market-based factors such as economic growth, inflation, and others. In
addition, the success of the stock and other types of securities that may be
issued will depend on whether new technologies turn out to be useful and
economically viable. We do not control any of these factors, and therefore
may not be able to control the long-term success of our company share
value.
3. The offering price of our stock was not established on an independent
basis. After we commence operations, the actual value of your investment
may be substantially less than what you pay. The most recent pre-revenue
valuation of our stock concluded our stock has a fair market value of
$0.10 per share as of October 14th, 2020.
4. The market in which we participate is intensely competitive, and we
may not be able to compete successfully with our current or future
competitors.
5. This offering is being made pursuant to recently adopted rules and
regulations under Regulation A of the Securities Act. The legal and
compliance requirements of these rules and regulations, including
ongoing reporting requirements related thereto, are relatively untested.
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6. Our operating results are dependent, in part, on management's estimates
of revenue to be earned in the future. We will regularly review and revise
our revenue estimates. Periodic adjustments in amortization rates may
significantly affect these results.
7. We are pre revenue. We anticipate that our revenue will begin in 2021.
Until we are revenue stable our revenue may not be evenly distributed
throughout the year but may be more evenly distributed in the future as
we expand our business and diversify, Until such time, our quarter to
quarter financial results may not be comparable within any single fiscal
year or from fiscal year to fiscal year.
8. Our projections may fluctuate. As a result of the foregoing and other
factors, our results of operations may fluctuate significantly from period
to period, and the results of any one period may not be indicative of the
results for any future period
9. We are smaller and less diversified than many of our competitors. Some
of our larger competitors have more resources with which to compete for
ideas, enhancements, and better functionality.
10. We must successfully respond to rapid technological changes and
alternative forms of delivery or storage to remain competitive. The
financial industry in general continues to undergo significant
developments as advances in technologies and new methods of product
delivery and storage, or certain changes in consumer behavior driven by
these developments, emerge. Consumers are spending an increasing
amount of time online and on mobile devices, and are increasingly
viewing financial date in real time, on their televisions and on handheld or
portable devices. we must adapt our businesses to changing consumer
behavior and preferences and exploit new distribution channels. Our
strategy is to seek to take advantage of these changes and thereby to create
new revenue streams and other opportunities for our content. If we cannot
successfully utilize these and other emerging technologies, it could have a
material adverse effect on our business, financial condition, operating
results, liquidity, and prospects.
11. We must constantly be aware of any intellectual property issues.
Protecting and defending against intellectual property claims may have a
material adverse effect on our business. Our ability to compete depends,
in part, upon successful protection of our intellectual property relating to
our software. We will attempt to protect proprietary and intellectual
property rights to our software through available copyright and trademark
laws and licensing and distribution arrangements with reputable
international companies in specific territories.
12. We plan to conduct business abroad and internationally. We face risks
from doing business internationally. We intend to distribute our content
outside the U.S. and derive revenue in foreign jurisdictions. As a result,
our business is subject to certain risks inherent in international business,
many of which are beyond our control. These risks include:
a. Laws and policies affecting trade, investment, and taxes, including
laws and policies relating to the repatriation of funds and withholding
taxes, and changes in these laws.
b. The Foreign Corrupt Practices Act ("FCPA") and similar laws
10
regulating interactions and dealings with foreign government officials.
c. Changes in local regulatory requirements, including restrictions on
video content.
d. Differing cultural tastes and attitudes.
e. Differing degrees of protection for intellectual property
f. Financial instability and increased market concentration of buyers in
foreign markets.
g. The instability of foreign economies and governments.
h. Fluctuating foreign exchange rates.
i. The spread of communicable diseases in such jurisdictions, which
may impact business in such jurisdictions; and
j. War and acts of terrorism.
Events or developments related to these and other risks associated
with international trade could adversely affect our revenue from non-U.S.
sources, which could have a material adverse effect on our business,
financial condition, operating results, liquidity, and prospects.
Risks Specific to this Offering
a. DeCryptoFi's securities are just being introduced to the market. Our
stock has no history and thus face significant uncertainties around its
valuation. This valuation may be highly dependent on the demand for our
patented software, which is unproven and uncertain, and the reliability of
the underlying technology which is untested.
b. The securities being offered are volatile in nature. There is no
guarantee that our securities will hold their value or increase in value, and
you may lose the amount of your investment in the DeCryptoFi stock in
whole or in part. The shares in the initial stock offering are highly
speculative, and any return on an investment is contingent upon numerous
circumstances, many of which (including legal and regulatory conditions)
are beyond our control. There is no assurance that purchasers will realize
any return on their investments or that their entire investment will not be
lost. For this reason, each purchaser should carefully read this offering
circular and should consult with his or her own attorney, financial and tax
advisors prior to making any investment decision with respect to
DeCryptoFi stock.
c. There is much reliance on the Firm's CEO, Nicholas Scherling,
regarding the ultimate success of the company. Our chairman and chief
executive officer will effectively control our company. DeCryptoFi will
only be offering one class of common stock. Our chairman and chief
executive officer, Nicholas Scherling, has control over the vast majority of
all the outstanding voting power and, in turn, our company. This
concentration of ownership and decision making may make it more
difficult for other stockholders to effect substantial changes in our
company and may also have the effect of delaying, preventing or
expediting, as the case may be, a change in control of our company.
d. Dividend payments will not be made during the inception of the
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Company's offering. We do not intend to pay any dividends on our
common stock at this time. The payment of cash dividends on our
common stock in the future will be dependent upon our revenue and
earnings, if any, capital requirements and general financial condition as
well as the limitations on dividends and distributions that exist under the
laws and regulations of the State of Delaware and will be within the
discretion of the Company. It is the present intention of the Company to
retain all earnings, if any, for use in our business operations and,
accordingly, the Company does not anticipate declaring any dividends on
our common stock in the foreseeable future. As a result, any gain you will
realize on our common stock will result solely from the appreciation of
such shares.
e. If our securities become subject to the SEC's penny stock rules,
broker-dealers may experience difficulty in completing customer
transactions and trading activity in our securities may be adversely
affected. If at any time we have net tangible assets of $5,000,000 or less
and our common stock has a market price per share of less than $5.00,
transactions in our securities may be subject to the "penny stock" rules
promulgated under the Securities Exchange Act of 1934. Under these
rules, broker-dealers who recommend such securities to persons other
than institutional accredited investors must:
1. make a special written suitability determination for the purchaser.
2. receive the purchaser's written agreement to the transaction prior to
sale.
3. provide the purchaser with risk disclosure documents which identify
certain risks associated with investing in "penny stocks" and which
describe the market for these "penny stocks" as well as a purchaser's legal
remedies; and
4. obtain a signed and dated acknowledgment from the purchaser
demonstrating that the purchaser has received the required risk disclosure
document before a transaction in a "penny stock" can be completed.
If our securities become subject to these rules, it may be difficult to
effectuate customer transactions and trading activity in our securities may
be adversely affected. As a result, the market price of our securities may
be depressed, and you may find it more difficult to sell our securities.
We have 50,000,000 shares in reserve for future issuance which
could have an adverse effect on the market price for our securities or on
our ability to obtain future public financing. If and when we issue
additional securities to raise funds or consummate any acquisition or
business combination, you may experience dilution to your holdings.
The determination for the offering price of our shares is more
arbitrary compared with the pricing of securities for an established
operating company.
- You will not be able to sell almost all of our stock immediately after
purchase, and it may decline in value before you have a chance to sell it.
In addition, at issuance, there will be no trading market for the Stock, and
a trading market may never develop.
- If the Stock is issued, there may not be a trading market available for the
Stock, or any exchange on which holders of Stock may transfer or resell
their Stock. As a result, the Stock may initially only be traded on very
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limited range of venues, including U.S. registered exchanges, or regulated
alternative trading systems for which a Form ATS will have been properly
submitted to the SEC.
- Exchanges may decide not to list the DeCryptoFi Stock for several
reasons not under our control, a perceived lack of market interest in the
DeCryptoFi Stock, and any other factors. As a result, investors of
DeCryptoFi Stock should be prepared to hold their Stock indefinitely, as
there is no guarantee that holders will be able to sell or exchange their
Stock. In the event that the Stock remains illiquid for a significant period
of time or indefinitely, the value of the DeCryptoFi Stock may be
materially adversely affected.
- Most securities that are publicly traded in the U.S. have one or more
broker-dealers acting as "market makers" for the security. A market maker
is a firm that stands ready to buy and sell the security on a regular and
continuous basis at publicly quoted prices. In the event the stock is listed
on an exchange, we cannot guarantee that the stock will have a market
maker, which could contribute to a lack of liquidity in the DeCryptoFi
stock and could have a material adverse effect on holders' ability to trade
the stock.
- The offering price of shares of DeCryptoFi was not established on an
independent basis; the actual value of your investment may be
substantially less than what you pay.
The selling price of DeCryptoFi Stock bears no relationship to our book
or asset values or likelihood of repayment or to any other established
criteria for valuing securities. Because the offering price is not based upon
an independent valuation, the offering price may not be indicative of the
proceeds that you would receive upon a commercial sale of the Stock.
Further, the offering price may be significantly more than the price at
which the Stock would trade if they were to be listed on an exchange or
actively traded by broker-dealers. -
The determination for the offering price of our shares is more arbitrary
compared with the pricing of securities for an established operating
company.
Prior to this offering there has been no public market for any of our
securities. The public offering price of our shares was negotiated between
us and the joint book-running managers. Factors considered in determining
the prices and terms of the Shares (and the Additional Shares) offered
hereby include:
* the history and prospects of companies similar to our company;
* prior offerings of those companies;
* our prospects;
* our capital structure;
* an assessment of our management;
* general conditions of the securities markets at the time of the offering
and other factors as were deemed relevant
13
However, although these factors were considered, the determination
of the offering prices is more arbitrary than the pricing of securities for an
established operating company
The value of your share value in DeCryptoFi may depend on its supply,
and whether there is a pre-determined schedule of Stock Compensation
every year. During our first year we will issue approximately 3,125,000
shares of stock in our Stock Compensation Plan, and every two years we
will decrease this number by 5%. This is subject to vary slightly. The
following table shows our projections for the first 6 years:
* Our use of Form 1-A and our reliance on Regulation A for this offering
may make it more difficult to raise capital as and when we need it, as
compared to if we were conducting a traditional initial public offering on
Form S-1.
o Because of the exemptions from various reporting requirements
provided to us under Regulation A and because we are only permitted to
raise up to $50,000,000 in any 12-month period under Regulation A
(although we may raise capital in other ways, such as the concurrent
Regulation S offering), this securities offering may be less attractive to
purchasers and it may be difficult for us to raise additional capital as and
when we need it. If we are unable to raise additional capital as and when
we need it, the growth of our financial condition and
results of operations may be adversely affected, which may have a
material adverse effect on the value of our stock.
Years 1-2 3,125,277
Years 3-4 2,969,013
Years 5-6 2,820,562
* DeCryptoFi may evaluate and consider strategic transactions,
combinations, acquisitions, or alliances to enhance its existing business or
develop new products and services. These transactions could be material
to its financial condition. If we do consummate a transaction, we may be
unable to obtain the benefits or avoid the difficulties and risks of the
transaction.
* Any acquisition will involve risks commonly encountered in business
relationships, including:
o difficulties in assimilating and integrating the operations, personnel,
systems, data, technologies, products, and services of the acquired
business.
o inability of the acquired technologies, products, or businesses to achieve
expected levels of revenue, profitability, productivity, or other benefits.
o difficulties in retaining, training, motivating, and integrating key
personnel.
o diversion of management's time and resources from our normal daily
operations.
o difficulties in maintaining uniform standards, controls, procedures, and
policies within the combined organizations.
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o difficulties in retaining relationships with customers, employees, and
suppliers of the acquired business.
o risks of entering markets in which we have no or limited direct prior
experience.
o regulatory risks, including remaining in good standing with existing
regulatory bodies or receiving any necessary pre- closing or post-closing
approvals, as well as being subject to new regulators with oversight over
an acquired business.
o assumption of contractual obligations that contain terms that are not
beneficial to us, require us to license or waive intellectual property rights
or increase our risk for liability.
o failure to successfully further develop the acquired technology; liability
for activities of the acquired business before the acquisition, including
patent and trademark infringement claims, violations of laws, commercial
disputes, tax liabilities and other known and unknown liabilities.
o potential disruptions to our ongoing businesses; and
o unexpected costs and unknown risks and liabilities associated with the
acquisition.
Risks Related to Regulations
* There are uncertainties related to the regulatory regimes governing the
issuance of new publicly traded securities, and as such, new regulations or
policies may materially adversely affect the development and value our
securities.
* Any future regulatory actions applicable to our related activities could
severely impact our operations and the value of DeCryptoFi. Accordingly,
DeCryptoFi may need to restructure operations significantly to comply
with any new regulation or guidance. These efforts could be costly and
could involve fundamentally changing core portions of our business,
operations and in turn negatively affect the value of our
securities. On the other hand, failure to restructure for compliance
adequately or quickly enough could result in regulatory action (such as
investigations by the government or a self-regulatory organization or
government or private litigation or administrative actions) that requires
DeCryptoFi to spend significant time and effort, which would pull the
Company's attention away from the core of its business and potentially
deplete our resources. It could also result in negative publicity.
* New or changing laws and regulations or interpretations of existing laws
and regulations, in the United States and other jurisdictions, may
adversely impact securities, including with respect to their value, their
liquidity, the ability of purchasers to access marketplaces or exchanges on
which to trade the security, and the structure, rights and transferability of
the security.
Transfer Agent and Registrar
The Company will act as registrar and maintain the Company's share
register. As of the date of this offering circular, we have not engaged a
transfer agent, and do not intend to engage a transfer agent until such time
as we determine its necessary or we are required to do so in order to
satisfy the conditional exemption contained in Rule 12g5-1(a)(7) of the
Securities Exchange Act of 1934, as amended, or the Exchange Act.
TERMS OF THIS OFFERING
Securities being offered by Company: DeCryptoFi is authorized to
issue 500,000,000 shares. We will be offering only one class of common
stock. 25,000,000 shares will be offered through our initial public
offering. The Company will also be offering up to 125,000,000 shares as
stock for non-cash consideration in exchange for certain goods and
services. Please see the section, Stock Compensation Plan for additional
information.
Reserved Funds: The Company will keep 50,000,000 shares in reserve
for future issuance and to enhance the growth of the Company and/or for
reasons that the Company believes are in the best interests of its
shareholders. The CEO of the Company owns 300,000,000 shares subject
to a lock-up period of 180 days, which shall commence 2 days after the
Commission approves this offering.
Best Efforts Offering: There is no minimum number of Offering Shares
that we must sell in order to conduct a closing in this offering. If all the
Offering Shares are sold in the offering, we will have the option to sell up
to 50 million additional newly issued shares in the offering in our
discretion ("Additional Shares").
Lock-up Agreement: Insider(s) of the company have entered into an
agreement with the Company pursuant to which he has agreed to not
sell, transfer or otherwise dispose of any Company Securities for an initial
period of 180 days which shall begin two days after the Commission's
approval of this circular.
Payment for Common stock: After the qualification by the SEC of the
offering statement of which this offering circular is a part, investors will
create a profile on DeCryptoFi's online platform which has been
engineered to seamlessly accept investment online, including verifying
investor identities, performing anti-money laundering checks on investors,
facilitating investment document execution, funds transfer and regulatory
compliance. We may also permit payment to be made in foreign currency
or by credit card if and to the extent we can establish and maintain
relationships with licensed currency exchange services providers and or
payment processing entities to facilitate such transactions and provided,
further, we are able to do so in accordance with FINRA and SEC
guidelines. On each closing date, the funds in the account will be released
to us and the associated shares will be issued to the investors in this
Offering. If any funds are returned by us if we choose to reject a
subscription or elect not to proceed with the Offering, such funds will be
returned by mail via a check in U.S. dollars or through the payment
method received.
Stock Compensation Plan: We are offering up to 125,000,000 shares of
stock through our Stock Compensation Plan. In the future, stock may be
16
exchanged for public or private shares of companies that utilize
DeCryptoFi services for the issuance of public or private capitalization.
Voting Rights: Each holder of the Company's Common Stock is entitled
to one vote for each share on all matters submitted to a vote of the
shareholder, except as provided by law or by the other provisions of the
Certificate of Incorporation.
Dividends: We do not intend to pay any dividends currently. The
payment of cash dividends on our common stock in the future will be
dependent upon our revenue and earnings, if any, capital requirements
and general financial condition as well as the limitations on dividends and
distributions that exist under the laws and regulations of the State of
Virginia and will be within the discretion of the Company. It is the present
intention of the Company to retain all earnings, if any, for use in our
business operations and accordingly, the Company does not anticipate
declaring any dividends on our common stock in the foreseeable future.
As a result, any gain you will realize on our common stock will result
solely from the appreciation of such shares.
List of securities and proposed symbols: Prior to this offering, there have
been no public market for our common stock. We currently do not meet
the financial listing requirements to be listed on a national securities
exchange. Once the Company reaches the applicable thresholds, the
Company intends to register with one or more registered securities
exchanges.
USE OF PROCEEDS
We estimate that the net cash proceeds to us from the sale of the
company stock offering in this offering will be $15 million, minus any
offering expenses and other fixed costs.
We intend to use the proceeds of this offering, net of any federal and
state income taxes for working capital and other general corporate
purposes general operations and cash reserves, including but not limited
to payment of salaries (including those of directors and officers) and
hiring employees and consultants. We also intend to use the proceeds of
this offering for research and development, specifically for continued
development in ways to enhance our software and our platform, and for
hiring costs and payment of salaries that are allocated to research and
development, as well as for marketing and education, which includes
organizing and hosting educational and developer events.
We will also use the above proceeds in conjunction with the proceeds
from a potential concurrent or subsequent Regulation S offering to
non-U.S. persons, the net proceeds of which we estimate to be
$15,000,000.00. We cannot specify with certainty all the particular uses
for the net proceeds to be received upon the concurrent Regulation S
offering. In addition, the amount, allocation, and timing of our actual
expenditures will depend upon numerous factors. Pending other uses, we
intend to invest the proceeds in interest-bearing, investment-grade
instruments, certificates of deposit or direct or guaranteed obligations of
the U.S. government, or hold as cash. We cannot predict whether the
proceeds invested will yield a favorable return. Our management will
have broad discretion in the application of the net proceeds we receive
17
from our offering and the concurrent Regulation S offering, and investors
will be relying on the judgment of our management regarding the
application of the net proceeds. It is in the Company's sole discretion
whether to pursue a Regulation S offering.
In addition, we intend to use our proceeds for the following:
a. financing production and associated development and operating costs
and expenses for our software.
b. working capital and general corporate purposes.
DeCryptoFi reserves the right to alter the use of proceeds in this offering.
DESCRIPTION OF BUSINESS
DeCryptoFi's main goal is to make the public and private offering
process of raising capital easier for small and midsized businesses to
achieve. Our top priority is to aid and facilitate with the complexities in
the alternative space of capital raising. Many companies, even if aware of
these alternative methods of capital raising, simply lack the legal and
finance team dedicated in ensuring that all regulatory and audit
requirements are satisfied. Without the proper personnel, small to medium
sized businesses cannot devote the time to raising capital while
simultaneously running their business. If these business owners wish to
outsource these functions, it can drastically affect the company's bottom
line.
We aim to assist with initial public offerings ("IPO"), initial public
debt offerings ("IPDO"), private offerings, and private debt offerings. We
believe that average business owners are not even aware of the ability for
tapping public and private markets simply through debt offerings and the
potential advantages associated with it. Staging an IPO is also a very
time-consuming and expensive process. The registration process can be
quite complex and requires the company to disclose a variety of
information to potential investors. In addition, the IPO process can take as
little as six months or as long as two years, during which time
management's attention is distracted away from day-to-day operations. It
can also conservatively cost a company between $50,000 and $250,000 in
underwriting fees, legal and accounting expenses, and printing costs.
DeCryptoFi's software will allow companies the ability to streamline
and automate SEC filings, quarterly and annual reports, dividend
payments, privacy notifications, General Data Protection Regulations
("GDPR"), Anti-Money laundering provisions, and the Trust Indenture
Act regulations. By giving our customers the ability to systematize these
processes, the regulatory landscape will be satisfied, thereby alleviating
some of these hurdles and giving them the opportunity to focus on
running their business.
DeCryptoFi has not filed for any bankruptcy receivership, or similar
proceedings, nor is DeCryptoFi currently subject to, or has been subject
to, any legal proceedings material to the business or its financial
condition. There is no material litigation, arbitration or governmental
proceeding currently pending against us, or any of our officers or in their
capacity acting as such and neither we, nor our officers have been subject
18
to any such proceedings in the 12 months preceding the date of this
preliminary offering circular.
Trademarks and Copyrights:
We own or have applied for rights to trademarks or trade names that
we use in connection with the operation of our business, including our
corporate names, logos and website names. In addition, we own or have
the rights to copyrights, trade secrets and other proprietary rights that
protect our business. This offering circular may also contain trademarks,
service marks and trade names of other companies, which are the property
of their respective owners. Our use or display of third parties' trademarks,
service marks, trade names or products in this offering circular is not
intended to, and should not be read to, imply a relationship with or
endorsement or sponsorship of us. Solely for convenience, some of the
copyrights, trade names and trademarks referred to in this offering
circular are listed without their (c), (r) and (tm) symbols, but we will
assert, to the fullest extent under applicable law, our rights to our
copyrights, trade names and trademarks. All other trademarks are the
property of their respective owners.
DeCryptoFi Platform:
We will operate an online platform, where investors can manage their
accounts and purchase shares of our company. Prospective investors will
create a public address (username) and private key (password) and
indicate agreement to our terms and conditions and privacy policy.
* Available Online Directly from Us. Investors must purchase shares of
our stock directly from us.
* No Minimum Investment. Investors will be able to build ownership over
time by making purchases as low as the initial offering price.
DESCRIPTION OF DECRYPTOFI'S COMMON STOCK
GENERAL
DeCryptoFi has a total of 500,000,000 authorized shares of common
stock, with a par value $.0001. As of the date of this offering circular,
300,000,000 shares of the Company's common stock are outstanding.
VOTING RIGHTS
As DeCryptoFi's business expands, it is the intention of the Company
to grant voting rights to Company shareholders. Shareholders would be
entitled to one vote per share.
NO PREEMPTIVE OR SIMILAR RIGHTS
Our common stock is not entitled to preemptive rights and is not
subject to conversion, redemption or sinking fund provisions.
MERGER OR CONSOLODATION
In the case of any distribution or payment in respect of the Company's
common stock upon any potential consolidation or merger with or into
any other entity, or in the case of any other transaction having an effect on
stockholders substantially similar to that resulting from a
consolidation or merger, such distribution or payment shall be made
ratably on a per share basis among the Company's shareholders.
19
REGULATORY CONSIDERATIONS
Below is a summary of certain current areas of government regulation
that apply to our business and potential regulatory issues of which we are
aware. As discussed below, we generally believe that our business and the
offering discussed in this offering circular are compliant with these
regulations, but in certain cases there may be uncertainty related to that
conclusion.
Government Regulations
The regulatory treatment of securities offerings is uncertain in many
ways. In part, this uncertainty results from the need for regulators to apply
existing law to a new and evolving set of technologies and assets. We
anticipate that regulation will evolve as various state, federal and
international government agencies take greater interest in regulation of
newly issued securities, especially with the recent enactment of
Regulation Best Interest ("Reg BI"), and the current Dodd Frank
provisions. We anticipate new regulations to be established, at which
point, if applicable to DeCryptoFi's business model, we will take all
necessary steps to ensure we are compliant. In addition, various
legislative and executive bodies in the United States and in other
countries may adopt new laws, regulations, or guidance, or take other
actions in the future.
Any future regulatory actions applicable to DeCryptoFi and our
related activities could severely impact our operations and the value of
our securities. We may need to restructure operations significantly to
comply with any new regulation or guidance. Failure to do so adequately
or quickly enough could result in regulatory action (such as investigations
by the government or a self-regulatory organization or government or
private litigation or administrative actions) that requires us to spend
significant time and effort, which would pull our attention away from the
core of our business and potentially deplete our resources. It could also
result in negative publicity. Regulatory change could even potentially
result in certain aspects of our operations being viewed as impermissible,
which could result in a need for us to dramatically alter or cease activities
Securities Act Considerations
Typically, offerings of securities in the U.S. are required to register
under the Securities Act with the SEC and, in compliance with state law,
with applicable state regulators (blue sky regulations). Our current
offering relies on an exemption from federal registration under the
Securities Act provided by Regulation A, which also provides for
preemption of state registration requirements, but which also currently
limits issuances by a single issuer to offerings of no more than
$50,000,000 each year. We have also taken the position that the
commercial uses of our stock, including transfers between owners, do not
require registration or an exemption from registration under state
securities laws.
If in subsequent years after our initial filing we find that our ability to
issue additional shares would exceed the $50m threshold provided by Reg
A Tier 2, we recognize that we may need to fully register our securities
with the SEC and/or to register our shares of stock with one or more U.S.
20
state securities regulators.
Exchange Act Considerations
Registration as Transfer Agents. Under the Exchange Act, a transfer
agent is a person who engages, with respect to securities registered under
Section 12 of the Exchange Act, in (a) countersigning issued securities,
(b) monitoring issued securities, with the goal of preventing unauthorized
issuances, (c) registering transfers of issued securities, (d) exchanging or
converting issued securities, or (e) transferring record ownership of
securities by bookkeeping entry without physical issuance of securities
certificates. Transfer agents are typically required to register with the SEC
under the Exchange Act. Because our distributed software will record the
owner of our stock, and/or the debt of clients we potentially assist in
going public that may not be listed on an exchange at the time of going
public, we could be viewed as engaging in these types of activities.
We have taken the position that DeCryptoFi, and anyone operating its
software are not required to register as transfer agents because direct sale
of stock from seller to buyer without an exchange or marketplace is not
captured or described in the definition of a transfer agent and is not
facilitated by DeCryptoFi. In the future, once listed on an exchange, stock
transfers occurring on an exchange will be recorded by the relevant
exchange in accordance with all applicable laws.
It is possible that the SEC or another regulator would disagree with
our position. If so, we, or anyone running our software could be forced to
register as a transfer agent and comply with applicable law, which could
lead to significant costs to DeCryptoFi and could force DeCryptoFi to
change or cease its operations. It could also lead to considerable
uncertainty as to how we would comply with regulation, which would
likely result in a need for a relatively long registration process and could
ultimately prove prohibitive to our business model. Any of these
developments would decrease the value of the stock sold in this offering.
Registration as Clearing Agency
Also under the Exchange Act, a clearing agency is any person who
(a) acts as an intermediary in making payments or deliveries, or both, in
connection with transactions in securities; (b) provides facilities for
comparison of data respecting the terms of settlement of securities
transactions, to reduce the number of settlements of securities
transactions, or for the allocation of securities settlement responsibilities;
(c) acts as a custodian of securities in connection with a system for the
central handling of securities whereby all securities of a particular class or
series of any issuer deposited within the system are treated as fungible
and may be transferred, loaned, or pledged by bookkeeping entry without
physical delivery of securities certificates; or (d) otherwise permits or
facilitates the settlement of securities transactions or the hypothecation or
lending of securities without physical delivery of securities certificates. A
clearing agency does not include any person solely by reason of
performing a transfer agent function, specifically transferring record
ownership of securities by bookkeeping entry without physical issuance
of securities certificates. Clearing agencies are generally required to
register with the SEC and comply with applicable regulation. Because
DeCryptoFi, or anyone operating our software will be involved in
recording transfers in the stock, they could be viewed as engaging in these
types of activities.
21
We have taken the position that DeCryptoFi, and anyone operating its
software are not clearing agencies under the Exchange Act because the
types of activities they engage in are not those described in the definition
of a clearing agency. To the extent that transfers are recorded by our
software, the software is not a "person" that would be required to register.
It is possible that the SEC or another regulator would disagree with
our position. If so, we, or anyone running our software could be forced to
register as a clearing agency and comply with applicable law, which could
lead to significant costs to DeCryptoFi and could force DeCryptoFi to
change or cease its operations. It could also lead to considerable
uncertainty as to how we would comply with regulation, which would
likely result in a need for a relatively long registration process and could
ultimately prove prohibitive to our business model. Any of these
developments would decrease the value of the stock sold in this offering.
Registration as an Exchange or ATS
Entities that are engaged as "exchanges" or "ATSs" with respect to
securities are subject to federal registration and significant regulatory
oversight by the SEC and FINRA. Exchanges and ATSs are generally
networks that constitute, maintain, or provide a marketplace or facilities
for bringing together the orders of multiple purchasers and multiple
sellers of securities. A system "brings together" orders if it displays
trading interests entered on the system to users (e.g., through consolidated
quote screens) or receives orders for processing and execution. This does
not include systems that have only one seller for each security (e.g., the
issuer), even if there are multiple buyers.
We have taken the position that DeCryptoFi and its software should not
be viewed as an exchange or an ATS because it does not constitute,
maintain, or provide a marketplace or facilities for bringing together the
orders of multiple purchasers and multiple sellers of the stock.
Registration as a Broker-Dealer
Under the Exchange Act, a "broker" is a person engaged in the
business of effecting transactions in securities for the account of others.
The staff of the SEC has indicated that receiving commissions or other
transaction-related compensation is one of the determinative factors in
deciding whether a person is "engaged in the business" of being a
"broker," in part because this "salesman's stake" in a securities transaction
incentivizes the recipient to encourage transactions that may or may not
be appropriate for the parties involved. Because DeCryptoFi's software
operators receive stock for maintaining software operations (which may
involve recording transactions in the Stock), they could be viewed as
brokers.
We take the position that DeCryptoFi or any operator of its software
is not a broker-dealers, because they do not receive a commission or
compensation to encourage transactions. All compensation is paid for
software operations and is pre-determined with no regard to the number
of total transactions occurring during the pre-determined timeframe.
It is possible that the SEC or another regulator would disagree with our
position. If so, DeCryptoFi or its software operators could be forced to
22
register as broker-dealers and comply with applicable law. This would
disrupt our business significantly, perhaps making it prohibitive to
operate, and would likely lead to a decrease or complete loss in the value
of the Stock.
Reporting Company Considerations
Under Regulation A, we will have limited ongoing reporting
obligations to investors relative to the obligations of companies that are
"reporting companies" for purposes of the Exchange Act. The exemption
that allows this lighter reporting, however, is in part dependent on the use
of a transfer agent with respect to a company's securities. We do not
intend to engage a transfer agent with respect to our securities, in part
because the types of activities a transfer agent would normally engage in
are performed automatically by our software. As a result, as a practical
matter, we also do not think we would be able to comply with the transfer
agent requirement, and we do not think it applies to or would provide
additional investor protections for this offering.
It is possible that a regulator would disagree with this position and, as
a result, require us to file the full set of reports required of a reporting
company. If so, we would need to spend considerable additional time and
effort to provide the required reports. This could have a material adverse
effect on our operations, which in turn could affect the value of our
Company stock.
Regulation M
Regulation M under the Exchange Act generally prohibits issuers
from buying and selling their securities at the same time, in order to
prevent potential price manipulation that could result from those
activities. In certain circumstances, we may be selling stock at a future
date while concurrently retiring stock. We are currently set to retire
2% of the stock every 4 years. The company will not be purchasing the
2% stock being retired every 4 years after our initial offering but will
be charging a flat fee per transaction not to exceed 20 shares of stock
(with a value of $2.00 at offering) per transfer between a stock seller
and stock buyer for recording the transaction. This fee/stock will be
retired immediately and automatically at the time of the transaction.
DeCryptoFi may be viewed as receiving stock at the same time as selling
it under Regulation A. However, we believe retiring a percentage of stock
at a pre-determined rate does not constitute buying and selling the
security for price manipulation. As a result, we do not believe these
activities are in violation of Regulation M.
It is possible that a regulator would disagree with this position. If so,
we may be required to significantly restructure the transactions, which
could lead to significant costs to the Company and could force it to
change or cease the operations. This would result in a loss or decrease in
value of the Stock.
Foreign Considerations
We may also subject to a variety of foreign laws and regulations that
involve matters central to our business. These could include, for example,
regulations related to user privacy such as the General Data Protection
Regulation, potential broker-dealer or exchange activities, data protection,
and intellectual property, among others. In certain cases, foreign laws may
be more restrictive than those in the U.S. Although we believe we are
operating in compliance with the laws of jurisdictions in which
DeCryptoFi exists, foreign laws and regulations are constantly evolving
and can be subject to significant change. In addition, the application and
interpretation of these laws and regulations are often uncertain,
23
particularly in the new and rapidly evolving industry in which we operate.
As a result, we are involved in face an uncertain regulatory landscape in
many foreign jurisdictions, including but not limited to the European
Union. Other foreign jurisdictions may also adopt laws, regulations or
directives that affect the similar types of securities offerings.
We have adopted policies and procedures designed to comply with
the laws that apply to us as we understand them. However, the growth of
our business and its expansion outside of the U.S. may increase the
potential of violating foreign laws or our own internal policies and
procedures. The risk of our Company being found in violation of
applicable laws and regulations is further increased by the fact that many
of them are open to a variety of interpretations given the absence of
formal interpretation by regulatory authorities or the courts.
Any action brought against us by a foreign regulator or in a private
action based on foreign law could cause us to incur significant legal
expenses and divert our management's attention from the operation of the
business. If our operations are found to be in violation of any laws and
regulations, we may be subject to penalties associated
with the violation, including civil and criminal penalties, damages and
fines; we could be required to refund payments received by us; and we
could be required to curtail or cease operations. Any of these
consequences could seriously harm our business and financial results. In
addition, existing and proposed laws and regulations can be costly to
comply with and can delay or impede the development of new products,
result in negative publicity, increase operating costs, require significant
management time and attention, and subject us to claims or other
remedies, including fines or demands that we modify or cease existing
business practices.
Any applicable foreign laws, regulations or directives may also
conflict with those of the United States. The effect of any future
regulatory change is impossible to predict, but any change could be
substantial and materially adverse to the adoption and value of the
securities and our operations.
CHANNELS FOR DISCLOSURE OF INFORMATION AND
PLAN OF DISTRIBUTION
Upon the Commission's qualification, this offering circular shall be
an initial offering for 25,000,000 shares of our common stock. We will
have the option to sell up to 50,000,000 Additional Shares which are
currently authorized but unissued, should all of the Offering Shares be
sold in the offering. There is no minimum number of Offering Shares that
we must sell in order to conduct a closing in this offering.
The offering price of the Offering Shares was determined by the
Company. This determination was done without reference to our book
value or asset values or by the application of any customary, established
models for valuing companies or securities. Accordingly, the offering
price may not be indicative of any amounts you might receive should you
seek to sell your shares or should there be a liquidation of our company.
In addition, such prices are not necessarily indicative of any prices at
which our securities may trade, or any value that might be ascribed to our
24
Company after the completion of the offering.
Any purchase of our Offering Shares by an officer or director of the
Company shall be conducted in compliance with the applicable provisions
of Regulation M.
We may decide to close the offering early or cancel it, in our sole
discretion. If we extend the offering, we will provide that information in
an amendment to this offering circular. If we close the offering early or
cancel it, we may do so without notice to you, although if we cancel the
offering all funds that may have been provided by any investors will be
promptly returned without interest or deduction.
Investors, the media and others should note that, following the
completion of this offering, we intend to announce material information to
the public regarding DeCryptoFi through filings with the SEC,
DeCryptoFi's corporate blog at DeCryptoFi.com/blog, DeCryptoFi's
mailing list which is available for sign-up at DeCryptoFi.com press
releases, public conference calls and webcasts. We also intend to
announce information regarding DeCryptoFi and its business, operating
results, financial condition and other matters through our Twitter account,
which can be accessed at https://twitter.com/DeCryptoFi.
Investors should monitor our website and the above social media accounts
in addition to following its press releases, SEC filings, public conference
calls, and webcasts. The social media channels that DeCryptoFi intends to
use as a means of disclosing the information described above may be
updated from time to time.
This offering circular will be furnished to prospective investors via
electronic PDF format before or at the time of all written offers and will
be available for viewing and download on the DeCryptoFi website, as
well as on the SEC's website at www.sec.gov.
PROCEDURES FOR SUBSCRIBING
Shares pursuant to this offering circular will be offered only through
DeCryptoFi's website at https://www.DeCryptoFi.com and, if the
Company chooses so, through management-approved third party platform
partners, which partners will be registered investment advisers or
broker-dealers and may, by virtue of their registration status, be deemed to
be underwriters. As of the date of this offering circular, we do not have,
nor do we intend, to develop relationships with any third-party platform
partners.
We are offering our stock for cash through our website
www.DeCryptoFi.com where potential investors in the offering will be
able to review an electronic version of this offering circular and execute a
subscription agreementas of the commencement of this offering.
In order to subscribe to purchase DeCryptoFi stock, a prospective investor
will be required to electronically complete, sign, and deliver an executed
subscription agreement. Once submitted, an investor's subscription is
irrevocable, except for limited exceptions, such as if the investor's
subscription is only partially accepted, in which case within 20 days of the
investor having been provided notice of this fact.
There is no minimum number of shares of stock that we must sell in
order to conduct a closing in this offering. Payment for stock sold through
25
the cash offering will be accepted on a rolling basis during the term of the
cash offering.
We may decide to cancel the offering entirely, in our sole discretion.
If we cancel the Offering, we may do so without notice to you, although if
we cancel the Offering, all funds that may have been provided by any
investors will be promptly returned without interest or deduction.
STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS
Our shares of Common stock are being offered and sold only to
"qualified purchasers" (as defined in Regulation A under the Securities
Act). As a Tier 2 offering pursuant to Regulation A under the Securities
Act, this Offering is exempt from state law "Blue Sky" review, subject to
meeting certain state filing requirements and complying with certain
anti-fraud provisions, to the extent that our Class A shares offered hereby
are offered and sold only to "qualified purchasers" or at a time when our
Class A shares are listed on a national securities exchange. "Qualified
purchasers" include: (i) "accredited investors" under Rule 501(a) of
Regulation D and (ii) all other investors so long as their investment in our
Class A shares does not represent more than 10% of the greater of their
annual income or net worth (for natural persons), or 10% of the greater of
annual revenue or net assets at fiscal year-end (for non-natural persons).
Accordingly, we reserve the right to reject any investor's subscription in
whole or in part for any reason, including if we determine in our sole and
absolute discretion that such investor is not a "qualified purchaser" for
purposes of Regulation A.
To determine whether a potential investor is an "accredited investor"
for purposes of satisfying one of the tests in the "qualified purchaser"
definition, the investor must be a natural person who has:
1. The individual must have a net worth greater than $1 million, either
individually or jointly with the individual's spouse. Except for the special
provisions described below, individuals should include all their assets and
all of their liabilities in calculating net worth, excluding the value of their
primary residence; or
2. persons who had an income of at least $200,000 in each of the two
most recent years (or $300,000 together with their spouse) and have a
reasonable expectation of reaching the same income level in the current
year.
If the investor is not a natural person, different standards apply. See Rule
501 of Regulation D for more details.
For purposes of determining whether a potential investor is a
"qualified purchaser," annual income and net worth should be calculated
as provided in the "accredited investor" definition under Rule 501 of
Regulation D. Net worth in all cases should be calculated excluding the
value of an investor's home, home furnishings and automobiles.
DILUTION
Dilution refers to the reduction in value, control, or earnings of the
shares the investor owns.
IMMEDIATE DILUTION
26
An early-stage company typically sells its shares (or grants options
over its shares) to its founders and early employees at a very low cash
cost, because they are, in effect, putting their "sweat equity" into the
company. When the company seeks cash investments from outside
investors, like you, the new investors typically pay a larger sum for their
shares than the founders or earlier investors, which means that the cash
value of your stake is diluted because each share of the same type is worth
the same amount, and you paid more for your shares than earlier investors
did for theirs.
The Company acknowledges that the dilution may be substantial
under certain market conditions. The Company further acknowledges that
its obligations under the Transaction Documents, including without
limitation its obligation to issue the Securities (including the Underlying
Shares) pursuant to the Transaction Documents, are unconditional and
absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim that
the Company may have against any Purchaser.
The following table summarizes the differences between the total
consideration and the weighted-average price per share paid by, on the
one hand, officers, directors, promoters and affiliates of DeCryptoFi who
have acquired shares prior to the date of this offering circular and, on the
other hand, investors participating in this offering, before deducting
estimated offering expenses, assuming that the maximum number of
shares are sold at the $0.10 per share price. The table compares the price
that new investors are paying for their shares with the effective cash price
paid by existing shareholders, giving effect to full conversion of all
outstanding stock options. The schedule presents shares and pricing as
issued and reflects all transactions since inception, which gives investors
a better picture of what they will pay for their investment compared to the
company's insiders:
SHARES
PURCHASED TOTAL CONSIDERATION TOTAL
WEIGHTED AVG PRICE PER SHARE
Existing shareholders before this offering2 300,000,000
$0 .000000
Public Sale 25,000,000
$2,500,000 0.1000
Stock Compensation Plan 125,000,000
$12,500,000 0.1000
Total Investors Participating in this Offering 150,000,000
$15,000,000 0.10003
FUTURE DILUTION
27
Another important way of looking at dilution is the dilution that
happens due to future actions by the company. The investor's stake in a
company could be diluted due to the company issuing additional shares,
whether as part of a capital-raising event, or issued as compensation to the
company's employees or marketing partners. In other words, when the
company issues more shares, the percentage of the company that you own
will go down, even though the value of the company may go up. You will
own a smaller piece of a larger company. This increase in number of
shares outstanding could result from a stock offering (such as an initial
public offering, another crowdfunding round, a venture capital round,
angel investment), employees exercising stock options, or by conversion
of certain instruments (e.g. convertible bonds, preferred shares or
warrants) into stock.
If the company decides to issue more shares, an investor could
experience value dilution, with each share being worth less than before,
and control dilution, with the total percentage an investor owns being less
than before. There may also be earnings dilution, with a reduction in the
amount earned per share (though this typically occurs only if the company
offers dividends, and most development stage companies do not pay
dividends for some time).
The type of dilution that hurts early-stage investors most occurs when
the company sells more shares in a "down round," meaning at a lower
valuation than in earlier offerings. An example of how this might occur is
as follows (numbers are for illustrative purposes only):
In June 2014, Jane invests $20,000 for shares that represent 2% of a
company valued at $1 million.
In December, the company is doing very well and sells $5 million in
shares to venture capitalists on a
valuation (before the new investment) of $10 million. Jane now owns
only 1.3% of the company,
but her stake is worth $200,000.
In June 2015, the company has run into serious problems, and in order to
stay afloat, it raises $1 million
at a valuation of only $2 million (the "down round"). Jane now owns only
0.89% of the company,
and her stake is worth only $26,660.
If you are making an investment expecting to own a certain
percentage of the company or expecting each share to hold a certain
amount of value, it's important to realize how the value of those shares
can decrease by actions taken by the company. Dilution can make drastic
changes to the value of each share, ownership percentage, voting control,
and earnings per share. In some cases, dilution can also completely wipe
out the value of investments made by early investors, without any person
being at fault. Investors should understand how dilution works and the
availability of anti-dilution protection.
DeCryptoFi is committed to zero new share issuance outside of the
28
500,000,000 shares in existence today.
CONCURRENT OR SUBSEQUENT REGULATION S (REG S)
OFFERING
Regulation S provides an exclusion from the Section 5 registration
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), for offerings made outside the U.S. by both U.S. and foreign
issuers. A securities offering, whether private or public, made by an
issuer outside of the United States in reliance on Regulation S need not be
registered under the Securities Act. The Regulation S safe harbors are
non-exclusive, meaning that an issuer that attempts to comply with
Regulation S also may claim the availability of another applicable
exemption from registration.
Further, a contemporaneous registered offering or exempt private
placement in the U.S. will not be integrated with an offshore offering that
otherwise complies with Regulation S. In fact, Regulation S contemplates
that a private placement in the United States may be made simultaneously
with an offshore public offering in reliance on the issuer safe harbor.
Thus, offshore offerings and sales of securities made in reliance on
Regulation S do not preclude the resale of those same securities made in
reliance on Rule 144A or Regulation D, even if the resale occurs during
the distribution compliance period.
The stock in a potential concurrent or subsequent Regulation S
offering will be restricted securities and will be sold for delayed delivery
and subject to a transfer restriction for one year after sale.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Impact of COVID-19
You should read the following discussion and analysis of our financial
condition and results of operations together with our consolidated
financial statements and the related notes and other financial information
included elsewhere in this offering circular. Some of the information
contained in this discussion and analysis, including information with
respect to our plans and strategy for our business, includes
forward-looking statements that involve risks and uncertainties. You
should review the "Risk Factors" section of this offering circular for a
discussion of important factors that could cause actual results to differ
materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
In March 2020, the World Health Organization declared the outbreak
of a novel coronavirus (COVID-19) as a pandemic, which continues to
spread throughout the U.S and other countries. As a result, Company
franchisees have temporarily closed some retail locations, reduced or
modified store operating hours, adopted a "to-go" only operating model,
or implemented a combination of these actions. These actions have
reduced consumer traffic, resulting in a negative impact to Company
revenues. While the disruption to our business from the COVID-19
29
pandemic is currently expected to be temporary, there is a great deal of
uncertainty around the severity and duration of the disruption, and also
the longer-term effects on our business and economic growth and
consumer demand in the U.S. and worldwide.
The effects of COVID-19 may continue to materially adversely affect
our business, results of operations and liquidity, particularly if these
effects continue in place for a significant amount of time. As additional
information becomes available regarding the potential impact and the
duration of the negative financial effects of the current pandemic, the
Company may determine that an impairment adjustment to the recorded
value of trademarks, goodwill and other intangible assets may be
necessary.
Effects of COVID-19 on Liquidity and Operations
While the Company expects COVID-19 to negatively impact its
business, results of operations and financial position, the full financial
impact cannot be reasonably estimated at this time. The Company
currently believes that its working capital combined with our disciplined
management of the Company' operating expenses, will be sufficient to
meet our current liquidity needs. However, COVID-19 pandemic events
will continue to evolve over time and the negative effects on the
operations of our franchisees could prove to be worse than we currently
estimate.
Business overview
Decentralized Crypto Financial Inc. uses patented proprietary
software to assist small and medium sized companies in determining the
best approach to raising capital.
We are aggressively growing our business through a combination of
organic growth, licensing and distribution arrangements, acquisitions, and
strategic relationships.
Trends and Key Factors Affecting Our Performance
Investment in Long-Term Growth.
The core elements of the Company's growth strategy include
acquiring new customers, broadening distribution capabilities, enhancing
data and software functionality, and expanding product offerings. The
Company plans to continue to invest significant resources to accomplish
these goals, and the Company anticipates that its operating expenses will
continue to increase for the foreseeable future, particularly sales and
marketing and technology expenses. These investments are intended to
contribute to long-term growth, but they may affect near-term
profitability.
Originations.
The Company's future growth will continue to depend, in part, on
attracting additional investors as well as additional companies wanting to
utilize our software. The Company plans to increase its sales and
marketing spending and seek to attract these investors and companies. We
expect to rely on strategic partners, affinity networks, social media, and
30
conference and speaking events for investor growth. The Company
expects there to be a consistent need of undercapitalized companies
seeking capital raising alternatives. The extent to which the Company can
satisfy this ongoing demand will be an important factor in its continued
revenue growth.
Use of GAAP Financial Measures
DeCryptoFi's management's discussion and analysis of DeCryptoFi's
financial condition and results of operations is based on its financial
statements, which have been prepared in accordance with United States
generally accepted accounting principles, or U.S. GAAP. The preparation
of these financial statements requires DeCryptoFi to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements, as well as the reported revenue generated, and
expenses incurred during the reporting periods. DeCryptoFi's estimates
are based on its comparable and on various other factors that DeCryptoFi
believes are reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
Due to the fact that DeCryptoFi was not formed until August 2020
DeCryptoFi believes that the accounting policies discussed may be of
little use to understanding DeCryptoFi historical and future performance,
as these policies relate to the more significant areas involving
management's judgments and estimates.
When we prepare our consolidated financial statements in conformity
with GAAP, we must make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities, and the reported amounts of revenue and expenses
during each reporting period. Our estimates may include those related to
revenue recognition, accounts receivable allowances, intangible assets,
share-based compensation expense, income taxes and programming costs.
Actual results included in this offering circular, and in future financial
results, could differ from the original estimates.
Under ASC 606, an entity recognizes revenue when its customer
obtains control of promised goods or services, in an amount that reflects
the consideration which the entity expects to receive in exchange for
those goods or services. To determine revenue recognition for
arrangements that DeCryptoFi determines are within the scope of ASC
606, the following five steps are performed:
a. Identify the contract(s) with a customer.
b. Identify the performance obligations in the contract.
c. Determine the transaction price.
d. Allocate the transaction price to the performance obligations in the
contract; and
e. Recognize revenue when (or as) DeCryptoFi satisfies a performance
obligation
31
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
EMPLOYEES
As of October 2020, the Company has one executive officer, CEO
Nick Scherling. Mr. Scherling is not represented by a labor union or
covered under a collective bargaining agreement.
NAME POSITION AGE TERM OF
OFFICE
Nicholas Scherling CEO 37 August
2020
Mr. Scherling has more than 20 years of technology expertise at senior
levels serving in the Intelligence Community, DoD, and industry. Mr.
Scherling served in leadership and technical roles in TENICA and
Associates, Booz Allen Hamilton, General Dynamics, Electronic Warfare
Associates, Northwest Airlines, and the Air National Guard. Although
DeCryptoFi is a newly organized C-Corp, Mr. Scherling has been
developing the systemic and automated technology for a substantial
period of time prior to officially having his company qualified by the
Commission.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS.
Summary compensation table
The following table summarizes the compensation of the
highest paid person, the CEO, during the year ended December 31, 2019.
Name Capacity in which compensation was received
Cash Compensation ($) Other Compensation ($)
Total Compensation ($)
Nicholas Scherling Chief Executive Officer
$0.00 $0.00
$0.00
Authorized Shares. A total of 50,000,000 shares of our corporate common
stock are reserved for issuance as the Company sees fit. Upon
qualification, if the Company determines that issuing these shares will
neither its shareholders nor increase the value of the Company, then the
Company may determine that such shares shall be available for future
grant or sale. As the Company continues grow and better understand its
strengths and weaknesses, the Company may decide to adopt a formalized
incentive plan, which will then outline the specifications that must be met.
Currently, there is no such plan in place, nor is there any intention to
memorialize any such plan.
Stock Options. Upon qualification, the Company may determine, at a later
date, that it wishes to compensate its employees in the form of stock
options. While no such plan is currently in place, if the Company does
decide to implement a stock option plan, certain guidelines must be
followed: The term of an incentives stock option may not exceed 10
years; the stock option strike price shall be equal to its fair market value
of the Company's stock on the day the option is granted except that with
respect to incentive stock options granted to any participant who owns
32
more than 10% of the voting power of outstanding stock, the exercise
price must generally equal at least 110% of the fair market value on the
grant date and the term must not exceed five years. The Company will
determine the methods of payment of the exercise price of an option,
which may include cash, shares or other property acceptable to the
Company, as well as other types of consideration permitted by applicable
law. After the termination of service of an employee, director or
consultant, he or she may exercise his or her option for the period of time
stated in his or her option agreement. Unless otherwise provided for by
the Company, if termination is due to death or disability, the option will
remain exercisable for 12 months and in all other cases, the option will
generally remain exercisable for three months following the termination
of service. These are simply guidelines and the Company may amend
some or all of these guidelines if the company introduces an incentivized
stock option plan.
Code of Ethics. Effective upon consummation of this offering, we will
adopt a code of ethics that applies to all of our respective executive
officers, directors, and employees. The code of ethics will codify the
business and ethical principles that govern all aspects of our business.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS
The following table sets forth information regarding the beneficial
ownership of our shares of our common stock as of the date of this
offering circular. Since DeCryptoFi will only be offering only one class of
stock, and since our insider is subject to a predetermined lock-up period,
there is no need to adjust to reflect the sale of all of the Shares offered by
this preliminary offering circular (assuming none of the individuals listed
purchase shares in this offering), by:
1. each person known by us to be the beneficial owner of more than 5%
of our outstanding shares.
2. each of our executive officers and directors; and
3. all our executive officers and directors as a group.
Unless otherwise indicated, we believe that all persons named in the
table have sole voting and investment power with respect to all shares
beneficially owned by them. Additionally, except as otherwise indicated,
beneficial ownership reflected in the table has been determined in
accordance with Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended.
Shares Beneficially Owned Prior to Offering
Shares Beneficially Owned After Offering
Name and address of % of Total
Voting % of Total Voting
Beneficial Owner5___ Shares % Prior to
Offering Shares % After Offering
Nicholas Scherling 300M 100%
100% 300M 60% 66.67%
33
SHARES ELIGIBLE FOR FUTURE SALE
Rule 144
A person who has beneficially owned restricted shares of common
stock, for at least six months would be entitled to sell their securities
provided that (i) such person is not deemed to have been an affiliate of the
subject company at the time of, or at any time during the three months
preceding, a sale and (ii) the subject company is subject to the Exchange
Act periodic reporting requirements for at least three months before the
sale. Persons who have beneficially owned restricted shares of common
stock for at least six months but who are an affiliate of the subject
company at the time of, or any time during the three months preceding, a
sale, would be subject to additional restrictions under which such person
would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of either of the following:
a. 1% of the number of shares of our common stock then outstanding, and
b. if our common stock is listed on a national securities exchange, the
average weekly trading volume of the shares of common stock during the
four calendar weeks preceding the filing of a notice on Form 144 with
respect to the sale.
Sales under Rule 144 are also limited by manner of sale provisions and
notice requirements and to the availability of current public information
about the subject company.
DECENTRALIZED CRYPTO FINANCIAL INC.
Consolidated Financial Statements
2020
FINANCIAL INFORMATION
SECTION
Decentralized Crypto Financial Inc.
INDEX TO FINANCIAL
STATEMENTS
For the Fiscal Year Ending August 31,
2020
Independent Auditors Report
Consolidated Balance Sheets as of August 31, 2020
Consolidated Statements of Operations for the Fiscal Year Ending August
31, 2020
Consolidated Statements of Changes in Stockholders' Equity/Members'
Deficiency for the Year Ending August 31, 2020 F-5
Consolidated Statements of Cash Flows for the Year Ending August 31,
2020
Notes to Consolidated Financial Statements
34
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITORS' REPORT
Board of Directors
Decentralized Crypto Financial Inc.
Chantilly, Virginia
We have audited the accompanying consolidated financial statements of
Decentralized Crypto Financial Inc., which comprise the consolidated
balance sheets as of August 31, 2020 and the related consolidated
statements of income, changes in equity, and cash flows for the years then
ended, and the related notes to the consolidated financial statements.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL
STATEMENTS
Management is responsible for the preparation and fair presentation of
these consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud
or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We conducted our audits in accordance
with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the consolidated financial statements
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Decentralized Crypto Financial Inc. as of August 31, 2020, and the results
35
of their operations and their cash flows for the years then ended in
accordance with accounting principles generally accepted in the United
States of America.
- Chesapeake Financial Corp
DECENTRALIZED CRYPTO FINIANCIAL INC.
BALANCE SHEETS
2020
ASSETS
Current assets:
Cash and cash equivalents $ 0
Accounts receivable 0
Prepaid expenses 0
Total current assets 0
Property and equipment, net 0
Other assets:
Goodwill, net 0
Investments in equity securities 0
Deposits 0
Total assets $ 0
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Line of credit $ 0
Accounts payable and accrued expenses 0
Accrued payroll and related liabilities 0
Notes payable, current portion 0
Deferred rent and other current liabilities 0
Deferred compensation liability 0
Total current liabilities 0
Notes payable, less current portion 0
Total liabilities 0
Member's equity 0
Total liabilities and member's equity $ 0
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF OPERATIONS
36
2020
Revenue $ 0
Revenue 0
Total revenue 0
Direct cost of revenue 0
Gross profit 0
Indirect costs of revenue Costs 0
not allocable 0
Operating income 0
Other income (expense)
Other expense 0
Interest expense 0
Other income 0
Total other income 0
Net income $ 0
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
__Member's Equity__
Balance, August 31, 2020 $ 0
Member distribution 0
Net income
Balance, August 31, 2020 0
Member contributions 0
Net income 0
Balance, August $ 0
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF CASH FLOWS
2020
Cash flows from operating activities:
Net income $ 0
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 0
Amortization of goodwill 0
Loss on disposal of assets
Gain on investments 0
37
Deferred rent and other current liabilities 0
Change in:
Accounts receivable 0
Prepaid expenses 0
Deposits
Accounts payable and accrued expenses 0
Accrued payroll and related liabilities 0
Deferred compensation liability 0
Net cash provided by (used in) operating activities 0
Cash flows from investing activities:
Purchase of life insurance policies 0
Proceeds from sale of property and equipment
Purchase of property and equipment 0
Net cash used in investing activities 0
Cash flows from financing activities:
Net borrowings on (repayments on) line of credit 0
Repayments on notes payable 0
Contributions from member 0
Distributions to member
Net cash provided by (used in) financing activities 0
Net change in cash and cash equivalents
0
Cash and cash equivalents, beginning of year 0
Cash and cash equivalents, end of year $ 0
Supplemental disclosure of cash flow information:
Cash paid for interest $ 0
DECENTRALIZED CRYPTO FINIANCIAL INC.
NOTES TO FINANCIAL STATEMENT
Notes to Consolidated Financial Statements
The accompanying notes are an integral part of this consolidated financial
statement.
ORGANIZATION AND NATURE OF BUSINESS
We are an early-stage financial technology company that has created a
proprietary and patented software that will allow small and mid-sized
companies to fully understand the complexities surrounding initial public
offerings and private placement offerings. Our software is geared towards
companies that seek alternatives to the issuance of bank loans in order to
raise capital. Our company allows for the automation of various
38
Self-Regulatory Organizations (SRO) initial and ongoing regulatory
reporting and filings, and assists companies that lack the relevant
expertise and/or personnel to be fully compliant with investor disclosure
obligations, privacy notifications, Anti-Money laundering regulations, etc.
Our patented software also has the capability to track various asset classes
and automate investor documentation, such as proxy statements, dividend
payments, and GDPR notifications.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accounting policies of the Company are in accordance with
accounting principles generally accepted in the United States of America
applied on a basis consistent with that of the preceding years. Outlined
below are those policies considered particularly significant.
ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates and may have impact on future periods.
INVESTMENTS
In January 2016, the Financial Accounting Standards Board (FASB)
issued ASU No. 2016-01, Financial Instruments
- Overall (Subtopic 825-10): Recognition and Measurement of Financial
Assets and Financial Liabilities ("ASU
2016-01"). ASU 2016-01 requires that most equity investments be
measured at fair value, with subsequent changes in fair value recognized
in net income, while eliminating the available-for-sale classification for
equity securities with readily determinable fair values and the cost method
for equity investments without readily determinable fair
values.
INCOME TAXES
The Company, with the consent of its stockholders, has elected C
corporation status.
PART III- EXHIBITS
Index to Exhibits.
Exhibit No. Description
1.1 Articles of Incorporation for Decentralized Crypto
Financial Inc
1.2 Certificate of Conversion
Company
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form 1-A and has duly caused this Offering
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Chantilly, Virginia, on, October 14th, 2020.
Decentralized Crypto Financial Inc.
By /s/ Nicholas Scherling
Nicholas Scherling
Decentralized Crypto Financial Inc.
Date:____________________
The following persons in the capacities and on the dates
indicated have signed this Offering Statement.
By /s/ Nicholas Scherling
Nicholas Scherling
Decentralized Crypto Financial Inc.
Date:____________________
3 This is a "best efforts" offering. There is no minimum number of shares
that must be sold in this offering.
2 Shares that were issued to any insider were sold prior to the
development of DeCryptoFi's proprietary software, thereby materially
altering the value of the Company.
3 Assumes the maximum 25,000,000 shares are sold in the initial public
offering at a price of $0.10 per share, and the sale of 125,000,000 shares
through the Stock Compensation Plan for non-cash consideration
comparable to $0.10 per share
4Mr. Nicholas Scherling is currently the CEO and chairman of
DeCryptoFi. As mentioned, DeCryptoFi was not officially organized until
August 2020. As such, there has been zero compensation awarded to any
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individuals as it relates to DeCryptoFi's business.
5 Unless otherwise indicated, the business address of the individual is
4795 Meadow Wood Lane #200 Chantilly, Virginia 20151