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. Should the
Company decide to test the waters prior to this circular
being qualified, all soliciting materials will be
properly filed with the Commission before its intended use.
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 3407454
www.Decryptofi.com
Nicholas Scherling
Chief Executive Officer
Decentralized Crypto Financial Inc. (DeCryptoFi)
4795 Meadow Wood Lane, #200
Chantilly, Virginia 20151
(703) 3407454
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 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 overdiluting 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. 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
Discounts to Issuer
to other Persons
Per Share $0.10
$0.0 $0.10 $0.0
Total Min 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. 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 TEN PERCENT (10%) OF THE GREATER OF
YOUR ANNUAL INCOME
OR YOUR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED
INVESTORS AND NONNATURAL
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+. 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 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
SUMMARY5
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
7
RISK FACTORS9
TERMS OF THIS OFFERING15
USE OF PROCEEDS17
DESCRIPTION OF BUSINESS18
DESCRIPTION OF COMMON STOCK19
REGULATORY CONSIDERATIONS20
CHANNELS FOR DISCLOSURE OF INFORMATION AND PLAN OF
DISTRIBUTION24
DILUTION26
CONCURRENT OR SUBSEQUENT REGULATION S (REG S) OFFERING28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS29
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES31
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS32
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
33
SHARES ELIGIBLE FOR FUTURE SALE34
FINANCIAL INFORMATION SECTIONF-1
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 circularis current only as of its date.
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 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,
organizational structure, and so forth, 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 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 upon qualification, will be
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 principal
place of business address is 4795 Meadow Wood Lane # 200,
Chantilly, VA 20151, our telephone number is (703)
955-7770, and our website is www. DeCryptofi.com.
DeCryptoFi.com will officially launch our website upon
SEC approval in order to ensure that we do not disclose
our intent to conduct a Stock Offering ahead of SEC
qualification of our Reg A filing.
Except for this offering circular and our other public
filings with the SEC pursuant to the requirements of SEC
regulation A, information found 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:
olimited operating history and ability to maintain or
increase profitability.
oreliance on third parties for production and
distribution.
oresults of operations.
oability to manage growth.
oability to minimize our production and distribution
costs by utilizing funding sources provided by
others.
oregulatory or operational risks.
osuccess in retaining or recruiting, or changes
required in, our officers, key employees or directors.
ocapital structure.
oability to obtain additional financing when and if
needed; and
oliquidity 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 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.
The subscription price of our common stock has been
determined by the Company's management without regard to the
Company's assets or earnings or the lack thereof, or book
value and does not represent nor is it intended to imply that
the Units
being offered have a market value or could be resold at that
price, even if a sale were permissible. The valuation was
arbitrarily
determined by the Company, and not by an independent third
party applying a specified valuation criterion. Accordingly,
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:
oThe history and prospects of companies similar to our
company
oPrior offerings of those companies
oOur capital structure
oOur software
oAn assessment of our management
oGeneral conditions of the securities markets at the
time of the offering; and
oOther 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 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 was conducted by the Company and it 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.
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 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 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 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 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 actual value of your investment may be
substantially less than what you pay.
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. Factors considered in
determining the prices and terms of the Shares (and the
Additional Shares) offered hereby include:
*the history of companies similar to our company;
*prior offerings of those companies;
*
*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
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 may be affected by how much Stock
Compensation is offered in a given year.
*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.
oBecause 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.
*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:
odifficulties in assimilating and integrating the
operations, personnel, systems, data, technologies,
products, and services of the acquired business.
oinability of the acquired technologies, products, or
businesses to achieve expected levels of revenue,
profitability, productivity, or other benefits.
odifficulties in retaining, training, motivating, and
integrating key personnel.
odiversion of management's time and resources from our
normal daily operations.
odifficulties in maintaining uniform standards,
controls, procedures, and policies within the combined
organizations.
odifficulties in retaining relationships with
customers, employees, and suppliers of the acquired
business.
orisks of entering markets in which we have no or
limited direct prior experience.
oregulatory 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.
oassumption 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.
ofailure 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.
opotential disruptions to our ongoing businesses; and
ounexpected 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. 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, Subscriber acknowledges that he or
she will incur
additional processing fees, depending on Subscriber's payment
method. The
Company is equipped to accept payment from two payment
processors,
Braintree and Bitpay. Braintree's fee structure is 2.9% + $.30
per
transaction. There is also a 1% fee applied when the
Subscriber's credit card
is issued outside the United States, and a $15.00 fee when
someone initiates
a chargeback through the Subscriber's credit card. For ACH
payments,
Braintree charges a .75% per transaction fee, capped at a
maximum of $5.00.
Bitpay charges a 1% fee for all transactions. Subscriber
understands that he
or she shall incur the cost(s) of these fees. Lastly,
DeCryptoFi reserves the
right to use other payment processors in the future or do
direct exchanges for
other assets or securities. 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. For non-cash consideration, the aggregate
offering price or
aggregate sales will be based on the value of the
consideration as established
by bona fide sales of that consideration made within a
reasonable time, or, in the
absence of sales, on the fair value as determined by an
accepted standard.
Valuations of all non-cash consideration will be reasonable at
the time made.
Voting RightsEach 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.
Lock-up agreements with our compan
DividendsWe 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
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.
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
properly navigating through the confounding but necessary
SEC regulations. . The techniques that DeCryptoFi has
developed will assist companies with identifying options for
raising capital that make sense given their current business
circumstances. Companies interested in raising capital
will be able to use our portal and software allowing us to
assist them in the various options available to them to raise
capital that they otherwise may not have known exist or to
have been possible. In addition, DeCryptoFi seeks to be
able to automate the initial and ongoing required regulatory
filings (depending on the type of offering a user
chooses) on the customers behalf. Lastly, DeCrytpoFi seeks to
be able to facilitate and automate the necessary
documentation that companies are required to provide its
investors. In this day and age where investor protection,
preservation of personal identifying information, and complete
transparency with respect to businesses is paramount,
our goal is to assist companies with this evolving landscape.
Further, as the importance of combating money-
laundering continues to be a top priority for all
institutions, DeCryptoFi will facilitate and assist with the
compliance
of Anti-Money Laundering ("AML") regulations. The language on
page 18 in our circular now reads, in part, "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 properly
navigating through the confounding but necessary SEC
regulations. Our techniques will allow small and mid-sized
companies to better understand the initial and ongoing
regulatory filings with respect to the public and private
offering processes. Our main goal can be summed up in one
word... simplification. We strive to make the overlooked
alternative methods of raising capital easy to achieve,
easier 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! As an early-
stage financial technology company, we have created techniques
and processes which will allow small and mid-
sized companies to fully understand the complexities
surrounding initial public offerings, private placement
offerings, and other exempt offerings. Our focus is on
companies that seek alternatives to the issuance of bank loans
in order to raise capital. Our company allows for the
automation of various Self-Regulatory Organizations (SRO)
initial and ongoing regulatory reporting and filings and
assists companies that lack the relevant expertise and/or
personnel to stay up to date with relevant compliance
obligations as well as the need for the proper investor
disclosures, privacy notifications, and Anti-Money Laundering
(AML) regulations. DeCryptoFi has the capability to
track various asset classes and automate investor
documentation, such as proxy statements, dividend payments,
and
GDPR notifications.
Users working with DeCryptoFi will better understand
the user's business and what attainable capital
raising methods the user may be overlooking. Topics for
information sharing will include, but are 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. In turn, businesses will be able to streamline
the structuring of a potential business capitalization and the
regulatory safeguards associated with these capital
raising options. Once a business owner fully comprehends the
types of offerings available and decides which to
pursue, DeCryptoFi's will assist in automating filings and
much more."
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 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.
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. 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 should not be required to
register as a transfer agent 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, nor is such action directly facilitated by DeCryptoFi.
Further, we believe that DeCryptoFi's software and its
software operators are not required to register as transfer
agents. Software Operators are paid resources of DeCryptoFi
via the Work Compensation Plan and as such are not
independent entities. They hold no autonomy to make decisions,
prioritize transactions, impose fees, or facilitate a
marketplace. Our software operators solely record transactions
on behalf of DeCryptoFi so that the company may
have an accurate account of its investors and any transactions
they make. Each proposed transaction involving
DeCryptoFi's securities will be individually negotiated and
implemented. The Company recognizes that in the
foreseeable future, the Company may be required to list its
securities on a registered exchanges and utilize registered
transfer agents, at which point the Company will take all
reasonable steps to remain compliant 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.
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
Rule 240.3b16 of the Exchange Act requires registration
for any organization, association, or group of
persons who maintain or provide "a market place or facilities
for bringing together purchasers and sellers of
securities or for otherwise performing with respect to
securities the functions commonly performed by a stock
exchange if such organization, association, or group of
persons:
(1) Brings together the orders for securities of multiple
buyers and sellers; and
(2) Uses established, non-discretionary methods
(whether by providing a trading facility or by setting rules)
under
which such orders interact with each other, and the buyers and
sellers entering such orders agree to the terms of a trade.
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's platform and its
software not be viewed as an exchange or an ATS
because neither will "bring together" anyone by sorting or
organizing orders in the Company's securities in a
consolidated way or by receiving orders for processing and
execution of transactions in the Company's shares.
Rather, each proposed transaction involving DeCryptoFi's stock
will be individually negotiated and implemented
without DeCryptoFi's involvement. DeCryptoFi's software will
maintain a list of shareholders to ensure the
company knows whom to send shareholder notifications required
under the SEC. It is possible that the SEC or
another regulator would disagree with our position. If so, we
could be forced to register the platform and/or our
software as an exchange or ATS and comply with applicable law,
which could lead to significant costs to
DeCryptoFi and could force it to change or cease its
operations. Any of these developments could decrease the value
of the securities sold in this offering.
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. We believe that our
software operators do not fit under this definition and we
have updated our disclosure language on page 23 to reflect the
basis for this conclusion. Our disclosure now reads,
in part: "[O]ur software is responsible for recording
shareholder information so that DeCryptoFi has an accurate
list
of current shareholders at any point in time. It does not and
is not capable of operate as a broker - buying and selling
securities for its own account or on behalf of any customer.
It is also not capable of acting as a deal and executing
orders on behalf of any client which it has none. This does
not change regardless of whom a Software Operator may
be. As such operators should not be considered broker-dealers,
because they do not buy or sell a security on
anyone's behalf, they simply operate our software that is
responsible for keeping an up-to-date list of security
owners on behalf of DeCrytpoFi in order for the company to
facilitate its regulatory compliance. Payment amounts
made through DeCryptoFi's Work Compensation Plan are preset,
do not fluctuate from a predetermined amount and
are not transaction-based compensation. As such, it is
DeCryptoFi's view that recording shareholder information on
behalf of the company does not constitute a broker dealer.
Further, the Company has given weight to Rule 3a4-1,
"Associated Persons of an Issuer Deemed Not to be
Brokers" and believe that the Company's software operators
qualify for such an exemption, since they will not have
been s subject to a statutory disqualification as defined in
section 3(a)(39) of the Act, and they will not be
compensated in the form of commissions or other remuneration
based directly or indirectly on transactions in
securities and their work is more ministerial and clerical in
nature with respect to effecting any potential securities
transaction.
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 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 will follow Accounting for
Stock BuyBack and Retirement (ASC 505-30-30-8) which reads
in part, 30-8 When a corporation's stock is retired, or
repurchased for constructive retirement (with or without an
intention
to retire the stock formally in accordance with applicable
laws), an excess of repurchase price over par or stated value
may
be allocated between additional paid-in capital and retained
earnings. Alternatively, the excess may be charged entirely to
retained earnings in recognition of the fact that a
corporation can always capitalize or allocate retained
earnings for such
purposes. If a portion of the excess is allocated to
additional paid-in capital, it shall be limited to the sum of
both of the
following:
a. All additional paid-in capital arising from previous
retirements and net gains on sales of treasury stock of the
same issue
b. The pro rata portion of additional paid-in capital,
voluntary transfers of retained earnings, capitalization of
stock
dividends, and so forth, on the same issue. For this purpose,
any remaining additional paid-in capital applicable to issues
fully retired (formal or constructive) is deemed to be
applicable pro rata to shares of common stock.
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, 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 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
agreement, attached herein as Exhibit 1.1 in part III of this
offering, as 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 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.
EXHIDILUTION
Dilution refers to the reduction in value, control, or
earnings of the shares the investor owns.
IMMEDIATE DILUTION
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 offering
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
0.1000
Shares in Reserve
50,000,000
$5,000,000
..1000
FUTURE DILUTION
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 (i.e. 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 500 million 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
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 and Outlook
Decentralized Crypto Financial Inc. uses proprietary
software to assist small and medium sized
companies in determining the best approach to raising capital.
The Company will utilize software operators in
a 1099 capacity to further assist with automating the
navigation of public and private offerings, as well as the
applicable regulatory and compliance components for the
Company's prospective clients. These software
operators will be compensated via the Stock Compensation Plan,
and although they will not be employees of
DeCryptoFi, any and all rules and regulations applied to
DeCryptoFi shall directly apply to our software
operators to the same extent the applicable rules and
regulations apply to DeCryptoFi itself.
We do not anticipate any change to our operations if
25%, 50%, 75% or 100% of our offering is sold. The
Company believes that it has the necessary foundation and key
components to fully maintain its operations until
100% of the offering is sold. Further, the proceeds from the
initial offering will satisfy the Company's cash
requirements and as such, there will be no need to raise
additional funds within the first six (6) months that the
Offering becomes qualified.
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 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
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
*Nicholas Scherling. 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 Booz Allen
Hamilton, General Dynamics, Electronic Warfare Associates, MLT
Vacations, 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
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 Owner ___ Shares %
Prior to Offering Shares % After
Offering
Nicholas Scherling 300M 100%
100% 300M 60%
66.67%
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
Page
Number
Independent Auditors ReportF-2
Consolidated Balance Sheets as of August 31, 2020F-3
Consolidated Statements of Operations for the Fiscal Year
Ending August 31, 2020F-4
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, 2020F-6
Notes to Consolidated Financial Statements F-8
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 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 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
Centreville, VA
Saturday, December 5, 2020
DECENTRALIZED CRYPTO FINIANCIAL INC.
BALANCE SHEETS
As of August 31, 2020
2020
ASSETS
Current assets:0
Cash and cash equivalents0
Accounts receivable0
Prepaid expenses0
Total current assets
Property and equipment, net
Other assets:0
Goodwill, net0
Investments in equity securities30,000
Deposits 0
Total assets $30,000
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 liabilities0
Notes payable, less current portion0
Total liabilities0
Member's equity30,000
Total liabilities and member's equity $30,000
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF OPERATIONS
For the period ending August 31, 2020
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
$0
Basic Earnings Per Share$
0
Diluted Earnings Per Share$
0
See accompanying notes.
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the period ending August 31, 2020
__Member's Equity__
Balance, August 31, 2020
Common Stock Shares
Amount
Balance as of August 31, 2020
300,000,000
$ 30,000
Stock-based compensation
----
---
Shares issued upon vesting of restricted
stock awards
--
--
Exercise of stock options
--
--
Year Ended August 31, 2020
See accompanying notes.
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF CASH FLOWS
For the period ending August 31, 2020
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 amortization0
Amortization of goodwill0
Loss on disposal of assets
Gain on investments0
Deferred rent and other current liabilities0
Change in:
Accounts receivable0
Prepaid expenses0
Deposits
Accounts payable and accrued expenses0
Accrued payroll and related liabilities0
Deferred compensation liability0
Net cash provided by (used in) operating activities0
Cash flows from investing activities:
Purchase of life insurance policies0
Proceeds from sale of property and equipment
Purchase of property and equipment0
Net cash used in investing activities0
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 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 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
proprietary 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.
STOCKHOLDERS' EQUITY
Equity Structure
The Company is authorized to issue 500,000,000 shares of
common stock, par value $.0001 ("Common Stock"). As of
August 31, 2020, the Company has 300,000,000 shares of Common
Stock outstanding. A general description of these
securities is as follows:
Common Stock
Holders of Common Stock are entitled to one vote per share.
For the fiscal year ending August 31, 2020, the authorized
capital of the Company consists of common stock of
500,000,000 shares with 300,000,000 shares issued and
outstanding with a $0.0001 par value.
Preferred Stock
The company is not issuing any preferred stocks, warrants, or
options with this filing (ASC 505-10). Additionally,
there will be no equity-based payments to Non-employees (ASC
505-50).
INCOME TAXES
The Company, with the consent of its stockholders, has elected
C corporation status.
EARNINGS PER SHARE (EPS)
The Company adopted calculating basic EPSs (FASB ASC 260) by
dividing income available to common stockholders by the
weighted average of number of common shares outstanding.
PART III- EXHIBITS
Index to Exhibits.
Exhibit No.Description
1.1Subscription Agreement
1.2Certificate of Incorporation
1.3By-laws of Decentralized Crypto Financial Inc.
1.4Legal Opinion of Michael R. Blackburn, Esq. as to the
legality of the securities being qualified
1.5Certification of Conversion from a Limited Liability
Company to a Corporation
1.6Action of Sole Organizer
1.7Consent of Chesapeake Financial Corporation
1.8Draft offering statement previously submitted pursuant
to Rule 252(d)
*To be filed separately with SEC
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.
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.
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
The Company currently has 50 million authorized shares being
held in reserve. The Company intends to issue these reserved
shares if all other authorized issued
shares are sold.
Mr. 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
individuals as it relates to DeCryptoFi's business.
Unless otherwise indicated, the business address of the
individual is 4795 Meadow Wood Lane #200 Chantilly, Virginia
20151