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 solicitating
materials will be properly filed with the Commission before its intended
use.
Preliminary Offering Circular
December 2022
Subject to Completion
DECENTRALIZED CRYPTO FINANCIAL INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
85-2718015
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification Number)
4795 Meadow Wood Lane, #200.
Chantilly, Virginia 20151
(703) 340-7454
www.DeCryptoFi.com
Up to 74,250,000 shares of Common Stock
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 Companys securities, the Holder does not intend to
sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any securities of the Company until the
conclusion of the offering period and satisfaction of any required lock-
up periods. Further, the Holder will be limited to sales of no more than
1% of his holdings per year, for a period of 2 years. Subsequently, the
Holder is limited to sales of nor more than 6% 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
two days 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 $74,250,000.00.
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.
Public Offering Price Stock Compensation Plan $1.00
Public Offering Price Sale of Shares of Stock $1.00
Offering Minimum: NA
Offering Maximum Stock Compensation Plan $50,000,000.00
Offering Maximum Sale of Shares of Stock $24,250,000.00
Offering Maximum Total: 75,000,000.00
Underwriting Discounts and Commissions: 0
Total Project Gross Proceeds to Issuer for Stock Compensation Plan:
$50,000,000.00
Total Project Gross Proceeds to Issuer for Sale of Shares of Stock:
$24,250,000.00
1 The price per share shown was arbitrarily determined by the Companys
management without regard to the Companys assets or earnings (or lack
thereof), book value, or other generally accepted valuation criteria and
does not represent, nor is either intended to imply that a share has a
market value or could be resold at that price.
2 As of the date hereof, the Company has not entered into any formal
agreement with any broker-dealer (or other such intermediary).
Decentralized Crypto Financial Inc. (we or the Company or DeCryptoFi), a
Delaware incorporated entity, is offering 74.25 million Shares of common
stock of our newly issued security. We are offering the Shares of common
stock in the following ways:
We are offering up to 24.25 million Shares of common stock at a price of
$1.00 per share to an unlimited number of accredited investors, and to
the maximum permissible amount to non-accredited investors, as such
limitations are defined under Regulation A Tier 2 of the Securities Act
of 1933, as amended (the Securities Act). This offering shall be referred
to as the general offering and/or the IPO.
We are offering up to 50,000,000 Shares for non-cash consideration
pursuant to our Stock Compensation program) in exchange for independent
1099 services of individuals and companies. 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. Payment
amounts made through DeCryptoFis Stock Compensation Plan are preset, do
not fluctuate from a predetermined amount and are not transaction-based
compensation
This Offering will expire when all 50,000,000 shares of the Stock
Compensation plan has been distributed and all 24,250,000 shares of
common stock has been initially sold.
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.
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.
Once the Offering has commenced, the Securities will be offered on a best
efforts basis, and there is no guarantee that any minimum amount will be
sold. Further, the Offering is intended to be made on an ongoing and
rolling basis to potential offerees, and sales of Securities may be
closed, and one or more Securities sold, from time to time until the
Expiration Date (as defined below) regardless of the then-aggregate
number of Securities subscribed to and/or sold (subject to the respective
maximum amounts per Security identified above and herein). It should also
be noted that itis intended that the offer and sale of the Coins will be
deemed a continuous offering within the meaning of 17 CFR 230.251(d)(3),
and that the Offering of the Shares will may remain open for more than
one (1) year, provided that, on or before the date that is one (1) year
from the date of qualification of the Offering, and/or as otherwise may
be required by applicable securities laws, the Company will file an
amendment to this Offering Circular (and all other required filings, if
any) with the SEC (and all other applicable regulatory agencies, if any).
There is no minimum required sale, and the Company has not made any
arrangements to place the funds received from the Offering in an escrow,
trust, or similar vehicle.
We are following the Offering Circular disclosure format under Regulation
A.
The date of this preliminary offering circular is December 1 2022.
TABLE OF CONTENTS
SUMMARY 6
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 8
TERMS OF THIS OFFERING 10
RISK FACTORS 12
USE OF PROCEEDS 17
DESCRIPTION OF BUSINESS 18
DESCRIPTION OF COMMON STOCK 20
REGULATORY CONSIDERATIONS 21
CHANNELS FOR DISCLOSURE OF INFORMATION AND PLAN OF
DISTRIBUTION 25
DILUTION 27
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 28
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 30
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 30
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY
HOLDERS 31
SHARES ELIGIBLE FOR FUTURE SALE 33
FINANCIAL INFORMATION SECTION 34
EXHIBITS i
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
As previously noted, this Offering Circular is part of the Offering
Statement filed by the Company with the SEC with respect to the Offering.
Please be aware that this Offering Circular, which is part of the
Offering Statement does not contain all the information set forth in the
Offering Statement (including all of the schedules and exhibits made a
part thereto), reference to which is hereby made. Among other things,
certain provisions of the agreements, documents, and records referred to
in this Offering Circular may be summarized. For complete information,
you should consult the original documents, which are either attached as a
schedule/exhibit hereto, made part of the Offering Statements, and/or
which are otherwise made available upon request to the Company as
provided below. 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 companys 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 borrowers 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 online platform 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
companys 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. DeCryptoFis online platform 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, DeCryptoFis online platform 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 SECs 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 its website upon SEC qualification
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:
limited operating history and ability to maintain or increase
profitability.
reliance on third parties for production and distribution.
results of operations.
ability to manage growth.
ability to minimize our production and distribution costs by
utilizing funding sources provided by others.
regulatory or operational risks.
success in retaining or recruiting, or changes required in, our
officers, key employees or directors.
capital structure.
ability to obtain additional financing when and if needed; and
liquidity and trading of our securities.
The forward-looking statements contained in this offering circular are
based on current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future
developments will be those that have been anticipated. These forward-
looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual
results or performance to be materially different from those expressed or
implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors described
under the heading Risk Factors. Should one or more of these risks or
uncertainties materialize, or should any of our assumptions prove
incorrect, actual results may vary in material respects from those
projected 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:
The history and prospects of companies similar to our company
Prior offerings of those companies
Our capital structure
Our software and online platform
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.
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.
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. 24,250,000 shares will be offered through
our initial public offering, or general offering. The Company will also
be offering up to 50,000,000 shares as stock for non-cash consideration
in exchange for certain goods and services. Please see the section, Stock
Compensation Plan for additional information.
Offering Price:
We are offering Shares of DeCryptoFi at:
$1.00 per share to the general public in the general offering; and the
price of the shares distributed pursuant to the Companys Stock
Compensation Plan in exchange for non-cash consideration will be deemed
to be $1.00 per share, for purposes of determining whether over
$50,000.000.00 have been sold pursuant to the Companys Stock Compensation
Plan. If at any time following that 12 month period, DeCryptoFi shares
that were sold pursuant to the Companys Stock Compensation Plan and are
traded on one or more authorized exchanges or alternative trading
systems, and there are trades executed through or on exchanges or
alternative trading systems during any calendar month (any such month, a
calculation month), then we will value the shares paid to such persons in
the following month and in all subsequent months until and including the
end of the next calculation month at the average closing bid price for
the shares during the calculation month. We will file supplements to this
offering circular to disclose both any changes to the price of the Shares
to be distributed pursuant to this offering circular, and whether the new
calculation price will result in a curtailment of the number of Shares
being issued in the next month.
Restricted Securities
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.
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 Commissions 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 DeCryptoFis 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 Subscribers payment method. The Company is equipped to
accept payment from the payment processor, Braintree. Braintrees fee
structure is 2.9% + $.30 per transaction. There is also a 1% fee applied
when the Subscribers credit card is issued outside the United States, and
a $15.00 fee when someone initiates a chargeback through the Subscribers
credit card. For ACH payments, Braintree charges a .75% per transaction
fee, capped at a maximum of $5.00. 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 initially offering up to 50,000,000 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 Rights
Each holder of the Companys Common Stock is entitled to one vote,
regardless of how it was obtained, for each share on all matters
submitted to a vote of the shareholder, except as provided by law or by
the other provisions of the Certificate of Incorporation.
Dividends
We do not intend to pay any dividends currently. The payment of cash
dividends on our common stock in the future will be dependent upon our
revenue and earnings, if any, capital requirements and general financial
condition as well as the limitations on dividends and distributions that
exist under the laws and regulations of the State of Virginia and will be
within the discretion of the Company. It is the present intention of the
Company to retain all earnings, if any, for use in our business
operations and accordingly, the Company does not anticipate declaring any
dividends on our common stock in the foreseeable future. As a result, any
gain you will realize on our common stock will result solely from the
appreciation of such shares.
List of securities and proposed symbols
Prior to this offering, there have been no public market for our common
stock. We currently do not meet the financial listing requirements to be
listed on a national securities exchange. Once the Company reaches the
applicable thresholds, the Company intends to register with one or more
registered securities exchanges.
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 classs 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 $1.00 per share as of December 1, 2022.
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 managements 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 and online platform. We will attempt to protect
proprietary and intellectual property rights to our software and online
platform 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
1. DeCryptoFis 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
online platform, which is unproven and uncertain, and the reliability of
the underlying technology which is untested.
2. 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.
3. There is much reliance on the Firms 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.
4. Dividend payments will not be made during the inception of the
Companys 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.
5. 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:
A. make a special written suitability determination for the purchaser.
B. receive the purchaser's written agreement to the transaction prior to
sale.
C. 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
D. 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.
6. 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.
7. The determination for the offering price of our shares is more
arbitrary compared with the pricing of securities for an established
operating company.
8. 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.
9. 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.
10. Our exclusive forum provision may result in increased costs for
investors to bring a claim and may limit an investors' ability to bring a
claim in a judicial forum that they find favorable.
11. 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.
12. 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.
13. 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:
1. The history of companies similar to our company;
2. Prior offerings of those companies;
3. Our capital structure;
4. An assessment of our management;
5. And 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.
Because of the exemptions from various reporting requirements provided to
us under Regulation A and because we are only permitted to raise up to
$75,000,000 in any 12-month period under Regulation A, 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:
1. difficulties in assimilating and integrating the operations,
personnel, systems, data, technologies, products, and services of the
acquired business.
2. inability of the acquired technologies, products, or businesses to
achieve expected levels of revenue, profitability, productivity, or other
benefits.
3. difficulties in retaining, training, motivating, and integrating key
personnel.
4. diversion of managements time and resources from our normal daily
operations.
5. difficulties in maintaining uniform standards, controls, procedures,
and policies within the combined organizations.
6. difficulties in retaining relationships with customers, employees, and
suppliers of the acquired business.
7. risks of entering markets in which we have no or limited direct prior
experience.
8. regulatory risks, including remaining in good standing with existing
regulatory bodies or receiving any necessary pre- closing or post-closing
approvals, as well as being subject to new regulators with oversight over
an acquired business.
9. assumption of contractual obligations that contain terms that are not
beneficial to us, require us to license or waive intellectual property
rights or increase our risk for liability.
10. failure to successfully further develop the acquired technology;
liability for activities of the acquired business before the acquisition,
including patent and trademark infringement claims, violations of laws,
commercial disputes, tax liabilities and other known and unknown
liabilities.
11. potential disruptions to our ongoing businesses; and
12. unexpected costs and unknown risks and liabilities associated with
the acquisition.
Risks Related to Regulations
There are uncertainties related to the regulatory regimes governing the
issuance of new publicly traded securities, and as such, new regulations
or policies may materially adversely affect the development and value our
securities.
Any future regulatory actions applicable to our related activities could
severely impact our operations and the value of DeCryptoFi. Accordingly,
DeCryptoFi may need to restructure operations significantly to comply
with any new regulation or guidance. These efforts could be costly and
could involve fundamentally changing core portions of our business
operations and in turn negatively affect the value of our securities. On
the other hand, failure to restructure for compliance adequately or
quickly enough could result in regulatory action (such as investigations
by the government or a self-regulatory organization or government or
private litigation or administrative actions) that requires DeCryptoFi to
spend significant time and effort, which would pull the Companys
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.
Pursuant to Section 27 of the Exchange Act, the federal courts shall have
exclusive jurisdiction for all Exchange Act claims. Federal courts shall
also hear all claims concerning (a) any derivative action or proceeding
brought on behalf of the Corporation, (b) any action asserting a claim of
breach of a fiduciary duty owed by any director, officer, or other
employee of the Corporation to the Corporation or the Corporations
stockholders, (c) any action asserting a claim against the Corporation or
any director or officer or other employee of the Corporation arising
pursuant to any provision of the Applicable Law, the Certificate, or
these Bylaws, or (d) any action asserting a claim against the Corporation
or any director or officer or other employee of the Corporation governed
by the internal affairs doctrine. This section shall apply to actions
arising under the Securities Act or Exchange Act. Accordingly, there is
uncertainty as to whether a court would enforce such provision, giving
consideration to Section 27 of the Exchange Act which creates exclusive
federal jurisdiction over all suits brought to enforce any duty or
liability created by the Exchange Act or the rules and regulations
thereunder. Further, Section 22 of the Securities Act creates concurrent
jurisdiction for federal and state courts over all suits brought to
enforce any duty or liability created by the Securities Act or the rules
and regulations thereunder. Please note that investors cannot waive
compliance with the federal securities laws and the rules and regulations
thereunder.
Transfer Agent and Registrar
The Company will act as registrar and maintain the Companys 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.
DeCryptoFi maintains its position that the Company is not required to
register as transfer agents, both because the Companys securities are not
currently securities required to be registered under Section 12(b) of the
Exchange Act, and because none of the activities DeCryptoFi and its
software are involved in are described in the definition of a transfer
agent. Further, pursuant to Section 17A(c)(1) of the Act, issuers that do
not have: (1) a class of equity securities (other than exempted
securities) held of record by 500 or more persons, and (2) total assets
exceeding $10,000,000.00 are not required to use a registered transfer
agent. In addition, to the extent that certain activities that meet the
definition of a transfer agent are performed automatically by our
software, our software is not a person that would be required to
register. The Company will establish and continuously maintain (or
otherwise cause to be continuously maintained), in as current a form as
is commercially and technologically possible, a ledger identifying, at a
minimum, the mailing address of each shareholder (and each designee of
such holder, as applicable), and the number of all shares held by each
shareholder.
In the event the Company elects to utilize a third party Transfer Agent,
and/or any change is made with respect to providing access to any of the
foregoing information, such change will be promptly and expressly made
known to both existing shareholders (via electronic communication made
pursuant to the available contact information for each share holder) and
to potential share purchasers via disclosures both on the Company Website
and on any Trading Platform (if any and if applicable) then used by the
Company in connection with the sale of the its securities.
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 $75 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 online 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.
In addition, we intend to use our proceeds for the following:
1. financing production and associated development and operating costs
and expenses for our online platform.
2. working capital and general corporate purposes.
DeCryptoFi reserves the right to alter the use of proceeds in this
offering.
DESCRIPTION OF BUSINESS
DeCryptoFis 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 companys 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 online platform 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, DeCryptoFi 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 users 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 companys 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 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.
DeCryptoFis online platform 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 , and 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 as it relates to our security.
DeCryptoFis platform that will become operational upon SEC approval of
our security will not, bring together anyone by sorting or organizing
orders in the Companys securities in a consolidated way nor will it be
receiving orders for processing and execution of transactions in the
Companys shares. Rather, each proposed transaction involving DeCryptoFis
stock will be individually negotiated and implemented without DeCryptoFis
involvement. DeCryptoFis software will maintain a list of shareholders to
ensure the company knows whom to send shareholder notifications required
under the SEC, where investors can manage their accounts. Prospective
investors will create a public address (username) and private key
(password) and indicate agreement to our terms and conditions and privacy
policy. DeCryptoFis platform provides the ability for investors to login
to their accounts and view the total number of shares that they own at a
given time. The platform has the ability for investors to send shares to
other investors but does not offer the ability to price, sell, or
purchase shares. This is for the sole purpose of DeCryptoFi to keep track
of investors that own its stock. Pricing, selling, or purchasing shares
must be done outside the platform, person to person, or through a
registered exchange once DeCryptoFi is listed in the future.
1. Available Online Directly from Us. Investors must purchase shares of
our stock directly from us.
2. No Minimum Investment. Investors will be able to build ownership over
time by making purchases as low as the initial offering price.
DESCRIPTION OF DECRYPTOFIS 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 Companys common stock are outstanding.
VOTING RIGHTS
As DeCryptoFis 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 Companys
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 Companys 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 DeCryptoFis 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
$75,000,000 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 software will record the owner of our stock we
could be viewed as engaging in these types of activities.
We have taken the position that DeCryptoFi 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 DeCryptoFis is not
required to register as a transfer agent. DeCryptoFis software for
recording shareholder information does not make decisions, prioritize
transactions, impose fees, or facilitate a
marketplace. Our software solely records transactions on behalf of
DeCryptoFi so that the company may have an accurate account of its
investors and any transactions they make in order to keep an accurate
legger of shareholders. Each proposed transaction involving DeCryptoFis
securities will be individually negotiated and implemented between
parties and is not facilitated by DeCryptoFis software. The Company
recognizes that in the foreseeable future, the Company may be required to
list its securities on a registered exchange 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, DeCryptoFi 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, 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 is not a clearing agency 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 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
marketplace 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 ATS 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 DeCryptoFis platform and its software is
not viewed as an exchange or an ATS because neither will bring together
anyone by sorting or organizing orders in the Companys securities in a
consolidated way or by receiving orders for processing and execution of
transactions in the Companys shares. Rather, each proposed transaction
involving DeCryptoFis stock will be individually negotiated and
implemented without DeCryptoFis involvement. DeCryptoFis 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.
Absence of Registration as a Broker-Dealer; Securities Exchange or ATS:
The purchase and sale of securities is heavily regulated in the United
States, both federally and at the state level. At the federal level, the
Exchange Act and its related regulation principally govern the way in
which the United States securities markets, and its brokers and dealers,
operate and are regulated. Generally speaking, unless an exemption
thereunder applies ,any person/entity involved in affecting the
purchase/sale of securities will be subject to some form of registration
with the SEC. Such person/entity may also be further subject to
registration with one or more self-regulatory organization (SRO) and/or
applicable state level agencies in the states in which they conduct
business.
Without limiting the foregoing, any person/entity which qualifies as a
broker (as defined in Section 3(a)(4)(A) of the Exchange Act) and/or as a
dealer (as defined in Section3(a)(5)(A) of the Exchange Act) must
register with the SEC and with the Financial Industry Regulatory
Authority (FINRA) as the applicable SRO. Registration as a broker-dealer
with the SEC does not carry a fee and can be done with minimal hassle or
delay. The related registration with FINRA however can carry a
significant fee (upwards of $55,000) and be very arduous and time
consuming to complete. Additionally, each state where the person/entity
elects to operate may have its own registration requirements/fees, and
they can vary significantly from state to state (including in terms of
the requirements to obtain such registration and the timeframe to process
the same). Moreover, assuming all applicable federal/state/SRO
registration is accepted (which is not guaranteed), there are significant
ongoing reporting/compliance requirements which must be satisfied in
order to maintain such registration as well as the payment of significant
related registration renewal fees. For a person/entity doing business in
a single or limited number of states, such reporting/compliance
requirements and fees are not onerous. However, for any person/entity
doing business across multiple states the reporting/compliance costs and
fees can be burdensome.
Additionally, unless an exemption thereunder applies, any entity/group of
persons which provides and/or maintains a marketplace for bringing
together purchasers and sellers of securities, or for otherwise
performing functions typical of a securities exchange, must be registered
as a national securities exchange with the SEC (pursuant to Section 6 of
the Exchange Act) and all other applicable federal and state regulatory
agencies. Registration as a national securities exchange is an extremely
onerous, costly, and burdensome undertaking which can cost millions of
dollars, and take several months/years, to complete (assuming the same is
even accepted). Not to mention the time and cost of complying with the
costly and onerous ongoing reporting and other requirements. As such
there is only a handful of registered exchanges; with the various Nasdaq,
NYSE and CBOE entities making up the majority of them. Regulation ATS (17
CFR 242.300, et seq.) provides a means for operating a securities
marketplace/trading platform without registering as a national securities
exchange (or as an exempt exchange pursuant to Section 5 of the Exchange
Act); otherwise referred to as an alternative trading system (ATS). The
process of qualifying as an ATS however can still cost exorbitant fees,
although admittedly significantly less than what is required for
registration as a national securities exchange. Further, in order to
acquire the status of an ATS the subject entity must first be registered
as a broker-dealer; meaning they would be subject to all of the federal
and state registration/compliance issues discussed above.
It should also be noted that, with respect to the initial and continued
registration as a broker-dealer, national securities exchange or ATS,
many states will have their own, often unique, administrative processes
and fees. As a result, compliance with all applicable state level
regulations can often be overly time consuming and costly and may
significantly delay or otherwise detrimentally effect the related
business operations of the subject person/entity.
The penalties for engaging in the purchase and sale of securities in
violation of the Exchange Act and/or other applicable federal or state
regulations are severe. The same applies to any failure to satisfy any of
the numerous required ongoing reporting/compliance requirements. Without
limiting the foregoing, federal statute provides for both civil and
criminal penalties in the event of any such failure. Moreover, such
penalties would be in addition to any penalties levied by the applicable
states in connection with any such failure.
The Company has not registered (and does not intend to register) as a
broker-dealer, national securities exchange or ATS; either federally or
with any state agency. However, there is a material risk that the
Companys core Business will be deemed to require the Company to register
as one or more of the foregoing; either federally or in one or more of
the states in which the Company conducts its core business. If the
Company becomes required to register as a broker-dealer, national
securities exchange or ATS, even if only in select jurisdictions, it
would incur extensive and unbudgeted registration, compliance and related
cost and expenses. Further, while the Company fully intends to comply
with all applicable federal and state regulations concerning the required
registration as broker-dealer, national securities exchange or ATS (as
applicable), there is a material risk that the Company may be found to be
operating its core business in violation of one or more of such
regulations and the resulting penalties would be severe as noted above.
If either of the foregoing were to occur, the viability and/or
profitability of the Companys Business would be materially adversely
affected, if not outright eliminated, and you would recognize a loss of
all, or a substantial part of, your investment in a Security.
3 See 15 U.S. Code 78ff.
In addition, as per 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 does 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. As such DeCryptoFi should not be considered
a broker-dealer, because we do not buy or sell a security on anyones
behalf, we simply operate our software that is responsible for keeping an
up-to-date list of security owners on behalf of DeCryptoFi in order for
the company to facilitate its regulatory compliance. As such, it is
DeCryptoFis view that recording shareholder information does not
constitute a broker dealer.
It is possible that the SEC or another regulator would disagree with our
position. If so, DeCryptoFi could be forced to register as a broker-
dealer 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 companys 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.
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 managements 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 Commissions 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.
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,
DeCryptoFis corporate blog at DeCryptoFi.com/blog, DeCryptoFis mailing
list which is available for sign-up at www.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 SECs website at www.sec.gov.
PROCEDURES FOR SUBSCRIBING
Shares pursuant to this offering circular will be offered only through
DeCryptoFis 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 investors subscription is
irrevocable, except for limited exceptions, such as if the investors
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
investors 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 individuals 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
investors home, home furnishings and automobiles.
DILUTION
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 $1.00 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 companys insiders:
4
Existing Shareholders Before This Offering
Shares Held: 300,000,000
TOTAL CONSIDERATION: $0
TOTAL WEIGHTED AVG PRICE PER SHARE: .000000
Public Sale:
Shares Purchased: 24,250,000
TOTAL CONSIDERATION: $24,250,000
TOTAL WEIGHTED AVG PRICE PER SHARE: $1.00
Stock Compensation Plan
Shares Purchased: 50,000,000
TOTAL CONSIDERATION: $50,000,000.00
TOTAL WEIGHTED AVG PRICE PER SHARE: $1.00
Total Investors Participation in this offering
Shares Purchased: 74,250,000
TOTAL CONSIDERATION: $74,250,000.00
TOTAL WEIGHTED AVG PRICE PER SHARE: $1.00
Shares in Reserve
Shares Held: 125,7500,000
TOTAL CONSIDERATION: $125,7500,000
TOTAL WEIGHTED AVG PRICE PER SHARE: $1.00
4 Shares that were issued to any insider were sold prior to the
development of DeCryptoFis proprietary software and online platform,
thereby materially altering the value of the Company.
FUTURE DILUTION
Another important way of looking at dilution is the dilution that happens
due to future actions by the company. The investors 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
companys 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,
its 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
500,000,000 shares in existence today.
MANAGEMENTS 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 its proprietary online platform
to assist small and medium sized companies in determining the best
approach to raising capital. The Company will utilize proprietary
software and its online platform to further assist with automating the
navigation of public and private offerings, as well as the applicable
regulatory and compliance components for the Companys prospective
clients.
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 Companys 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 Companys growth strategy include acquiring new
customers, broadening distribution capabilities, enhancing data and
online platform 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 Companys future growth will continue to depend, in part, on
attracting additional investors as well as additional companies wanting
to utilize our online platform. 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
DeCryptoFis managements discussion and analysis of DeCryptoFis 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. DeCryptoFis 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
managements 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:
1. Identify the contract(s) with a customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price.
4. Allocate the transaction price to the performance obligations in the
contract; and
5. Recognize revenue when (or as) DeCryptoFi satisfies a performance
obligation
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
As of December 2022, 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: Nicholas Scherling
Position: CEO
AGE: 40
Term of Office: August 2020 - Present
*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
TENICA, Several Fortune 500 Companies, 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, 2021.
Name: Nicholas Scherling
Capacity in which compensation was received: CEO
Cash Compensation ($): 0
Other Compensation ($): 0
Total Compensation ($): 0
5 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 DeCryptoFis business.
Authorized Shares. A total of 125,750,000 shares of our corporate common
stock are reserved for issuance as the Company sees fit as described in
pervious sections. Upon qualification, if the Company determines that
issuing these shares will neither benefit 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 Companys 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.
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
Beneficial Owner: Nicholas Scherling
Shares: 300M
%: 100%
% Of total Voting Prior to Offering: 100
Shares of Beneficially Owned After Offering
Beneficial Owner: Nicholas Scherling
Shares: 300M
%: 60%
% Of total Voting Prior to Offering: 60%
Unless otherwise indicated, the business address of the individual is
4795 Meadow Wood Lane #200 Chantilly, Virginia 20151
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:
1. 1% of the number of shares of our common stock then outstanding, and
2. 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 December 31, 2021
Page
Independent Auditors Report 36
Consolidated Balance Sheets as of December 31, 2021 37
Consolidated Statements of Operations for the Fiscal
Year Ending December 31, 2021 38
Consolidated Statements of Changes in Stockholders'
Equity/Members Deficiency for the Year Ending
December31, 2021 39
Consolidated Statements of Cash Flows for the Year
Ending December 31, 2021 40
Notes to Consolidated Financial Statements 41
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 December 31, 2021 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.
MANAGEMENTS 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
entitys 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 entitys 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 December 31, 2021, 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
February 8, 2022
DECENTRALIZED CRYPTO FINANCIAL INC.
BALANCE SHEETS
As of December 31, 2021
ASSETS 2020 2021
Current assets
Cash and cash equivalents $ 0 0
Accounts receivable 0 0
Prepaid expenses 0 0
Total current assets 0 0
Property and equipment, net 0 0
Other assets
Goodwill, net 0 0
Investments in equity securities 30,000 30, 000
Deposits 0 0
Total assets 30,000 30,000
LIABILITIES and MEMBERs EQUITY
2020 2021
Current liabilities:
Line of credit $ 0 0
Accounts payable and accrued expenses 0 0
Accrued payroll and related liabilities 0 0
Notes payable, current portion 0 0
Deferred rent and other current liabilities 0 0
Deferred compensation liability 0 0
Total current liabilities 0 0
Notes payable, less current portion 0 0
Total liabilities 0 0
Member's equity $ 30,000 30,000
Total liabilities and member's equity $ 30,000 30,000
DECENTRALIZED CRYPTO FINANCIAL INC.
STATEMENTS OF OPERATIONS
For the period ending December 31, 2021
2020 2021
Revenue $ 0 0
Total Revenue 0 0
Direct cost of revenue 0 0
Gross profit 0 0
Indirect costs of revenue Costs not allocable 0 0
Operating Income 0 0
Other income (expense)
Other expense 0 0
Interest expense 0 0
Other income 0 0
Total other income 0 0
Other income 0 0
Net Income 0 0
Basic Earnings Per Share $ 0 0
Diluted Earnings Per Share $ 0 0
See accompanying notes.
DECENTRALIZED CRYPTO FINANCIAL INC.
STATEMENTS OF STOCKHOLDERS EQUITY
For the period ending December 31, 2021
Members Equity
Balance, December 31, 2021
Common Stock Shares Amount
Balance as of December 31, 2021 300,000,000 $ 30,000
Stock-based compensation N/A N/A
Shares issued upon vesting of
restricted stock awards N/A N/A
Exercise of stock options N/A N/A
Year Ended December 31, 2021
See accompanying notes.
DECENTRALIZED CRYPTO FINANCIAL INC.
STATEMENTS OF CASH FLOWS
For the period ending December 31, 2021
2020 2021
Cash flows from operating activities:
Net income $ 0 0
Adjustments to reconcile net income to net cash
(used in) provided by
operating activities: 0 0
Depreciation and amortization 0 0
Amortization of goodwill 0 0
Loss on disposal of assets 0 0
Gain on investments 0 0
Deferred rent and other current liabilities 0 0
Change in: 0 0
Accounts receivable 0 0
Prepaid expenses 0 0
Deposits 0 0
Accounts payable and accrued expenses 0 0
Accrued payroll and related liabilities 0 0
Deferred compensation liability 0 0
Net cash provided by (used in) operating
activities 0 0
Cash flows from investing activities:
Purchase of life insurance policies 0 0
Proceeds from sale of property and equipment 0 0
Purchase of property and equipment 0 0
Net cash used in investing activities 0 0
Cash flows from financing activities:
Net borrowings on (repayments on) line of credit 0 0
Repayments on notes payable 0 0
Contributions from member 0 0
Distributions to member 0 0
Net cash provided by (used in)
financing activities 0 0
Net change in cash and cash equivalents 0 0
Cash and cash equivalents, beginning of year 0 0
Cash and cash equivalents, end of year 0 0
DECENTRALIZED CRYPTO FINANCIAL 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 December 31, 2021, 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 December 31, 2021, 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.
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PART III- EXHIBITS
Index to Exhibits. *
Exhibit No. Description
1.1 Subscription Agreement
1.2 Certificate of Incorporation
1.3 By-laws of Decentralized Crypto Financial Inc.
1.4 Legal Opinion of Michael R. Blackburn, Esq. as to the
legality of the securities being qualified
1.5 Certification of Conversion from a Limited Liability Company
to a Corporation
1.6 Action of Sole Organizer
1.7 Consent of Chesapeake Financial Corporation
1.8 Draft 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, December 1, 2022
Decentralized Crypto Financial Inc.
By /s/ Nicholas Scherling
Nicholas Scherling
Decentralized Crypto Financial Inc.
Date: December 1, 2022
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: December 1, 2022
2