0001826220-21-000006.txt : 20210310
0001826220-21-000006.hdr.sgml : 20210310
20210310163709
ACCESSION NUMBER: 0001826220-21-000006
CONFORMED SUBMISSION TYPE: 1-A/A
PUBLIC DOCUMENT COUNT: 10
FILED AS OF DATE: 20210310
DATE AS OF CHANGE: 20210310
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Decentralized Crypto Financial Inc.
CENTRAL INDEX KEY: 0001826220
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389]
IRS NUMBER: 852718015
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0821
FILING VALUES:
FORM TYPE: 1-A/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 024-11353
FILM NUMBER: 21730296
BUSINESS ADDRESS:
STREET 1: 4795 MEADOW WOOD LANE
STREET 2: #200
CITY: CHANTILLY
STATE: VA
ZIP: 20151
BUSINESS PHONE: (703) 955-7770
MAIL ADDRESS:
STREET 1: 4795 MEADOW WOOD LANE
STREET 2: #200
CITY: CHANTILLY
STATE: VA
ZIP: 20151
1-A/A
1
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Decentralized Crypto Financial Inc.
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2020
0001826220
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85-2718015
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4795 Meadow Wood Lane
#200
Chantilly
VA
20151
703-594-6840
Michael Blackburn
Other
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Decentralized Crypto Financial Inc.
common stock
500000000
300000000
0. Decryptofi was originally organized as an LLC in DE on 7.24.20, whereby Mr. Scherling held 100% of the ownership interests. On 8.20.20, the company underwent a statutory conversion in DE, changing the legal structure of the company from an LLC to a C-corp with 500m authorized shares. As owner, CEO, chairman, and sole director of the company, Mr. Scherling retained 300m shares.
0
Section 4(a) of the Securities Act, and issued in compliance with Rule 701.
EX1A-4 SUBS AGMT
2
exhibit1txtfinal.txt
SUBSCRIPTION AGREEMENT
DECENTRALIZED CRYPTO FINANCIAL, INC.
Common Stock Subscription Agreement
The securities offered hereby are highly speculative.
Investing in Shares of DECENTRALIZED CRYPTO FINANCIAL, INC.
(?DeCryptoFi? and/or the ?Company?), involves significant risks.
This investment is suitable only for persons who can afford to
lose their entire investment. Furthermore, investors must
understand that such investment could be illiquid for an
indefinite period of time. No public market currently exists for
the securities, and if a public market develops following this
offering, there is no guarantee that it will continue.
The securities offered hereby have not been registered
under the Securities Act of 1933, as amended (the "Securities
Act"), or any state securities or blue-sky laws, and as such,
are being offered and sold in reliance on exemptions from the
registration requirements of the Securities Act and state
securities regulations and blue-sky laws. Although an offering
statement has been filed with the Securities and Exchange
Commission ("SEC"), that offering statement does not include the
same information that would be included in a registration
statement under the Securities Act. The securities have not been
approved or disapproved by the SEC, any state securities
commission or other regulatory authority, nor have any of the
foregoing authorities passed upon the merits of this offering or
the adequacy or accuracy of the offering circular or any other
materials or information made available to subscriber in
connection with this offering through our web-based platform
(the "Platform"). Any representation to the contrary is
unlawful.
No sale may be made to persons in this offering who are
not "accredited investors" if the aggregate purchase price is
more than 10% of the greater of such investors' annual income or
net worth. The Company is relying on the representations and
warranties set forth by each subscriber in this subscription
agreement and the other information provided by subscriber in
connection with this offering to determine compliance with this
requirement.
Prospective investors may not treat the contents of the
subscription agreement, the offering circular or any of the
other materials made available on the Platform (collectively,
the "Offering Materials") or any prior or subsequent
communications from the Company or any of its officers,
employees or agents as investment, legal or tax advice. In
making an investment decision, investors must rely on their own
examination of the Company and the terms of this offering,
including the merits and the risks involved. Each prospective
investor should consult his or her own counsel, accountant and
other professional advisor as to investment, legal, tax and
other related matters concerning the investor's proposed
investment.
The Company reserves the right in its sole discretion and
for any reason whatsoever to modify, amend or withdraw any
portion of this offering. Further, the Company has the authority
to accept or reject in whole or in part any prospective
investment in the securities or to allot to any prospective
investor less than the amount of securities such investor
desires to purchase.
Except as otherwise indicated, the Offering Materials
speak as of the date of the most recent offering circular.
Neither the delivery nor the purchase of the securities shall,
under any
circumstances, create any implication that there has not been a
change in the affairs of the Company since said date.
This agreement (the ?Agreement") is made as of the date
set forth below by and between the undersigned ("Subscriber")
and DeCryptoFi., a Delaware corporation, and is intended to set
forth certain representations, covenants and agreements between
Subscriber and the Company with respect to the offering (the
"Offering") for sale by the Company in Shares of its common
stock (the "Shares") as described in the Company's Offering
Circular (the "Offering Circular")"a copy of which has been
provided to Subscriber, or will immediately be provided to
Subscriber. Further, a copy of the Offering Circular and all
other public filings can be found via the Electronic Data
Gathering Analysis and Retrieval system (?EDGAR?) database, at
https://www.sec.gov/edgar.shtml. The Shares are also referred to
herein as the "Securities.?
ARTICLE I SUBSCRIPTION
1.01 Subscription: Subject to the terms and conditions hereof,
Subscriber hereby irrevocably subscribes for and agrees to
purchase from the Company the number of Shares set forth on the
Subscription Agreement Signature Page, and the Company agrees to
sell such Shares to Subscriber at a purchase price of $0.10 per
Share for the total amount set forth on the Subscription
Agreement Signature Page (the "Purchase Price"), subject to the
Company's right to sell to Subscriber such lesser number of
Shares as the Company may, in its sole discretion, deem
necessary or desirable.
1.02 Delivery of Subscription Amount; Acceptance of
Subscription; Delivery of Securities: Subscriber understands and
agrees that this subscription is made subject to the following
terms and conditions:
(a) Contemporaneously with the execution and delivery of this
Agreement, Subscriber shall pay the purchase price for the
Shares via the Company?s online web platform found at
www.decryptofi.com with the instructions set forth:
(b) Payment of the purchase price shall be received by
DeCryptoFi via its online web platform at www.decryptofi.com.
(c) This subscription shall be deemed to be complete only
when this Agreement has been accepted by an authorized officer
or agent of the Company. The deposit of the payment of the
purchase price for clearance alone will not be deemed an
acceptance of this Agreement.
(d) The Company shall have the right to reject this
subscription, in whole or in part.
(e) The payment of the Subscription Amount (or, in the case
of rejection of a portion of the Subscriber's subscription, the
part of the payment relating to such rejected portion) will be
returned promptly --without interest or deduction -- if
Subscriber's subscription is rejected in whole or in part or if
the Offering is withdrawn or cancelled.
_
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER
By executing this Subscription Agreement, Subscriber (and,
if Subscriber is purchasing the Securities subscribed for hereby
in a fiduciary capacity, the person or persons for whom
Subscriber is so purchasing) represents and warrants that all
statements contained herein are true and complete in all
material respects as of the date of each Closing Date:
2.01 Requisite Power and Authority: Such Subscriber has all
necessary power andauthority under all applicable provisions of
law to execute and deliver this Subscription Agreement. All
action on Subscriber's part required for the lawful execution
and delivery of this Subscription Agreement has been or will be
effectively taken. Upon execution and delivery, this
Subscription Agreement will be a valid and binding obligation of
Subscriber, enforceable in accordance with its terms, except (a)
as limited by applicable laws of general application affecting
Anti-Money Laundering (?AML?) obligations, and (b) enforcement
of creditors' rights.
2.02 Investment Representations: Subscriber understands that the
Securities have not been registered under the Securities Act.
Subscriber also understands that the Securities are being
offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Subscriber's
representations contained in this Subscription Agreement.
2.03 Illiquidity and Continued Economic Risk: Subscriber
acknowledges and agrees that there is no readily available
public market for the Securities and that there is no guarantee
that a market for their resale will ever exist. Subscriber must
bear the economic risk of this investment indefinitely and the
Company currently has no obligation to list the Securities on
any market or take any steps (including registration under the
Securities Act or the Securities Exchange Act of 1934, as
amended) with respect to facilitating trading or resale of the
Securities. Subscriber acknowledges that Subscriber is able to
bear the economic risk of losing Subscriber's entire investment
in the Securities. Subscriber also understands that an
investment in the Company involves significant risks and
thoroughly understands all of the risk factors relating to the
purchase of Securities.
2.04 Accredited Investor Status or Investment Limits: Subscriber
represents that either:
(a) Subscriber is an "accredited investor"1 within the
meaning of Rule 501 of Regulation D under the Securities Act.
Subscriber represents and warrants that the information set
forth in the Subscription Agreement Signature Page hereto
concerning Subscriber is true and correct; or
1 Accredited investor shall mean any person who comes within any
of the following categories, or who the issuer reasonably
believes comes within any of the following categories, at the
time of the sale of the securities to that person:
(1) Any bank as defined in section 3(a)(2) of the Act, or any
savings and loan association or other institution as defined in
section 3(a)(5)(A) of the Act whether acting in its individual
or fiduciary capacity; any broker or dealer registered pursuant
to section 15 of the Securities Exchange Act of 1934; any
insurance company as defined in section 2(a)(13) of the Act; any
investment company registered under the Investment Company Act
of 1940 or a business development company as defined in section
2(a)(48) of that Act; any Small Business Investment Company
licensed by the U.S. Small Business Administration under section
301(c) or (d) of the Small Business Investment Act of 1958; any
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000; any employee
benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974 if the investment decision is made
by a plan fiduciary, as defined in section 3(21) of such act,
which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a
self- directed plan, with investment decisions made solely by
persons that are accredited investors;
(2) Any private business development company as defined in
section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
(b) The Purchase Price of the Subscription Agreement
Signature Page, together with any other amounts previously used
to purchase Securities in this offering, does not exceed 10% of
the greater of the Subscriber's annual income or net worth.
Subscriber represents that to the extent Subscriber has any
questions with respect to its status as an accredited investor,
or the application of the investment limits, Subscriber has
sought professional advice.
2.05 Shareholder Information: Within 5 business days after
receipt of a request from the Company, Subscriber hereby agrees
to provide such information with respect to its status as a
shareholder (or potential shareholder) and to execute and
deliver such documents as may reasonably be necessary to comply
with any and all laws and regulations to which the Company is or
may become subject, including, without limitation, the need to
determine the accredited status of the Company's shareholders.
Subscriber further agrees that in the event it transfers any
Securities, it will require the transferee of such Securities to
agree to provide relevant information to the Company as a
condition of such transfer.
2.06 Company Information: Subscriber has read the Offering
Circular filed with the SEC, including the section titled "Risk
Factors." Subscriber understands that the Company is subject to
all the risks that apply to early-stage companies, whether or
not those risks are explicitly set out in the Offering Circular.
Subscriber acknowledges that no representations or warranties
have been made to Subscriber, or to Subscriber's advisors or
representatives, by the Company or others with respect to the
business or prospects of the Company or its financial condition.
2.07 Valuation: Subscriber acknowledges that the price of the
Securities was set by the Company on the basis of the Company's
internal valuation and no warranties are made as to value.
Subscriber further acknowledges that future offerings of
Securities may be made at lower valuations, which may result
that the Subscriber's initial investment will bear a lower
valuation.
2.08 Domicile: Subscriber is domiciled in the United States and
maintains such domicile (and is not a transient or temporary
resident) at the address provided on the signature page.
2.09 No Brokerage Fees: There are no claims for brokerage
commission, finders' fees or similar compensation in connection
with the transactions contemplated by this Subscription
Agreement or related documents based on any arrangement or
agreement binding upon Subscriber. Subscriber will indemnify and
hold the Company harmless against any liability,loss or expense
(including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such
claim.
(4) Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any director,
executive officer, or general partner of a general partner of
that issuer;
(5) Any natural person whose individual net worth, or joint net
worth with that person's spouse, exceeds $1,000,000.
(i) for purposes of calculating net worth:
(A) The person's primary residence shall not be included as an
asset.
(B) Indebtedness that is secured by the person's primary
residence, up to the estimated fair market value of the primary
residence at the time of the sale of securities, shall not be
included as a liability (except that if the amount of such
indebtedness outstanding at the time of sale of securities
exceeds the amount outstanding 60 days before such time, other
than as a result of the acquisition of the primary residence,
the amount of such excess shall be included as a liability); and
(C) Indebtedness that is secured by the person's primary
residence in excess of the estimated fair market value of the
primary residence at the time of the sale of securities shall be
included as a liability.
DECRYPTOFI SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned, desiring to purchase Shares of common stock of
DeCryptoFi., by executing this signature page, hereby executes,
adopts and agrees to all terms, conditions and representations
of the Subscription Agreement.
ADDITIONAL FEES
Subscriber acknowledges that he or she will incur additional
processing fees, depending on Subscriber?s payment method. The
Company is equipped to accept payment from two payment
processors, Braintree and Bitpay.
Braintree?s fee structure is 2.9% + $.30 per transaction. There
is also a 1% fee applied when the Subscriber?s credit card is
issued outside the United States, and a $15.00 fee when someone
initiates a chargeback through the Subscriber?s credit card. For
ACH payments, Braintree charges a .75% per transaction fee,
capped at a maximum of $5.00.
Bitpay charges a 1% fee for all transactions.
Subscriber understands that he or she shall incur the cost(s) of
these fees.
Lastly, DeCryptoFi reserves the right to accept other Real
Assets not listed in exchange for shares and the subscriber
agrees to pay any fees related to the Real Assets transfer of
ownership.
Number of Shares Purchased: _ Price: $0.10 per share
Name of Subscriber:
Telephone Number: Email Address:
Tax Identification Number (TIN): Signature:
Full Name and Title of Authorized Signatory (if applicable):
Address for Mailing Purposes (street, city, state and zip code.
NO PO BOXES): Street:
City and State:
Zip Code:
ADD EXHB
3
exhibit2txt.txt
CERT OF INCORP
State of Delaware Secretary of State Division of Corporatoi
ns
Delivered 03:20 PM 08/24/2020 FILED 03:20 PM 08/24/2020
SR 20206903529 - File Number 3311473
CERTIFICATE OF INCORPORATION OF
Decentralized Crypto Financial Inc.
FIRST: SECOND:
THIRD:
FOURTH:
FIFTH:
SIXTH:
The name of the corporation is: Decentralized Crypto Financial
Inc.*
The address of the registered office of the corporation in the*
State of Delaware is located at: 108 West 13th Street,
Wilmington, Delaware 19801*
Located in the County of New Castle
The name of the registered agent at that address is: Business*
Filings Incorporated
*
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the*
Delaware General Corporation Law.
The total number of shares of stock which the corporation is
authorized to issue is 500,000,000 shares of common stock having
a one ten thousandth of a cent ($0.0001) par value.
No director of the corporation will be personally liable to the*
corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director; provided, however, that the
foregoing clause shall not apply to any liability of a director
(i) for any breach of the director's duty ofloyalty to the
corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation oflaw, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal
benefit. This Article shall not eliminate or limit the liability
of a director for any act or omission occurring prior to the
time this Article became effective.
The name and address of the incorporator is Nicholas Scherling,
4795 Meadow Wood Ln, 200, Chantilly, Virginia 20151
I, the undersigned, being the incorporator, for the purpose of
forming a corporation under the laws of the State of Delaware do
make, file, and record this Certificate oflncorporation and do
certify that the facts herein are true.
Isl Nicholas Scherling
Nicholas Scherling, Incorporator Dated: 08/20/2020
EX1A-2B BYLAWS
4
exhibit3txt.txt
BYLAWS
CORPORATE BYLAWS OF
DECENTRALIZED CRYPTO FINANCIAL, INCORPORATED.
ARTICLE 1.
CORPORATE AUTHORITY
1.1 Incorporation. Decentralized Crypto Financial,
Incorporated., (the ?Corporation?) is a duly organized
corporation authorized to do business in the State of Delaware
by the filing of the Articles of Incorporation on August 20,
2020.
1.2 State Law. The Corporation is organized under the Delaware
Statutes and except as otherwise provided herein, the Statutes
shall apply to the governance of the Corporation. The laws,
statutes, regulations and rules to which the Corporation is
subject shall be referred to herein as ?Applicable Law.?
1.3 Corporate Purpose. The purpose of the Corporation is any and
all lawful business.
ARTICLE 2.
OFFICES AND RECORDS
2.1 Registered Office and Registered Agent. The principal office
and the registered agent of the Corporation shall be as stated
in the Articles of Incorporation of the Corporation, as amended
from time to time by the Board of Directors and on file in
the appropriate public offices of the State of Delaware as
provided by law. Currently, the Company has one Director on its
Board of Directors (also, the ?Board?).
2.2 Other Offices. The Corporation maintains its principal place
of business at 4795 Meadow Wood Lane, #200, Chantilly VA 20151.
The Board may, from time to time, determine to add additional
office locations.
2.3 Books, Accounts and Records, and Inspection Rights. The
books, accounts, and records of the Corporation, except as may
be otherwise required by the laws of the State of Delaware, may
be kept outside of the State of Delaware, at such place(s) as
the Board may from time to time determine. Except as otherwise
provided by law, the Board will determine whether, to what
extent, and the conditions upon which the books, accounts and
records of the Corporation will be open to the inspection of the
stockholders of the Corporation.
ARTICLE 3.
STOCKHOLDER MEETINGS
3.1 Place of Meetings. Meetings of the stockholders may be held
at such place, either within or without the State of Virginia,
as may be determined from time to time by the Board. The Board
may, in its sole discretion, determine that the meeting shall
not be held at any place, but may instead be held solely by
means of remote communication as provided by the Applicable Law.
3.2 Annual Meeting. The annual meeting of the stockholders of
the Corporation, for the purpose of election of directors and
for such other business as may lawfully come before it, shall be
held on such date and at such time as may be designated from
time to time by the Board. At an annual meeting of the
stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. The Chairman may
cancel a regular meeting of the Board by giving written notice
of the cancellation at least ten (10) work days prior to the
meeting where practical.
3.3 Special Meetings.
(a) Special meetings of the stockholders of the Corporation may
be called, for any purpose or purposes, by (i) the Chairman of
the Board, (ii) the Chief Executive Officer, (iii) the
President,
(iv) once applicable, the Board pursuant to a resolution adopted
by directors representing a quorum of the Board, or (v) by the
holders of shares representing at least fifty one (51) percent
of the total shares of the Corporation eligible to vote, and
shall be held at such place, on such date, and at such time as
the Board shall fix.
(b) If a special meeting is properly called by any person or
persons other than the Board, the request shall be in writing,
specifying the general nature of the business proposed to be
transacted, and shall be delivered personally or sent by
certified or registered mail, return receipt requested, or by
telegraphic or other facsimile transmission to the Chairman of
the Board, the Chief Executive Officer, or the Secretary. No
business may be transacted at such special meeting otherwise
than specified in such notice.
3.4 Notice of Meetings. Once applicable, whenever shareholders
are required or permitted to take any action at a meeting, a
written notice (including by email) of the meeting shall be
provided to each shareholder of record entitled to vote at or
entitled to notice of the meeting, which shall state the place,
date, and hour of the meeting, as well as the purpose or
purposes for which the meeting is called. Unless otherwise
provided by law, written notice of any meeting shall be given
not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each shareholder entitled to vote at such
meeting.
3.5 Quorum. Shareholders may take action on a matter at a
meeting only if a quorum exists with respect to that matter.
Except as otherwise provided by law, Fifty One (51) percent of
the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at
a meeting of shareholders. Once a share is represented for a
purpose at a meeting (other than solely to object to the holding
of the meeting), it is deemed present for
quorum purposes for the remainder of the meeting and the
shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal of sufficient shareholders to leave less than a
quorum. The holders of a majority of the outstanding shares
represented at a meeting, whether or not a quorum is present,
may adjourn the meeting from time to time.
3.6 Voting Rights.
(a) Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate
action in writing without a meeting may authorize another person
or persons to vote for him or her by proxy, but no such proxy
shall be voted or acted upon after one (1) year from its date
unless the proxy expressly provides for a longer period. A duly
executed proxy shall be irrevocable only if it states that it is
irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power.
(b) If a quorum exists, action on a matter (other than the
election of directors) is approved if the votes cast favoring
the action exceed the votes cast opposing the action. Directors
shall be elected by a plurality of the votes cast by the shares
entitled to vote in the election (provided a quorum exists).
Unless otherwise provided by law or in the Corporation?s
Articles of Incorporation, and subject to other provisions of
these Bylaws, each shareholder shall be entitled to one (1) vote
on each matter, in person or by proxy, for each share of the
Corporation?s capital stock that has voting power and that is
held by such shareholder. Voting need not be by written ballot.
3.7 List of Stockholders. The officer of the Corporation who has
charge of the stock ledger of the Corporation shall prepare and
make available to voting shareholders the books and records that
a shareholder is legally entitled to inspect. These records can
include, but may not be limited to, the articles of
incorporation, bylaws, and corporate resolutions.
3.8 Consent in Lieu of a Meeting.
(a) Any action required to be taken or which may be taken at any
meeting of shareholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the
holders of outstanding shares having not less than the minimum
number of votes that would be necessary to take such action at a
meeting at which all shareholders entitled to vote were present
and voted. The action must be evidenced by one or more written
consents, describing the action taken, signed and dated by the
shareholders entitled to take action without a meeting, and
delivered to the Corporation at its registered office or to the
officer having charge of the Corporation?s minute book.
(b) No consent shall be effective to take the corporate action
referred to in the consent unless the number of consents
required to take action are delivered to the Corporation or to
the officer having charge of its minute book within sixty (60)
days of the delivery of the earliest- dated consent.
(c) Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing or by
electronic transmission and who, if the action had been taken at
a meeting, would have been entitled to notice of the meeting if
the record date for such meeting had been the date that written
consents signed by a sufficient number of stockholders to take
action were delivered to the Corporation as provided in the
Applicable Law.
3.9 Conference Call. One or more shareholders may participate in
a meeting of shareholders by means of conference telephone,
videoconferencing, or similar communications equipment by means
of which all persons participating in the meeting can hear each
other. Participation in this manner shall constitute presence in
person at such meeting.
ARTICLE 4. DIRECTORS
4.1 Powers. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors,
which may exercise all such powers of the Corporation and do all
lawful acts and things, subject to any limitations set forth in
these Bylaws or the Articles of Incorporation for the
corporation.
4.2 Number and Term of Office. The number of directors is
currently set at one (1) but is subject to change. Each director
shall be at least eighteen (18) years of age. The directors need
not be residents of the state of incorporation. The directors
shall be elected by the shareholders at the annual meeting of
shareholders by the vote of shareholders holding of record in
the aggregate at least a plurality of the shares of stock of the
Corporation present in person or by proxy and entitled to vote
at the annual meeting of shareholders. Each director shall be
elected for a term until his or her successor shall be elected
and shall qualify or until his or her earlier resignation or
removal.
4.3 Vacancies. Except as otherwise provided by law, any vacancy
in the Board of Directors occurring by reason of an increase in
the authorized number of directors or by reason of the death,
withdrawal, removal, disqualification, inability to act, or
resignation of an acting director shall be filled by the
majority of directors then in office and notice of a shareholder
meeting shall be provided to the shareholders for the purpose of
electing a director to permanently fill such vacancy. Any
director may resign at any time by giving written notice to the
Board.
4.4 Resignation. Any director may resign at any time by
delivering his or her notice in writing or by electronic
transmission to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt
by the Secretary or at the pleasure of the Board. If no such
specification is made, it shall be deemed effective at the
pleasure of the Board.
4.5 Removal. Subject to any limitations imposed by Applicable
Law, any director may be removed from office at any time (i)
with cause by the affirmative vote of the holders of at least
51% percent
of the voting power of all then-outstanding shares of capital
stock of the Corporation entitled to vote.
4.6 Meetings. Meetings of the Board of Directors may be called
by any director or the President on five (5) days? notice to
each director, either personally or by telephone, express
delivery service, email, or facsimile transmission, and on ten
(10) days? notice by mail (effective upon deposit of such notice
in the mail). The notice shall specify the purpose of such
meeting.
4.7 Quorum and Voting. A simple majority of the total number of
authorized directors shall constitute a quorum for transaction
of business. The act of a majority of directors present at any
meeting at which a quorum is present shall be the act of the
Board of Directors, except as provided by law, the Articles of
Incorporation, or these Bylaws. Each director present shall have
one vote, irrespective of the number of shares of stock, if any,
he or she may hold.
4.8.Super Majority Vote. The Company agrees that, except as
otherwise provided, the Company shall not take any material
actions without the affirmative vote or consent of at least
Fifty One percent (51%) of the members of the Board of Directors
(and, to the extent Delaware law requires stockholder approval
to take such action, without affirmative vote or consent of at
least sixty percent (60%) of the issued and outstanding capital
stock of the Company). ?Material actions? shall include, but is
not limited to, matters pertaining to voting rights; dividend
payments; redemption rights; anti-dilution protections; and
rights of first refusal.
4.9 Action Without a Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting of all members
of the Board or committee, as the case may be, with the written
consent of a quorum of the Directors, such writing or writings
to be filed with the minutes or proceedings of the Board or
committee.
4.10 Fees and Compensation. Directors shall be entitled to such
compensation for their services as may be approved by the Board,
including, if so approved, by resolution of the Board, a fixed
sum and expenses of attendance, if any, for attendance at each
regular or special meeting of the Board and at any meeting of a
committee of the Board. Nothing herein contained shall be
construed to preclude any director from serving the Corporation
in any other capacity as an officer, agent, employee, or
otherwise and receiving compensation therefor. Until these
bylaws are amended, the Director shall not be eligible to
receive additional compensation for his services as the sole
Board member.
4.11 Conference Call. One or more directors may participate in
meetings of the Board or a committee of the Board by any
communication, including videoconference, by means of which all
participating directors can simultaneously hear each other
during the meeting. Participation in this manner shall
constitute presence in person at such meeting.
4.12 Committees. The Board of Directors, by resolution, may
create one or more committees, each consisting of one or more
directors. Each such committee shall serve at the pleasure of
the Board. All provisions under the Statutes and these Bylaws
relating to meetings, action without
meetings, notice, and waiver of notice, quorum, and voting
requirements of the Board of Directors shall apply to such
committees and their members.
4.13 Organization. At every meeting of the Board, the Chairman
of the Board, or, if a Chairman has not been appointed or is
absent, the President (if a director) shall preside over the
meeting.
ARTICLE 5. OFFICERS
5.1 Officers. The officers of the Corporation currently comprise
the following and is subject to change: (a) the Chief Executive
Officer and/or the President. The Board may assign such
additional titles to one or more of the officers as it shall
deem appropriate. Any one person may hold any number of offices
of the Corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation
of the officers of the Corporation shall be fixed by or in the
manner designated by the Board.
5.2 Tenure and Duties of Officers.
(a) Subject to any employment contracts that may be in place,
all officers shall hold office at the pleasure of the Board and
until their successors shall have been duly elected and
qualified, unless sooner removed.
(b) The Chief Executive Officer and/or the President shall have
overall responsibility and authority for management and
operations of the Corporation, shall preside at all meetings of
the Board of Directors and shareholders, and shall ensure that
all orders and resolutions of the Board of Directors and
shareholders are implemented. The President shall have the
authority to create any entity, either as a wholly-owned
subsidiary or with owners additional to the Corporation, as the
President may deem appropriate to accomplish any legitimate
objective of the Corporation. The President shall be an ex-
officio member of all committees and shall have the general
powers and duties of management and supervision usually vested
in the office of president of a corporation.
(c) The current Director shall also act as the Board?s
Secretary. The Secretary shall attend all meetings of the Board
and all meetings of the shareholders and shall act as clerk
thereof and record all the votes of the Corporation and the
minutes of all its transactions in a book to be kept for that
purpose, and shall perform like duties for all committees of the
Board of Directors when required. The Secretary shall give, or
cause to be given, notice of all meetings of the shareholders
and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of
Directors or President, and under whose supervision the
Secretary shall be. The Secretary shall maintain the records,
minutes, and seal of the Corporation and may attest any
instruments signed by any other officer of the Corporation.
(d) The Treasurer shall be the chief financial officer of the
Corporation, shall have responsibility for the custody of the
corporate funds and securities, shall keep full and
accurate records and accounts of receipts and disbursements in
books belonging to the Corporation, and shall keep the monies of
the Corporation in a separate account in the name of the
Corporation. The Treasurer shall provide to the President and
directors, at the regular meetings of the Board, or whenever
requested by the Board, an account of all financial transactions
and of the financial condition of the Corporation.
5.3 Execution of Instruments. All contracts, checks, drafts or
demands for money and notes and other instruments or rights of
any nature of the Corporation shall be signed by the President
and/or such other officer or officers as the Board of Directors
may from time to time designate.
ARTICLE 6. DIVIDENDS
6.1 Declaration of Dividends. Dividends upon the capital stock
of the Corporation, subject to the provisions of the Certificate
and Applicable Law, if any, may be declared by the Board.
Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the Certificate and
Applicable Law.
6.2 Dividend Reserve. There may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the
Board from time to time, in their absolute discretion, think
proper as a reserve or reserves for any purpose as the Board
determines is in the interests of the Corporation.
ARTICLE 7. FISCAL YEAR
7.1 Fiscal Year. The fiscal year of of the Company shall begin
on the 1st day of September and end on the 31st day of August of
each year but may be changed by resolution of the Board of
Directors.
ARTICLE 8.
INDEMNIFICATION AND INSURANCE
8.1 Indemnification.
(a) The Corporation shall have the power to indemnify its
directors, officers, employees, and other agents. The Board
shall have the power to delegate the determination of whether
indemnification shall be given to any such person (except
executive officers) to such officers or other persons as the
Board shall determine.
(b) The Corporation may purchase and maintain insurance in a
reasonable amount on behalf of any person who is or was a
director, officer, agent or employee of the Corporation against
liability asserted against or incurred by such person in such
capacity or arising from such person?s status as such.
Additionally, the Corporation may purchase life insurance on the
life of any shareholder which may, in the discretion of the
Corporation or subject to any
agreement entered into with such shareholder or his/her estate,
be used in connection with the repurchase of such shareholder?s
shares upon his/her death.
ARTICLE 9. NOTICES
9.1 Notices.
(a) Whenever written notice is required to be given to any
person, it may be given to such person, either personally or by
sending a copy thereof through the United States mail, or by
email, or facsimile, charges prepaid, to his or her address
appearing in the books of the Corporation, or supplied by him or
her to the Corporation for the purpose of notice. If the notice
is sent by mail it shall be deemed to have been given to the
person entitled thereto when deposited in the United States
mail. If the notice is sent by email or facsimile, it shall be
deemed to have been given at the date and time shown on a
written confirmation of the transmission of such facsimile
communication. If such notice is related to a shareholder
meeting, the notice shall specify the place, day, time of the
meeting and the purpose of and general nature of the business to
be transacted at such meeting.
(b) Whenever any written notice is required by law, or by the
Articles of Incorporation or by these Bylaws, a waiver thereof
in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice. Attendance of
a person, either in person or by proxy, at any meeting shall
constitute a waiver of notice of such meeting, except where a
person attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting was not
lawfully convened or called.
ARTICLE 10. AMENDMENTS
10.1 Amendments. The Board is expressly empowered to adopt,
amend, or repeal these Bylaws (or any provision hereof). The
stockholders shall also have power to adopt, amend, or repeal
these Bylaws (or any provision hereof).
ARTICLE 11.
MISCELLANEOUS
11.1 Annual Report. The Board shall cause an annual report to be
sent to each stockholder of the Corporation after the close of
the Corporation?s fiscal year. Such report shall include a
balance sheet as of the end of such fiscal year and an income
statement and statement of changes in financial position for
such fiscal year, accompanied by any report thereon of
independent accountants or, if there is no such report, the
certificate of an authorized officer of the Corporation that
such statements were prepared without audit from the books and
records of the Corporation.
11.2 Forum. Unless the Corporation consents in writing to the
selection of an alternative forum, the courts of the State of
Delaware shall be the sole and exclusive forum for (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 Corporation?s 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.
11.3 Interpretation. In interpreting these Bylaws, except where
the context otherwise requires, (a) ?including? or ?include?
does not denote or imply any limitation, (b) ?or? has the
inclusive meaning ?and/or,? (c) the singular includes the
plural, and vice versa, and each gender includes each other
gender, (d) captions or headings are only for reference and are
not to be considered in interpreting these Bylaws, (e) ?Section?
refers to a section of these Bylaws, unless otherwise stated in
these Bylaws, and (f) ?day? refers to a calendar day unless
expressly identified as a business day.
***
CERTIFICATE
The undersigned Chief Executive Officer of Decentralized Crypto
Financial, Incorporated., a Delaware corporation, hereby
certifies that the foregoing Bylaws are the original Bylaws of
the Corporation adopted by the initial director of the
Corporation.
Dated: December 11, 2020
Name: Nicholas P. Scherling
Title: Chief Executive Officer & Chairman
This page intentionally left blank
EX1A-12 OPN CNSL
5
exhibit4txt.txt
LEGAL OPINION
December 3, 2020
Decentralized Crypto Financial, Inc. 4795 Meadow Wood Lane,
Suite 200
Chantilly, VA. 20151
*
Re: Decentralized Crypto Financial, Incorporated Offering*
Statement on Form 1-A Ladies and Gentlemen:
I have acted as counsel to Decentralized Crypto
Financial,* Incorporated (the ?Company?), a corporation
incorporated under the laws of the State of Delaware, in*
connection with the filing of the Offering Statement under
Regulation A of the Securities Act of 1933, as amended (the*
?Securities Act?), with the Securities and Exchange Commission
(?SEC?) relating to the proposed offering by the Company (the*
?Offering?) of up to 200,000,000 shares (the ?Shares?) of common
stock, at $0.0001 par value, of the Company.*
For purposes of rendering this opinion, I have examined*
originals or copies (certified or otherwise identified to my
satisfaction) of:*
1. Certificate of Formation of Decentralized Crypto Financial,*
LLC as a Limited Liability Company (?LLC?), filed with the state
of Delaware as of July 24, 2020, and further to be filed with
the Securities and Exchange Commission;
2. Action of Sole Organizer of Decentralized Crypto Financial,
LLC with the state of Delaware, as of July 28, 2020, further*
to be filed with the Securities and Exchange Commission;
3. Certification of Incorporation of Decentralized Crypto*
Financial, Inc., filed with the state of Delaware, dated August*
20, 2020, and further to be filed with the Securities and*
Exchange Commission;*
*
4. Certificate of Conversion from an LLC to a Corporation*
pursuant to Section 265 of Delaware General Corporation Law,*
as of August 24, 2020, and further to be filed with the*
Securities and Exchange Commission; and
5. Bylaws of the Company in the form to be filed with the
Securities and Exchange Commission.
I have also examined such other certificates of public
officials, such certificates of executive officers of the
Company and such other records, agreements, documents and
instruments as I have deemed relevant and necessary as a basis
for the opinion hereafter set forth.
In such examination, I have assumed: (i) the genuineness
of all signatures, (ii) the legal capacity of all natural
persons, (iii) the authenticity of all documents submitted to me
as originals, (iv) the conformity to original documents of all
documents submitted to me as certified, conformed or other
copies and the authenticity of the originals of such documents
and (v) that all records and other information made available to
me by the Company on which I have relied are complete in all
material respects. As to all questions of fact material to this
opinion, I have relied solely upon the above-referenced
certificates or comparable documents and other documents
delivered pursuant thereto, have not performed or had performed
any independent research of public records and have assumed that
certificates of or other comparable documents from public
officials dated prior to the date hereof remain accurate as of
the date hereof.
MICHAEL ROSS BLACKBURN, ESQ.
331 PINE STREET JERSEY CITY, NJ 07304 PHONE: +1 516 504 8169
Based on the foregoing and on such legal considerations as
I deem relevant, I am of the opinion that the Shares, when
issued and delivered against payment therefor as described in
the Offering Circular, will be validly issued, fully paid and
non-assessable.
The foregoing opinion is limited to the Delaware General
Corporation Law, as currently in effect, and I do not express
any opinion herein concerning any other law.
The opinion expressed herein is rendered as of the date
hereof and is based on existing law, which is subject to change.
Where my opinion expressed herein refers to events to occur at a
future date, I have assumed that there will have been no changes
in the relevant law or facts between the date hereof and such
future date. I do not undertake to advise you of any changes in
the opinion expressed herein from matters that may hereafter
arise or be brought to my attention or to revise or supplement
such opinion should the present laws of any jurisdiction be
changed by legislative action, judicial decision or otherwise.
The opinion expressed herein is limited to the matters
expressly stated herein, and no opinion is implied or may be
inferred beyond the matters expressly stated.
I hereby consent to the use of this letter as an exhibit
to the Offering Statement and to any and all references in the
offering circular that is a part of the Offering Statement. In
giving this consent, I do not admit that I am within the
category of persons whose consent is required under Section 7 of
the Securities Act, or the rules and regulations of the
Securities and Exchange Commission.
Very Truly Yours,
Michael R. Blackburn, Esq.
..
ADD EXHB
6
exhibit5rxt.txt
CERTIFICATE OF CONVERSION
Delaware
The First State
Page 1
I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF*
DELAWARE, DO HEREBY CERTIFY THAT THE ATTACHED IS A TRUE AND
CORRECT COPY OF THE CERTIFICATE OF CONVERSION OF A DELAWARE
LIMITED LIABILITY COMPANY UNDER THE NAME OF "DECENTRALIZED
CRYPTO FINANCIAL LLC" TO A DELAWARE CORPORATION, CHANGING ITS
NAME FROM "DECENTRALIZED CRYPTO FINANCIAL LLC" TO "DECENTRALIZED
CRYPTO FINANCIAL INC.", FILED IN THIS OFFICE ON THE TWENTY-
FOURTH DAY OF AUGUST, A.D. 2020, AT 3:20 O`CLOCK P.M.
3311473 8100V Authentication: 203689528
SR# 20207363217 Date: 09-18-20
You may verify this certificate online at
corp.delaware.gov/authver.shtml
State of Delaware Secretary of State Division of Corporatoi
ns
Delivered 03:20 PM 08/24/2020 FILED 03:20 PM 08/24/2020
SR 20206903529 - File Number 3311473
STATE OF DELAWARE CERTIFICATE OF CONVERSION
FROM A LIMITED LIABILITY COMPANY TO A
CORPORATION PURSUANT TO SECTION 265 OF THE DELAWARE GENERAL
CORPORATION LAW
*
1.) The jurisdiction where the Limited Liability Company first
formed is*
De1aware
2.) The jurisdiction immediately prior to filing this
Certificate is Delaware*
3.) The date the Limited Liability Company first formed
is_0_7_12_4_12_0_2_0 _
4.The name of the Limited Liability Company immediately prior to
filing this Certificate is Decentralized Crypto Financial LLC
5.) The name of the Corporation as set forth in the Certificate
of Incorporation is Decentralized Crypto Financial Inc.
IN WITNESS WHEREOF, the undersigned being duly authorized to
sign on behalf of the converting Limited Liability Company have
executed this Certificate on the
20th day of August , A.D._20_2_0 _
By: Isl Nicholas Scherling
Name: Nicholas Scherling
Print or Type*
Title: Member
Print or Type
Delaware
The First State
Page 1
I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF INCORPORATION OF ?DECENTRALIZED
CRYPTO FINANCIAL INC.?, FILED IN THIS OFFICE ON THE TWENTY-
FOURTH DAY OF AUGUST, A.D. 2020, AT 3:20 O`CLOCK P.M.
3311473 8100 Authentication: 203689529
SR# 20207363217 Date: 09-18-20
You may verify this certificate online at
corp.delaware.gov/authver.shtml
State of Delaware Secretary of State Division of Corporatoi
ns
Delivered 03:20 PM 08/24/2020 FILED 03:20 PM 08/24/2020
SR 20206903529 - File Number 3311473
CERTIFICATE OF INCORPORATION OF
Decentralized Crypto Financial Inc.
FIRST: SECOND:
*
*
THIRD:*
*
FOURTH:
*
FIFTH:*
*
SIXTH:
The name of the corporation is: Decentralized Crypto Financial
Inc.
The address of the registered office of the corporation in the
State of Delaware is located at: 108 West 13th Street,
Wilmington, Delaware 19801
Located in the County of New Castle
The name of the registered agent at that address is: Business
Filings Incorporated
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the
Delaware General Corporation Law.
The total number of shares of stock which the corporation is
authorized to issue is 500,000,000 shares of common stock having
a one ten thousandth of a cent ($0.0001) par value.
No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director; provided, however, that the
foregoing clause shall not apply to any liability of a director
(i) for any breach of the director's duty ofloyalty to the
corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation oflaw, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal
benefit. This Article shall not eliminate or limit the liability
of a director for any act or omission occurring prior to the
time this Article became effective.
The name and address of the incorporator is Nicholas Scherling,
4795 Meadow Wood Ln, 200, Chantilly, Virginia 20151
I, the undersigned, being the incorporator, for the purpose of
forming a corporation under the laws of the State of Delaware do
make, file, and record this Certificate oflncorporation and do
certify that the facts herein are true.
Isl Nicholas Scherling
Nicholas Scherling, Incorporator Dated: 08/20/2020
ADD EXHB
7
exhibit6txt.txt
ACTION OF SOLE ORGANIZER
ACTION OF SOLE ORGANIZER
OF
Decentralized Crypto Financial LLC
The undersigned, being the sole organizer of Decentralized*
Crypto Financial LLC, a Delaware Limited Liability Company (the
Company), does hereby approve and adopt the following
resolutions:
*
Election of Members
RESOLVED, that the following persons are hereby elected as the
members of the Limited Liability Company to serve until the
first annual meeting of the members or until their successors*
are duly elected and qualified:
Nicholas Scherling, 4795 Meadow Wood Ln 200, Chantilly, Virginia
20151
The undersigned, upon completion of this Action of Organizer,
shall have no further responsibilities or obligations to the
Limited Liability Company in his capacity as sole organizer.
Dated: July 28, 2020
Business Filings Incorporated, Organizer Mark Williams, A.V.P.
PART II AND III
8
originialcircular.txt
ORIGINALLY FILED OFFERING CIRCULAR
Part II - INFORMATION REQUIRED IN OFFERING CIRCULAR
An offering statement pursuant to Regulation A relating to these shares
has been filed with the U.S. Securities and Exchange Commission (the
"Commission"). Information contained in this preliminary offering
circular is subject to completion or amendment. These shares may not be
sold nor may offers to buy be accepted before the offering statement filed
with the Commission is qualified. This preliminary offering circular shall
not constitute an offer to sell or a solicitation of an offer to buy or sell any
of these shares in any state in which such offer, solicitation or sale would
be unlawful before registration or qualification under the laws of any such
state. We may elect to satisfy our obligation to deliver a final offering
circular by sending you a notice within two business days after the
completion of our sale to you that contains the URL where the final
offering circular or the offering statement in which such final offering
circular was filed may be obtained.
Preliminary Offering Circular
October 14th, 2020
Subject to Completion
DECENTRALIZED CRYPTO FINANCIAL INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
85-2718015
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification Number)
4795 Meadow Wood Lane, #200
Chantilly, Virginia 20151
(703) 594-6840
www.Decryptofi.com
Nicholas Scherling
Chief Executive Office
Decentralized Crypto Financial Inc. ("DeCryptoFi")
4795 Meadow Wood Lane, #200
Chantilly, Virginia 20151
(703) 594-6840
Up to
150,000,000 shares of Common Stock
This is an initial public offering of our common stock. The offering
price is $0.10 per share.
The offering consists of 150,000,000 shares of our common stock
comprised of (a) up to 25,000,000 newly issued shares of our common
stock ("Shares") in our Initial Public Offering ("IPO"), and up to (b)
125,000,000 shares for non-cash consideration pursuant to our "Work
Compensation" program.
In the event all of the Offering Shares are sold, we may, in our
discretion, sell up to 50,000,000 additional authorized, but currently
unissued shares ("Additional Shares" and/or "Reserve Shares") in the
1
offering currently held in reserve.
300,000,000 shares are currently owned by the CEO of DeCryptoFi,
Nicholas Scherling ("Company insider" and/or "Holder"). In connection
with the initial public offering of the Company's securities, the Holder
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company held
immediately prior to the effectiveness of the registration statement for
such offering (other than those included in the registration), for such
period of time (not to exceed 180 days or such longer period of time as
may be required to comply with Rule 2711 of the Financial Industry
Regulatory Authority, Inc. (or any successor rule thereto)) two days
following the effective date of such registration statement ("lock-up
period"). Further, following the lock-up period, the Holder will be limited
to selling 12.5% of his holdings per year. This not only protects against
over-diluting the market share value, but also preserves the integrity of the
Company.
There is no minimum number of Offering Shares that we must sell in
order to conduct a closing in this offering. The offering will commence
within six weeks after this offering circular has been qualified by the
Commission. The offering will exist until the date on which the offering
of any additional stock would cause the aggregate offering price or
aggregate gross sales in this offering, as those terms are defined under
Rule 251(a) of the Securities Act, to exceed $50,000,000.00.
The Commission does not pass upon the merits of or give its approval to
any shares offered hereby or the terms of the offering, nor does it pass
upon the accuracy or completeness of any offering circular or other
solicitation materials. The Offering Shares are being offered pursuant to
an exemption from registration with the Commission; however, the
Commission has not made an independent determination that the Offering
Shares offered are exempt from registration.
Price to Public Underwriter Proceeds
Proceeds
Per Share Discounts To Issuer
to other Persons
$0.10 $0.0 $0.10
$0.0
Total Min1 N/A N/A N/A
N/A
Total Max. $0.10 N/A $15M
N/A
Investing in an IPO is speculative and involves substantial risks.
You should purchase stock only if you can afford a complete loss of your
investment. See "Risk Factors" to read about the more significant risks
you should consider before buying our stock. Please see subsection "Risk
Factors," beginning on page 9 of this offering circular.
This is a Regulation A+ Tier 2 offering. The Company may
decide, either concurrently with this offering (potentially commencing
prior to its qualification) or on a date subsequent to the qualification of
this offering, to sell between 0 and 25 million shares of stock to non-U.S.
2
persons in a private placement exempt from the registration requirements
of the Securities Act under Regulation S promulgated thereunder
("Regulation S"). The stock in any potential concurrent or subsequent
Regulation S offering will be considered a restricted security and will be
sold for delayed delivery and subject to a transfer restriction for ranging
from 40 days to one year.
THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE
ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS
OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY
OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER
SELLING LITERATURE. THESE SECURITIES ARE BEING
OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION WITH THE COMMISSION; HOWEVER, THE
COMMISSION HAS NOT MADE AN INDEPENDENT
DETERMINATION THAT THE SECURITIES OFFERED
HEREUNDER ARE EXEMPT FROM REGISTRATION.
Generally, no sale may be made to you in this offering if the
aggregate purchase price you pay is more than 10% greater of your annual
income or net worth. Different rules apply to accredited investors and
non-natural persons. Before making any representation that your
investment does not exceed applicable thresholds, we encourage you to
review Rule 251(d)(2)(i)(C) of Regulation A. We deem this limitation on
investment not to apply to the non-cash consideration for which stock is
received through our Work Compensation plan, and therefore to not limit
the number of shares that may be received through the Work
Compensation Plan. Prior to this offering, there has been no public market
for our common stock. For general information on investing, we
encourage you to refer to www.investor.gov.
Initially, DeCryptoFi stock will not trade on a stock exchange, securities
exchange, or other trading market. This means that it may be difficult to
sell your shares of stock.
IMPORTANT INFORMATION ABOUT THIS OFFERING
CIRCULAR
Please carefully read the information in this offering circular and any
accompanying offering circular supplements, which we refer to
collectively as the "preliminary offering circular." You should rely only on
the information contained in this offering circular. We have not authorized
anyone to provide you with different information. This offering circular
may only be used where it is legal to sell these securities. You should not
assume that the information contained in this offering circular is accurate
as of any date later than the date hereof or such other dates as are stated
herein or as of the respective dates of any documents or other information
incorporated herein by reference.
This preliminary offering circular is part of an offering statement that
we filed with the SEC, using a continuous offering process, and is still
pending approval. Periodically, as we make material developments, we
will provide an offering circular supplement that may add, update or
change information contained in this offering circular. Any statement that
we make in this offering circular will be modified or superseded by any
subsequent statement made by us in a subsequent offering circular
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supplement.
We are following the "Offering Circular:
disclosure format under Regulation A
The date of this preliminary offering circular is
October 14th, 2020
TABLE OF CONTENTS
SUMMARY 4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS 5
RISK FACTORS 7
TERMS OF THIS OFFERING 12
USE OF PROCEEDS 13
DESCRIPTION OF BUSINESS 14
DESCRIPTION OF COMMON STOCK 15
REGULATORY CONSIDERATIONS 15
CHANNELS FOR DISCLOSURE OF INFORMATION AND PLAN OF
DISTRIBUTION
DILUTION 18
CONCURRENT OR SUBSEQUENT REGULATION S (REG S)
OFFERING 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 21
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
EMPLOYEES 22
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 24
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITY HOLDERS 24
SHARES ELIGIBLE FOR FUTURE SALE 25
FINANCIAL INFORMATION SECTION 25
EXHIBITS
Offering Circular
We have not authorized anyone to provide any information or to make any
representations other than those contained in this offering circular or in
any free writing prospectuses we have prepared. We take no responsibility
for and can provide no assurance as to the reliability of, any other
information that others may give you. The information contained in this
preliminary offering circulars current only as of its date.
4
You should rely only on the information contained in this offering
circular. We have not authorized anyone to provide you with different
information. The information in this offering circular assumes that all the
shares offered are sold and we have not taken advantage of our option to
sell any Additional Shares as described herein.
SUMMARY
This offering summary highlights certain information appearing
elsewhere in this offering circular. Because it is a summary, it may not
contain all the information that is important to you. To understand this
offering fully, you should read the entire offering circular carefully,
including the "Risk Factors" section, before making a decision to invest in
our stock. Unless the context requires otherwise, in this offering the terms
"we," "us" and "our" refer to DeCryptoFi, the issuer of the common
shares of stock. For a more complete understanding of this offering, you
should read the entire offering circular carefully, including the risk factors
and the financial statements.
Who we Are. We are an early-stage financial technology company.
Our company, DeCryptoFi, has identified a glaring and persistent
issue that many privately held businesses face; the ability for small and
medium sized companies to raise additional capital. When businesses
need capital, typically they must go through the arduous process of
seeking a loan from a bank or lending company. It is extremely difficult
for small and medium sized companies to access public markets where
they may receive the same or better terms in return for capital. When a
small business is approved for a loan by a bank (or other lending
provider), these institutions will often require from the business a form of
hard asset collateral, and most require a personal guarantee from its
owner, regardless of the company's financial stability. W2 employees,
working for a successful business, would never personally guarantee a
business loan just to keep their job, so why should legitimate business
owners?
If businesses are turned away from financial institutions, there seems
to be few alternatives except for these businesses to seek additional
capital from Merchant Cash Advance firms, or some form of lending
company that charges usurious interest rates. These types of lending
institutions tend to benefit from the borrower's company failing rather
than succeeding, which then puts people out of jobs and facing massive
debts that need to be repaid.
As a result, many business owners are unable to secure the capital
they need to scale their business and those that are able to get a good loan
at a low rate may still be unwilling to do so due to personal guarantee
requirements. No employee or business owner wants to personally secure
business loans with their personal finances regardless of how well their
business is performing.
Our Solution.
The reality is that there are numerous additional ways that companies can
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raise capital, but they simply lack the knowledge, expertise, or personnel
to facilitate alternative capital-raising offerings.
DeCryptoFi has created a technology-driven software that will allow
small and mid-sized companies to understand and be fully compliant with
the public and private offering processes. Our main goal can be summed
up in one word... simplification. Our goal is to tap into this market and
assist small and medium size companies that want to pursue a public
offering or an alternative acceptable private offering and remain fully
compliant with SEC regulations. We strive to make the overlooked
alternative methods of raising capital easy to achieve, easy to
comprehend, and for many aspects of the process, completely automated.
The SEC has long struggled with how to assist small and medium size
businesses get access to the public market; we are here to help!
By answering a series of questions specific to their company,
including, but not limited to, how much capital the company seeks to
raise, who the company's target investors will be, current and past
revenue, profitability, growth rate, what its organizational structure is like,
etc., businesses will be able to streamline the structuring of a potential
business capitalization and the regulatory safeguards associated with these
capital raising options. DeCryptoFi's patented software will provide a list
of currently available offerings to our customers, as well as a list of
offerings that are just within their grasp. Once the business owner fully
comprehends the types of offerings available to them and decides which
to pursue, DeCryptoFi's software will assist in automating all relevant
SEC filings, state filings, investor notifications, disclosures, offering
circulars, registration statements, offering memoranda, prospectuses,
dividend payments, proxy statements, and much more.
Strategy. We will pursue the following strategies:
Continue to attract top talent. To grow our business, we recognize the
need to attract experienced professionals in technology, legal, accounting,
and so forth. While we already have a strong team of employees and
advisors with the relevant expertise (discussed in greater detail below), we
plan to supplement key roles as we ramp up our operations.
Scale our business to become a national leader in our sector. We are
focused on growing our national and international footprint and are
testing business development and marketing efforts in multiple channels.
Increased awareness of our products and services will enable us to scale
and attract a whole assortment of different types of businesses that
previously did not fall under the SEC's purview, but will now be a fully
compliant reporting company or exempt reporting company, thereby
increasing investor protection across broad range of market tiers.
Corporate Information. We are a Delaware corporation (C-Corp)
organized on August 20, 2020 Our principle place of business address is
4795 Meadow Wood Lane # 200, Chantilly, VA 20151, our telephone
number is (703) 594-6840, and our website is www. DeCryptofi.com.
Except for this offering circular and our other public filings with the
SEC pursuant to the requirements of SEC regulation A, information found
6
on, or accessible through our website is not a part of, and is not
incorporated into this offering circular, and you should not consider it part
of this offering circular. We consider these facilities adequate for our
current operations.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
The statements contained in this offering circular that are not purely
historical are forward-looking statements. Forward-looking statements
include, but are not limited to, statements regarding expectations, hopes,
beliefs, intentions, or strategies regarding the future. In addition, any
statements that refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intend," "may," "might,"
"plan," "possible," "potential," "predicts," "project," "should," "would"
and similar expressions may identify forward-looking statements, but the
absence of these words does not mean that a statement is not
forward-looking. Forward-looking statements in this offering circular may
include, for example, statements about our:
o limited operating history and ability to maintain or increase profitability.
o reliance on third parties for production and distribution.
o results of operations.
o ability to manage growth.
o ability to minimize our production and distribution costs by utilizing
funding sources provided by others.
o regulatory or operational risks.
o success in retaining or recruiting, or changes required in, our officers,
key employees or directors.
o capital structure.
o ability to obtain additional financing when and if needed; and
o liquidity and trading of our securities.
The forward-looking statements contained in this offering circular are
based on current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future
developments will be those that have been anticipated. These
forward-looking statements involve a number of risks, uncertainties (some
of which are beyond our control) or other assumptions that may cause
actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks
and uncertainties include, but are not limited to, those factors described
under the heading "Risk Factors." Should one or more of these risks or
uncertainties materialize, or should any of our assumptions prove
incorrect, actual results may vary in material respects from those projected
7
in these forward-looking statements. We undertake no obligation to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required
under applicable securities laws.
These statements involve risks, uncertainties, assumptions, and other
factors that may cause actual results, levels of activity, performance, or
achievements to be materially different from the information expressed or
implied by these forward-looking statements. Although we believe that we
have a reasonable basis for each forward-looking statement contained in
this offering circular, we caution you that these statements are based on a
combination of facts and factors currently known by us and our
projections of the future, about which we cannot be certain.
In determining the current price in the general offering, DeCryptoFi
has relied on preliminary oral indications of interest from potential
investors, both institutional and retail, that we received in compliance
with Rule 255 under the Securities Act. As noted on the cover page to this
offering circular, DeCryptoFi does intend to seek additional input on this
price by seeking pre- qualification indications of interest from potential
investors pursuant to Rule 255 under the Securities Act. The offering
price of the DeCryptoFi Stock, however, bears no relationship to
DeCryptoFi's book or asset values or likelihood of repayment or to any
other established criteria for valuing securities. This price may not be
indicative of the market price of the DeCryptoFi Stock at such time as a
secondary trading market does develop, if ever, or the proceeds that you
would receive upon a commercial sale of the DeCryptoFi Stock; the
offering price may be significantly more than either such price.
Prior to this offering there has been no public market for any of our
securities. The public offering price of our shares was determined on a
number of factors. Factors considered in determining the prices and terms
of the Shares (and the Additional Shares) offered hereby include:
o The history and prospects of companies similar to our company
o Prior offerings of those companies
o Our prospects
o Our capital structure
o Our software
o An assessment of our management
o General conditions of the securities markets at the time of the offering;
and
o Other factors as were deemed relevant
However, although these factors were considered, the determination
of the offering prices is more arbitrary than the pricing of securities for an
established operating company.
Following this offering, the price of our common stock may vary
significantly due to general market or economic conditions as well as
other factors. Furthermore, an active trading market for the securities may
8
never develop or, if developed, may not be sustained. You may be unable
to sell your securities unless a market can be established and sustained.
RISK FACTORS
The SEC requires that we identify risks that are specific to our
business and financial condition. We are still subject to all the same risks
that all companies in our business, and all companies in the economy, are
exposed to. These include risks relating to economic downturns, political
and economic events, and technological developments (such as hacking
and the ability to prevent hacking). Additionally, early-stage companies
are inherently riskier than more developed companies. You should
consider general risks as well as specific risks when deciding whether to
invest.
An investment in the securities offered by this offering circular
involves a high degree of risk. You should carefully consider all the
material risks described below, together with the other information
contained in this offering circular, before making a decision to invest in
DeCryptoFi. There can be no assurance that any purchaser will achieve
his or her investment objective or avoid substantial losses by investing in
DeCryptoFi. All investments entail a high degree of risk, and purchasers
may lose some or all their investment.
Risks associated with our business
1. We do not have a long operating history on which to evaluate our
company. We face all the risks faced by newer companies in similar
industries, including significant competition from existing and emerging
capital raising platforms many of which may be significantly more
established, larger, and better financed than our company. However, we
believe that what we are offering is incredibly unique and the market we
are entering should be far less saturated.
2. There is considerable uncertainty about the asset class's long-term
viability, which could be affected by a variety of factors, including many
market-based factors such as economic growth, inflation, and others. In
addition, the success of the stock and other types of securities that may be
issued will depend on whether new technologies turn out to be useful and
economically viable. We do not control any of these factors, and therefore
may not be able to control the long-term success of our company share
value.
3. The offering price of our stock was not established on an independent
basis. After we commence operations, the actual value of your investment
may be substantially less than what you pay. The most recent pre-revenue
valuation of our stock concluded our stock has a fair market value of
$0.10 per share as of October 14th, 2020.
4. The market in which we participate is intensely competitive, and we
may not be able to compete successfully with our current or future
competitors.
5. This offering is being made pursuant to recently adopted rules and
regulations under Regulation A of the Securities Act. The legal and
compliance requirements of these rules and regulations, including
ongoing reporting requirements related thereto, are relatively untested.
9
6. Our operating results are dependent, in part, on management's estimates
of revenue to be earned in the future. We will regularly review and revise
our revenue estimates. Periodic adjustments in amortization rates may
significantly affect these results.
7. We are pre revenue. We anticipate that our revenue will begin in 2021.
Until we are revenue stable our revenue may not be evenly distributed
throughout the year but may be more evenly distributed in the future as
we expand our business and diversify, Until such time, our quarter to
quarter financial results may not be comparable within any single fiscal
year or from fiscal year to fiscal year.
8. Our projections may fluctuate. As a result of the foregoing and other
factors, our results of operations may fluctuate significantly from period
to period, and the results of any one period may not be indicative of the
results for any future period
9. We are smaller and less diversified than many of our competitors. Some
of our larger competitors have more resources with which to compete for
ideas, enhancements, and better functionality.
10. We must successfully respond to rapid technological changes and
alternative forms of delivery or storage to remain competitive. The
financial industry in general continues to undergo significant
developments as advances in technologies and new methods of product
delivery and storage, or certain changes in consumer behavior driven by
these developments, emerge. Consumers are spending an increasing
amount of time online and on mobile devices, and are increasingly
viewing financial date in real time, on their televisions and on handheld or
portable devices. we must adapt our businesses to changing consumer
behavior and preferences and exploit new distribution channels. Our
strategy is to seek to take advantage of these changes and thereby to create
new revenue streams and other opportunities for our content. If we cannot
successfully utilize these and other emerging technologies, it could have a
material adverse effect on our business, financial condition, operating
results, liquidity, and prospects.
11. We must constantly be aware of any intellectual property issues.
Protecting and defending against intellectual property claims may have a
material adverse effect on our business. Our ability to compete depends,
in part, upon successful protection of our intellectual property relating to
our software. We will attempt to protect proprietary and intellectual
property rights to our software through available copyright and trademark
laws and licensing and distribution arrangements with reputable
international companies in specific territories.
12. We plan to conduct business abroad and internationally. We face risks
from doing business internationally. We intend to distribute our content
outside the U.S. and derive revenue in foreign jurisdictions. As a result,
our business is subject to certain risks inherent in international business,
many of which are beyond our control. These risks include:
a. Laws and policies affecting trade, investment, and taxes, including
laws and policies relating to the repatriation of funds and withholding
taxes, and changes in these laws.
b. The Foreign Corrupt Practices Act ("FCPA") and similar laws
10
regulating interactions and dealings with foreign government officials.
c. Changes in local regulatory requirements, including restrictions on
video content.
d. Differing cultural tastes and attitudes.
e. Differing degrees of protection for intellectual property
f. Financial instability and increased market concentration of buyers in
foreign markets.
g. The instability of foreign economies and governments.
h. Fluctuating foreign exchange rates.
i. The spread of communicable diseases in such jurisdictions, which
may impact business in such jurisdictions; and
j. War and acts of terrorism.
Events or developments related to these and other risks associated
with international trade could adversely affect our revenue from non-U.S.
sources, which could have a material adverse effect on our business,
financial condition, operating results, liquidity, and prospects.
Risks Specific to this Offering
a. DeCryptoFi's securities are just being introduced to the market. Our
stock has no history and thus face significant uncertainties around its
valuation. This valuation may be highly dependent on the demand for our
patented software, which is unproven and uncertain, and the reliability of
the underlying technology which is untested.
b. The securities being offered are volatile in nature. There is no
guarantee that our securities will hold their value or increase in value, and
you may lose the amount of your investment in the DeCryptoFi stock in
whole or in part. The shares in the initial stock offering are highly
speculative, and any return on an investment is contingent upon numerous
circumstances, many of which (including legal and regulatory conditions)
are beyond our control. There is no assurance that purchasers will realize
any return on their investments or that their entire investment will not be
lost. For this reason, each purchaser should carefully read this offering
circular and should consult with his or her own attorney, financial and tax
advisors prior to making any investment decision with respect to
DeCryptoFi stock.
c. There is much reliance on the Firm's CEO, Nicholas Scherling,
regarding the ultimate success of the company. Our chairman and chief
executive officer will effectively control our company. DeCryptoFi will
only be offering one class of common stock. Our chairman and chief
executive officer, Nicholas Scherling, has control over the vast majority of
all the outstanding voting power and, in turn, our company. This
concentration of ownership and decision making may make it more
difficult for other stockholders to effect substantial changes in our
company and may also have the effect of delaying, preventing or
expediting, as the case may be, a change in control of our company.
d. Dividend payments will not be made during the inception of the
11
Company's offering. We do not intend to pay any dividends on our
common stock at this time. The payment of cash dividends on our
common stock in the future will be dependent upon our revenue and
earnings, if any, capital requirements and general financial condition as
well as the limitations on dividends and distributions that exist under the
laws and regulations of the State of Delaware and will be within the
discretion of the Company. It is the present intention of the Company to
retain all earnings, if any, for use in our business operations and,
accordingly, the Company does not anticipate declaring any dividends on
our common stock in the foreseeable future. As a result, any gain you will
realize on our common stock will result solely from the appreciation of
such shares.
e. If our securities become subject to the SEC's penny stock rules,
broker-dealers may experience difficulty in completing customer
transactions and trading activity in our securities may be adversely
affected. If at any time we have net tangible assets of $5,000,000 or less
and our common stock has a market price per share of less than $5.00,
transactions in our securities may be subject to the "penny stock" rules
promulgated under the Securities Exchange Act of 1934. Under these
rules, broker-dealers who recommend such securities to persons other
than institutional accredited investors must:
1. make a special written suitability determination for the purchaser.
2. receive the purchaser's written agreement to the transaction prior to
sale.
3. provide the purchaser with risk disclosure documents which identify
certain risks associated with investing in "penny stocks" and which
describe the market for these "penny stocks" as well as a purchaser's legal
remedies; and
4. obtain a signed and dated acknowledgment from the purchaser
demonstrating that the purchaser has received the required risk disclosure
document before a transaction in a "penny stock" can be completed.
If our securities become subject to these rules, it may be difficult to
effectuate customer transactions and trading activity in our securities may
be adversely affected. As a result, the market price of our securities may
be depressed, and you may find it more difficult to sell our securities.
We have 50,000,000 shares in reserve for future issuance which
could have an adverse effect on the market price for our securities or on
our ability to obtain future public financing. If and when we issue
additional securities to raise funds or consummate any acquisition or
business combination, you may experience dilution to your holdings.
The determination for the offering price of our shares is more
arbitrary compared with the pricing of securities for an established
operating company.
- You will not be able to sell almost all of our stock immediately after
purchase, and it may decline in value before you have a chance to sell it.
In addition, at issuance, there will be no trading market for the Stock, and
a trading market may never develop.
- If the Stock is issued, there may not be a trading market available for the
Stock, or any exchange on which holders of Stock may transfer or resell
their Stock. As a result, the Stock may initially only be traded on very
12
limited range of venues, including U.S. registered exchanges, or regulated
alternative trading systems for which a Form ATS will have been properly
submitted to the SEC.
- Exchanges may decide not to list the DeCryptoFi Stock for several
reasons not under our control, a perceived lack of market interest in the
DeCryptoFi Stock, and any other factors. As a result, investors of
DeCryptoFi Stock should be prepared to hold their Stock indefinitely, as
there is no guarantee that holders will be able to sell or exchange their
Stock. In the event that the Stock remains illiquid for a significant period
of time or indefinitely, the value of the DeCryptoFi Stock may be
materially adversely affected.
- Most securities that are publicly traded in the U.S. have one or more
broker-dealers acting as "market makers" for the security. A market maker
is a firm that stands ready to buy and sell the security on a regular and
continuous basis at publicly quoted prices. In the event the stock is listed
on an exchange, we cannot guarantee that the stock will have a market
maker, which could contribute to a lack of liquidity in the DeCryptoFi
stock and could have a material adverse effect on holders' ability to trade
the stock.
- The offering price of shares of DeCryptoFi was not established on an
independent basis; the actual value of your investment may be
substantially less than what you pay.
The selling price of DeCryptoFi Stock bears no relationship to our book
or asset values or likelihood of repayment or to any other established
criteria for valuing securities. Because the offering price is not based upon
an independent valuation, the offering price may not be indicative of the
proceeds that you would receive upon a commercial sale of the Stock.
Further, the offering price may be significantly more than the price at
which the Stock would trade if they were to be listed on an exchange or
actively traded by broker-dealers. -
The determination for the offering price of our shares is more arbitrary
compared with the pricing of securities for an established operating
company.
Prior to this offering there has been no public market for any of our
securities. The public offering price of our shares was negotiated between
us and the joint book-running managers. Factors considered in determining
the prices and terms of the Shares (and the Additional Shares) offered
hereby include:
* the history and prospects of companies similar to our company;
* prior offerings of those companies;
* our prospects;
* our capital structure;
* an assessment of our management;
* general conditions of the securities markets at the time of the offering
and other factors as were deemed relevant
13
However, although these factors were considered, the determination
of the offering prices is more arbitrary than the pricing of securities for an
established operating company
The value of your share value in DeCryptoFi may depend on its supply,
and whether there is a pre-determined schedule of Stock Compensation
every year. During our first year we will issue approximately 3,125,000
shares of stock in our Stock Compensation Plan, and every two years we
will decrease this number by 5%. This is subject to vary slightly. The
following table shows our projections for the first 6 years:
* Our use of Form 1-A and our reliance on Regulation A for this offering
may make it more difficult to raise capital as and when we need it, as
compared to if we were conducting a traditional initial public offering on
Form S-1.
o Because of the exemptions from various reporting requirements
provided to us under Regulation A and because we are only permitted to
raise up to $50,000,000 in any 12-month period under Regulation A
(although we may raise capital in other ways, such as the concurrent
Regulation S offering), this securities offering may be less attractive to
purchasers and it may be difficult for us to raise additional capital as and
when we need it. If we are unable to raise additional capital as and when
we need it, the growth of our financial condition and
results of operations may be adversely affected, which may have a
material adverse effect on the value of our stock.
Years 1-2 3,125,277
Years 3-4 2,969,013
Years 5-6 2,820,562
* DeCryptoFi may evaluate and consider strategic transactions,
combinations, acquisitions, or alliances to enhance its existing business or
develop new products and services. These transactions could be material
to its financial condition. If we do consummate a transaction, we may be
unable to obtain the benefits or avoid the difficulties and risks of the
transaction.
* Any acquisition will involve risks commonly encountered in business
relationships, including:
o difficulties in assimilating and integrating the operations, personnel,
systems, data, technologies, products, and services of the acquired
business.
o inability of the acquired technologies, products, or businesses to achieve
expected levels of revenue, profitability, productivity, or other benefits.
o difficulties in retaining, training, motivating, and integrating key
personnel.
o diversion of management's time and resources from our normal daily
operations.
o difficulties in maintaining uniform standards, controls, procedures, and
policies within the combined organizations.
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o difficulties in retaining relationships with customers, employees, and
suppliers of the acquired business.
o risks of entering markets in which we have no or limited direct prior
experience.
o regulatory risks, including remaining in good standing with existing
regulatory bodies or receiving any necessary pre- closing or post-closing
approvals, as well as being subject to new regulators with oversight over
an acquired business.
o assumption of contractual obligations that contain terms that are not
beneficial to us, require us to license or waive intellectual property rights
or increase our risk for liability.
o failure to successfully further develop the acquired technology; liability
for activities of the acquired business before the acquisition, including
patent and trademark infringement claims, violations of laws, commercial
disputes, tax liabilities and other known and unknown liabilities.
o potential disruptions to our ongoing businesses; and
o unexpected costs and unknown risks and liabilities associated with the
acquisition.
Risks Related to Regulations
* There are uncertainties related to the regulatory regimes governing the
issuance of new publicly traded securities, and as such, new regulations or
policies may materially adversely affect the development and value our
securities.
* Any future regulatory actions applicable to our related activities could
severely impact our operations and the value of DeCryptoFi. Accordingly,
DeCryptoFi may need to restructure operations significantly to comply
with any new regulation or guidance. These efforts could be costly and
could involve fundamentally changing core portions of our business,
operations and in turn negatively affect the value of our
securities. On the other hand, failure to restructure for compliance
adequately or quickly enough could result in regulatory action (such as
investigations by the government or a self-regulatory organization or
government or private litigation or administrative actions) that requires
DeCryptoFi to spend significant time and effort, which would pull the
Company's attention away from the core of its business and potentially
deplete our resources. It could also result in negative publicity.
* New or changing laws and regulations or interpretations of existing laws
and regulations, in the United States and other jurisdictions, may
adversely impact securities, including with respect to their value, their
liquidity, the ability of purchasers to access marketplaces or exchanges on
which to trade the security, and the structure, rights and transferability of
the security.
Transfer Agent and Registrar
The Company will act as registrar and maintain the Company's share
register. As of the date of this offering circular, we have not engaged a
transfer agent, and do not intend to engage a transfer agent until such time
as we determine its necessary or we are required to do so in order to
satisfy the conditional exemption contained in Rule 12g5-1(a)(7) of the
Securities Exchange Act of 1934, as amended, or the Exchange Act.
TERMS OF THIS OFFERING
Securities being offered by Company: DeCryptoFi is authorized to
issue 500,000,000 shares. We will be offering only one class of common
stock. 25,000,000 shares will be offered through our initial public
offering. The Company will also be offering up to 125,000,000 shares as
stock for non-cash consideration in exchange for certain goods and
services. Please see the section, Stock Compensation Plan for additional
information.
Reserved Funds: The Company will keep 50,000,000 shares in reserve
for future issuance and to enhance the growth of the Company and/or for
reasons that the Company believes are in the best interests of its
shareholders. The CEO of the Company owns 300,000,000 shares subject
to a lock-up period of 180 days, which shall commence 2 days after the
Commission approves this offering.
Best Efforts Offering: There is no minimum number of Offering Shares
that we must sell in order to conduct a closing in this offering. If all the
Offering Shares are sold in the offering, we will have the option to sell up
to 50 million additional newly issued shares in the offering in our
discretion ("Additional Shares").
Lock-up Agreement: Insider(s) of the company have entered into an
agreement with the Company pursuant to which he has agreed to not
sell, transfer or otherwise dispose of any Company Securities for an initial
period of 180 days which shall begin two days after the Commission's
approval of this circular.
Payment for Common stock: After the qualification by the SEC of the
offering statement of which this offering circular is a part, investors will
create a profile on DeCryptoFi's online platform which has been
engineered to seamlessly accept investment online, including verifying
investor identities, performing anti-money laundering checks on investors,
facilitating investment document execution, funds transfer and regulatory
compliance. We may also permit payment to be made in foreign currency
or by credit card if and to the extent we can establish and maintain
relationships with licensed currency exchange services providers and or
payment processing entities to facilitate such transactions and provided,
further, we are able to do so in accordance with FINRA and SEC
guidelines. On each closing date, the funds in the account will be released
to us and the associated shares will be issued to the investors in this
Offering. If any funds are returned by us if we choose to reject a
subscription or elect not to proceed with the Offering, such funds will be
returned by mail via a check in U.S. dollars or through the payment
method received.
Stock Compensation Plan: We are offering up to 125,000,000 shares of
stock through our Stock Compensation Plan. In the future, stock may be
16
exchanged for public or private shares of companies that utilize
DeCryptoFi services for the issuance of public or private capitalization.
Voting Rights: Each holder of the Company's Common Stock is entitled
to one vote for each share on all matters submitted to a vote of the
shareholder, except as provided by law or by the other provisions of the
Certificate of Incorporation.
Dividends: We do not intend to pay any dividends currently. The
payment of cash dividends on our common stock in the future will be
dependent upon our revenue and earnings, if any, capital requirements
and general financial condition as well as the limitations on dividends and
distributions that exist under the laws and regulations of the State of
Virginia and will be within the discretion of the Company. It is the present
intention of the Company to retain all earnings, if any, for use in our
business operations and accordingly, the Company does not anticipate
declaring any dividends on our common stock in the foreseeable future.
As a result, any gain you will realize on our common stock will result
solely from the appreciation of such shares.
List of securities and proposed symbols: Prior to this offering, there have
been no public market for our common stock. We currently do not meet
the financial listing requirements to be listed on a national securities
exchange. Once the Company reaches the applicable thresholds, the
Company intends to register with one or more registered securities
exchanges.
USE OF PROCEEDS
We estimate that the net cash proceeds to us from the sale of the
company stock offering in this offering will be $15 million, minus any
offering expenses and other fixed costs.
We intend to use the proceeds of this offering, net of any federal and
state income taxes for working capital and other general corporate
purposes general operations and cash reserves, including but not limited
to payment of salaries (including those of directors and officers) and
hiring employees and consultants. We also intend to use the proceeds of
this offering for research and development, specifically for continued
development in ways to enhance our software and our platform, and for
hiring costs and payment of salaries that are allocated to research and
development, as well as for marketing and education, which includes
organizing and hosting educational and developer events.
We will also use the above proceeds in conjunction with the proceeds
from a potential concurrent or subsequent Regulation S offering to
non-U.S. persons, the net proceeds of which we estimate to be
$15,000,000.00. We cannot specify with certainty all the particular uses
for the net proceeds to be received upon the concurrent Regulation S
offering. In addition, the amount, allocation, and timing of our actual
expenditures will depend upon numerous factors. Pending other uses, we
intend to invest the proceeds in interest-bearing, investment-grade
instruments, certificates of deposit or direct or guaranteed obligations of
the U.S. government, or hold as cash. We cannot predict whether the
proceeds invested will yield a favorable return. Our management will
have broad discretion in the application of the net proceeds we receive
17
from our offering and the concurrent Regulation S offering, and investors
will be relying on the judgment of our management regarding the
application of the net proceeds. It is in the Company's sole discretion
whether to pursue a Regulation S offering.
In addition, we intend to use our proceeds for the following:
a. financing production and associated development and operating costs
and expenses for our software.
b. working capital and general corporate purposes.
DeCryptoFi reserves the right to alter the use of proceeds in this offering.
DESCRIPTION OF BUSINESS
DeCryptoFi's main goal is to make the public and private offering
process of raising capital easier for small and midsized businesses to
achieve. Our top priority is to aid and facilitate with the complexities in
the alternative space of capital raising. Many companies, even if aware of
these alternative methods of capital raising, simply lack the legal and
finance team dedicated in ensuring that all regulatory and audit
requirements are satisfied. Without the proper personnel, small to medium
sized businesses cannot devote the time to raising capital while
simultaneously running their business. If these business owners wish to
outsource these functions, it can drastically affect the company's bottom
line.
We aim to assist with initial public offerings ("IPO"), initial public
debt offerings ("IPDO"), private offerings, and private debt offerings. We
believe that average business owners are not even aware of the ability for
tapping public and private markets simply through debt offerings and the
potential advantages associated with it. Staging an IPO is also a very
time-consuming and expensive process. The registration process can be
quite complex and requires the company to disclose a variety of
information to potential investors. In addition, the IPO process can take as
little as six months or as long as two years, during which time
management's attention is distracted away from day-to-day operations. It
can also conservatively cost a company between $50,000 and $250,000 in
underwriting fees, legal and accounting expenses, and printing costs.
DeCryptoFi's software will allow companies the ability to streamline
and automate SEC filings, quarterly and annual reports, dividend
payments, privacy notifications, General Data Protection Regulations
("GDPR"), Anti-Money laundering provisions, and the Trust Indenture
Act regulations. By giving our customers the ability to systematize these
processes, the regulatory landscape will be satisfied, thereby alleviating
some of these hurdles and giving them the opportunity to focus on
running their business.
DeCryptoFi has not filed for any bankruptcy receivership, or similar
proceedings, nor is DeCryptoFi currently subject to, or has been subject
to, any legal proceedings material to the business or its financial
condition. There is no material litigation, arbitration or governmental
proceeding currently pending against us, or any of our officers or in their
capacity acting as such and neither we, nor our officers have been subject
18
to any such proceedings in the 12 months preceding the date of this
preliminary offering circular.
Trademarks and Copyrights:
We own or have applied for rights to trademarks or trade names that
we use in connection with the operation of our business, including our
corporate names, logos and website names. In addition, we own or have
the rights to copyrights, trade secrets and other proprietary rights that
protect our business. This offering circular may also contain trademarks,
service marks and trade names of other companies, which are the property
of their respective owners. Our use or display of third parties' trademarks,
service marks, trade names or products in this offering circular is not
intended to, and should not be read to, imply a relationship with or
endorsement or sponsorship of us. Solely for convenience, some of the
copyrights, trade names and trademarks referred to in this offering
circular are listed without their (c), (r) and (tm) symbols, but we will
assert, to the fullest extent under applicable law, our rights to our
copyrights, trade names and trademarks. All other trademarks are the
property of their respective owners.
DeCryptoFi Platform:
We will operate an online platform, where investors can manage their
accounts and purchase shares of our company. Prospective investors will
create a public address (username) and private key (password) and
indicate agreement to our terms and conditions and privacy policy.
* Available Online Directly from Us. Investors must purchase shares of
our stock directly from us.
* No Minimum Investment. Investors will be able to build ownership over
time by making purchases as low as the initial offering price.
DESCRIPTION OF DECRYPTOFI'S COMMON STOCK
GENERAL
DeCryptoFi has a total of 500,000,000 authorized shares of common
stock, with a par value $.0001. As of the date of this offering circular,
300,000,000 shares of the Company's common stock are outstanding.
VOTING RIGHTS
As DeCryptoFi's business expands, it is the intention of the Company
to grant voting rights to Company shareholders. Shareholders would be
entitled to one vote per share.
NO PREEMPTIVE OR SIMILAR RIGHTS
Our common stock is not entitled to preemptive rights and is not
subject to conversion, redemption or sinking fund provisions.
MERGER OR CONSOLODATION
In the case of any distribution or payment in respect of the Company's
common stock upon any potential consolidation or merger with or into
any other entity, or in the case of any other transaction having an effect on
stockholders substantially similar to that resulting from a
consolidation or merger, such distribution or payment shall be made
ratably on a per share basis among the Company's shareholders.
19
REGULATORY CONSIDERATIONS
Below is a summary of certain current areas of government regulation
that apply to our business and potential regulatory issues of which we are
aware. As discussed below, we generally believe that our business and the
offering discussed in this offering circular are compliant with these
regulations, but in certain cases there may be uncertainty related to that
conclusion.
Government Regulations
The regulatory treatment of securities offerings is uncertain in many
ways. In part, this uncertainty results from the need for regulators to apply
existing law to a new and evolving set of technologies and assets. We
anticipate that regulation will evolve as various state, federal and
international government agencies take greater interest in regulation of
newly issued securities, especially with the recent enactment of
Regulation Best Interest ("Reg BI"), and the current Dodd Frank
provisions. We anticipate new regulations to be established, at which
point, if applicable to DeCryptoFi's business model, we will take all
necessary steps to ensure we are compliant. In addition, various
legislative and executive bodies in the United States and in other
countries may adopt new laws, regulations, or guidance, or take other
actions in the future.
Any future regulatory actions applicable to DeCryptoFi and our
related activities could severely impact our operations and the value of
our securities. We may need to restructure operations significantly to
comply with any new regulation or guidance. Failure to do so adequately
or quickly enough could result in regulatory action (such as investigations
by the government or a self-regulatory organization or government or
private litigation or administrative actions) that requires us to spend
significant time and effort, which would pull our attention away from the
core of our business and potentially deplete our resources. It could also
result in negative publicity. Regulatory change could even potentially
result in certain aspects of our operations being viewed as impermissible,
which could result in a need for us to dramatically alter or cease activities
Securities Act Considerations
Typically, offerings of securities in the U.S. are required to register
under the Securities Act with the SEC and, in compliance with state law,
with applicable state regulators (blue sky regulations). Our current
offering relies on an exemption from federal registration under the
Securities Act provided by Regulation A, which also provides for
preemption of state registration requirements, but which also currently
limits issuances by a single issuer to offerings of no more than
$50,000,000 each year. We have also taken the position that the
commercial uses of our stock, including transfers between owners, do not
require registration or an exemption from registration under state
securities laws.
If in subsequent years after our initial filing we find that our ability to
issue additional shares would exceed the $50m threshold provided by Reg
A Tier 2, we recognize that we may need to fully register our securities
with the SEC and/or to register our shares of stock with one or more U.S.
20
state securities regulators.
Exchange Act Considerations
Registration as Transfer Agents. Under the Exchange Act, a transfer
agent is a person who engages, with respect to securities registered under
Section 12 of the Exchange Act, in (a) countersigning issued securities,
(b) monitoring issued securities, with the goal of preventing unauthorized
issuances, (c) registering transfers of issued securities, (d) exchanging or
converting issued securities, or (e) transferring record ownership of
securities by bookkeeping entry without physical issuance of securities
certificates. Transfer agents are typically required to register with the SEC
under the Exchange Act. Because our distributed software will record the
owner of our stock, and/or the debt of clients we potentially assist in
going public that may not be listed on an exchange at the time of going
public, we could be viewed as engaging in these types of activities.
We have taken the position that DeCryptoFi, and anyone operating its
software are not required to register as transfer agents because direct sale
of stock from seller to buyer without an exchange or marketplace is not
captured or described in the definition of a transfer agent and is not
facilitated by DeCryptoFi. In the future, once listed on an exchange, stock
transfers occurring on an exchange will be recorded by the relevant
exchange in accordance with all applicable laws.
It is possible that the SEC or another regulator would disagree with
our position. If so, we, or anyone running our software could be forced to
register as a transfer agent and comply with applicable law, which could
lead to significant costs to DeCryptoFi and could force DeCryptoFi to
change or cease its operations. It could also lead to considerable
uncertainty as to how we would comply with regulation, which would
likely result in a need for a relatively long registration process and could
ultimately prove prohibitive to our business model. Any of these
developments would decrease the value of the stock sold in this offering.
Registration as Clearing Agency
Also under the Exchange Act, a clearing agency is any person who
(a) acts as an intermediary in making payments or deliveries, or both, in
connection with transactions in securities; (b) provides facilities for
comparison of data respecting the terms of settlement of securities
transactions, to reduce the number of settlements of securities
transactions, or for the allocation of securities settlement responsibilities;
(c) acts as a custodian of securities in connection with a system for the
central handling of securities whereby all securities of a particular class or
series of any issuer deposited within the system are treated as fungible
and may be transferred, loaned, or pledged by bookkeeping entry without
physical delivery of securities certificates; or (d) otherwise permits or
facilitates the settlement of securities transactions or the hypothecation or
lending of securities without physical delivery of securities certificates. A
clearing agency does not include any person solely by reason of
performing a transfer agent function, specifically transferring record
ownership of securities by bookkeeping entry without physical issuance
of securities certificates. Clearing agencies are generally required to
register with the SEC and comply with applicable regulation. Because
DeCryptoFi, or anyone operating our software will be involved in
recording transfers in the stock, they could be viewed as engaging in these
types of activities.
21
We have taken the position that DeCryptoFi, and anyone operating its
software are not clearing agencies under the Exchange Act because the
types of activities they engage in are not those described in the definition
of a clearing agency. To the extent that transfers are recorded by our
software, the software is not a "person" that would be required to register.
It is possible that the SEC or another regulator would disagree with
our position. If so, we, or anyone running our software could be forced to
register as a clearing agency and comply with applicable law, which could
lead to significant costs to DeCryptoFi and could force DeCryptoFi to
change or cease its operations. It could also lead to considerable
uncertainty as to how we would comply with regulation, which would
likely result in a need for a relatively long registration process and could
ultimately prove prohibitive to our business model. Any of these
developments would decrease the value of the stock sold in this offering.
Registration as an Exchange or ATS
Entities that are engaged as "exchanges" or "ATSs" with respect to
securities are subject to federal registration and significant regulatory
oversight by the SEC and FINRA. Exchanges and ATSs are generally
networks that constitute, maintain, or provide a marketplace or facilities
for bringing together the orders of multiple purchasers and multiple
sellers of securities. A system "brings together" orders if it displays
trading interests entered on the system to users (e.g., through consolidated
quote screens) or receives orders for processing and execution. This does
not include systems that have only one seller for each security (e.g., the
issuer), even if there are multiple buyers.
We have taken the position that DeCryptoFi and its software should not
be viewed as an exchange or an ATS because it does not constitute,
maintain, or provide a marketplace or facilities for bringing together the
orders of multiple purchasers and multiple sellers of the stock.
Registration as a Broker-Dealer
Under the Exchange Act, a "broker" is a person engaged in the
business of effecting transactions in securities for the account of others.
The staff of the SEC has indicated that receiving commissions or other
transaction-related compensation is one of the determinative factors in
deciding whether a person is "engaged in the business" of being a
"broker," in part because this "salesman's stake" in a securities transaction
incentivizes the recipient to encourage transactions that may or may not
be appropriate for the parties involved. Because DeCryptoFi's software
operators receive stock for maintaining software operations (which may
involve recording transactions in the Stock), they could be viewed as
brokers.
We take the position that DeCryptoFi or any operator of its software
is not a broker-dealers, because they do not receive a commission or
compensation to encourage transactions. All compensation is paid for
software operations and is pre-determined with no regard to the number
of total transactions occurring during the pre-determined timeframe.
It is possible that the SEC or another regulator would disagree with our
position. If so, DeCryptoFi or its software operators could be forced to
22
register as broker-dealers and comply with applicable law. This would
disrupt our business significantly, perhaps making it prohibitive to
operate, and would likely lead to a decrease or complete loss in the value
of the Stock.
Reporting Company Considerations
Under Regulation A, we will have limited ongoing reporting
obligations to investors relative to the obligations of companies that are
"reporting companies" for purposes of the Exchange Act. The exemption
that allows this lighter reporting, however, is in part dependent on the use
of a transfer agent with respect to a company's securities. We do not
intend to engage a transfer agent with respect to our securities, in part
because the types of activities a transfer agent would normally engage in
are performed automatically by our software. As a result, as a practical
matter, we also do not think we would be able to comply with the transfer
agent requirement, and we do not think it applies to or would provide
additional investor protections for this offering.
It is possible that a regulator would disagree with this position and, as
a result, require us to file the full set of reports required of a reporting
company. If so, we would need to spend considerable additional time and
effort to provide the required reports. This could have a material adverse
effect on our operations, which in turn could affect the value of our
Company stock.
Regulation M
Regulation M under the Exchange Act generally prohibits issuers
from buying and selling their securities at the same time, in order to
prevent potential price manipulation that could result from those
activities. In certain circumstances, we may be selling stock at a future
date while concurrently retiring stock. We are currently set to retire
2% of the stock every 4 years. The company will not be purchasing the
2% stock being retired every 4 years after our initial offering but will
be charging a flat fee per transaction not to exceed 20 shares of stock
(with a value of $2.00 at offering) per transfer between a stock seller
and stock buyer for recording the transaction. This fee/stock will be
retired immediately and automatically at the time of the transaction.
DeCryptoFi may be viewed as receiving stock at the same time as selling
it under Regulation A. However, we believe retiring a percentage of stock
at a pre-determined rate does not constitute buying and selling the
security for price manipulation. As a result, we do not believe these
activities are in violation of Regulation M.
It is possible that a regulator would disagree with this position. If so,
we may be required to significantly restructure the transactions, which
could lead to significant costs to the Company and could force it to
change or cease the operations. This would result in a loss or decrease in
value of the Stock.
Foreign Considerations
We may also subject to a variety of foreign laws and regulations that
involve matters central to our business. These could include, for example,
regulations related to user privacy such as the General Data Protection
Regulation, potential broker-dealer or exchange activities, data protection,
and intellectual property, among others. In certain cases, foreign laws may
be more restrictive than those in the U.S. Although we believe we are
operating in compliance with the laws of jurisdictions in which
DeCryptoFi exists, foreign laws and regulations are constantly evolving
and can be subject to significant change. In addition, the application and
interpretation of these laws and regulations are often uncertain,
23
particularly in the new and rapidly evolving industry in which we operate.
As a result, we are involved in face an uncertain regulatory landscape in
many foreign jurisdictions, including but not limited to the European
Union. Other foreign jurisdictions may also adopt laws, regulations or
directives that affect the similar types of securities offerings.
We have adopted policies and procedures designed to comply with
the laws that apply to us as we understand them. However, the growth of
our business and its expansion outside of the U.S. may increase the
potential of violating foreign laws or our own internal policies and
procedures. The risk of our Company being found in violation of
applicable laws and regulations is further increased by the fact that many
of them are open to a variety of interpretations given the absence of
formal interpretation by regulatory authorities or the courts.
Any action brought against us by a foreign regulator or in a private
action based on foreign law could cause us to incur significant legal
expenses and divert our management's attention from the operation of the
business. If our operations are found to be in violation of any laws and
regulations, we may be subject to penalties associated
with the violation, including civil and criminal penalties, damages and
fines; we could be required to refund payments received by us; and we
could be required to curtail or cease operations. Any of these
consequences could seriously harm our business and financial results. In
addition, existing and proposed laws and regulations can be costly to
comply with and can delay or impede the development of new products,
result in negative publicity, increase operating costs, require significant
management time and attention, and subject us to claims or other
remedies, including fines or demands that we modify or cease existing
business practices.
Any applicable foreign laws, regulations or directives may also
conflict with those of the United States. The effect of any future
regulatory change is impossible to predict, but any change could be
substantial and materially adverse to the adoption and value of the
securities and our operations.
CHANNELS FOR DISCLOSURE OF INFORMATION AND
PLAN OF DISTRIBUTION
Upon the Commission's qualification, this offering circular shall be
an initial offering for 25,000,000 shares of our common stock. We will
have the option to sell up to 50,000,000 Additional Shares which are
currently authorized but unissued, should all of the Offering Shares be
sold in the offering. There is no minimum number of Offering Shares that
we must sell in order to conduct a closing in this offering.
The offering price of the Offering Shares was determined by the
Company. This determination was done without reference to our book
value or asset values or by the application of any customary, established
models for valuing companies or securities. Accordingly, the offering
price may not be indicative of any amounts you might receive should you
seek to sell your shares or should there be a liquidation of our company.
In addition, such prices are not necessarily indicative of any prices at
which our securities may trade, or any value that might be ascribed to our
24
Company after the completion of the offering.
Any purchase of our Offering Shares by an officer or director of the
Company shall be conducted in compliance with the applicable provisions
of Regulation M.
We may decide to close the offering early or cancel it, in our sole
discretion. If we extend the offering, we will provide that information in
an amendment to this offering circular. If we close the offering early or
cancel it, we may do so without notice to you, although if we cancel the
offering all funds that may have been provided by any investors will be
promptly returned without interest or deduction.
Investors, the media and others should note that, following the
completion of this offering, we intend to announce material information to
the public regarding DeCryptoFi through filings with the SEC,
DeCryptoFi's corporate blog at DeCryptoFi.com/blog, DeCryptoFi's
mailing list which is available for sign-up at DeCryptoFi.com press
releases, public conference calls and webcasts. We also intend to
announce information regarding DeCryptoFi and its business, operating
results, financial condition and other matters through our Twitter account,
which can be accessed at https://twitter.com/DeCryptoFi.
Investors should monitor our website and the above social media accounts
in addition to following its press releases, SEC filings, public conference
calls, and webcasts. The social media channels that DeCryptoFi intends to
use as a means of disclosing the information described above may be
updated from time to time.
This offering circular will be furnished to prospective investors via
electronic PDF format before or at the time of all written offers and will
be available for viewing and download on the DeCryptoFi website, as
well as on the SEC's website at www.sec.gov.
PROCEDURES FOR SUBSCRIBING
Shares pursuant to this offering circular will be offered only through
DeCryptoFi's website at https://www.DeCryptoFi.com and, if the
Company chooses so, through management-approved third party platform
partners, which partners will be registered investment advisers or
broker-dealers and may, by virtue of their registration status, be deemed to
be underwriters. As of the date of this offering circular, we do not have,
nor do we intend, to develop relationships with any third-party platform
partners.
We are offering our stock for cash through our website
www.DeCryptoFi.com where potential investors in the offering will be
able to review an electronic version of this offering circular and execute a
subscription agreementas of the commencement of this offering.
In order to subscribe to purchase DeCryptoFi stock, a prospective investor
will be required to electronically complete, sign, and deliver an executed
subscription agreement. Once submitted, an investor's subscription is
irrevocable, except for limited exceptions, such as if the investor's
subscription is only partially accepted, in which case within 20 days of the
investor having been provided notice of this fact.
There is no minimum number of shares of stock that we must sell in
order to conduct a closing in this offering. Payment for stock sold through
25
the cash offering will be accepted on a rolling basis during the term of the
cash offering.
We may decide to cancel the offering entirely, in our sole discretion.
If we cancel the Offering, we may do so without notice to you, although if
we cancel the Offering, all funds that may have been provided by any
investors will be promptly returned without interest or deduction.
STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS
Our shares of Common stock are being offered and sold only to
"qualified purchasers" (as defined in Regulation A under the Securities
Act). As a Tier 2 offering pursuant to Regulation A under the Securities
Act, this Offering is exempt from state law "Blue Sky" review, subject to
meeting certain state filing requirements and complying with certain
anti-fraud provisions, to the extent that our Class A shares offered hereby
are offered and sold only to "qualified purchasers" or at a time when our
Class A shares are listed on a national securities exchange. "Qualified
purchasers" include: (i) "accredited investors" under Rule 501(a) of
Regulation D and (ii) all other investors so long as their investment in our
Class A shares does not represent more than 10% of the greater of their
annual income or net worth (for natural persons), or 10% of the greater of
annual revenue or net assets at fiscal year-end (for non-natural persons).
Accordingly, we reserve the right to reject any investor's subscription in
whole or in part for any reason, including if we determine in our sole and
absolute discretion that such investor is not a "qualified purchaser" for
purposes of Regulation A.
To determine whether a potential investor is an "accredited investor"
for purposes of satisfying one of the tests in the "qualified purchaser"
definition, the investor must be a natural person who has:
1. The individual must have a net worth greater than $1 million, either
individually or jointly with the individual's spouse. Except for the special
provisions described below, individuals should include all their assets and
all of their liabilities in calculating net worth, excluding the value of their
primary residence; or
2. persons who had an income of at least $200,000 in each of the two
most recent years (or $300,000 together with their spouse) and have a
reasonable expectation of reaching the same income level in the current
year.
If the investor is not a natural person, different standards apply. See Rule
501 of Regulation D for more details.
For purposes of determining whether a potential investor is a
"qualified purchaser," annual income and net worth should be calculated
as provided in the "accredited investor" definition under Rule 501 of
Regulation D. Net worth in all cases should be calculated excluding the
value of an investor's home, home furnishings and automobiles.
DILUTION
Dilution refers to the reduction in value, control, or earnings of the
shares the investor owns.
IMMEDIATE DILUTION
26
An early-stage company typically sells its shares (or grants options
over its shares) to its founders and early employees at a very low cash
cost, because they are, in effect, putting their "sweat equity" into the
company. When the company seeks cash investments from outside
investors, like you, the new investors typically pay a larger sum for their
shares than the founders or earlier investors, which means that the cash
value of your stake is diluted because each share of the same type is worth
the same amount, and you paid more for your shares than earlier investors
did for theirs.
The Company acknowledges that the dilution may be substantial
under certain market conditions. The Company further acknowledges that
its obligations under the Transaction Documents, including without
limitation its obligation to issue the Securities (including the Underlying
Shares) pursuant to the Transaction Documents, are unconditional and
absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim that
the Company may have against any Purchaser.
The following table summarizes the differences between the total
consideration and the weighted-average price per share paid by, on the
one hand, officers, directors, promoters and affiliates of DeCryptoFi who
have acquired shares prior to the date of this offering circular and, on the
other hand, investors participating in this offering, before deducting
estimated offering expenses, assuming that the maximum number of
shares are sold at the $0.10 per share price. The table compares the price
that new investors are paying for their shares with the effective cash price
paid by existing shareholders, giving effect to full conversion of all
outstanding stock options. The schedule presents shares and pricing as
issued and reflects all transactions since inception, which gives investors
a better picture of what they will pay for their investment compared to the
company's insiders:
SHARES
PURCHASED TOTAL CONSIDERATION TOTAL
WEIGHTED AVG PRICE PER SHARE
Existing shareholders before this offering2 300,000,000
$0 .000000
Public Sale 25,000,000
$2,500,000 0.1000
Stock Compensation Plan 125,000,000
$12,500,000 0.1000
Total Investors Participating in this Offering 150,000,000
$15,000,000 0.10003
FUTURE DILUTION
27
Another important way of looking at dilution is the dilution that
happens due to future actions by the company. The investor's stake in a
company could be diluted due to the company issuing additional shares,
whether as part of a capital-raising event, or issued as compensation to the
company's employees or marketing partners. In other words, when the
company issues more shares, the percentage of the company that you own
will go down, even though the value of the company may go up. You will
own a smaller piece of a larger company. This increase in number of
shares outstanding could result from a stock offering (such as an initial
public offering, another crowdfunding round, a venture capital round,
angel investment), employees exercising stock options, or by conversion
of certain instruments (e.g. convertible bonds, preferred shares or
warrants) into stock.
If the company decides to issue more shares, an investor could
experience value dilution, with each share being worth less than before,
and control dilution, with the total percentage an investor owns being less
than before. There may also be earnings dilution, with a reduction in the
amount earned per share (though this typically occurs only if the company
offers dividends, and most development stage companies do not pay
dividends for some time).
The type of dilution that hurts early-stage investors most occurs when
the company sells more shares in a "down round," meaning at a lower
valuation than in earlier offerings. An example of how this might occur is
as follows (numbers are for illustrative purposes only):
In June 2014, Jane invests $20,000 for shares that represent 2% of a
company valued at $1 million.
In December, the company is doing very well and sells $5 million in
shares to venture capitalists on a
valuation (before the new investment) of $10 million. Jane now owns
only 1.3% of the company,
but her stake is worth $200,000.
In June 2015, the company has run into serious problems, and in order to
stay afloat, it raises $1 million
at a valuation of only $2 million (the "down round"). Jane now owns only
0.89% of the company,
and her stake is worth only $26,660.
If you are making an investment expecting to own a certain
percentage of the company or expecting each share to hold a certain
amount of value, it's important to realize how the value of those shares
can decrease by actions taken by the company. Dilution can make drastic
changes to the value of each share, ownership percentage, voting control,
and earnings per share. In some cases, dilution can also completely wipe
out the value of investments made by early investors, without any person
being at fault. Investors should understand how dilution works and the
availability of anti-dilution protection.
DeCryptoFi is committed to zero new share issuance outside of the
28
500,000,000 shares in existence today.
CONCURRENT OR SUBSEQUENT REGULATION S (REG S)
OFFERING
Regulation S provides an exclusion from the Section 5 registration
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), for offerings made outside the U.S. by both U.S. and foreign
issuers. A securities offering, whether private or public, made by an
issuer outside of the United States in reliance on Regulation S need not be
registered under the Securities Act. The Regulation S safe harbors are
non-exclusive, meaning that an issuer that attempts to comply with
Regulation S also may claim the availability of another applicable
exemption from registration.
Further, a contemporaneous registered offering or exempt private
placement in the U.S. will not be integrated with an offshore offering that
otherwise complies with Regulation S. In fact, Regulation S contemplates
that a private placement in the United States may be made simultaneously
with an offshore public offering in reliance on the issuer safe harbor.
Thus, offshore offerings and sales of securities made in reliance on
Regulation S do not preclude the resale of those same securities made in
reliance on Rule 144A or Regulation D, even if the resale occurs during
the distribution compliance period.
The stock in a potential concurrent or subsequent Regulation S
offering will be restricted securities and will be sold for delayed delivery
and subject to a transfer restriction for one year after sale.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Impact of COVID-19
You should read the following discussion and analysis of our financial
condition and results of operations together with our consolidated
financial statements and the related notes and other financial information
included elsewhere in this offering circular. Some of the information
contained in this discussion and analysis, including information with
respect to our plans and strategy for our business, includes
forward-looking statements that involve risks and uncertainties. You
should review the "Risk Factors" section of this offering circular for a
discussion of important factors that could cause actual results to differ
materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
In March 2020, the World Health Organization declared the outbreak
of a novel coronavirus (COVID-19) as a pandemic, which continues to
spread throughout the U.S and other countries. As a result, Company
franchisees have temporarily closed some retail locations, reduced or
modified store operating hours, adopted a "to-go" only operating model,
or implemented a combination of these actions. These actions have
reduced consumer traffic, resulting in a negative impact to Company
revenues. While the disruption to our business from the COVID-19
29
pandemic is currently expected to be temporary, there is a great deal of
uncertainty around the severity and duration of the disruption, and also
the longer-term effects on our business and economic growth and
consumer demand in the U.S. and worldwide.
The effects of COVID-19 may continue to materially adversely affect
our business, results of operations and liquidity, particularly if these
effects continue in place for a significant amount of time. As additional
information becomes available regarding the potential impact and the
duration of the negative financial effects of the current pandemic, the
Company may determine that an impairment adjustment to the recorded
value of trademarks, goodwill and other intangible assets may be
necessary.
Effects of COVID-19 on Liquidity and Operations
While the Company expects COVID-19 to negatively impact its
business, results of operations and financial position, the full financial
impact cannot be reasonably estimated at this time. The Company
currently believes that its working capital combined with our disciplined
management of the Company' operating expenses, will be sufficient to
meet our current liquidity needs. However, COVID-19 pandemic events
will continue to evolve over time and the negative effects on the
operations of our franchisees could prove to be worse than we currently
estimate.
Business overview
Decentralized Crypto Financial Inc. uses patented proprietary
software to assist small and medium sized companies in determining the
best approach to raising capital.
We are aggressively growing our business through a combination of
organic growth, licensing and distribution arrangements, acquisitions, and
strategic relationships.
Trends and Key Factors Affecting Our Performance
Investment in Long-Term Growth.
The core elements of the Company's growth strategy include
acquiring new customers, broadening distribution capabilities, enhancing
data and software functionality, and expanding product offerings. The
Company plans to continue to invest significant resources to accomplish
these goals, and the Company anticipates that its operating expenses will
continue to increase for the foreseeable future, particularly sales and
marketing and technology expenses. These investments are intended to
contribute to long-term growth, but they may affect near-term
profitability.
Originations.
The Company's future growth will continue to depend, in part, on
attracting additional investors as well as additional companies wanting to
utilize our software. The Company plans to increase its sales and
marketing spending and seek to attract these investors and companies. We
expect to rely on strategic partners, affinity networks, social media, and
30
conference and speaking events for investor growth. The Company
expects there to be a consistent need of undercapitalized companies
seeking capital raising alternatives. The extent to which the Company can
satisfy this ongoing demand will be an important factor in its continued
revenue growth.
Use of GAAP Financial Measures
DeCryptoFi's management's discussion and analysis of DeCryptoFi's
financial condition and results of operations is based on its financial
statements, which have been prepared in accordance with United States
generally accepted accounting principles, or U.S. GAAP. The preparation
of these financial statements requires DeCryptoFi to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements, as well as the reported revenue generated, and
expenses incurred during the reporting periods. DeCryptoFi's estimates
are based on its comparable and on various other factors that DeCryptoFi
believes are reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
Due to the fact that DeCryptoFi was not formed until August 2020
DeCryptoFi believes that the accounting policies discussed may be of
little use to understanding DeCryptoFi historical and future performance,
as these policies relate to the more significant areas involving
management's judgments and estimates.
When we prepare our consolidated financial statements in conformity
with GAAP, we must make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities, and the reported amounts of revenue and expenses
during each reporting period. Our estimates may include those related to
revenue recognition, accounts receivable allowances, intangible assets,
share-based compensation expense, income taxes and programming costs.
Actual results included in this offering circular, and in future financial
results, could differ from the original estimates.
Under ASC 606, an entity recognizes revenue when its customer
obtains control of promised goods or services, in an amount that reflects
the consideration which the entity expects to receive in exchange for
those goods or services. To determine revenue recognition for
arrangements that DeCryptoFi determines are within the scope of ASC
606, the following five steps are performed:
a. Identify the contract(s) with a customer.
b. Identify the performance obligations in the contract.
c. Determine the transaction price.
d. Allocate the transaction price to the performance obligations in the
contract; and
e. Recognize revenue when (or as) DeCryptoFi satisfies a performance
obligation
31
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
EMPLOYEES
As of October 2020, the Company has one executive officer, CEO
Nick Scherling. Mr. Scherling is not represented by a labor union or
covered under a collective bargaining agreement.
NAME POSITION AGE TERM OF
OFFICE
Nicholas Scherling CEO 37 August
2020
Mr. Scherling has more than 20 years of technology expertise at senior
levels serving in the Intelligence Community, DoD, and industry. Mr.
Scherling served in leadership and technical roles in TENICA and
Associates, Booz Allen Hamilton, General Dynamics, Electronic Warfare
Associates, Northwest Airlines, and the Air National Guard. Although
DeCryptoFi is a newly organized C-Corp, Mr. Scherling has been
developing the systemic and automated technology for a substantial
period of time prior to officially having his company qualified by the
Commission.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS.
Summary compensation table
The following table summarizes the compensation of the
highest paid person, the CEO, during the year ended December 31, 2019.
Name Capacity in which compensation was received
Cash Compensation ($) Other Compensation ($)
Total Compensation ($)
Nicholas Scherling Chief Executive Officer
$0.00 $0.00
$0.00
Authorized Shares. A total of 50,000,000 shares of our corporate common
stock are reserved for issuance as the Company sees fit. Upon
qualification, if the Company determines that issuing these shares will
neither its shareholders nor increase the value of the Company, then the
Company may determine that such shares shall be available for future
grant or sale. As the Company continues grow and better understand its
strengths and weaknesses, the Company may decide to adopt a formalized
incentive plan, which will then outline the specifications that must be met.
Currently, there is no such plan in place, nor is there any intention to
memorialize any such plan.
Stock Options. Upon qualification, the Company may determine, at a later
date, that it wishes to compensate its employees in the form of stock
options. While no such plan is currently in place, if the Company does
decide to implement a stock option plan, certain guidelines must be
followed: The term of an incentives stock option may not exceed 10
years; the stock option strike price shall be equal to its fair market value
of the Company's stock on the day the option is granted except that with
respect to incentive stock options granted to any participant who owns
32
more than 10% of the voting power of outstanding stock, the exercise
price must generally equal at least 110% of the fair market value on the
grant date and the term must not exceed five years. The Company will
determine the methods of payment of the exercise price of an option,
which may include cash, shares or other property acceptable to the
Company, as well as other types of consideration permitted by applicable
law. After the termination of service of an employee, director or
consultant, he or she may exercise his or her option for the period of time
stated in his or her option agreement. Unless otherwise provided for by
the Company, if termination is due to death or disability, the option will
remain exercisable for 12 months and in all other cases, the option will
generally remain exercisable for three months following the termination
of service. These are simply guidelines and the Company may amend
some or all of these guidelines if the company introduces an incentivized
stock option plan.
Code of Ethics. Effective upon consummation of this offering, we will
adopt a code of ethics that applies to all of our respective executive
officers, directors, and employees. The code of ethics will codify the
business and ethical principles that govern all aspects of our business.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS
The following table sets forth information regarding the beneficial
ownership of our shares of our common stock as of the date of this
offering circular. Since DeCryptoFi will only be offering only one class of
stock, and since our insider is subject to a predetermined lock-up period,
there is no need to adjust to reflect the sale of all of the Shares offered by
this preliminary offering circular (assuming none of the individuals listed
purchase shares in this offering), by:
1. each person known by us to be the beneficial owner of more than 5%
of our outstanding shares.
2. each of our executive officers and directors; and
3. all our executive officers and directors as a group.
Unless otherwise indicated, we believe that all persons named in the
table have sole voting and investment power with respect to all shares
beneficially owned by them. Additionally, except as otherwise indicated,
beneficial ownership reflected in the table has been determined in
accordance with Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended.
Shares Beneficially Owned Prior to Offering
Shares Beneficially Owned After Offering
Name and address of % of Total
Voting % of Total Voting
Beneficial Owner5___ Shares % Prior to
Offering Shares % After Offering
Nicholas Scherling 300M 100%
100% 300M 60% 66.67%
33
SHARES ELIGIBLE FOR FUTURE SALE
Rule 144
A person who has beneficially owned restricted shares of common
stock, for at least six months would be entitled to sell their securities
provided that (i) such person is not deemed to have been an affiliate of the
subject company at the time of, or at any time during the three months
preceding, a sale and (ii) the subject company is subject to the Exchange
Act periodic reporting requirements for at least three months before the
sale. Persons who have beneficially owned restricted shares of common
stock for at least six months but who are an affiliate of the subject
company at the time of, or any time during the three months preceding, a
sale, would be subject to additional restrictions under which such person
would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of either of the following:
a. 1% of the number of shares of our common stock then outstanding, and
b. if our common stock is listed on a national securities exchange, the
average weekly trading volume of the shares of common stock during the
four calendar weeks preceding the filing of a notice on Form 144 with
respect to the sale.
Sales under Rule 144 are also limited by manner of sale provisions and
notice requirements and to the availability of current public information
about the subject company.
DECENTRALIZED CRYPTO FINANCIAL INC.
Consolidated Financial Statements
2020
FINANCIAL INFORMATION
SECTION
Decentralized Crypto Financial Inc.
INDEX TO FINANCIAL
STATEMENTS
For the Fiscal Year Ending August 31,
2020
Independent Auditors Report
Consolidated Balance Sheets as of August 31, 2020
Consolidated Statements of Operations for the Fiscal Year Ending August
31, 2020
Consolidated Statements of Changes in Stockholders' Equity/Members'
Deficiency for the Year Ending August 31, 2020 F-5
Consolidated Statements of Cash Flows for the Year Ending August 31,
2020
Notes to Consolidated Financial Statements
34
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITORS' REPORT
Board of Directors
Decentralized Crypto Financial Inc.
Chantilly, Virginia
We have audited the accompanying consolidated financial statements of
Decentralized Crypto Financial Inc., which comprise the consolidated
balance sheets as of August 31, 2020 and the related consolidated
statements of income, changes in equity, and cash flows for the years then
ended, and the related notes to the consolidated financial statements.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL
STATEMENTS
Management is responsible for the preparation and fair presentation of
these consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud
or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We conducted our audits in accordance
with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the consolidated financial statements
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Decentralized Crypto Financial Inc. as of August 31, 2020, and the results
35
of their operations and their cash flows for the years then ended in
accordance with accounting principles generally accepted in the United
States of America.
- Chesapeake Financial Corp
DECENTRALIZED CRYPTO FINIANCIAL INC.
BALANCE SHEETS
2020
ASSETS
Current assets:
Cash and cash equivalents $ 0
Accounts receivable 0
Prepaid expenses 0
Total current assets 0
Property and equipment, net 0
Other assets:
Goodwill, net 0
Investments in equity securities 0
Deposits 0
Total assets $ 0
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Line of credit $ 0
Accounts payable and accrued expenses 0
Accrued payroll and related liabilities 0
Notes payable, current portion 0
Deferred rent and other current liabilities 0
Deferred compensation liability 0
Total current liabilities 0
Notes payable, less current portion 0
Total liabilities 0
Member's equity 0
Total liabilities and member's equity $ 0
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF OPERATIONS
36
2020
Revenue $ 0
Revenue 0
Total revenue 0
Direct cost of revenue 0
Gross profit 0
Indirect costs of revenue Costs 0
not allocable 0
Operating income 0
Other income (expense)
Other expense 0
Interest expense 0
Other income 0
Total other income 0
Net income $ 0
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
__Member's Equity__
Balance, August 31, 2020 $ 0
Member distribution 0
Net income
Balance, August 31, 2020 0
Member contributions 0
Net income 0
Balance, August $ 0
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF CASH FLOWS
2020
Cash flows from operating activities:
Net income $ 0
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 0
Amortization of goodwill 0
Loss on disposal of assets
Gain on investments 0
37
Deferred rent and other current liabilities 0
Change in:
Accounts receivable 0
Prepaid expenses 0
Deposits
Accounts payable and accrued expenses 0
Accrued payroll and related liabilities 0
Deferred compensation liability 0
Net cash provided by (used in) operating activities 0
Cash flows from investing activities:
Purchase of life insurance policies 0
Proceeds from sale of property and equipment
Purchase of property and equipment 0
Net cash used in investing activities 0
Cash flows from financing activities:
Net borrowings on (repayments on) line of credit 0
Repayments on notes payable 0
Contributions from member 0
Distributions to member
Net cash provided by (used in) financing activities 0
Net change in cash and cash equivalents
0
Cash and cash equivalents, beginning of year 0
Cash and cash equivalents, end of year $ 0
Supplemental disclosure of cash flow information:
Cash paid for interest $ 0
DECENTRALIZED CRYPTO FINIANCIAL INC.
NOTES TO FINANCIAL STATEMENT
Notes to Consolidated Financial Statements
The accompanying notes are an integral part of this consolidated financial
statement.
ORGANIZATION AND NATURE OF BUSINESS
We are an early-stage financial technology company that has created a
proprietary and patented software that will allow small and mid-sized
companies to fully understand the complexities surrounding initial public
offerings and private placement offerings. Our software is geared towards
companies that seek alternatives to the issuance of bank loans in order to
raise capital. Our company allows for the automation of various
38
Self-Regulatory Organizations (SRO) initial and ongoing regulatory
reporting and filings, and assists companies that lack the relevant
expertise and/or personnel to be fully compliant with investor disclosure
obligations, privacy notifications, Anti-Money laundering regulations, etc.
Our patented software also has the capability to track various asset classes
and automate investor documentation, such as proxy statements, dividend
payments, and GDPR notifications.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accounting policies of the Company are in accordance with
accounting principles generally accepted in the United States of America
applied on a basis consistent with that of the preceding years. Outlined
below are those policies considered particularly significant.
ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates and may have impact on future periods.
INVESTMENTS
In January 2016, the Financial Accounting Standards Board (FASB)
issued ASU No. 2016-01, Financial Instruments
- Overall (Subtopic 825-10): Recognition and Measurement of Financial
Assets and Financial Liabilities ("ASU
2016-01"). ASU 2016-01 requires that most equity investments be
measured at fair value, with subsequent changes in fair value recognized
in net income, while eliminating the available-for-sale classification for
equity securities with readily determinable fair values and the cost method
for equity investments without readily determinable fair
values.
INCOME TAXES
The Company, with the consent of its stockholders, has elected C
corporation status.
PART III- EXHIBITS
Index to Exhibits.
Exhibit No. Description
1.1 Articles of Incorporation for Decentralized Crypto
Financial Inc
1.2 Certificate of Conversion
Company
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form 1-A and has duly caused this Offering
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Chantilly, Virginia, on, October 14th, 2020.
Decentralized Crypto Financial Inc.
By /s/ Nicholas Scherling
Nicholas Scherling
Decentralized Crypto Financial Inc.
Date:____________________
The following persons in the capacities and on the dates
indicated have signed this Offering Statement.
By /s/ Nicholas Scherling
Nicholas Scherling
Decentralized Crypto Financial Inc.
Date:____________________
3 This is a "best efforts" offering. There is no minimum number of shares
that must be sold in this offering.
2 Shares that were issued to any insider were sold prior to the
development of DeCryptoFi's proprietary software, thereby materially
altering the value of the Company.
3 Assumes the maximum 25,000,000 shares are sold in the initial public
offering at a price of $0.10 per share, and the sale of 125,000,000 shares
through the Stock Compensation Plan for non-cash consideration
comparable to $0.10 per share
4Mr. Nicholas Scherling is currently the CEO and chairman of
DeCryptoFi. As mentioned, DeCryptoFi was not officially organized until
August 2020. As such, there has been zero compensation awarded to any
40
individuals as it relates to DeCryptoFi's business.
5 Unless otherwise indicated, the business address of the individual is
4795 Meadow Wood Lane #200 Chantilly, Virginia 20151
PART II AND III
9
partiiandiii.txt
AMENDED OFFERING CIRCULAR
Part II - INFORMATION REQUIRED IN OFFERING CIRCULAR
An offering statement pursuant to Regulation A relating to
these shares has been filed with the U.S. Securities
and Exchange Commission (the Commission). Information
contained in this preliminary offering circular is
subject to completion or amendment. These shares may not be
sold nor may offers to buy be accepted before
the offering statement filed with the Commission is qualified.
This preliminary offering circular shall not
constitute an offer to sell or a solicitation of an offer to
buy or sell any of these shares in any state in which such
offer, solicitation or sale would be unlawful before
registration or qualification under the laws of any such
state. We may elect to satisfy our obligation to deliver a
final offering circular by sending you a notice within
two business days after the completion of our sale to you that
contains the URL where the final offering
circular or the offering statement in which such final
offering circular was filed may be obtained. Should the
Company decide to test the waters prior to this circular
being qualified, all soliciting materials will be
properly filed with the Commission before its intended use.
Preliminary Offering Circular
October 14th, 2020
Subject to Completion
DECENTRALIZED CRYPTO FINANCIAL INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
85-2718015
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification
Number)
4795 Meadow Wood Lane, 200.
Chantilly, Virginia 20151
703 3407454
www.Decryptofi.com
Nicholas Scherling
Chief Executive Officer
Decentralized Crypto Financial Inc. (DeCryptoFi)
4795 Meadow Wood Lane, #200
Chantilly, Virginia 20151
(703) 3407454
Up to
150,000,000 shares of Common Stock
This is an initial public offering of our common stock. The
offering price is $0.10 per share.
The offering consists of 150,000,000 shares of our common
stock comprised of (a) up to 25,000,000 newly issued
shares of our common stock (Shares) in our Initial Public
Offering (IPO), and up to (b) 125,000,000 shares for
non-cash consideration pursuant to our Work Compensation
program.
In the event all of the Offering Shares are sold, we may,
in our discretion, sell up to 50,000,000 additional
authorized, but currently unissued shares (Additional Shares
and/or Reserve Shares) in the offering currently held
in reserve.
300,000,000 shares are currently owned by the CEO of
DeCryptoFi, Nicholas Scherling (Company insider
and/or Holder"). In connection with the initial public
offering of the Company's securities, the Holder agrees not to
sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the
Company held immediately prior to the effectiveness of the
registration statement for such offering (other than those
included in the registration), for such period of time (not to
exceed 180 days or such longer period of time as may be
required to comply with Rule 2711 of the Financial Industry
Regulatory Authority, Inc. (or any successor rule
thereto)) two days following the effective date of such
registration statement (lock-up period). Further, following
the lock-up period, the Holder will be limited to selling
12.5% of his holdings per year. This not only protects
against overdiluting the market share value, but also
preserves the integrity of the Company.
There is no minimum number of Offering Shares that we must
sell in order to conduct a closing in this offering.
The offering will commence within six weeks after this
offering circular has been qualified by the Commission. The
offering will exist until the date on which the offering of
any additional stock would cause the aggregate offering
price or aggregate gross sales in this offering, as those
terms are defined under Rule 251(a) of the Securities Act, to
exceed $50,000,000.00.
The Commission does not pass upon the merits of or give its
approval to any shares offered hereby or the terms
of the offering, nor does it pass upon the accuracy or
completeness of any offering circular. The Offering Shares
are being offered pursuant to an exemption from registration
with the Commission; however, the Commission
has not made an independent determination that the Offering
Shares offered are exempt from registration.
Price to Public Underwriter Proceeds
Proceeds
Discounts to Issuer
to other Persons
Per Share $0.10
$0.0 $0.10 $0.0
Total Min N/A N/A
N/A N/A
Total Max. $0.10 N/A
$15M N/A
Investing in an IPO is speculative and involves
substantial risks. You should purchase stock only if you can
afford
a complete loss of your investment. See "Risk Factors" to read
about the more significant risks you should consider before
buying our stock. Please see subsection "Risk Factors,"
beginning on page 9 of this offering circular.
This is a Regulation A+ Tier 2 offering. The
Company may decide, either concurrently with this offering
(potentially
commencing prior to its qualification) or on a date subsequent
to the qualification of this offering, to sell between 0 and
25 million
shares of stock to non-U.S. persons in a private placement
exempt from the registration requirements of the Securities
Act under
Regulation S promulgated thereunder ("Regulation S"). The
stock in any potential concurrent or subsequent Regulation S
offering
will be considered a restricted security and will be sold for
delayed delivery and subject to a transfer restriction for
ranging from 40
days to one year.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT
PASS UPON THE
MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR
THE TERMS OF THE
OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS
OF ANY OFFERING
CIRCULAR OR OTHER SELLING LITERATURE. THESE SECURITIES ARE
BEING OFFERED PURSUANT
TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION;
HOWEVER, THE COMMISSION
HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES
OFFERED
HEREUNDER ARE EXEMPT FROM REGISTRATION.
GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE
AGGREGATE PURCHASE
PRICE YOU PAY IS MORE THAN TEN PERCENT (10%) OF THE GREATER OF
YOUR ANNUAL INCOME
OR YOUR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED
INVESTORS AND NONNATURAL
PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT
DOES NOT EXCEED
APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE
251(D)(2)(I)(C) OF
REGULATION A+. FOR GENERAL INFORMATION ON INVESTING, WE
ENCOURAGE YOU TO REFER
TO WWW.INVESTOR.GOV.
Initially, DeCryptoFi stock will not trade on a stock
exchange, securities exchange, or other trading market. This
means
that it may be difficult to sell your shares of stock.
IMPORTANT INFORMATION ABOUT THIS OFFERING CIRCULAR
Please carefully read the information in this offering
circular and any accompanying offering circular
supplements, which we refer to collectively as the
"preliminary offering circular." You should rely only on the
information
contained in this offering circular. We have not authorized
anyone to provide you with different information. This
offering
circular may only be used where it is legal to sell these
securities. You should not assume that the information
contained in
this offering circular is accurate as of any date later than
the date hereof or such other dates as are stated herein or as
of the
respective dates of any documents or other information
incorporated herein by reference.
This preliminary offering circular is part of an
offering statement that we filed with the SEC, using a
continuous
offering process, and is still pending approval. Periodically,
as we make material developments, we will provide an
offering circular supplement that may add, update or change
information contained in this offering circular. Any statement
that we make in this offering circular will be modified or
superseded by any subsequent statement made by us in a
subsequent offering circular supplement.
We are following the "Offering Circular" disclosure format
under Regulation A.
The date of this preliminary offering circular is October
14th, 2020
TABLE OF CONTENTS
SUMMARY5
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
7
RISK FACTORS9
TERMS OF THIS OFFERING15
USE OF PROCEEDS17
DESCRIPTION OF BUSINESS18
DESCRIPTION OF COMMON STOCK19
REGULATORY CONSIDERATIONS20
CHANNELS FOR DISCLOSURE OF INFORMATION AND PLAN OF
DISTRIBUTION24
DILUTION26
CONCURRENT OR SUBSEQUENT REGULATION S (REG S) OFFERING28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS29
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES31
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS32
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
33
SHARES ELIGIBLE FOR FUTURE SALE34
FINANCIAL INFORMATION SECTIONF-1
EXHIBITS
Offering Circular
_____________________________
We have not authorized anyone to provide any information or to
make any representations other than those contained in
this offering circular or in any free writing prospectuses we
have prepared. We take no responsibility for and can provide
no assurance as to the reliability of, any other information
that others may give you. The information contained in this
preliminary offering circularis current only as of its date.
You should rely only on the information contained in this
offering circular. We have not authorized anyone to provide
you
with different information. The information in this offering
circular assumes that all the shares offered are sold and we
have not taken advantage of our option to sell any Additional
Shares as described herein.
SUMMARY
This offering summary highlights certain information appearing
elsewhere in this offering circular. Because it is a
summary, it may not contain all the information that is
important to you. To understand this offering fully, you
should read
the entire offering circular carefully, including the "Risk
Factors" section, before making a decision to invest in our
stock.
Unless the context requires otherwise, in this offering the
terms "we," "us" and "our" refer to DeCryptoFi, the issuer of
the common shares of stock. For a more complete understanding
of this offering, you should read the entire offering
circular carefully, including the risk factors and the
financial statements.
Who we Are. We are an early-stage financial technology
company.
Our company, DeCryptoFi, has identified a glaring and
persistent issue that many privately held businesses
face; the ability for small and medium sized companies to
raise additional capital. When businesses need capital,
typically they must go through the arduous process of seeking
a loan from a bank or lending company. It is
extremely difficult for small and medium sized companies to
access public markets where they may receive the same
or better terms in return for capital. When a small business
is approved for a loan by a bank (or other lending
provider), these institutions will often require from the
business a form of hard asset collateral, and most require a
personal guarantee from its owner, regardless of the company's
financial stability. W2 employees, working for a
successful business, would never personally guarantee a
business loan just to keep their job, so why should
legitimate business owners?
If businesses are turned away from financial
institutions, there seems to be few alternatives except for
these
businesses to seek additional capital from Merchant Cash
Advance firms, or some form of lending company that
charges usurious interest rates. These types of lending
institutions tend to benefit from the borrower's company
failing rather than succeeding, which then puts people out of
jobs and facing massive debts that need to be repaid.
As a result, many business owners are unable to secure
the capital they need to scale their business and
those that are able to get a good loan at a low rate may still
be unwilling to do so due to personal guarantee
requirements. No employee or business owner wants to
personally secure business loans with their personal finances
regardless of how well their business is performing.
Our Solution. The reality is that there are numerous
additional ways that companies can raise capital, but they
simply lack the knowledge, expertise, or personnel to
facilitate alternative capital-raising offerings.
DeCryptoFi has created a technology-driven software
that will allow small and mid-sized companies to
understand and be fully compliant with the public and private
offering processes. Our main goal can be summed up
in one word... simplification. Our goal is to tap into this
market and assist small and medium size companies that
want to pursue a public offering or an alternative acceptable
private offering and remain fully compliant with SEC
regulations. We strive to make the overlooked alternative
methods of raising capital easy to achieve, easy to
comprehend, and for many aspects of the process, completely
automated. The SEC has long struggled with how to
assist small and medium size businesses get access to the
public market; we are here to help!
By answering a series of questions specific to their
company, including, but not limited to, how much capital the
company seeks to raise, who the company's target investors
will be: current and past revenue, profitability, growth rate,
organizational structure, and so forth, Businesses will be
able to streamline the structuring of a potential business
capitalization and the regulatory safeguards associated with
these capital raising options. DeCryptoFi's software will
provide a list of currently available offerings to our
customers, as well as a list of offerings that are just within
their grasp.
Once the business owner fully comprehends the types of
offerings available to them and decides which to pursue,
DeCryptoFi's software will assist in automating all relevant
SEC filings, state filings, investor notifications,
disclosures,
offering circulars, registration statements, offering
memoranda, prospectuses, dividend payments, proxy statements,
and
much more.
Strategy. We will pursue the following strategies:
Continue to attract top talent. To grow our business,
we recognize the need to attract experienced
professionals in technology, legal, accounting, and so forth.
While we already have a strong team of employees and
advisors with the relevant expertise (discussed in greater
detail below), we plan to supplement key roles as we ramp
up our operations.
Scale our business to become a national leader in our
sector. We are focused on growing our national and
international footprint and upon qualification, will be
testing business development and marketing efforts in multiple
channels.
Increased awareness of our products and services will enable
us to scale and attract a whole assortment of different
types of businesses that previously did not fall under the
SEC's purview but will now be a fully compliant reporting
company or exempt reporting company, thereby increasing
investor protection across broad range of market tiers.
Corporate Information. We are a Delaware corporation (C-Corp)
organized on August 20, 2020 Our principal
place of business address is 4795 Meadow Wood Lane # 200,
Chantilly, VA 20151, our telephone number is (703)
955-7770, and our website is www. DeCryptofi.com.
DeCryptoFi.com will officially launch our website upon
SEC approval in order to ensure that we do not disclose
our intent to conduct a Stock Offering ahead of SEC
qualification of our Reg A filing.
Except for this offering circular and our other public
filings with the SEC pursuant to the requirements of SEC
regulation A, information found on, or accessible through our
website is not a part of, and is not incorporated into this
offering circular, and you should not consider it part of this
offering circular. We consider these facilities adequate for
our
current operations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this offering circular that
are not purely historical are forward-looking
statements. Forward-looking statements include, but are not
limited to, statements regarding expectations, hopes,
beliefs, intentions, or strategies regarding the future. In
addition, any statements that refer to projections, forecasts
or
other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intend," "may," "might,"
"plan," "possible," "potential," "predicts," "project,"
"should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking.
Forward-looking statements in this offering circular may
include, for example, statements about our:
olimited operating history and ability to maintain or
increase profitability.
oreliance on third parties for production and
distribution.
oresults of operations.
oability to manage growth.
oability to minimize our production and distribution
costs by utilizing funding sources provided by
others.
oregulatory or operational risks.
osuccess in retaining or recruiting, or changes
required in, our officers, key employees or directors.
ocapital structure.
oability to obtain additional financing when and if
needed; and
oliquidity and trading of our securities.
The forward-looking statements contained in this
offering circular are based on current expectations and
beliefs concerning future developments and their potential
effects on us. There can be no assurance that future
developments will be those that have been anticipated. These
forward-looking statements involve a number of risks,
uncertainties (some of which are beyond our control) or other
assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements. These
risks and uncertainties include, but are not limited to, those
factors described under the heading "Risk Factors." Should
one or more of these risks or uncertainties materialize, or
should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation
to update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
These statements involve risks, uncertainties,
assumptions, and other factors that may cause actual results,
levels
of activity, performance, or achievements to be materially
different from the information expressed or implied by these
forward-looking statements. Although we believe that we have a
reasonable basis for each forward-looking statement
contained in this offering circular, we caution you that these
statements are based on a combination of facts and factors
currently known by us and our projections of the future, about
which we cannot be certain.
The subscription price of our common stock has been
determined by the Company's management without regard to the
Company's assets or earnings or the lack thereof, or book
value and does not represent nor is it intended to imply that
the Units
being offered have a market value or could be resold at that
price, even if a sale were permissible. The valuation was
arbitrarily
determined by the Company, and not by an independent third
party applying a specified valuation criterion. Accordingly,
this price
may not be indicative of the market price of the DeCryptoFi
Stock at such time as a secondary trading market does develop,
if ever,
or the proceeds that you would receive upon a commercial sale
of the DeCryptoFi Stock; the offering price may be
significantly
more than either such price.
Prior to this offering there has been no public market
for any of our securities. The public offering price of our
shares was determined on a number of factors. Factors
considered in determining the prices and terms of the Shares
(and the Additional Shares) offered hereby include:
oThe history and prospects of companies similar to our
company
oPrior offerings of those companies
oOur capital structure
oOur software
oAn assessment of our management
oGeneral conditions of the securities markets at the
time of the offering; and
oOther factors as were deemed relevant
However, although these factors were considered, the
determination of the offering prices is more arbitrary
than the pricing of securities for an established operating
company.
Following this offering, the price of our common stock
may vary significantly due to general market or
economic conditions as well as other factors. Furthermore, an
active trading market for the securities may never
develop or, if developed, may not be sustained. You may be
unable to sell your securities unless a market can be
established and sustained.
RISK FACTORS
The SEC requires that we identify risks that are
specific to our business and financial condition. We are still
subject to all the same risks that all companies in our
business, and all companies in the economy, are exposed to.
These
include risks relating to economic downturns, political and
economic events, and technological developments (such as
hacking and the ability to prevent hacking). Additionally,
early-stage companies are inherently riskier than more
developed companies. You should consider general risks as well
as specific risks when deciding whether to invest.
An investment in the securities offered by this
offering circular involves a high degree of risk. You should
carefully consider all the material risks described below,
together with the other information contained in this offering
circular, before making a decision to invest in DeCryptoFi.
There can be no assurance that any purchaser will
achieve his or her investment objective or avoid substantial
losses by investing in DeCryptoFi. All investments entail
a high degree of risk, and purchasers may lose some or all
their investment.
Risks associated with our business
1. We do not have a long operating history on which to
evaluate our company. We face all the risks faced by newer
companies in similar industries, including significant
competition from existing and emerging capital raising
platforms many of which may be significantly more established,
larger, and better financed than our company.
However, we believe that what we are offering is incredibly
unique and the market we are entering should be far less
saturated.
2.There is considerable uncertainty about the asset
class's long-term viability, which could be affected by a
variety of
factors, including many market-based factors such as economic
growth, inflation, and others. In addition, the success
of the stock and other types of securities that may be issued
will depend on whether new technologies turn out to be
useful and economically viable. We do not control any of these
factors, and therefore may not be able to control the
long-term success of our company share value.
3.The offering price of our stock was not established on
an independent basis. After we commence operations, the
actual value of your investment may be substantially less than
what you pay. The most recent pre-revenue valuation of
our stock was conducted by the Company and it concluded our
stock has a fair market value of $0.10 per share as of
October 14th, 2020.
4.The market in which we participate is intensely
competitive, and we may not be able to compete successfully
with
our current or future competitors.
5.This offering is being made pursuant to recently
adopted rules and regulations under Regulation A of the
Securities Act. The legal and compliance requirements of these
rules and regulations, including ongoing reporting
requirements related thereto, are relatively untested.
6.Our operating results are dependent, in part, on
management's estimates of revenue to be earned in the future.
We
will regularly review and revise our revenue estimates.
Periodic adjustments in amortization rates may significantly
affect these results.
7.We are pre revenue. We anticipate that our revenue
will begin in 2021. Until we are revenue stable our revenue
may
not be evenly distributed throughout the year but may be more
evenly distributed in the future as we expand our
business and diversify, Until such time, our quarter to
quarter financial results may not be comparable within any
single fiscal year or from fiscal year to fiscal year.
8.Our projections may fluctuate. As a result of the
foregoing and other factors, our results of operations may
fluctuate
significantly from period to period, and the results of any
one period may not be indicative of the results for any future
period
9.We are smaller and less diversified than many of our
competitors. Some of our larger competitors have more
resources with which to compete for ideas, enhancements, and
better functionality.
10.We must successfully respond to rapid technological
changes and alternative forms of delivery or storage to remain
competitive. The financial industry in general continues to
undergo significant developments as advances in
technologies and new methods of product delivery and storage,
or certain changes in consumer behavior driven by
these developments, emerge. Consumers are spending an
increasing amount of time online and on mobile devices, and
are increasingly viewing financial date in real time, on their
televisions and on handheld or portable devices. we must
adapt our businesses to changing consumer behavior and
preferences and exploit new distribution channels. Our
strategy is to seek to take advantage of these changes and
thereby to create new revenue streams and other
opportunities for our content. If we cannot successfully
utilize these and other emerging technologies, it could have a
material adverse effect on our business, financial condition,
operating results, liquidity, and prospects.
11.We must constantly be aware of any intellectual
property issues. Protecting and defending against intellectual
property claims may have a material adverse effect on our
business. Our ability to compete depends, in part, upon
successful protection of our intellectual property relating to
our software. We will attempt to protect proprietary and
intellectual property rights to our software through available
copyright and trademark laws and licensing and
distribution arrangements with reputable international
companies in specific territories.
12.We plan to conduct business abroad and
internationally. We face risks from doing business
internationally. We
intend to distribute our content outside the U.S. and derive
revenue in foreign jurisdictions. As a result, our business is
subject to certain risks inherent in international business,
many of which are beyond our control. These risks include:
a.Laws and policies affecting trade, investment, and
taxes, including laws and policies relating to the
repatriation of
funds and withholding taxes, and changes in these laws.
b.The Foreign Corrupt Practices Act ("FCPA") and similar
laws regulating interactions and dealings with foreign
government officials.
c.Changes in local regulatory requirements, including
restrictions on video content.
d.Differing cultural tastes and attitudes.
e.Differing degrees of protection for intellectual
property
f.Financial instability and increased market
concentration of buyers in foreign markets.
g.The instability of foreign economies and governments.
h.Fluctuating foreign exchange rates.
i.The spread of communicable diseases in such
jurisdictions, which may impact business in such
jurisdictions; and
j.War and acts of terrorism.
Events or developments related to these and other risks
associated with international trade could adversely affect
our revenue from non-U.S. sources, which could have a material
adverse effect on our business, financial condition,
operating results, liquidity, and prospects.
Risks Specific to this Offering
a.DeCryptoFi's securities are just being introduced to
the market. Our stock has no history and thus face significant
uncertainties around its valuation. This valuation may be
highly dependent on the demand for our software, which is
unproven and uncertain, and the reliability of the underlying
technology which is untested.
b.The securities being offered are volatile in nature.
There is no guarantee that our securities will hold their
value or
increase in value, and you may lose the amount of your
investment in the DeCryptoFi stock in whole or in part. The
shares in the initial stock offering are highly speculative,
and any return on an investment is contingent upon
numerous circumstances, many of which (including legal and
regulatory conditions) are beyond our control. There is
no assurance that purchasers will realize any return on their
investments or that their entire investment will not be
lost. For this reason, each purchaser should carefully read
this offering circular and should consult with his or her
own attorney, financial and tax advisors prior to making any
investment decision with respect to DeCryptoFi stock.
c.There is much reliance on the Firm's CEO, Nicholas
Scherling, regarding the ultimate success of the company.
Our chairman and chief executive officer will effectively
control our company. DeCryptoFi will only be offering
one class of common stock. Our chairman and chief executive
officer, Nicholas Scherling, has control over the vast
majority of all the outstanding voting power and, in turn, our
company. This concentration of ownership and
decision making may make it more difficult for other
stockholders to effect substantial changes in our company and
may also have the effect of delaying, preventing or
expediting, as the case may be, a change in control of our
company.
d.Dividend payments will not be made during the
inception of the Company's offering. We do not intend to pay
any dividends on our common stock at this time. The payment of
cash dividends on our common stock in the future
will be dependent upon our revenue and earnings, if any,
capital requirements and general financial condition as
well as the limitations on dividends and distributions that
exist under the laws and regulations of the State of
Delaware and will be within the discretion of the Company. It
is the present intention of the Company to retain all
earnings, if any, for use in our business operations and,
accordingly, the Company does not anticipate declaring any
dividends on our common stock in the foreseeable future. As a
result, any gain you will realize on our common
stock will result solely from the appreciation of such shares.
e.If our securities become subject to the SEC's penny
stock rules, broker-dealers may experience difficulty in
completing customer transactions and trading activity in our
securities may be adversely affected. If at any time we
have net tangible assets of $5,000,000 or less and our common
stock has a market price per share of less than
$5.00, transactions in our securities may be subject to the
"penny stock" rules promulgated under the Securities
Exchange Act of 1934. Under these rules, broker-dealers who
recommend such securities to persons other than
institutional accredited investors must:
1.make a special written suitability determination for
the purchaser.
2.receive the purchaser's written agreement to the
transaction prior to sale.
3.provide the purchaser with risk disclosure documents
which identify certain risks associated with
investing in "penny stocks" and which describe the market for
these "penny stocks" as well as a
purchaser's legal remedies; and
4.obtain a signed and dated acknowledgment from the
purchaser demonstrating that the purchaser has
received the required risk disclosure document before a
transaction in a "penny stock" can be completed.
If our securities become subject to these rules, it may
be difficult to effectuate customer transactions and trading
activity in our securities may be adversely affected. As a
result, the market price of our securities may be depressed,
and
you may find it more difficult to sell our securities.
We have 50,000,000 shares in reserve for future
issuance which could have an adverse effect on the market
price
for our securities or on our ability to obtain future public
financing. If and when we issue additional securities to raise
funds or consummate any acquisition or business combination,
you may experience dilution to your holdings.
The determination for the offering price of our shares
is more arbitrary compared with the pricing of securities for
an established operating company.
-
-
-You will not be able to sell almost all of our stock
immediately after purchase, and it may decline in value before
you have
a chance to sell it. In addition, at issuance, there will be
no trading market for the Stock, and a trading market may
never
develop.
-If the Stock is issued, there may not be a trading
market available for the Stock, or any exchange on which
holders of
Stock may transfer or resell their Stock. As a result, the
Stock may initially only be traded on very limited range of
venues,
including U.S. registered exchanges, or regulated alternative
trading systems for which a Form ATS will have been
properly submitted to the SEC.
-Exchanges may decide not to list the DeCryptoFi Stock
for several reasons not under our control, a perceived lack of
market interest in the DeCryptoFi Stock, and any other
factors. As a result, investors of DeCryptoFi Stock should be
prepared to hold their Stock indefinitely, as there is no
guarantee that holders will be able to sell or exchange their
Stock.
In the event that the Stock remains illiquid for a significant
period of time or indefinitely, the value of the DeCryptoFi
Stock may be materially adversely affected.
-Most securities that are publicly traded in the U.S.
have one or more broker-dealers acting as "market makers" for
the
security. A market maker is a firm that stands ready to buy
and sell the security on a regular and continuous basis at
publicly quoted prices. In the event the stock is listed on an
exchange, we cannot guarantee that the stock will have a
market maker, which could contribute to a lack of liquidity in
the DeCryptoFi stock and could have a material adverse
effect on holders' ability to trade the stock.
-The actual value of your investment may be
substantially less than what you pay.
The determination for the offering price of our shares is more
arbitrary compared with the pricing of securities for an
established operating company.
Prior to this offering there has been no public market
for any of our securities. Factors considered in
determining the prices and terms of the Shares (and the
Additional Shares) offered hereby include:
*the history of companies similar to our company;
*prior offerings of those companies;
*
*our capital structure;
*an assessment of our management;
*general conditions of the securities markets at the
time of the offering and other factors as were deemed
relevant
However, although these factors were considered, the
determination of the offering prices is more arbitrary
than the pricing of securities for an established operating
company
The value of your share value in DeCryptoFi may depend on its
supply and may be affected by how much Stock
Compensation is offered in a given year.
*Our use of Form 1-A and our reliance on Regulation A
for this offering may make it more difficult to raise
capital as and when we need it, as compared to if we were
conducting a traditional initial public offering
on Form S-1.
oBecause of the exemptions from various reporting
requirements provided to us under Regulation A and
because we are only permitted to raise up to $50,000,000 in
any 12-month period under Regulation A
(although we may raise capital in other ways, such as the
concurrent Regulation S offering), this
securities offering may be less attractive to purchasers and
it may be difficult for us to raise additional
capital as and when we need it. If we are unable to raise
additional capital as and when we need it, the
growth of our financial condition and results of operations
may be adversely affected, which may have
a material adverse effect on the value of our stock.
*DeCryptoFi may evaluate and consider strategic
transactions, combinations, acquisitions, or alliances to
enhance its existing business or develop new products and
services. These transactions could be material to its
financial condition. If we do consummate a transaction, we may
be unable to obtain the benefits or avoid the
difficulties and risks of the transaction.
*Any acquisition will involve risks commonly
encountered in business relationships, including:
odifficulties in assimilating and integrating the
operations, personnel, systems, data, technologies,
products, and services of the acquired business.
oinability of the acquired technologies, products, or
businesses to achieve expected levels of revenue,
profitability, productivity, or other benefits.
odifficulties in retaining, training, motivating, and
integrating key personnel.
odiversion of management's time and resources from our
normal daily operations.
odifficulties in maintaining uniform standards,
controls, procedures, and policies within the combined
organizations.
odifficulties in retaining relationships with
customers, employees, and suppliers of the acquired
business.
orisks of entering markets in which we have no or
limited direct prior experience.
oregulatory risks, including remaining in good standing
with existing regulatory bodies or receiving any
necessary pre- closing or post-closing approvals, as well as
being subject to new regulators with
oversight over an acquired business.
oassumption of contractual obligations that contain
terms that are not beneficial to us, require us to
license or waive intellectual property rights or increase our
risk for liability.
ofailure to successfully further develop the acquired
technology; liability for activities of the acquired
business before the acquisition, including patent and
trademark infringement claims, violations of
laws, commercial disputes, tax liabilities and other known and
unknown liabilities.
opotential disruptions to our ongoing businesses; and
ounexpected costs and unknown risks and liabilities
associated with the acquisition.
Risks Related to Regulations
*There are uncertainties related to the regulatory
regimes governing the issuance of new publicly traded
securities, and as such, new regulations or policies may
materially adversely affect the development and value
our securities.
*Any future regulatory actions applicable to our
related activities could severely impact our operations and
the
value of DeCryptoFi. Accordingly, DeCryptoFi may need to
restructure operations significantly to comply with
any new regulation or guidance. These efforts could be costly
and could involve fundamentally changing core
portions of our business operations and in turn negatively
affect the value of our securities. On the other hand,
failure to restructure for compliance adequately or quickly
enough could result in regulatory action (such as
investigations by the government or a self-regulatory
organization or government or private litigation or
administrative actions) that requires DeCryptoFi to spend
significant time and effort, which would pull the
Company's attention away from the core of its business and
potentially deplete our resources. It could also
result in negative publicity.
*New or changing laws and regulations or
interpretations of existing laws and regulations, in the
United States
and other jurisdictions, may adversely impact securities,
including with respect to their value, their liquidity, the
ability of purchasers to access marketplaces or exchanges on
which to trade the security, and the structure,
rights and transferability of the security.
Transfer Agent and Registrar
The Company will act as registrar and maintain the
Company's share register. As of the date of this
offering circular, we have not engaged a transfer agent, and
do not intend to engage a transfer agent until such time
as we determine its necessary or we are required to do so in
order to satisfy the conditional exemption contained in
Rule 12g5-1(a)(7) of the Securities Exchange Act of 1934, as
amended, or the Exchange Act.
TERMS OF THIS OFFERING
Securities being offered
by Company DeCryptoFi is
authorized to issue 500,000,000 shares. We will be
offering only one class of common stock. 25,000,000 shares
will be
offered through our initial public offering. The Company will
also be
offering up to 125,000,000 shares as stock for non-cash
consideration
in exchange for certain goods and services. Please see the
section,
Stock Compensation Plan for additional information.
Reserved Funds The
Company will keep 50,000,000 shares in reserve for future
issuance and to enhance the growth of the Company and/or for
reasons that the Company believes are in the best interests of
its
shareholders. The CEO of the Company owns 300,000,000 shares
subject to a lock-up period of 180 days, which shall commence
2
days after the Commission approves this offering.
Best Efforts Offering There
is no minimum number of Offering Shares that we must sell
in order to conduct a closing in this offering. If all the
Offering
Shares are sold in the offering, we will have the option to
sell up to
50 million additional newly issued shares in the offering in
our
discretion ("Additional Shares").
Lock-up Agreement
Insider(s) of the company have entered into an agreement with
the
Company pursuant to which he has agreed to not sell, transfer
or
otherwise dispose of any Company Securities for an initial
period
of 180 days which shall begin two days after the Commission's
approval of this circular.
Payment for Common stock After the qualification by the
SEC of the offering statement of which this
offering circular is a part, investors will create a profile
on DeCryptoFi's
online platform which has been engineered to seamlessly accept
investment
online, including verifying investor identities, performing
anti-money
laundering checks on investors, facilitating investment
document execution,
funds transfer and regulatory compliance. by credit card if
and to the extent
we can establish and maintain relationships with licensed
currency exchange
services providers and or payment processing entities to
facilitate such
transactions and provided, Subscriber acknowledges that he or
she will incur
additional processing fees, depending on Subscriber's payment
method. The
Company is equipped to accept payment from two payment
processors,
Braintree and Bitpay. Braintree's fee structure is 2.9% + $.30
per
transaction. There is also a 1% fee applied when the
Subscriber's credit card
is issued outside the United States, and a $15.00 fee when
someone initiates
a chargeback through the Subscriber's credit card. For ACH
payments,
Braintree charges a .75% per transaction fee, capped at a
maximum of $5.00.
Bitpay charges a 1% fee for all transactions. Subscriber
understands that he
or she shall incur the cost(s) of these fees. Lastly,
DeCryptoFi reserves the
right to use other payment processors in the future or do
direct exchanges for
other assets or securities. further, we are able to do so in
accordance with
FINRA and SEC guidelines. On each closing date, the funds in
the account
will be released to us and the associated shares will be
issued to the investors
in this Offering. If any funds are returned by us if we choose
to reject a
subscription or elect not to proceed with the Offering, such
funds will be
returned by mail via a check in U.S. dollars or through the
payment method
received.
Stock Compensation Plan We are offering up to
125,000,000 shares of stock through our Stock
Compensation Plan. For non-cash consideration, the aggregate
offering price or
aggregate sales will be based on the value of the
consideration as established
by bona fide sales of that consideration made within a
reasonable time, or, in the
absence of sales, on the fair value as determined by an
accepted standard.
Valuations of all non-cash consideration will be reasonable at
the time made.
Voting RightsEach holder of the Company's Common Stock is
entitled to one vote
for each share on all matters submitted to a vote of the
shareholder,
except as provided by law or by the other provisions of the
Certificate
of Incorporation.
Lock-up agreements with our compan
DividendsWe do not intend to pay any dividends
currently. The payment of
cash dividends on our common stock in the future will be
dependent
upon our revenue and earnings, if any, capital requirements
and
general financial condition as well as the limitations on
dividends
and distributions that exist under the laws and regulations of
the State
of Virginia and will be within the discretion of the Company.
It is the
present intention of the Company to retain all earnings, if
any, for use
in our business operations and accordingly, the Company does
not
anticipate declaring any dividends on our common stock in the
foreseeable future. As a result, any gain you will realize on
our
common stock will result solely from the appreciation of such
shares.
List of securities and proposed symbols Prior to this
offering, there have been no public market for our
common stock. We currently do not meet the financial listing
requirements to be listed on a national securities exchange.
Once
the Company reaches the applicable thresholds, the Company
intends to register with one or more registered securities
exchanges.
USE OF PROCEEDS
We estimate that the net cash proceeds to us from the
sale of the company stock offering in this offering
will be $15 million, minus any offering expenses and other
fixed costs.
We intend to use the proceeds of this offering, net of
any federal and state income taxes for working capital
and other general corporate purposes general operations and
cash reserves, including but not limited to payment of
salaries (including those of directors and officers) and
hiring employees and consultants. We also intend to use the
proceeds of this offering for research and development,
specifically for continued development in ways to enhance
our software and our platform, and for hiring costs and
payment of salaries that are allocated to research and
development, as well as for marketing and education, which
includes organizing and hosting educational and
developer events.
We will also use the above proceeds in conjunction with
the proceeds from a potential concurrent or
subsequent Regulation S offering to non-U.S. persons, the net
proceeds of which we estimate to be $15,000,000.00.
We cannot specify with certainty all the particular uses for
the net proceeds to be received upon the concurrent
Regulation S offering. In addition, the amount, allocation,
and timing of our actual expenditures will depend upon
numerous factors. Pending other uses, we intend to invest the
proceeds in interest-bearing, investment-grade
instruments, certificates of deposit or direct or guaranteed
obligations of the U.S. government, or hold as cash. We
cannot predict whether the proceeds invested will yield a
favorable return. Our management will have broad
discretion in the application of the net proceeds we receive
from our offering and the concurrent Regulation S
offering, and investors will be relying on the judgment of our
management regarding the application of the net
proceeds. It is in the Company's sole discretion whether to
pursue a Regulation S offering.
In addition, we intend to use our proceeds for the
following:
a.financing production and associated development and
operating costs and expenses for our software.
b.working capital and general corporate purposes.
DeCryptoFi reserves the right to alter the use of proceeds in
this offering
DESCRIPTION OF BUSINESS
DeCryptoFi's main goal is to make the public and
private offering process of raising capital easier for small
and midsized businesses to achieve. Our top priority is to aid
and facilitate with the complexities in the alternative
space of capital raising. Many companies, even if aware of
these alternative methods of capital raising, simply lack
the legal and finance team dedicated in ensuring that all
regulatory and audit requirements are satisfied. Without the
proper personnel, small to medium sized businesses cannot
devote the time to raising capital while simultaneously
running their business. If these business owners wish to
outsource these functions, it can drastically affect the
company's bottom line.
Our goal is to tap into this market and assist small
and medium size companies that want to pursue a public
offering or an alternative acceptable private offering and
properly navigating through the confounding but necessary
SEC regulations. . The techniques that DeCryptoFi has
developed will assist companies with identifying options for
raising capital that make sense given their current business
circumstances. Companies interested in raising capital
will be able to use our portal and software allowing us to
assist them in the various options available to them to raise
capital that they otherwise may not have known exist or to
have been possible. In addition, DeCryptoFi seeks to be
able to automate the initial and ongoing required regulatory
filings (depending on the type of offering a user
chooses) on the customers behalf. Lastly, DeCrytpoFi seeks to
be able to facilitate and automate the necessary
documentation that companies are required to provide its
investors. In this day and age where investor protection,
preservation of personal identifying information, and complete
transparency with respect to businesses is paramount,
our goal is to assist companies with this evolving landscape.
Further, as the importance of combating money-
laundering continues to be a top priority for all
institutions, DeCryptoFi will facilitate and assist with the
compliance
of Anti-Money Laundering ("AML") regulations. The language on
page 18 in our circular now reads, in part, "Our
goal is to tap into this market and assist small and medium
size companies that want to pursue a public offering or
an alternative acceptable private offering and properly
navigating through the confounding but necessary SEC
regulations. Our techniques will allow small and mid-sized
companies to better understand the initial and ongoing
regulatory filings with respect to the public and private
offering processes. Our main goal can be summed up in one
word... simplification. We strive to make the overlooked
alternative methods of raising capital easy to achieve,
easier to comprehend, and for many aspects of the process,
completely automated. The SEC has long struggled with
how to assist small and medium size businesses get access to
the public market; we are here to help! As an early-
stage financial technology company, we have created techniques
and processes which will allow small and mid-
sized companies to fully understand the complexities
surrounding initial public offerings, private placement
offerings, and other exempt offerings. Our focus is on
companies that seek alternatives to the issuance of bank loans
in order to raise capital. Our company allows for the
automation of various Self-Regulatory Organizations (SRO)
initial and ongoing regulatory reporting and filings and
assists companies that lack the relevant expertise and/or
personnel to stay up to date with relevant compliance
obligations as well as the need for the proper investor
disclosures, privacy notifications, and Anti-Money Laundering
(AML) regulations. DeCryptoFi has the capability to
track various asset classes and automate investor
documentation, such as proxy statements, dividend payments,
and
GDPR notifications.
Users working with DeCryptoFi will better understand
the user's business and what attainable capital
raising methods the user may be overlooking. Topics for
information sharing will include, but are not limited to,
how much capital the company seeks to raise, who the company's
target investors will be, current and past revenue,
profitability, growth rate, what its organizational structure
is like, etc. In turn, businesses will be able to streamline
the structuring of a potential business capitalization and the
regulatory safeguards associated with these capital
raising options. Once a business owner fully comprehends the
types of offerings available and decides which to
pursue, DeCryptoFi's will assist in automating filings and
much more."
We aim to assist with initial public offerings ("IPO"),
initial public debt offerings ("IPDO"), private
offerings, and private debt offerings. We believe that average
business owners are not even aware of the ability for
tapping public and private markets simply through debt
offerings and the potential advantages associated with it.
Staging an IPO is also a very time-consuming and expensive
process. The registration process can be quite complex
and requires the company to disclose a variety of information
to potential investors. In addition, the IPO process can
take as little as six months or as long as two years, during
which time management's attention is distracted away
from day-to-day operations. It can also conservatively cost a
company between $50,000 and $250,000 in
underwriting fees, legal and accounting expenses, and printing
costs.
DeCryptoFi's software will allow companies the ability
to streamline and automate SEC filings, quarterly
and annual reports, dividend payments, privacy notifications,
General Data Protection Regulations ("GDPR"), Anti-
Money laundering provisions, and the Trust Indenture Act
regulations. By giving our customers the ability to
systematize these processes, the regulatory landscape will be
satisfied, thereby alleviating some of these hurdles and
giving them the opportunity to focus on running their
business.
DeCryptoFi has not filed for any bankruptcy
receivership, or similar proceedings, nor is DeCryptoFi
currently subject to, or has been subject to, any legal
proceedings material to the business or its financial
condition.
There is no material litigation, arbitration or governmental
proceeding currently pending against us, or any of our
officers or in their capacity acting as such and neither we,
nor our officers have been subject to any such proceedings
in the 12 months preceding the date of this preliminary
offering circular.
Trademarks and Copyrights
We own or have applied for rights to trademarks or
trade names that we use in connection with the
operation of our business, including our corporate names,
logos and website names. In addition, we own or have the
rights to copyrights, trade secrets and other proprietary
rights that protect our business. This offering circular may
also contain trademarks, service marks and trade names of
other companies, which are the property of their
respective owners. Our use or display of third parties'
trademarks, service marks, trade names or products in this
offering circular is not intended to, and should not be read
to, imply a relationship with or endorsement or
sponsorship of us. Solely for convenience, some of the
copyrights, trade names and trademarks referred to in this
offering circular are listed without their (c), (r) and (tm)
symbols, but we will assert, to the fullest extent under
applicable law, our rights to our copyrights, trade names and
trademarks. All other trademarks are the property of
their respective owners.
DeCryptoFi Platform
We will operate an online platform, where investors can
manage their accounts and purchase shares of our
company. Prospective investors will create a public address
(username) and private key (password) and indicate
agreement to our terms and conditions and privacy policy.
*Available Online Directly from Us. Investors must
purchase shares of our stock directly from us.
*No Minimum Investment. Investors will be able to build
ownership over time by making purchases as low
as the initial offering price.
DESCRIPTION OF DECRYPTOFI'S COMMON STOCK
GENERAL
DeCryptoFi has a total of 500,000,000 authorized shares
of common stock, with a par value $.0001. As of
the date of this offering circular, 300,000,000 shares of the
Company's common stock are outstanding.
VOTING RIGHTS
As DeCryptoFi's business expands, it is the intention
of the Company to grant voting rights to
Company shareholders. Shareholders would be entitled to one
vote per share.
NO PREEMPTIVE OR SIMILAR RIGHTS
Our common stock is not entitled to preemptive rights
and is not subject to conversion, redemption or
sinking fund provisions.
MERGER OR CONSOLODATION
In the case of any distribution or payment in respect
of the Company's common stock upon any
potential consolidation or merger with or into any other
entity, or in the case of any other transaction having an
effect on stockholders substantially similar to that resulting
from a consolidation or merger, such distribution or
payment shall be made ratably on a per share basis among the
Company's shareholders.
REGULATORY CONSIDERATIONS
Below is a summary of certain current areas of
government regulation that apply to our business and
potential regulatory issues of which we are aware. As
discussed below, we generally believe that our business and
the offering discussed in this offering circular are compliant
with these regulations, but in certain cases there may be
uncertainty related to that conclusion.
Government Regulations
The regulatory treatment of securities offerings is
uncertain in many ways. In part, this uncertainty results
from the need for regulators to apply existing law to a new
and evolving set of technologies and assets. We
anticipate that regulation will evolve as various state,
federal and international government agencies take greater
interest in regulation of newly issued securities, especially
with the recent enactment of Regulation Best Interest
("Reg BI"), and the current Dodd Frank provisions. We
anticipate new regulations to be established, at which point,
if applicable to DeCryptoFi's business model, we will take all
necessary steps to ensure we are compliant. In
addition, various legislative and executive bodies in the
United States and in other countries may adopt new laws,
regulations, or guidance, or take other actions in the future.
Any future regulatory actions applicable to DeCryptoFi
and our related activities could severely impact our
operations and the value of our securities. We may need to
restructure operations significantly to comply with any
new regulation or guidance. Failure to do so adequately or
quickly enough could result in regulatory action (such as
investigations by the government or a self-regulatory
organization or government or private litigation or
administrative actions) that requires us to spend significant
time and effort, which would pull our attention away
from the core of our business and potentially deplete our
resources. It could also result in negative publicity.
Regulatory change could even potentially result in certain
aspects of our operations being viewed as impermissible,
which could result in a need for us to dramatically alter or
cease activities
Securities Act Considerations
Typically, offerings of securities in the U.S. are
required to register under the Securities Act with the SEC
and, in compliance with state law, with applicable state
regulators (blue sky regulations). Our current offering relies
on an exemption from federal registration under the Securities
Act provided by Regulation A, which also provides
for preemption of state registration requirements, but which
also currently limits issuances by a single issuer to
offerings of no more than $50,000,000 each year. We have also
taken the position that the commercial uses of our
stock, including transfers between owners, do not require
registration or an exemption from registration under state
securities laws.
If in subsequent years after our initial filing we find
that our ability to issue additional shares would exceed
the $50m threshold provided by Reg A Tier 2, we recognize that
we may need to fully register our securities with
the SEC and/or to register our shares of stock with one or
more U.S. state securities regulators.
Exchange Act Considerations
Registration as Transfer Agents.
Under the Exchange Act, a transfer agent is a person
who engages, with respect to securities registered
under Section 12 of the Exchange Act, in (a) countersigning
issued securities, (b) monitoring issued securities, with
the goal of preventing unauthorized issuances, (c) registering
transfers of issued securities, (d) exchanging or
converting issued securities, or (e) transferring record
ownership of securities by bookkeeping entry without
physical issuance of securities certificates. Transfer agents
are typically required to register with the SEC under the
Exchange Act. Because our distributed software will record the
owner of our stock, and/or the debt of clients we
potentially assist in going public that may not be listed on
an exchange at the time of going public, we could be
viewed as engaging in these types of activities.
We have taken the position that DeCryptoFi, and anyone
operating its software should not be required to
register as a transfer agent because direct sale of stock from
seller to buyer without an exchange or marketplace is
not captured or described in the definition of a transfer
agent, nor is such action directly facilitated by DeCryptoFi.
Further, we believe that DeCryptoFi's software and its
software operators are not required to register as transfer
agents. Software Operators are paid resources of DeCryptoFi
via the Work Compensation Plan and as such are not
independent entities. They hold no autonomy to make decisions,
prioritize transactions, impose fees, or facilitate a
marketplace. Our software operators solely record transactions
on behalf of DeCryptoFi so that the company may
have an accurate account of its investors and any transactions
they make. Each proposed transaction involving
DeCryptoFi's securities will be individually negotiated and
implemented. The Company recognizes that in the
foreseeable future, the Company may be required to list its
securities on a registered exchanges and utilize registered
transfer agents, at which point the Company will take all
reasonable steps to remain compliant with all applicable
laws.,
It is possible that the SEC or another regulator would
disagree with our position. If so, we, or anyone
running our software could be forced to register as a transfer
agent and comply with applicable law, which could
lead to significant costs to DeCryptoFi and could force
DeCryptoFi to change or cease its operations. It could also
lead to considerable uncertainty as to how we would comply
with regulation, which would likely result in a need for
a relatively long registration process and could ultimately
prove prohibitive to our business model. Any of these
developments would decrease the value of the stock sold in
this offering.
Registration as Clearing Agency
Also under the Exchange Act, a clearing agency is any
person who (a) acts as an intermediary in making
payments or deliveries, or both, in connection with
transactions in securities; (b) provides facilities for
comparison
of data respecting the terms of settlement of securities
transactions, to reduce the number of settlements of
securities
transactions, or for the allocation of securities settlement
responsibilities; (c) acts as a custodian of securities in
connection with a system for the central handling of
securities whereby all securities of a particular class or
series of
any issuer deposited within the system are treated as fungible
and may be transferred, loaned, or pledged by
bookkeeping entry without physical delivery of securities
certificates; or (d) otherwise permits or facilitates the
settlement of securities transactions or the hypothecation or
lending of securities without physical delivery of
securities certificates. A clearing agency does not include
any person solely by reason of performing a transfer agent
function, specifically transferring record ownership of
securities by bookkeeping entry without physical issuance of
securities certificates. Clearing agencies are generally
required to register with the SEC and comply with applicable
regulation. Because DeCryptoFi, or anyone operating our
software will be involved in recording transfers in the
stock, they could be viewed as engaging in these types of
activities.
We have taken the position that DeCryptoFi, and anyone
operating its software are not clearing agencies
under the Exchange Act because the types of activities they
engage in are not those described in the definition of a
clearing agency. To the extent that transfers are recorded by
our software, the software is not a "person" that would
be required to register.
It is possible that the SEC or another regulator would
disagree with our position. If so, we, or anyone
running our software could be forced to register as a clearing
agency and comply with applicable law, which could
lead to significant costs to DeCryptoFi and could force
DeCryptoFi to change or cease its operations. It could also
lead to considerable uncertainty as to how we would comply
with regulation, which would likely result in a need for
a relatively long registration process and could ultimately
prove prohibitive to our business model. Any of these
developments would decrease the value of the stock sold in
this offering.
Registration as an Exchange or ATS
Rule 240.3b16 of the Exchange Act requires registration
for any organization, association, or group of
persons who maintain or provide "a market place or facilities
for bringing together purchasers and sellers of
securities or for otherwise performing with respect to
securities the functions commonly performed by a stock
exchange if such organization, association, or group of
persons:
(1) Brings together the orders for securities of multiple
buyers and sellers; and
(2) Uses established, non-discretionary methods
(whether by providing a trading facility or by setting rules)
under
which such orders interact with each other, and the buyers and
sellers entering such orders agree to the terms of a trade.
Entities that are engaged as "exchanges" or "ATSs" with
respect to securities are subject to federal registration and
significant regulatory oversight by the SEC and FINRA.
Exchanges and ATSs are generally networks that
constitute, maintain, or provide a marketplace or facilities
for bringing together the orders of multiple purchasers
and multiple sellers of securities. A system "brings together"
orders if it displays trading interests entered on the
system to users (e.g., through consolidated quote screens) or
receives orders for processing and execution. This does
not include systems that have only one seller for each
security (e.g., the issuer), even if there are multiple
buyers.
We have taken the position that DeCryptoFi's platform and its
software not be viewed as an exchange or an ATS
because neither will "bring together" anyone by sorting or
organizing orders in the Company's securities in a
consolidated way or by receiving orders for processing and
execution of transactions in the Company's shares.
Rather, each proposed transaction involving DeCryptoFi's stock
will be individually negotiated and implemented
without DeCryptoFi's involvement. DeCryptoFi's software will
maintain a list of shareholders to ensure the
company knows whom to send shareholder notifications required
under the SEC. It is possible that the SEC or
another regulator would disagree with our position. If so, we
could be forced to register the platform and/or our
software as an exchange or ATS and comply with applicable law,
which could lead to significant costs to
DeCryptoFi and could force it to change or cease its
operations. Any of these developments could decrease the value
of the securities sold in this offering.
Registration as a Broker-Dealer
Under the Exchange Act, a "broker" is a person engaged
in the business of effecting transactions in
securities for the account of others. We believe that our
software operators do not fit under this definition and we
have updated our disclosure language on page 23 to reflect the
basis for this conclusion. Our disclosure now reads,
in part: "[O]ur software is responsible for recording
shareholder information so that DeCryptoFi has an accurate
list
of current shareholders at any point in time. It does not and
is not capable of operate as a broker - buying and selling
securities for its own account or on behalf of any customer.
It is also not capable of acting as a deal and executing
orders on behalf of any client which it has none. This does
not change regardless of whom a Software Operator may
be. As such operators should not be considered broker-dealers,
because they do not buy or sell a security on
anyone's behalf, they simply operate our software that is
responsible for keeping an up-to-date list of security
owners on behalf of DeCrytpoFi in order for the company to
facilitate its regulatory compliance. Payment amounts
made through DeCryptoFi's Work Compensation Plan are preset,
do not fluctuate from a predetermined amount and
are not transaction-based compensation. As such, it is
DeCryptoFi's view that recording shareholder information on
behalf of the company does not constitute a broker dealer.
Further, the Company has given weight to Rule 3a4-1,
"Associated Persons of an Issuer Deemed Not to be
Brokers" and believe that the Company's software operators
qualify for such an exemption, since they will not have
been s subject to a statutory disqualification as defined in
section 3(a)(39) of the Act, and they will not be
compensated in the form of commissions or other remuneration
based directly or indirectly on transactions in
securities and their work is more ministerial and clerical in
nature with respect to effecting any potential securities
transaction.
It is possible that the SEC or another regulator would
disagree with our position. If so, DeCryptoFi or its
software operators could be forced to register as
broker-dealers and comply with applicable law. This would
disrupt
our business significantly, perhaps making it prohibitive to
operate, and would likely lead to a decrease or complete
loss in the value of the Stock.
Reporting Company Considerations
Under Regulation A, we will have limited ongoing
reporting obligations to investors relative to the
obligations of companies that are "reporting companies" for
purposes of the Exchange Act. The exemption that
allows this lighter reporting, however, is in part dependent
on the use of a transfer agent with respect to a company's
securities. We do not intend to engage a transfer agent with
respect to our securities, in part because the types of
activities a transfer agent would normally engage in are
performed automatically by our software. As a result, as a
practical matter, we also do not think we would be able to
comply with the transfer agent requirement, and we do
not think it applies to or would provide additional investor
protections for this offering.
It is possible that a regulator would disagree with
this position and, as a result, require us to file the full
set
of reports required of a reporting company. If so, we would
need to spend considerable additional time and effort to
provide the required reports. This could have a material
adverse effect on our operations, which in turn could affect
the value of our Company stock.
Regulation M
Regulation M under the Exchange Act generally prohibits
issuers from buying and selling their securities at the same
time,
in order to prevent potential price manipulation that could
result from those activities. In certain circumstances, we may
be
selling stock at a future date while concurrently retiring
stock. We are currently set to retire 2% of the stock every 4
years.
The company will not be purchasing the 2% stock being retired
every 4 years after our initial offering but will be charging
a
flat fee per transaction not to exceed 20 shares of stock
(with a value of $2.00 at offering) per transfer between a
stock
seller and stock buyer for recording the transaction. This
fee/stock will be retired immediately and automatically at the
time
of the transaction. DeCryptoFi will follow Accounting for
Stock BuyBack and Retirement (ASC 505-30-30-8) which reads
in part, 30-8 When a corporation's stock is retired, or
repurchased for constructive retirement (with or without an
intention
to retire the stock formally in accordance with applicable
laws), an excess of repurchase price over par or stated value
may
be allocated between additional paid-in capital and retained
earnings. Alternatively, the excess may be charged entirely to
retained earnings in recognition of the fact that a
corporation can always capitalize or allocate retained
earnings for such
purposes. If a portion of the excess is allocated to
additional paid-in capital, it shall be limited to the sum of
both of the
following:
a. All additional paid-in capital arising from previous
retirements and net gains on sales of treasury stock of the
same issue
b. The pro rata portion of additional paid-in capital,
voluntary transfers of retained earnings, capitalization of
stock
dividends, and so forth, on the same issue. For this purpose,
any remaining additional paid-in capital applicable to issues
fully retired (formal or constructive) is deemed to be
applicable pro rata to shares of common stock.
DeCryptoFi may be viewed as receiving stock at the same
time as selling it under Regulation A. However,
we believe retiring a percentage of stock at a pre-determined
rate does not constitute buying and selling the security
for price manipulation. As a result, we do not believe these
activities are in violation of Regulation M.
It is possible that a regulator would disagree with
this position. If so, we may be required to significantly
restructure the transactions, which could lead to significant
costs to the Company and could force it to change or
cease the operations. This would result in a loss or decrease
in value of the Stock.
Foreign Considerations
We may also subject to a variety of foreign laws and
regulations that involve matters central to our
business. These could include, for example, regulations
related to user privacy such as the General Data Protection
Regulation, potential broker-dealer or exchange activities,
data protection, and intellectual property, among others.
In certain cases, foreign laws may be more restrictive than
those in the U.S. Although we believe we are operating in
compliance with the laws of jurisdictions in which DeCryptoFi
exists, foreign laws and regulations are constantly
evolving and can be subject to significant change. In
addition, the application and interpretation of these laws and
regulations are often uncertain, particularly in the new and
rapidly evolving industry in which we operate. As a
result, we are involved in face an uncertain regulatory
landscape in many foreign jurisdictions, including but not
limited to the European Union. Other foreign jurisdictions may
also adopt laws, regulations or directives that affect
the similar types of securities offerings.
We have adopted policies and procedures designed to
comply with the laws that apply to us as we
understand them. However, the growth of our business and its
expansion outside of the U.S. may increase the
potential of violating foreign laws or our own internal
policies and procedures. The risk of our Company being
found in violation of applicable laws and regulations is
further increased by the fact that many of them are open to a
variety of interpretations given the absence of formal
interpretation by regulatory authorities or the courts.
Any action brought against us by a foreign regulator or
in a private action based on foreign law could cause
us to incur significant legal expenses and divert our
management's attention from the operation of the business. If
our operations are found to be in violation of any laws and
regulations, we may be subject to penalties associated
with the violation, including civil and criminal penalties,
damages and fines; we could be required to refund
payments received by us; and we could be required to curtail
or cease operations. Any of these consequences could
seriously harm our business and financial results. In
addition, existing and proposed laws and regulations can be
costly to comply with and can delay or impede the development
of new products, result in negative publicity,
increase operating costs, require significant management time
and attention, and subject us to claims or other
remedies, including fines or demands that we modify or cease
existing business practices.
Any applicable foreign laws, regulations or directives
may also conflict with those of the United States.
The effect of any future regulatory change is impossible to
predict, but any change could be substantial and
materially adverse to the adoption and value of the securities
and our operations.
CHANNELS FOR DISCLOSURE OF INFORMATION AND PLAN OF
DISTRIBUTION
Upon the Commission's qualification, this offering
circular shall be an initial offering for 25,000,000
shares of our common stock. We will have the option to sell up
to 50,000,000 Additional Shares which are currently
authorized but unissued, should all of the Offering Shares be
sold in the offering. There is no minimum number of
Offering Shares that we must sell in order to conduct a
closing in this offering.
The offering price of the Offering Shares was
determined by the Company. This determination was done
without reference to our book value or asset values or by the
application of any customary, established models for
valuing companies or securities. Accordingly, the offering
price may not be indicative of any amounts you might
receive should you seek to sell your shares or should there be
a liquidation of our company. In addition, such prices
are not necessarily indicative of any prices at which our
securities may trade, or any value that might be ascribed to
our Company after the completion of the offering.
Any purchase of our Offering Shares by an officer or
director of the Company shall be conducted in
compliance with the applicable provisions of Regulation M.
We may decide to close the offering early or cancel it,
in our sole discretion. If we extend the offering, we
will provide that information in an amendment to this offering
circular. If we close the offering early or cancel it, we
may do so without notice to you, although if we cancel the
offering all funds that may have been provided by any
investors will be promptly returned without interest or
deduction.
Investors, the media and others should note that,
following the completion of this offering, we intend to
announce material information to the public regarding
DeCryptoFi through filings with the SEC, DeCryptoFi's
corporate blog at DeCryptoFi.com/blog, DeCryptoFi's mailing
list which is available for sign-up at DeCryptoFi.com
press releases, public conference calls and webcasts. We also
intend to announce information regarding DeCryptoFi
and its business, operating results, financial condition and
other matters through our Twitter account, which can be
accessed at https://twitter.com/DeCryptoFi.
Investors should monitor our website and the above
social media accounts in addition to following its press
releases, SEC filings, public conference calls, and webcasts.
The social media channels that DeCryptoFi intends to
use as a means of disclosing the information described above
may be updated from time to time.
This offering circular will be furnished to prospective
investors via electronic PDF format before or at the
time of all written offers and will be available for viewing
and download on the DeCryptoFi website, as well as on
the SEC's website at www.sec.gov.
PROCEDURES FOR SUBSCRIBING
Shares pursuant to this offering circular will be
offered only through DeCryptoFi's website at
https://www.DeCryptoFi.com and, if the Company chooses so,
through management-approved third party platform
partners, which partners will be registered investment
advisers or broker-dealers and may, by virtue of their
registration status, be deemed to be underwriters. As of the
date of this offering circular, we do not have, nor do we
intend, to develop relationships with any third-party platform
partners.
We are offering our stock for cash through our website
www.DeCryptoFi.com where potential investors in
the offering will be able to review an electronic version of
this offering circular and execute a subscription
agreement, attached herein as Exhibit 1.1 in part III of this
offering, as of the commencement of this offering. In
order to subscribe to purchase DeCryptoFi stock, a prospective
investor will be required to electronically complete,
sign, and deliver an executed subscription agreement. Once
submitted, an investor's subscription is irrevocable,
except for limited exceptions, such as if the investor's
subscription is only partially accepted, in which case within
20 days of the investor having been provided notice of this
fact.
There is no minimum number of shares of stock that we
must sell in order to conduct a closing in this
offering. Payment for stock sold through the cash offering
will be accepted on a rolling basis during the term of the
cash offering.
We may decide to cancel the offering entirely, in
our sole discretion. If we cancel the Offering, we may
do so without notice to you, although if we cancel the
Offering, all funds that may have been provided by any
investors will be promptly returned without interest or
deduction.
STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS
Our shares of Common stock are being offered and sold
only to "qualified purchasers" (as defined in
Regulation A under the Securities Act). As a Tier 2 offering
pursuant to Regulation A under the Securities Act, this
Offering is exempt from state law "Blue Sky" review, subject
to meeting certain state filing requirements and
complying with certain anti-fraud provisions, to the extent
that our Class A shares offered hereby are offered and
sold only to "qualified purchasers" or at a time when our
Class A shares are listed on a national securities exchange.
"Qualified purchasers" include: (i) "accredited investors"
under Rule 501(a) of Regulation D and (ii) all other
investors so long as their investment in our Class A shares
does not represent more than 10% of the greater of their
annual income or net worth (for natural persons), or 10% of
the greater of annual revenue or net assets at fiscal year-
end (for non-natural persons). Accordingly, we reserve the
right to reject any investor's subscription in whole or in
part for any reason, including if we determine in our sole and
absolute discretion that such investor is not a
"qualified purchaser" for purposes of Regulation A.
To determine whether a potential investor is an
"accredited investor" for purposes of satisfying one of the
tests
in the "qualified purchaser" definition, the investor must be
a natural person who has:
1.The individual must have a net worth greater than $1
million, either individually or jointly with the
individual's spouse. Except for the special provisions
described below, individuals should include all their
assets and all of their liabilities in calculating net worth,
excluding the value of their primary residence; or
2.persons who had an income of at least $200,000 in each
of the two most recent years (or $300,000 together
with their spouse) and have a reasonable expectation of
reaching the same income level in the current year.
If the investor is not a natural person, different standards
apply. See Rule 501 of Regulation D for more details.
For purposes of determining whether a potential
investor is a "qualified purchaser," annual income and net
worth should be calculated as provided in the "accredited
investor" definition under Rule 501 of Regulation D. Net
worth in all cases should be calculated excluding the value of
an investor's home, home furnishings and
automobiles.
EXHIDILUTION
Dilution refers to the reduction in value, control, or
earnings of the shares the investor owns.
IMMEDIATE DILUTION
An early-stage company typically sells its shares (or
grants options over its shares) to its founders and early
employees at a very low cash cost, because they are, in
effect, putting their "sweat equity" into the company. When
the company seeks cash investments from outside investors,
like you, the new investors typically pay a larger sum
for their shares than the founders or earlier investors, which
means that the cash value of your stake is diluted
because each share of the same type is worth the same amount,
and you paid more for your shares than earlier
investors did for theirs.
The Company acknowledges that the dilution may be
substantial under certain market conditions. The
Company further acknowledges that its obligations under the
Transaction Documents, including without limitation
its obligation to issue the Securities (including the
Underlying Shares) pursuant to the Transaction Documents, are
unconditional and absolute and not subject to any right of set
off, counterclaim, delay or reduction, regardless of the
effect of any such dilution or any claim that the Company may
have against any Purchaser.
The following table summarizes the differences between
the total consideration and the weighted-average
price per share paid by, on the one hand, officers, directors,
promoters and affiliates of DeCryptoFi who have
acquired shares prior to the date of this offering circular
and, on the other hand, investors participating in this
offering, before deducting estimated offering expenses,
assuming that the maximum number of shares are sold at the
$0.10 per share price. The table compares the price that new
investors are paying for their shares with the effective
cash price paid by existing shareholders, giving effect to
full conversion of all outstanding stock options. The
schedule presents shares and pricing as issued and reflects
all transactions since inception, which gives investors a
better picture of what they will pay for their investment
compared to the company's insiders:
SHARES
PURCHASED
TOTAL
CONSIDERATION
TOTAL WEIGHTED
AVG PRICE PER
SHARE
Existing shareholders
before this offering
300,000,000
$0
..000000
Public Sale
25,000,000
$2,500,000
0.1000
Stock Compensation Plan
125,000,000
$12,500,000
0.1000
Total Investors
Participating in this
Offering
150,000,000
$15,000,000
0.1000
Shares in Reserve
50,000,000
$5,000,000
..1000
FUTURE DILUTION
Another important way of looking at dilution is the
dilution that happens due to future actions by the
company. The investor's stake in a company could be diluted
due to the company issuing additional shares, whether
as part of a capital-raising event, or issued as compensation
to the company's employees or marketing partners. In
other words, when the company issues more shares, the
percentage of the company that you own will go down, even
though the value of the company may go up. You will own a
smaller piece of a larger company. This increase in
number of shares outstanding could result from a stock
offering (such as an initial public offering, another
crowdfunding round, a venture capital round, angel
investment), employees exercising stock options, or by
conversion of certain instruments (i.e. convertible bonds,
preferred shares or warrants) into stock.
If the company decides to issue more shares, an
investor could experience value dilution, with each share
being worth less than before, and control dilution, with the
total percentage an investor owns being less than before.
There may also be earnings dilution, with a reduction in the
amount earned per share (though this typically occurs
only if the company offers dividends, and most development
stage companies do not pay dividends for some time).
The type of dilution that hurts early-stage investors
most occurs when the company sells more shares in a
"down round," meaning at a lower valuation than in earlier
offerings. An example of how this might occur is as
follows (numbers are for illustrative purposes only):
In June 2014, Jane invests $20,000 for shares that represent
2% of a company valued at $1 million.
In December, the company is doing very well and sells $5
million in shares to venture capitalists on a
valuation (before the new investment) of $10 million. Jane now
owns only 1.3% of the company,
but her stake is worth $200,000.
?
In June 2015, the company has run into serious problems, and
in order to stay afloat, it raises $1 million
at a valuation of only $2 million (the "down round"). Jane now
owns only 0.89% of the company,
and her stake is worth only $26,660.
If you are making an investment expecting to own a
certain percentage of the company or expecting each
share to hold a certain amount of value, it's important to
realize how the value of those shares can decrease by
actions taken by the company. Dilution can make drastic
changes to the value of each share, ownership percentage,
voting control, and earnings per share. In some cases,
dilution can also completely wipe out the value of investments
made by early investors, without any person being at fault.
Investors should understand how dilution works and the
availability of anti-dilution protection.
DeCryptoFi is committed to zero new share issuance outside of
the 500 million shares in existence today.
CONCURRENT OR SUBSEQUENT REGULATION S (REG S) OFFERING
Regulation S provides an exclusion from the Section 5
registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), for offerings made
outside the U.S. by both U.S. and foreign issuers. A
securities offering, whether private or public, made by an
issuer outside of the United States in reliance on
Regulation S need not be registered under the Securities Act.
The Regulation S safe harbors are non-exclusive,
meaning that an issuer that attempts to comply with Regulation
S also may claim the availability of another
applicable exemption from registration.
Further, a contemporaneous registered offering or
exempt private placement in the U.S. will not be
integrated with an offshore offering that otherwise complies
with Regulation S. In fact, Regulation S contemplates
that a private placement in the United States may be made
simultaneously with an offshore public offering in
reliance on the issuer safe harbor. Thus, offshore
offerings and sales of securities made in reliance on
Regulation S
do not preclude the resale of those same securities made in
reliance on Rule 144A or Regulation D, even if the resale
occurs during the distribution compliance period.
The stock in a potential concurrent or subsequent
Regulation S offering will be restricted securities and will
be sold for delayed delivery and subject to a transfer
restriction for one year after sale.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF
OPERATIONS
Impact of COVID-19
You should read the following discussion and analysis of our
financial condition and results of operations together
with our consolidated financial statements and the related
notes and other financial information included elsewhere
in this offering circular. Some of the information contained
in this discussion and analysis, including information
with respect to our plans and strategy for our business,
includes forward-looking statements that involve risks and
uncertainties. You should review the "Risk Factors" section of
this offering circular for a discussion of important
factors that could cause actual results to differ materially
from the results described in or implied by the forward-
looking statements contained in the following discussion and
analysis.
In March 2020, the World Health Organization declared
the outbreak of a novel coronavirus (COVID-19)
as a pandemic, which continues to spread throughout the U.S
and other countries. As a result, Company franchisees
have temporarily closed some retail locations, reduced or
modified store operating hours, adopted a "to-go" only
operating model, or implemented a combination of these
actions. These actions have reduced consumer traffic,
resulting in a negative impact to Company revenues. While the
disruption to our business from the COVID-19
pandemic is currently expected to be temporary, there is a
great deal of uncertainty around the severity and duration
of the disruption, and also the longer-term effects on our
business and economic growth and consumer demand in
the U.S. and worldwide.
The effects of COVID-19 may continue to materially
adversely affect our business, results of operations
and liquidity, particularly if these effects continue in place
for a significant amount of time. As additional
information becomes available regarding the potential impact
and the duration of the negative financial effects of the
current pandemic, the Company may determine that an impairment
adjustment to the recorded value of trademarks,
goodwill and other intangible assets may be necessary.
Effects of COVID-19 on Liquidity and Operations
While the Company expects COVID-19 to negatively impact
its business, results of operations and
financial position, the full financial impact cannot be
reasonably estimated at this time. The Company currently
believes that its working capital combined with our
disciplined management of the Company' operating expenses,
will be sufficient to meet our current liquidity needs.
However, COVID-19 pandemic events will continue to evolve
over time and the negative effects on the operations of our
franchisees could prove to be worse than we currently
estimate.
Business Overview and Outlook
Decentralized Crypto Financial Inc. uses proprietary
software to assist small and medium sized
companies in determining the best approach to raising capital.
The Company will utilize software operators in
a 1099 capacity to further assist with automating the
navigation of public and private offerings, as well as the
applicable regulatory and compliance components for the
Company's prospective clients. These software
operators will be compensated via the Stock Compensation Plan,
and although they will not be employees of
DeCryptoFi, any and all rules and regulations applied to
DeCryptoFi shall directly apply to our software
operators to the same extent the applicable rules and
regulations apply to DeCryptoFi itself.
We do not anticipate any change to our operations if
25%, 50%, 75% or 100% of our offering is sold. The
Company believes that it has the necessary foundation and key
components to fully maintain its operations until
100% of the offering is sold. Further, the proceeds from the
initial offering will satisfy the Company's cash
requirements and as such, there will be no need to raise
additional funds within the first six (6) months that the
Offering becomes qualified.
Trends and Key Factors Affecting Our Performance
Investment in Long-Term Growth.
The core elements of the Company's growth strategy
include acquiring new customers, broadening
distribution capabilities, enhancing data and software
functionality, and expanding product offerings. The
Company plans to continue to invest significant resources to
accomplish these goals, and the Company
anticipates that its operating expenses will continue to
increase for the foreseeable future, particularly sales and
marketing and technology expenses. These investments are
intended to contribute to long-term growth, but they
may affect near-term profitability.
Originations.
The Company's future growth will continue to depend, in
part, on attracting additional investors as well
as additional companies wanting to utilize our software. The
Company plans to increase its sales and marketing
spending and seek to attract these investors and companies. We
expect to rely on strategic partners, affinity
networks, social media, and conference and speaking events for
investor growth. The Company expects there to
be a consistent need of undercapitalized companies seeking
capital raising alternatives. The extent to which the
Company can satisfy this ongoing demand will be an important
factor in its continued revenue growth.
Use of GAAP Financial Measures
DeCryptoFi's management's discussion and analysis of
DeCryptoFi's financial condition and results of
operations is based on its financial statements, which have
been prepared in accordance with United States generally
accepted accounting principles, or U.S. GAAP. The preparation
of these financial statements requires DeCryptoFi to
make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial
statements, as well as the reported revenue generated, and
expenses incurred during the reporting periods. DeCryptoFi's
estimates are based on its comparable and on various
other factors that DeCryptoFi believes are reasonable under
the circumstances, the results of which form the basis
for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under
different assumptions or conditions. Due to the fact
that DeCryptoFi was not formed until August 2020 DeCryptoFi
believes that the accounting policies discussed may
be of little use to understanding DeCryptoFi historical and
future performance, as these policies relate to the more
significant areas involving management's judgments and
estimates.
When we prepare our consolidated financial statements
in conformity with GAAP, we must make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities, and the reported amounts of revenue and expenses
during each reporting period. Our estimates may
include those related to revenue recognition, accounts
receivable allowances, intangible assets, share-based
compensation expense, income taxes and programming costs.
Actual results included in this offering circular, and in
future financial results, could differ from the original
estimates.
Under ASC 606, an entity recognizes revenue when its
customer obtains control of promised goods or
services, in an amount that reflects the consideration which
the entity expects to receive in exchange for those goods
or services. To determine revenue recognition for arrangements
that DeCryptoFi determines are within the scope of
ASC 606, the following five steps are performed:
a.Identify the contract(s) with a customer.
b.Identify the performance obligations in the contract.
c.Determine the transaction price.
d.Allocate the transaction price to the performance
obligations in the contract; and
e.Recognize revenue when (or as) DeCryptoFi satisfies a
performance obligation
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
As of October 2020, the Company has one executive
officer, CEO Nick Scherling. Mr. Scherling is not
represented by a labor union or covered under a collective
bargaining agreement.
NAME
POSITION
AGE
TERM OF OFFICE
Nicholas Scherling*
CEO
37
August 2020
*Nicholas Scherling. Mr. Scherling has more than 20 years of
technology expertise at senior levels serving in the
Intelligence Community, DoD, and industry. Mr. Scherling
served in leadership and technical roles in Booz Allen
Hamilton, General Dynamics, Electronic Warfare Associates, MLT
Vacations, and the Air National Guard.
Although DeCryptoFi is a newly organized C-Corp, Mr. Scherling
has been developing the systemic and automated
technology for a substantial period of time prior to
officially having his company qualified by the Commission.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS.
Summary compensation table
The following table summarizes the compensation of the
highest paid person, the CEO, during the
year ended December 31, 2019.
Name
Capacity in which
compensation was
received
Cash Compensation ($)
Other Compensation
($)
Total Compensation ($)
Nicholas Scherling
Chief Executive officer
$0.00
$0.00
$0.00
Authorized Shares. A total of 50,000,000 shares of our
corporate common stock are reserved for issuance as the
Company sees fit. Upon qualification, if the Company
determines that issuing these shares will neither its
shareholders nor increase the value of the Company, then the
Company may determine that such shares shall be
available for future grant or sale. As the Company continues
grow and better understand its strengths and
weaknesses, the Company may decide to adopt a formalized
incentive plan, which will then outline the
specifications that must be met. Currently, there is no such
plan in place, nor is there any intention to memorialize
any such plan.
Stock Options. Upon qualification, the Company may determine,
at a later date, that it wishes to compensate its
employees in the form of stock options. While no such plan is
currently in place, if the Company does decide to
implement a stock option plan, certain guidelines must be
followed: The term of an incentives stock option may not
exceed 10 years; the stock option strike price shall be equal
to its fair market value of the Company's stock on the
day the option is granted except that with respect to
incentive stock options granted to any participant who owns
more than 10% of the voting power of outstanding stock, the
exercise price must generally equal at least 110% of
the fair market value on the grant date and the term must not
exceed five years. The Company will determine the
methods of payment of the exercise price of an option, which
may include cash, shares or other property acceptable
to the Company, as well as other types of consideration
permitted by applicable law. After the termination of service
of an employee, director or consultant, he or she may exercise
his or her option for the period of time stated in his or
her option agreement. Unless otherwise provided for by the
Company, if termination is due to death or disability, the
option will remain exercisable for 12 months and in all other
cases, the option will generally remain exercisable for
three months following the termination of service. These are
simply guidelines and the Company may amend some
or all of these guidelines if the company introduces an
incentivized stock option plan.
Code of Ethics. Effective upon consummation of this offering,
we will adopt a code of ethics that applies to all of
our respective executive officers, directors, and employees.
The code of ethics will codify the business and ethical
Principles that govern all aspects of our business.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The following table sets forth information regarding
the beneficial ownership of our shares of our common stock
as of the date of this offering circular. Since DeCryptoFi
will only be offering only one class of stock, and since our
insider is subject to a predetermined lock-up period, there is
no need to adjust to reflect the sale of all of the Shares
offered by this preliminary offering circular (assuming none
of the individuals listed purchase shares in this offering),
by:
1.each person known by us to be the beneficial owner of
more than 5% of our outstanding shares.
2.each of our executive officers and directors; and
3.all our executive officers and directors as a group.
Unless otherwise indicated, we believe that all persons
named in the table have sole voting and investment
power with respect to all shares beneficially owned by them.
Additionally, except as otherwise indicated, beneficial
ownership reflected in the table has been determined in
accordance with Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended.
Shares Beneficially Owned Prior to Offering
Shares Beneficially Owned After Offering
Name and address of
% of Total Voting %
of Total Voting
Beneficial Owner ___ Shares %
Prior to Offering Shares % After
Offering
Nicholas Scherling 300M 100%
100% 300M 60%
66.67%
SHARES ELIGIBLE FOR FUTURE SALE
Rule 144
A person who has beneficially owned restricted shares
of common stock, for at least six months would
be entitled to sell their securities provided that (i) such
person is not deemed to have been an affiliate of the
subject company at the time of, or at any time during the
three months preceding, a sale and (ii) the subject
company is subject to the Exchange Act periodic reporting
requirements for at least three months before the
sale. Persons who have beneficially owned restricted shares of
common stock for at least six months but who
are an affiliate of the subject company at the time of, or any
time during the three months preceding, a sale,
would be subject to additional restrictions under which such
person would be entitled to sell within any three-
month period a number of shares that does not exceed the
greater of either of the following:
a.1% of the number of shares of our common stock then
outstanding, and
b.if our common stock is listed on a national securities
exchange, the average weekly trading
volume of the shares of common stock during the four calendar
weeks preceding the filing of
a notice on Form 144 with respect to the sale.
Sales under Rule 144 are also limited by manner of sale
provisions and notice requirements and to the
availability of current public information about the subject
company.
DECENTRALIZED CRYPTO FINANCIAL INC.
Consolidated Financial Statements
2020
FINANCIAL INFORMATION SECTION
Decentralized Crypto Financial Inc.
INDEX TO FINANCIAL STATEMENTS
For the Fiscal Year Ending August 31, 2020
Page
Number
Independent Auditors ReportF-2
Consolidated Balance Sheets as of August 31, 2020F-3
Consolidated Statements of Operations for the Fiscal Year
Ending August 31, 2020F-4
Consolidated Statements of Changes in Stockholders'
Equity/Members' Deficiency for the Year Ending August 31, 2020
F-5
Consolidated Statements of Cash Flows for the Year Ending
August 31, 2020F-6
Notes to Consolidated Financial Statements F-8
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT AUDITORS' REPORT
Board of Directors
Decentralized Crypto Financial Inc.
Chantilly, Virginia
We have audited the accompanying consolidated financial
statements of Decentralized Crypto Financial Inc., which
comprise the balance sheets as of August 31, 2020 and the
related consolidated statements of income, changes in equity,
and cash flows for the years then ended, and the related notes
to the consolidated financial statements.
MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in
accordance with accounting principles generally accepted in
the United States of America; this includes the design,
implementation, and maintenance of internal control relevant
to the preparation and fair presentation of consolidated
financial statements that are free from material misstatement,
whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We
conducted
our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards
require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the
auditors' judgment, including the assessment of the risks of
material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those
risk
assessments, the auditor considers internal control relevant
to the entity's preparation and fair presentation of the
consolidated
financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose
of
expressing an opinion on the effectiveness of the entity's
internal control. Accordingly, we express no such opinion. An
audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial
statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
OPINION
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the
financial
position of Decentralized Crypto Financial Inc. as of August
31, 2020, and the results of their operations and their cash
flows for the years then ended in accordance with accounting
principles generally accepted in the United States of
America.
- Chesapeake Financial Corp
Centreville, VA
Saturday, December 5, 2020
DECENTRALIZED CRYPTO FINIANCIAL INC.
BALANCE SHEETS
As of August 31, 2020
2020
ASSETS
Current assets:0
Cash and cash equivalents0
Accounts receivable0
Prepaid expenses0
Total current assets
Property and equipment, net
Other assets:0
Goodwill, net0
Investments in equity securities30,000
Deposits 0
Total assets $30,000
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Line of credit
$
0
Accounts payable and accrued expenses
0
Accrued payroll and related liabilities
0
Notes payable, current portion
0
Deferred rent and other current liabilities
0
Deferred compensation liability
0
Total current liabilities0
Notes payable, less current portion0
Total liabilities0
Member's equity30,000
Total liabilities and member's equity $30,000
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF OPERATIONS
For the period ending August 31, 2020
2020
Revenue
$
0
Revenue
0
Total revenue
0
Direct cost of revenue
0
Gross profit
0
Indirect costs of revenue Costs
0
not allocable
0
Operating income
0
Other income (expense):
Other expense
0
Interest expense
0
Other income
0
Total other income
0
Net income
$0
Basic Earnings Per Share$
0
Diluted Earnings Per Share$
0
See accompanying notes.
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the period ending August 31, 2020
__Member's Equity__
Balance, August 31, 2020
Common Stock Shares
Amount
Balance as of August 31, 2020
300,000,000
$ 30,000
Stock-based compensation
----
---
Shares issued upon vesting of restricted
stock awards
--
--
Exercise of stock options
--
--
Year Ended August 31, 2020
See accompanying notes.
DECENTRALIZED CRYPTO FINIANCIAL INC.
STATEMENTS OF CASH FLOWS
For the period ending August 31, 2020
2020
Cash flows from operating activities:
Net income$0
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization0
Amortization of goodwill0
Loss on disposal of assets
Gain on investments0
Deferred rent and other current liabilities0
Change in:
Accounts receivable0
Prepaid expenses0
Deposits
Accounts payable and accrued expenses0
Accrued payroll and related liabilities0
Deferred compensation liability0
Net cash provided by (used in) operating activities0
Cash flows from investing activities:
Purchase of life insurance policies0
Proceeds from sale of property and equipment
Purchase of property and equipment0
Net cash used in investing activities0
Cash flows from financing activities:
Net borrowings on (repayments on) line of credit
0
Repayments on notes payable
0
Contributions from member
0
Distributions to member
Net cash provided by (used in) financing activities
0
Net change in cash and cash equivalents
0
Cash and cash equivalents, beginning of year
0
Cash and cash equivalents, end of year
$0
Supplemental disclosure of cash flow information: Cash
paid for interest
$0
DECENTRALIZED CRYPTO FINIANCIAL INC.
NOTES TO FINANCIAL STATEMENT
Notes to Consolidated Financial Statements
The accompanying notes are an integral part of this
consolidated financial statement.
ORGANIZATION AND NATURE OF BUSINESS
We are an early-stage financial technology company that has
created a proprietary software that will allow small and
mid-sized
companies to fully understand the complexities surrounding
initial public offerings and private placement offerings. Our
software
is geared towards companies that seek alternatives to the
issuance of bank loans in order to raise capital. Our company
allows for
the automation of various Self-Regulatory Organizations (SRO)
initial and ongoing regulatory reporting and filings, and
assists
companies that lack the relevant expertise and/or personnel to
be fully compliant with investor disclosure obligations,
privacy
notifications, Anti-Money laundering regulations, etc. Our
proprietary software also has the capability to track various
asset
classes and automate investor documentation, such as proxy
statements, dividend payments, and GDPR notifications.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accounting policies of the Company are in accordance with
accounting principles generally accepted in the United States
of
America applied on a basis consistent with that of the
preceding years. Outlined below are those policies considered
particularly
significant.
ESTIMATES
The preparation of financial statements in accordance with
generally accepted accounting principles requires management
to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.
Actual results could differ from those estimates and may have
impact on future periods.
STOCKHOLDERS' EQUITY
Equity Structure
The Company is authorized to issue 500,000,000 shares of
common stock, par value $.0001 ("Common Stock"). As of
August 31, 2020, the Company has 300,000,000 shares of Common
Stock outstanding. A general description of these
securities is as follows:
Common Stock
Holders of Common Stock are entitled to one vote per share.
For the fiscal year ending August 31, 2020, the authorized
capital of the Company consists of common stock of
500,000,000 shares with 300,000,000 shares issued and
outstanding with a $0.0001 par value.
Preferred Stock
The company is not issuing any preferred stocks, warrants, or
options with this filing (ASC 505-10). Additionally,
there will be no equity-based payments to Non-employees (ASC
505-50).
INCOME TAXES
The Company, with the consent of its stockholders, has elected
C corporation status.
EARNINGS PER SHARE (EPS)
The Company adopted calculating basic EPSs (FASB ASC 260) by
dividing income available to common stockholders by the
weighted average of number of common shares outstanding.
PART III- EXHIBITS
Index to Exhibits.
Exhibit No.Description
1.1Subscription Agreement
1.2Certificate of Incorporation
1.3By-laws of Decentralized Crypto Financial Inc.
1.4Legal Opinion of Michael R. Blackburn, Esq. as to the
legality of the securities being qualified
1.5Certification of Conversion from a Limited Liability
Company to a Corporation
1.6Action of Sole Organizer
1.7Consent of Chesapeake Financial Corporation
1.8Draft offering statement previously submitted pursuant
to Rule 252(d)
*To be filed separately with SEC
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer
certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form 1-A and has
duly caused this Offering Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in
Chantilly, Virginia, on, October 14th, 2020.
Decentralized Crypto Financial Inc.
By /s/ Nicholas Scherling_______________________
Nicholas Scherling
Decentralized Crypto Financial Inc.
Date:____________________
The following persons in the capacities and on the
dates indicated have signed this Offering Statement.
By /s/ Nicholas Scherling______________________
Nicholas Scherling
Decentralized Crypto Financial Inc.
Date:____________________
3 This is a "best efforts" offering. There is no minimum
number of shares that must be sold in this offering.
Shares that were issued to any insider were sold prior to
the development of DeCryptoFi's proprietary software, thereby
materially altering the value of the Company.
Assumes the maximum 25,000,000 shares are sold in the
initial public offering at a price of $0.10 per share, and the
sale of 125,000,000 shares through the Stock
Compensation Plan for non-cash consideration comparable to
$0.10 per share
The Company currently has 50 million authorized shares being
held in reserve. The Company intends to issue these reserved
shares if all other authorized issued
shares are sold.
Mr. Nicholas Scherling is currently the CEO and chairman of
DeCryptoFi. As mentioned, DeCryptoFi was not officially
organized until August 2020. As
such, there has been zero compensation awarded to any
individuals as it relates to DeCryptoFi's business.
Unless otherwise indicated, the business address of the
individual is 4795 Meadow Wood Lane #200 Chantilly, Virginia
20151
ADD EXHB
10
responselettertxt.txt
DECRYPTOFI RESPONSE LETTER TO SEC
ATTN: Division of Corporation Finance Office of Trade & Services
c/o Stephen Kim
c/o Theresa Brilliant
Re: Decentralized Crypto Financial Inc.
Offering Statement on Form
1-A Filed October 27, 2020
File No. 024-11353
To Whom It May Concern:
We have reviewed your official comments with respect to our
offering statement. Please find enclosed resubmission of our
Form1-A as well as our offering circular and necessary exhibits.
It is our hope that our changes and explanations fully satisfy
and incorporate your comments and concerns. Below you will find
your original comments, with our responses keyed to those
comments. In many of our responses, we are directing you to
specific locations in our offering circular where you will be
able to find our changes or amendments. We have also provided
you, when applicable, the amended language now contained in the
offering circular.
We appreciate your helpful and insightful comments, as well
as the time that you spent reviewing our original submission. We
request your favorable consideration of our adjustments. Should
you have any further questions, or if you require any additional
information, please do not hesitate in reaching out to our legal
counsel, Michael Blackburn.
Email address is:
Michael.Blackburn@Decryptofi.com
Phone Number: (516) 504-8169
We look forward to your response and in the meantime, we wish you a
happy and healthy Holiday season.
Decentralized Crypto Financial,
Inc.
Re: Offering Statement on Form 1-A filed October 27, 2020, Cover
Page
SEC Comment (1): We note that you deem the sales limitation
provided by Rule 251(d)(2)(i)(C) of Regulation A to be
inapplicable to this offering as it relates to the 125 million
shares you are offering pursuant to your Work Compensation/Stock
Compensation Plan because you are accepting non-cash
consideration for the shares. Please provide us with an
explanation as to how you determined that such limitation does
not apply to this portion of your offering.
DeCryptoFi Response: In our original offering circular
we did not intend for the sales limitation provided by
Rule 251(d)(2)(i)(C) to apply to our Work Compensation
Program. We acknowledge that our original language was
unclear, and we have removed the sentence that created
this ambiguity. The paragraph on page 2 now reads:
?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.
SEC Comment (2): Your disclosure here and on page 27 of your
offering circular indicates that 150 million shares of your
common stock will be offered in this offering. Please reconcile
this disclosure with your disclosure in Part I of this Form 1-A,
which states that 500 million shares of your common stock will be
offered in this offering. Please also include the 50 million
additional shares that are "in reserve" and that you intend to
offer if all other shares are sold, consistent with your
disclosure on page 1, or remove the disclosure that suggests as
much. In doing so, clarify whether you will offer the shares in
reserve or conduct the Regulation S private placement, as it does
not appear that you have sufficient authorized shares to do both.
DeCryptoFi Response: We amended Form 1-A to indicate
that the total number of shares being offered is 200
million, allocated as follows: 25 million shares in our
IPO upon qualification; 125 million shares as part of
the Work Compensation Program; and 50 million authorized
shares that the Company currently holds in ?reserve.?
The chart on page 27 has been updated to reflect this
information. We also added a footnote on page 27 which
reads: ?The Company currently has 50 million authorized
shares being held in reserve. The Company intends to
issue these reserved shares if all other authorized
issued shares are sold.?
Re: Risks associated with our business, page 9
SEC Comment (3): Your disclosure in the third risk factor states
that you concluded that your stock had a fair market value of
$.10 per share as of October 13, 2020. Yet your disclosure on
pages 8 and 13 states that the offering price "bears no
relationship to [your] book or asset value"
and that there is no market for your stock. Please revise to
reconcile these statements.
DeCryptoFi Response: Our offering price was
independently determined, and we have amended our
language to reflect this. The language contained in our
circular now reads: ?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 Shares
being offered have a market value or could be resold at
that price, even if a sale were permissible. The
valuation was determined by the Company, and not by an
independent third party applying a specified valuation
criterion.?
SEC Comment (4): Your disclosure on page 13 suggests that you will
be using "joint book- running managers" in connection with this
offering. However, your disclosure throughout the remainder of
your filing indicates that you will not be using an underwriter in
connection with this offering and that this offering will be
conducted exclusively by you through your online platform that is
currently being developed. Please revise to reconcile these
discrepancies.
DeCryptoFi Response: We thank you for pointing out this
discrepancy and have reconciled such statements. It is true
that we do not intend to use any underwriter in connection
with this offering. The offering will be conducted
exclusively through our online platform. Any language
pertaining to the usage of ?joint book-running managers?
has been removed.
Re: Risks specific to this offering, page 11
SEC Comment (5): Revise your tabular disclosure about the number
of shares you intend to issue each year pursuant to your Stock
Compensation Plan to explain how you have arrived at these
amounts and how you know the number of shares you intend to issue
in the future. In this regard, clarify whether the shares to be
issued pursuant to this plan are the same as those to be issued
in this offering pursuant to the Work Compensation Plan, as you
seem to use these terms interchangeably. In this regard, you
direct readers to the "Stock Compensation Plan" section for
additional information, however, that section does not provide
sufficient detail around the terms of your plan(s). Please
revise.
DeCryptoFi Response: We are in agreement that this language
and the tabular initially included was unclear and could
lead to investor confusion. As such, we have opted to remove
the tabular disclosure in its entirety as we believe that
the rest of the document is clear on this issue.
Re: Terms of this Offering, page 16
SEC Comment (6): Your disclosure on page 16 suggests that you
may permit payment for your common stock to be made by credit
card and by foreign currency. Once known, please add disclosure
explaining how you will process subscriptions made by these
methods, including who will process these subscriptions, the
amount of processing fees or other charges, and whether the
company or investors will pay such fees.
DeCryptoFi Response: After consideration, we decided that we
will not accept foreign currency as payment. We added
relevant language to this section (as well as to our
Subscription Agreement) regarding payment fees and that the
Subscriber shall bear these costs. The language now reads:
?Subscriber acknowledges that he or she will incur
additional processing fees, depending on Subscriber?s
payment method. The Company is equipped to accept payment
from two payment processors, Braintree and Bitpay.
Braintree?s fee structure is 2.9% + $.30 per transaction.
There is also a 1% fee applied when the Subscriber?s credit
card is issued outside the United States, and a $15.00 fee
when someone initiates a chargeback through the Subscriber?s
credit card. For ACH payments, Braintree charges a .75% per
transaction fee, capped at a maximum of $5.00.
Bitpay charges a 1% fee for all transactions. Subscriber
understands that he or she shall incur the cost(s) of these
fees.?
SEC Comment (7): We note your disclosure that you will be
offering up to 125 million shares as stock for non-cash
consideration in exchange for certain goods and services. Please,
confirm through additional disclosure that you will value any
non-cash consideration according to the Note to Rule 251(a)(1) of
Regulation A. In this regard, please clearly disclose that the
aggregate offering price is based on the for-cash price and the
valuation of any non-cash consideration will be ?reasonable at
the time made.?
DeCryptoFi Response: We amended the language in the
disclosure to read, in part: ?We are offering up to
125,000,000 shares of stock through our Stock Compensation
Plan. For non-cash consideration, the aggregate offering
price or aggregate sales will be based on the value of the
consideration as established by bona fide sales of that
consideration made within a reasonable time, or, in the
absence of sales, on the fair value as determined by an
accepted standard. Valuations of all non-cash consideration
will be reasonable at the time made.?
Re: Description of Business, page 18
SEC Comment (8): Enhance your disclosure to explain how your
business will help small and medium business owners remain
"fully compliant with SEC regulations" and/or be a "fully
compliant reporting company or exempt reporting company," in
order to understand how your software and services will achieve
these statements. Clarify whether your services are exclusive to
raising capital or extend beyond a company's desire to conduct
an offering.
DeCryptoFi Response: The techniques that DeCryptoFi has
developed will assist companies with identifying options
for raising capital that make sense given their current
business circumstances. Companies interested in raising
capital will be able to use our portal and software
allowing us to assist them in the various options available
to them to raise capital that they otherwise may not have
known exist or to have been possible. In addition,
DeCryptoFi seeks to be able to automate the initial and
ongoing required
regulatory filings (depending on the type of offering a user
chooses) on the customers behalf. Lastly, DeCrytpoFi seeks
to be able to facilitate and automate the necessary
documentation that companies are required to provide its
investors. In this day and age where investor protection,
preservation of personal identifying information, and
complete transparency with respect to businesses is
paramount, our goal is to assist companies with this
evolving landscape. Further, as the importance of combating
money-laundering continues to be a top priority for all
institutions, DeCryptoFi will facilitate and assist with the
compliance of Anti-Money Laundering (?AML?) regulations. The
language on page 18 in our circular now reads, in part, ?Our
goal is to tap into this market and assist small and medium
size companies that want to pursue a public offering or an
alternative acceptable private offering and properly
navigating through the confounding but necessary SEC
regulations. Our techniques will allow small and mid-sized
companies to better understand the initial and ongoing
regulatory filings with respect to the public and private
offering processes. Our main goal can be summed up in one
word? simplification. We strive to make the overlooked
alternative methods of raising capital easy to achieve,
easier to comprehend, and for many aspects of the process,
completely automated. The SEC has long struggled with how to
assist small and medium size businesses get access to the
public market; we are here to help! As an early-stage
financial technology company, we have created techniques and
processes which will allow small and mid-sized
companies to fully understand the complexities surrounding
initial public offerings, private placement offerings, and
other exempt offerings. Our focus is on companies that seek
alternatives to the issuance of bank loans in order to raise
capital. Our company allows for the automation of various
Self-Regulatory Organizations (SRO) initial and ongoing
regulatory reporting and filings and assists companies that
lack the relevant expertise and/or personnel to stay up to
date with relevant compliance obligations as well as the
need for the proper investor disclosures, privacy
notifications, and Anti-Money Laundering (AML) regulations.
DeCryptoFi has the capability to track various asset classes
and automate investor documentation, such as proxy
statements, dividend payments, and GDPR notifications.
Users working with DeCryptoFi will better understand the
user?s business and what attainable capital raising methods
the user may be overlooking. Topics for information sharing
will include, but are not limited to, how much capital the
company seeks to raise, who the company?s target investors
will be, current and past revenue, profitability, growth
rate, what its organizational structure is like, etc. In
turn, businesses will be able to streamline the structuring
of a potential business capitalization and the regulatory
safeguards associated with these capital raising options.
Once a business owner fully comprehends the types of
offerings available and decides which to pursue, DeCryptoFi?s
will assist in automating filings and much more.?
? Please provide us with your legal analysis with citations to
proper authorities supporting your conclusion that you are
not required to register your online platform and its
software as an exchange or ATS. In this regard, please tell
us what consideration you have given to the applicability of
Exchange Act Rule 3b-16 or Regulation ATS to your online
platform and software.
DeCryptoFi Response: Regulation ATS and Rule
240.3b16 of the Exchange Act requires
registration for any organization, association,
or group of persons who maintain or provide ?a
market place or facilities for bringing together
purchasers and sellers of securities or for
otherwise performing with respect to securities
the functions commonly performed by a stock
exchange if such organization, association, or
group of persons: (a) Brings together the orders
for securities of multiple buyers and sellers;
and (b) 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.?
We have updated our language on pages 22-23 to
explain why neither our online platform nor our
software operators should be required to register
as an exchange or an Alternative Trading System
(ATS). Specifically, we have updated our
disclosure to read: ?We have taken the position
that DeCryptoFi?s platform and its software not
be viewed as an exchange or an ATS because
neither will ?bring together? anyone by sorting
or organizing orders in the Company?s securities
in a consolidated way or by receiving orders for
processing and execution of transactions in the
Company?s shares. Rather, each proposed
transaction involving DeCryptoFi?s stock will be
individually negotiated and implemented
without DeCryptoFi?s involvement. DeCryptoFi?s
software will maintain a list of shareholders to
ensure the company knows whom to send shareholder
notifications required under the SEC. It is
possible that the SEC or another regulator would
disagree with our position. If so, we could be
forced to register the platform and/or our
software as an exchange or ATS and comply with
applicable law, which could lead to significant
costs to DeCryptoFi and could force it to change
or cease its operations. Any of these
developments could decrease the value of the
securities sold in this offering.?
? Lastly, please provide us with your legal analysis with
citations to proper authorities supporting your conclusion
that you and the operators of your software are not broker-
dealers. In this regard, please tell us why you do not
believe that you, in offering the platform and conducting
related services, should be a registered broker- dealer and
disclose whether you or any persons affiliated with your
company are relying upon Rule 3a4-1 in connection with this
offering. We may have additional comments following the
review of your response.
DeCryptoFi Response: Under the Exchange Act, a
?broker? is a person engaged in the business of
effecting transactions in securities for the
account of others. We believe that our software
operators do not fit under this definition and we
have updated our disclosure language on page 23
to reflect the basis for this conclusion. Our
disclosure now reads, in part: ?[O]ur software is
responsible for recording shareholder information
so that DeCryptoFi has an accurate list of
current shareholders at any point in time. It
does not and is not capable of operate as a
broker - buying and selling securities for its
own account or on behalf of any customer. It is
also not capable of acting as a deal and
executing orders on behalf of any client which it
has none. This does not change regardless of whom
a Software Operator may be. As such operators
should not be considered broker-dealers, because
they do not buy or sell a security on anyone?s
behalf, they simply operate our software that is
responsible for keeping an up-to-date list of
security owners on behalf of DeCrytpoFi in order
for the company to facilitate its regulatory
compliance. Payment amounts made through
DeCryptoFi?s Work Compensation Plan are preset,
do not fluctuate from a predetermined amount and
are not transaction-based compensation. As such,
it is DeCryptoFi?s view that recording
shareholder information on behalf of the company
does not constitute a broker dealer.
Further, the Company has given weight to Rule
3a4-1, ?Associated Persons of an Issuer Deemed
Not to be Brokers? and believe that the
Company?s software operators qualify for such an
exemption, since they will not have been s
subject to a statutory disqualification as
defined in section 3(a)(39) of the Act, and they
will not be compensated in the form of
commissions or other remuneration based directly
or indirectly on transactions in securities and
their work is more ministerial and clerical in
nature with respect to effecting any potential
securities transaction.?
SEC Comment (10): We note your disclosure about your intent to
retire a certain amount of stock periodically. Please revise
to explain the purpose of the retirement of stock and how you
will determine the stock eligible for retirement by the
holders of your securities. We may have further comment about
how your intentions implicate Regulation M.
DeCryptoFi Response: We intend to retire 2% of our stock
every four years. The Company understands that once stock
is retired, it can no longer be sold and is to be taken
out of the market circulation, thereby permanently
reducing DeCryptoFi?s total share count over time. In
turn, the remaining shares in circulation will increase
shareholder ownership, as well as profits and dividends
(if offered). In addition, the remaining stock?s earnings
per share will increase while the price-to-earnings ratio
decreases. DeCryptoFi will follow Accounting for Stock
Buyback and Retirement (ASC 505-30-30-8) which reads in
part: ?30-8 When a corporation's stock is retired or
repurchased for constructive retirement (with or without an
intention to retire the stock formally in accordance with
applicable laws), an excess of repurchase price over par or
stated value may be allocated between additional paid-in
capital and retained earnings. Alternatively, the excess
may be charged entirely to retained earnings in recognition
of the fact that a corporation can always capitalize or
allocate retained earnings for such purposes. If a portion
of the excess is allocated to additional paid-in capital,
it shall be limited to the sum of both of the following:
a. All additional paid-in capital arising from
previous retirements and net gains on sales of
treasury stock of the same issue.
b. The pro rata portion of additional paid-in capital,
voluntary transfers of retained earnings,
capitalization of stock dividends, and so forth, on
the same issue. For this purpose, any remaining
additional paid-in capital applicable to issues
fully retired (formal or constructive) is deemed to
be applicable pro rata to shares of common stock.?
Re: Management's Discussion and Analysis of Financial
Condition and Results of Operations, page 30
SEC Comment (11): Please revise your Management's Discussion
and Analysis section to discuss your plan of operation for the
twelve months following commencement of the proposed offering,
or if this information is not available, please disclose the
reasons for its unavailability. Please ensure your revised
disclosure addresses how your plan of operations would differ
assuming 25%, 50%, 75%, and 100% of the shares being offered
are sold. Lastly, please clarify whether, in your opinion, the
proceeds from your offering will satisfy your cash requirements
or whether you anticipate it will be necessary to raise
additional funds in the next six months in order to implement
your plan of operations. Refer to Item 9(c) to Part II of Form
1-A.
DeCryptoFi Response: With very little overhead, the
Company will utilize software operators in a 1099 capacity
to further assist with automating the navigation of public
and private offerings, as well as the applicable
regulatory and compliance components for the Company?s
prospective clients. These software operators will be
compensated via the Stock Compensation Plan, and although
they will not be employees of DeCryptoFi, any and all
rules and regulations applied to DeCryptoFi shall directly
apply to our software operators to the same extent the
applicable rules and regulations apply to DeCryptoFi
itself.
We do not anticipate any change to our operations if 25%,
50%, 75% or 100% of our offering is sold. We believe that
the Company has the necessary foundation and key
components to fully maintain operations until 100% of the
offering is sold. Further, the proceeds from the initial
offering will satisfy the Company?s cash requirements. As
such, there will be no need to raise additional funds
within the first six (6) months that the Offering becomes
qualified.
Re: Independent Auditor's Report, page 35
SEC Comment (12): We note that the auditor's report lacks the
city and state of issuance, and the date. Please have your
auditor revise the report. Refer to Part F/S(c)(1) and (b)(2)
of Form 1-A, and Rule 2-02 of Regulation S-X.
DeCryptoFi Response: Our Independent Auditor, Chesapeake
Financial Corporation, completed the proper amendments in
the financials section of the updated offering circular.
Re: Financial Information Section Consolidated Financial
Statements, page 36
SEC Comment (13): We note certain financial statements are
missing the date of, or period covered by the financial
statement. Please revise.
DeCryptoFi Response: Our Independent Auditor, Chesapeake
Financial Corporation, completed the proper amendments in
the financials section of the updated offering circular.
SEC Comment (14): You disclose throughout the filing that 300
million shares of your common stock are issued, outstanding,
and currently owned by your Chief Executive Officer. However,
the financial statements do not reflect these issued and
outstanding shares. Please revise to fully reflect the issuance
of these shares in your financial statements, including
required disclosures in accordance with ASC 505 in the notes to
the financial statements. In addition, revise to include
required EPS presentation on the face of the income statement
and other required disclosures in accordance with ASC 260.
DeCryptoFi Response: Our Independent Auditor, Chesapeake
Financial Corporation, has amended the financials section
to adequately address the issuance of the aforementioned
300 million shares and the necessary disclosures in
accordance with ASC 505 and ASC 260.
Re: Exhibits
SEC Comment (15): Please file a consent from your auditor
as an exhibit in accordance with Part III Item 17.11(a) and
(b) of Form 1-A.
DeCryptoFi Response: Our independent auditor has provided
us with the necessary consent form, which we will file an
exhibit in accordance with Part III Form 1-A.
SEC Comment (16): Please file as exhibits to the offering
statement the appropriate documents as required by Part III,
Item 17 of Form 1-A, including for example only and without
limitation, your form of subscription agreement, certificate of
incorporation, bylaws, legality opinion, and any material
contracts.
DeCryptoFi Response: The following Exhibits are complete
and will immediately be filed as Exhibits to this offering
statement:
a) Subscription Agreement
b) Certificate of Incorporation
c) By-laws of DeCryptoFi
d) Legal Opinion
e) Certificate of Conversion
f) Action of Sole Organizer
g) Consent of Chesapeake Financial Corporation
h) Draft offering statement previously submitted
Re: General
SEC Comment (17): We note that your website, which you will use
as an online portal and information management tool in
connection with this offering, is currently inoperative. Please
tell us when you expect the website to be accessible.
DeCryptoFi Response: We will officially launch
DeCryptoFi.com as a publicly available website upon SEC
qualification. This is intended to ensure that the
website does not disclose DeCryptoFi?s intent to conduct
a Stock Offering ahead of SEC qualification of our Reg A
filing. We have also included this information on page 6
of the offering circular.
SEC Comment (18): Please revise your disclosure to provide a
factual basis for your claim that you are "aggressively growing
[y]our business through a combination of organic growth,
licensing and distribution arrangements, acquisitions, and
strategic relationships."
DeCryptoFi Response: After internal discussions, we
recognize that this statement was premature. While we can
foresee growing our business through a multitude of organic
and inorganic opportunities, and/or a combination of some
form, at this time we cannot state such growth.
Accordingly, this language has been removed from the
offering circular.
SEC Comment (19): We note that Part I of the Form 1-A indicates
that you have not used solicitation of interest communications
in connection with the proposed offering pursuant to Rule 255
of Regulation A whereas Part II suggests that you have and that
you intend to do so in the future. Please clarify if you have
used the types communications contemplated by Rule 255 and
revise to clarify that such information will be filed with the
offering circular pursuant to Item 17(13) of Part III of Form
1-A or advise. Please also revise the check box in Item 4 of
Part I of Form 1-A to reflect that you have used solicitations
of interest communications in connection with the proposed
offering or tell us why this is not applicable.
DeCryptoFi Response: Rule 255 of Regulation A states,
?[A]t any time before the qualification of an offering
statement, including before the non-public submission
or public filing of such offering statement, an
issuer or any person authorized to act on behalf of
an issuer may communicate orally or in writing to
determine whether there is any interest in a
contemplated securities offering. Such communications
are deemed to be an offer of a security for sale for
purposes of the antifraud provisions of the federal
securities laws. No solicitation or acceptance of money
or other consideration, nor of any commitment, binding
or otherwise, from any person is permitted until
qualification of the offering statement,? so long as
certain conditions are met. DeCryptoFi has not used any
forms of solicitation of interest in order to ?test the
waters,? and does not intend to do so until this
offering statement is qualified by the Commission. The
language in our offering circular has been updated to
clear up any ambiguity. We have incorporated
disclosures, where relevant, that read: ?[S]hould the
Company decide to ?test the waters? prior to this
circular becoming qualified, all solicitating materials
will be properly filed with the Commission before its
intended use.?