NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
NOTE
1 – ORGANIZATION AND DESCRIPTION OF THE BUSINESS
The
Crypto Company was incorporated in the State of Nevada on March 9, 2017 (“Inception”). The Company is engaged in the business
of providing consulting services and education for distributed ledger technologies (“blockchain”), for the building of technological
infrastructure and enterprise blockchain technology solutions. The Company currently generates revenues and incurs expenses solely through
these consulting operations.
Unless
expressly indicated or the context requires otherwise, the terms “Crypto,” the “Company,” “we,” “us,”
and “our” in this quarterly Report on Form 10-Q for the period ended March 31, 2021 (“Quarterly Report”) refer
to The Crypto Company and, where appropriate, its wholly-owned subsidiaries, Crypto Sub, Inc., a Nevada corporation (“Crypto Sub”);
CoinTracking, LLC, a Nevada limited liability company (“CoinTracking”); and Malibu Blockchain, LLC, a Nevada limited liability
company (“Malibu Blockchain”).
During
the year ended December 31, 2020, the Company generated revenues and incurred expenses primarily through the business of providing consulting
services and education for distributed ledger technologies (“blockchain”), for the building of technological infrastructure
and enterprise blockchain technology solutions,
The
Company’s accounting year-end is December 31.
COVID-19
On
March 11, 2020, the World Health Organization declared the Covid-19 outbreak to be a global pandemic. In addition
to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions
and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further
spread of the disease.
Covid-19
and the U.S’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance
as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject
to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management’s
Representation of Interim Financial Statements
The
accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations
of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or
omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented
not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are necessary
to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim
results are not necessarily indicative of results for a full year. These consolidated financial statements should be read in conjunction
with the audited consolidated financial statements at December 31, 2020, and 2019.
The
Company prepares its consolidated financial statements based upon the accrual method of accounting, recognizing income when earned and
expenses when incurred.
Basis
of Presentation and Principles of Consolidation
Use
of estimates
The
preparation of these consolidated financial statements in conformity with US GAAP requires management to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities.
The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. The Company’s significant estimates and assumptions include but are not limited to the
valuation allowances of deferred taxes, and share-based compensation expenses. Actual results may differ from these estimates. In addition,
any change in these estimates or their related assumptions could have an adverse effect on the Company’s operating results.
Management’s Representation of Interim
Financial Statements
The accompanying unaudited condensed consolidated
financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). The Company uses the same accounting policies in preparing quarterly and annual financial statements.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations,
and management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated
financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial
position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative
of results for a full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto at December 31, 2020, as presented in the Company’s Annual Report on Form 10-K filed on
March 31, 2021 with the SEC.
Cash
and cash equivalents
The
Company defines its cash and cash equivalents to include only cash on hand and certain highly liquid investments with original maturities
of ninety days or less. The Company maintains its cash and cash equivalents at financial institutions, the balances of which may, at
times, exceed federally insured limits. Management believes that the risk of loss due to the concentration is minimal.
Investments
in cryptocurrency
Investments
were comprised of several cryptocurrencies the Company owned, of which a majority was Bitcoin, that were actively traded on exchanges.
During 2018, the Company sold most of its investments and during 2019 wrote-off the remainder of all those investments because
there was no method to obtain liquidity for those investments. During the quarter ended March 31, 2021, one of those investments that
had previously been written off became valuable and the Company liquidated the extent of its holdings at that time for cash proceeds
of $160,808. The Company recorded this recovery as other income in its financial statements. As previously disclosed, the Company has
ceased operations of its former cryptocurrency investment segment, and the Company liquidates newly issued/accessible assets from old
investments as promptly as practicable for the sole purpose of winding down the Company’s legacy cryptocurrency investment segment.
The
Company records its investments as indefinite-lived intangible assets at cost less impairment and are reported as long-term assets in
the consolidated balance sheets. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually,
or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived
asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the
option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is
determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company
concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss
establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. The primary exchanges and principal
markets the Company utilized for its trading were Kraken, Bittrex, Poloniex, and Bitstamp.
As
of March 31, 2021, the Company had written off the value of its investments in cryptocurrency.
Investments
non-cryptocurrency
The
Company has historically invested in simple agreement for future tokens (“SAFT”) and a simple agreement for future equity
(“SAFE”) agreements. The SAFT agreements provide for the issuance of tokens in anticipation of a future token generation
event, with the number of tokens predetermined based on the price established in each respective agreement. The SAFE investment included
provisions that provide for either equity or tokens or both. As of March 31, 2021, and December 31, 2020 the Company had written off
its investments in non-cryptocurrency.
Business
combination
The
purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired
business based on their estimated fair values with the residual of the purchase price recorded as goodwill. The results of operations
of acquired businesses are included in our operating results from the dates of acquisition.
Income
taxes
Deferred
tax assets and liabilities are recognized for expected future consequences of events that have been included in the financial statements
or tax returns. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and
liabilities.
When
tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately
sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that
meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely
of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken
that exceed the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated
interest and penalties that would be payable to the taxing authorities upon examination.
As
of March 31, 2021, we are subject to federal taxation in the U.S, as well as state taxes. The Company has not been audited by the U.S.
Internal Revenue Service.
Fair
value measurements
The
Company recognizes and discloses the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable
inputs that are significant to the valuation (Level 3 measurements). Each level of input has different levels of subjectivity and the
difficulty involved in determining fair value.
|
Level
1
|
Inputs
are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurable date.
|
|
|
|
|
Level
2
|
Inputs,
other than quoted prices included in Level 1, which are observable for the asset or liability through corroboration with market data
at the measurement date.
|
|
|
|
|
Level
3
|
Unobservable
inputs that reflect management’s best estimate of what participants would use in pricing the asset or liability at the measurement
date.
|
The
carrying amounts of the Company’s financial assets and liabilities, including cash, accounts payable and accrued expenses approximate
fair value because of the short maturity of these instruments.
Revenue
recognition
The
Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of the new
revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five
steps are applied to achieve that core principle:
|
●
|
Step
1:
|
Identify
the contract with the customer
|
|
●
|
Step
2:
|
Identify
the performance obligations in the contract
|
|
●
|
Step
3:
|
Determine
the transaction price
|
|
●
|
Step
4:
|
Allocate
the transaction price to the performance obligations in the contract
|
|
●
|
Step
5:
|
Recognize
revenue when the Company satisfies a performance obligation
|
In
order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in
the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of
a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can
benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e.,
the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is
separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the
context of the contract).
If
a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services
is identified that is distinct.
The
transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods
or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.
When determining the transaction price, an entity must consider the effects of all of the following:
Variable
consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of
cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price
allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time
as appropriate.
The
Company adopted ASC 606 as of January 1, 2018, using the modified retrospective transition method for contracts as of the date of initial
application. There was no cumulative impact on the Company’s retained earnings.
During
the quarter ended March 31, 2021, the Company’s main source of revenue was consulting and development services for one customer.
The Company has determined that revenue should be recognized over time, as the service is provided. The Company considered the criteria
in ASC 606 in reaching this determination, specifically:
|
●
|
The
customer receives and consumes the benefit provided by the Company’s performance as the Company performs.
|
|
●
|
The
Company’s performance enhances an asset controlled by the customer.
|
|
●
|
The
Company’s performance does not create an asset with alternative use, and the Company has an enforceable right to payment for
performance completed to date.
|
The
consulting arrangement meet more than one of the criteria above.
Share-based
compensation
In
accordance with ASC No. 718, Compensation-Stock Compensation, the Company measures the compensation costs of
share-based compensation arrangements based on the grant date fair value of granted instruments and recognizes the costs in financial
statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock
options.
On
January 1, 2019, the Company adopted ASC No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies
the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with
certain exceptions. Previously, share-based payments to nonemployees was accounted for in accordance with ASC No. 505, Equity-Based Payments
to Non-Employees, which required compensation cost to be remeasured at fair value at each reporting period when the award vests. As a
result, stock option-based payments to non-employees resulted in significant volatility in compensation expense in prior years.
The
Company accounts for its share-based compensation using the Black-Scholes model to estimate the fair value of stock option awards. Using
this model, fair value is calculated based on assumptions with respect to the (i) expected volatility of the Company’s common stock
price, (ii) expected life of the award, which for options is the time over which employees and non-employees are expected to hold their
options prior to exercise, and (iii) risk-free interest rate.
Net
loss per common share
The
Company reports earnings per share (“EPS”) with a dual presentation of basic EPS and diluted EPS. Basic EPS is computed as
net income divided by the weighted average of common shares for the period. Diluted EPS reflects the potential dilution that could occur
from common shares issued through stock options, or warrants. For the three month period ended March 31, 2021, and 2020, the Company
had no potentially dilutive common stock equivalents. Therefore, the basic EPS and diluted EPS are the same.
NOTE
3 - RECENT ACCOUNTING PRONOUNCEMENTS
The
Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not
believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position
or results of operations.
NOTE
4 – NOTE PAYABLE
On
April 3, 2018, CoinTracking entered into a Loan Agreement (the “Loan Agreement”) with CoinTracking GmbH, which provided for
total borrowings of up to $3,000,000. During 2018, CoinTracking borrowed $1,500,000 in exchange for three promissory notes (the “CoinTracking
Note”) in the amounts of $300,000, $700,000, and $500,000, respectively. On December 31, 2018, the CoinTracking Note was still
outstanding. On January 2, 2019, the Company sold its equity ownership stake in CoinTracking GmbH, and $1,200,000 of the sales proceeds
were applied toward repayment of the $1,500,000 outstanding loan amount under the CoinTracking Note. The remaining balance of $300,000
is outstanding as of March 31, 2021, with a due date of March 31, 2022 which due date was extended from the prior due date of March 31,
2021 pursuant to an amendment dated December 28, 2018. The Note bears interest at 3%, which is payable monthly, in arrears. All payments
shall be applied first to all accrued and unpaid interest and second to the outstanding principal balance, as applicable.
Interest
expense was $2,250 for the three month period ended March 31, 2021, and March 31, 2020, respectively.
|
●
|
On
May 8, 2020, the Company entered into a promissory note (the “Promissory Note”) with First Bank, a Missouri banking
corporation, which provides for a loan of $53,492 (the “PPP Loan”) pursuant to the Paycheck Protection Program under
the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan has a two-year term and bears
interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement.
The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains events of default
and other provisions customary for a loan of this type. The Company anticipates this loan will be forgiven.
|
|
|
|
|
●
|
On
June 10, 2020, the Company received a loan from the Small Business Administration of $12,100 (the 2020 “SBA Loan”).
The 2020 SBA Loan bears interest at 3.75% per annum and is payable over 30 years with all payments of principal and interest
deferred for the first 12 months.
|
|
|
|
|
●
|
On
February 2, 2021, the Registrant received a loan from the Small Business Administration of $18,265 (the “2021 SBA Loan”).
The 2021 SBA Loan bears interest at 1% per annum and is payable over 5 years with all payments of principal and interest deferred
for the first 10 months.
|
NOTE
5 – CONVERTIBLE NOTES
The
balance of Convertible Notes was $125,000 as of March 31, 2021 and December 31, 2020.
In
June 2020, the Company issued Convertible Notes (“June 2020 Notes”) to an accredited investors for an aggregate amount of
$5,000. The June 2020 Notes mature in June 2025, unless earlier converted. The June 2020 Notes bear interest at a rate
of 5% per year. The June 2020 Notes will automatically convert into shares of common stock on the earlier to occur of a) a qualified
equity financing, with the conversion price equal to 50% of the common stock price paid by the purchasers of the equity, or b) on the
maturity date, at a price per share equal to the fair market value of the Company’s common stock on that date. If a change in control
occurs before either of the automatic conversion events, the holders of the June 2020 Notes will have the option to convert the June
2020 Notes at a price per share equal to the fair market value of the common stock at the time of such conversion. The Company can prepay
the principal and interest, in cash, at any time without any premium or penalty. The June 2020 Notes have no voting rights, do not participate
in dividends, and are unsecured. The Company believes it is more likely than not that the June 2020 Notes will not be automatically converted
in connection with a qualified equity financing prior to either prepayment or automatic conversion on maturity.
In
April 2020, the Company issued three Convertible Notes (“April 2020 Notes”) to three accredited investors for an aggregate
amount of $22,500. The April 2020 Notes mature in April 2025, unless earlier converted. The April 2020 Notes bear interest at
a rate of 5% per year. The April 2020 Notes will automatically convert into shares of common stock on the earlier to occur of a) a qualified
equity financing, with the conversion price equal to 50% of the common stock price paid by the purchasers of the equity, or b) on the
maturity date, at a price per share equal to the fair market value of the Company’s common stock on that date. If a change in control
occurs before either of the automatic conversion events, the holders of the April 2020 Notes will have the option to convert the April
2020 Notes at a price per share equal to the fair market value of the common stock at the time of such conversion. The Company can prepay
the principal and interest, in cash, at any time without any premium or penalty. The April 2020 Notes have no voting rights, do not participate
in dividends, and are unsecured. The Company believes it is more likely than not that the April 2020 Notes will not be automatically
converted in connection with a qualified equity financing prior to either prepayment or automatic conversion on maturity.
In
February 2020, the Company issued three Convertible Notes (“February 2020 Notes”) to three accredited investors for an aggregate
amount of $22,500. The February 2020 Notes mature in February 2025, unless earlier converted. The February 2020 Notes bear interest
at a rate of 5% per year. The February 2020 Notes will automatically convert into shares of common stock on the earlier to occur of a)
a qualified equity financing, with the conversion price equal to 50% of the common stock price paid by the purchasers of the equity,
or b) on the maturity date, at a price per share equal to the fair market value of the Company’s common stock on that date. If
a change in control occurs before either of the automatic conversion events, the holders of the February 2020 Notes will have the option
to convert the February 2020 Notes at a price per share equal to the fair market value of the common stock at the time of such conversion.
The Company can prepay the principal and interest, in cash, at any time without any premium or penalty. The February 2020 Notes have
no voting rights, do not participate in dividends, and are unsecured. The Company believes it is more likely than not that the February
2020 Notes will not be automatically converted in connection with a qualified equity financing prior to either prepayment or automatic
conversion on maturity.
Interest
expense for Convertible Notes was $1,541 for the three months ended March 31, 2021, compared to $1,088 for three month period ended March
31, 2020, respectively.
NOTE
6 – WARRANTS FOR COMMON STOCK
As
of March 31, 2021, outstanding warrants to purchase shares of the Company’s common stock were as follows:
Issuance Date
|
|
Exercisable for
|
|
Expiration Date
|
|
Exercise Price
|
|
|
Number of Shares
Outstanding
Under Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2019
|
|
Common Shares
|
|
September 24, 2022
|
|
$
|
0.01
|
|
|
|
75,000
|
|
February 2020
|
|
Common Shares
|
|
February 6, 2030
|
|
$
|
0.01
|
|
|
|
10,000
|
|
February 2020
|
|
Common Shares
|
|
February 12, 2030
|
|
$
|
0.01
|
|
|
|
2,500
|
|
February 2020
|
|
Common Shares
|
|
February 19, 2030
|
|
$
|
0.01
|
|
|
|
10,000
|
|
April 2020
|
|
Common Shares
|
|
April 20, 2030
|
|
$
|
0.01
|
|
|
|
22,500
|
|
June 2020
|
|
Common Shares
|
|
June 9, 2030
|
|
$
|
0.01
|
|
|
|
5,000
|
|
March 2020
|
|
Common Shares
|
|
February 28, 2026
|
|
$
|
0.50
|
|
|
|
412,500
|
|
The
exercise price of the warrants is subject to adjustment from time to time, as provided therein, to prevent dilution of purchase rights
granted thereunder. The warrants are considered indexed to the Company’s own stock and therefore no subsequent remeasurement is
required.
NOTE
7 - SUMMARY OF STOCK OPTIONS
On
July 21, 2017, the Company’s board of directors adopted The Crypto Company 2017 Equity Incentive Plan (the “Plan”),
which was approved by its stockholders on August 24, 2017. The Plan is administered by the board of directors (the “Administrator”).
Under the Plan, the Company may grant equity awards to eligible participants which may take the form of stock options (both incentive
stock options and non-qualified stock options) and restricted stock awards. Awards may be granted to officers, employees, non-employee
directors (as defined in the Plan) and other key persons (including consultants and prospective employees). The term of any stock option
award may not exceed 10 years and may be subject to vesting conditions, as determined by the Administrator. Options granted generally
vest over eighteen to thirty-six months. Incentive stock options may be granted only to employees of the Company or any subsidiary that
is a “subsidiary corporation” within the meaning of Section 424(f) of the Internal Revenue Code.
During
the three month period ended March 31, 2021, the Company did not issue any stock options.
5,000,000
shares of the Company’s common stock are reserved for issuance under the Plan. As of March 31, 2021, there are outstanding stock
option awards issued from the Plan covering a total of 2,281,429 shares of the Company’s common stock and there remain reserved
for future awards 2,718,571 shares of the Company’s common stock.
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Remaining
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Contractual
|
|
|
Aggregate
|
|
|
|
Number
|
|
|
Exercise
|
|
|
Term
|
|
|
Intrinsic
|
|
|
|
of Shares
|
|
|
Price
|
|
|
(years)
|
|
|
Value
|
|
Options outstanding, at December 31, 2020
|
|
|
2,281,429
|
|
|
$
|
2.26
|
|
|
|
5.25
|
|
|
|
5,155,003
|
|
Options granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Options canceled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Options exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Options outstanding, at March 31, 2021
|
|
|
2,281,429
|
|
|
$
|
2.26
|
|
|
|
5.00
|
|
|
$
|
5,155,003
|
|
Exercisable
|
|
|
2,281,429
|
|
|
$
|
2.26
|
|
|
|
5.00
|
|
|
$
|
5,155,003
|
|
Vested and exercisable and expected to vest, end of the period
|
|
|
2,281,429
|
|
|
$
|
2.26
|
|
|
|
5.00
|
|
|
$
|
5,155,003
|
|
The
Company recognized $-0- for share-based compensation related to stock options for the three month period ended March 31, 2021.
There
were no options exercised for the three months ended March 31, 2021.
The
Company did not grant any restricted stock awards during the three month period ended March 31, 2021.
As
of March 31, 2021, there was $-0- of unrecognized compensation costs related to stock options issued to employees and nonemployees.
NOTE
8 - COMMITMENTS AND CONTINGENCIES
Facility
rent expense was $-0- for the three months ended March 31, 2021, and $837 for the three months ended March 31, 2020, respectively.
NOTE
9 – SUBSEQUENT EVENTS
As previously
disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020, the Company entered into a Stock Purchase Agreement
(the “SPA”) effective as of March 24, 2021 with Blockchain Training Alliance, Inc (“BTA”) and its stockholders.
On April 8, 2021, the Company completed the acquisition of all of the issued and outstanding stock of BTA and BTA became a wholly owned
subsidiary of the Company. At the closing the Company delivered to the sellers a total of $600,000 in cash, promissory notes in the total
principal amount of $150,000 bearing 1% interest per annum, and an aggregate of 201,439 shares of Company common stock in accordance
with the terms of the SPA. BTA is a blockchain training company and service provider that provides training and educational courses focused
on blockchain technology and education as to the general understanding of blockchain to corporate and individual clients.
Subsequent to March 31, 2021 the Company generated
$630,000 in proceed from sale of tokens that were previously written off as described throughout this Report.