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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington
D.C. 20549
FORM
10-Q
☒ |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For
the quarterly period ended
April 30, 2022
☐ |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For
the transition period from __________ to ___________
Commission
File Number
000-24520
Descrypto Holdings, Inc.
(Exact
name of registrant as specified in its charter)
Delaware |
|
04-3021770 |
(State
or other jurisdiction
of
incorporation or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
625 N. Flagler Drive,
Suite 600
West Palm Beach,
FL
|
|
33401 |
(Address
of principal executive offices) |
|
(Zip
Code) |
(305) 351-9195
(Registrant’s
telephone number, including area code)
N/A
(Former
name, former address and former fiscal year, if changed since last
report)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
N/A |
|
N/A |
|
N/A |
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
Non-accelerated filer |
☒ |
Smaller
reporting company |
☒ |
|
|
Emerging
growth company |
☐ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
As of
June 14, 2022, there were
38,320,006 shares of common stock, par value $0.0001, issued
and outstanding.
Table
of Contents
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Quarterly Report includes “forward-looking statements” within the
meaning of the federal securities laws that involve risks and
uncertainties. Forward-looking statements include statements we
make concerning our plans, objectives, goals, strategies, future
events, future revenues or performance, capital expenditures,
financing needs and other information that is not historical
information. When used in this quarterly report, the words
“estimates,” “expects,” “anticipates,” “projects,” “forecasts,”
“plans,” “intends,” “believes,” “foresees,” “seeks,” “likely,”
“may,” “might,” “will,” “should,” “goal,” “target” or “intends” and
variations of these words or similar expressions (or the negative
versions of any such words) are intended to identify
forward-looking statements. All forward-looking statements are
based upon information available to us on the date of this
quarterly report.
These
forward-looking statements are subject to risks, uncertainties and
other factors, many of which are outside of our control, that could
cause actual results to differ materially from the results
discussed in the forward-looking statements. These risks and
uncertainties are discussed in the “Risk Factors” section of our
Transition Report on Form 10-KT for the transition period from
January 1, 2021 to July 31, 2021, filed with the Securities and
Exchange Commission on November 15, 2021, as the same may be
updated from time to time.
All
forward-looking statements attributable to us in this quarterly
report apply only as of the date of this quarterly report and are
expressly qualified in their entirety by the cautionary statements
included in this quarterly report. 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 publicly update or revise
forward-looking statements to reflect events or circumstances after
the date made or to reflect the occurrence of unanticipated events,
except as required by law.
PART I—FINANCIAL
INFORMATION
ITEM 1. FINANCIAL
STATEMENTS
DESCRYPTO
HOLDINGS, Inc.
CONSOLIDATED Balance Sheets
The
accompanying notes are an integral part of these unaudited
consolidated financial statements.
DESCRYPTO
HOLDINGS, INC.
CONSOLIDATED
Statements of Operations
(UNAUDITED)
The
accompanying notes are an integral part of these unaudited
consolidated financial statements.
DESCRYPTO
HOLDINGS, INC.
CONSOLIDATED
Statements of Changes in Stockholders’
Deficit
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
Total |
|
|
|
Common
Stock |
|
|
Paid-in |
|
|
Accumulated |
|
|
Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
31, 2020 |
|
|
233,474,958 |
|
|
$ |
23,347 |
|
|
$ |
(12,097 |
) |
|
$ |
(118,651 |
) |
|
$ |
(107,401 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,622 |
) |
|
|
(3,622 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
31, 2020 |
|
|
233,474,958 |
|
|
|
23,347 |
|
|
|
(12,097 |
) |
|
|
(122,273 |
) |
|
|
(111,023 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,503 |
) |
|
|
(2,503 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
31, 2021 |
|
|
233,474,958 |
|
|
|
23,347 |
|
|
|
(12,097 |
) |
|
|
(124,776 |
) |
|
|
(113,526 |
) |
Beginning
balance |
|
|
233,474,958 |
|
|
|
23,347 |
|
|
|
(12,097 |
) |
|
|
(124,776 |
) |
|
|
(113,526 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10,547 |
) |
|
|
(10,547 |
) |
Net
income / loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10,547 |
) |
|
|
(10,547 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
30, 2021 |
|
|
233,474,958 |
|
|
$ |
23,347 |
|
|
$ |
(12,097 |
) |
|
$ |
(135,323 |
) |
|
$ |
(124,073 |
) |
Ending
balance |
|
|
233,474,958 |
|
|
$ |
23,347 |
|
|
$ |
(12,097 |
) |
|
$ |
(135,323 |
) |
|
$ |
(124,073 |
) |
The
accompanying notes are an integral part of these unaudited
consolidated financial statements.
DESCRYPTO
HOLDINGS, INC.
consolidated
Statements of Cash Flows
(UNAUDITED)
The
accompanying notes are an integral part of these unaudited
consolidated financial statements.
DESCRYPTO HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
Note 1 – Organization,
Nature of Operations and Going Concern
Organization
and Nature of Operations
Descrypto
Holdings, Inc. and its subsidiary (“Descrypto,” “we,” “our,” “us,”
or the “Company”) is a holding company focused on blockchain
technology and digital assets, including the world of non-fungible
tokens (NFTs) and the metaverse. Descrypto is currently focused on
the sports and entertainment aspects of NFTs, including building
out a creative studio and NFT platform for the development of
crypto art, NFT development and digital entertainment. Descrypto
also intends to provide consulting and support services related to
the development of decentralized autonomous organizations (“DAOs”).
Through its subsidiary, OpenLocker, Inc. (“OpenLocker”), Descrypto
is connecting fans and athletes with innovative digital
collectibles and through OpenStable, which is part of the
OpenLocker ecosystem, Descrypto is providing the first thoroughbred
racing digital collectibles to a growing next generation of fans.
In general, Descrypto is focused on delivering shareholder value by
acquiring and developing high-quality companies and key personnel
while increasing the value and adoption of blockchain technologies
worldwide.
The
parent (Descrypto Holdings, Inc.) and subsidiary are organized as
follows:
Schedule Of Subsidary
Company
Name |
|
|
|
Incorporation
Date |
|
State
of Incorporation |
Descrypto
Holdings, Inc. |
|
|
|
1996 |
|
Delaware |
Descrypto,
Inc. |
|
* |
|
2017 |
|
Delaware |
Descrypto Studio, LLC |
|
|
|
2022 |
|
Wyoming |
* |
Entity
was acquired in a reverse merger on July 29, 2021. |
See
Note 6 regarding the acquisition of OpenLocker, Inc. which became a
wholly owned subsidiary on May 31, 2022.
Reverse
Merger
On
July 29, 2021, the Company entered into a share exchange agreement
with KryptoBank Co. (“KryptoBank”) and its stockholders, pursuant
to which the Company issued common stock representing 90% (233,474,958
shares) of the Company’s total issued and outstanding common stock
in exchange for 100%
interest in KryptoBank. KryptoBank was incorporated in Delaware on
December 27, 2017. Pursuant to the terms of the exchange agreement,
previous note holders were issued shares of common stock as
settlement of the outstanding notes payable. As a result,
KryptoBank became a wholly owned subsidiary of the Company and
assumed net liabilities of $16,306. This transaction was
accounted for as a reverse merger by which KrytoBank is deemed to
be the accounting acquirer. Consequently, the assets, liabilities
and historical operations are those of KryptoBank. In November
2021, KryptoBank’s name was changed to Descrypto, Inc.
Going
Concern and Management’s Plans
These
unaudited consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal
course of business.
As
reflected in the accompanying unaudited consolidated financial
statements, for the nine months ended April 30, 2022, the Company
had:
|
● |
Net
loss of $1,673,472; and |
|
● |
Net
cash used in operations of $. |
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
Additionally,
at April 30, 2022, the Company had:
|
● |
Accumulated
deficit of $1,824,913; |
|
● |
Stockholders’
equity of $594,944; and |
|
● |
Working
capital of $573,083. |
We
manage liquidity risk by reviewing, on an ongoing basis, our
sources of liquidity and capital requirements. The Company has cash
on hand of $607,145 at April 30, 2022. Although the Company
intends to raise additional debt or equity capital, the Company
expects to continue to incur significant losses from operations and
have negative cash flows from operating activities for the
near-term. These losses could be significant as operations ramp up
along with continuing expenses related to compensation,
professional fees, and regulatory are incurred.
The
Company has incurred significant losses since its inception and has
not demonstrated an ability to generate sufficient revenues to
achieve profitable operations. There can be no assurance that
profitable operations will ever be achieved, or if achieved, could
be sustained on a continuing basis. In making this assessment we
performed a comprehensive analysis of our current circumstances
including: our financial position, our cash flows and cash usage
forecasts for the twelve months ended April 30, 2023, and our
current capital structure including equity-based instruments and
our obligations and debts.
The
Company has satisfied its obligations from the issuance of common
stock; however, there is no assurance that such successful efforts
will continue during the twelve months subsequent to the date these
unaudited consolidated financial statements are issued.
If
the Company does not obtain additional capital, the Company will be
required to reduce the scope of its business development activities
or cease operations. The Company continues to explore obtaining
additional capital financing and the Company is closely monitoring
its cash balances, cash needs, and expense levels.
These
factors create substantial doubt about the Company’s ability to
continue as a going concern within the twelve-month period
subsequent to the date that these unaudited consolidated financial
statements are issued. The unaudited consolidated financial
statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
Accordingly, the unaudited consolidated financial statements have
been prepared on a basis that assumes the Company will continue as
a going concern and which contemplates the realization of assets
and satisfaction of liabilities and commitments in the ordinary
course of business.
Management’s strategic plans include the
following:
|
● |
Pursuing
additional capital raising opportunities; |
|
● |
Continuing
to explore and execute prospective partnering or distribution
opportunities; |
|
● |
Identifying
strategic acquisitions; and |
|
● |
Identifying
unique market opportunities that represent potential positive
short-term cash flow. |
During
the nine months ended April 30, 2022, the Company’s financial
results and operations were not materially adversely impacted by
the COVID-19 pandemic. The extent to which the Company’s future
financial results could be impacted by the COVID-19 pandemic
depends on future developments that are highly uncertain and cannot
be predicted at this time. The Company is not aware of any specific
event or circumstance that would require an update to its estimates
or judgments or a revision of the carrying value of its assets or
liabilities.
These
estimates may change, as new events occur, and additional
information is obtained. Actual results could differ materially
from these estimates under different assumptions or
conditions.
To
date, the Company has not experienced any significant economic
impact due to COVID-19.
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
Note 2 - Summary of
Significant Accounting Policies
Basis of Presentation
The
accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial
statements (“U.S. GAAP”) and with the instructions to Form 10-Q and
Article 8 of Regulation S-X of the United States Securities and
Exchange Commission (“SEC”). Accordingly, they do not contain all
information and footnotes required by U.S. GAAP for annual
financial statements.
In
the opinion of the Company’s management, the accompanying unaudited
consolidated financial statements contain all of the adjustments
necessary (consisting only of normal recurring accruals) to present
the financial position of the Company as of April 30, 2022 and the
results of operations and cash flows for the periods presented. The
results of operations for the nine months ended April 30, 2022 are
not necessarily indicative of the operating results for the full
fiscal year or any future period.
These
unaudited consolidated financial statements should be read in
conjunction with the financial statements and related notes thereto
included in the Company’s Annual Report on Form 10-KT (transition
period from January 1, 2021 to July 31, 2021) for the period ended
July 31, 2021 filed with the SEC on November 15, 2021.
Management
acknowledges its responsibility for the preparation of the
accompanying unaudited consolidated financial statements which
reflect all adjustments, consisting of normal recurring
adjustments, considered necessary in its opinion for a fair
statement of its consolidated financial position and the
consolidated results of its operations for the periods
presented.
Principles of Consolidation
These
unaudited consolidated financial statements have been prepared in
accordance with U.S. GAAP and include the accounts of the Company
and its wholly owned subsidiaries. All intercompany transactions
and balances have been eliminated.
Business Combinations
The
Company accounts for business combinations using the acquisition
method in accordance with the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards Codification (“ASC”) 805,
Business Combinations which requires recognition of assets
acquired and liabilities assumed, including contingent assets and
liabilities, at their respective fair values on the date of
acquisition.
Business Segments and Concentrations
The
Company uses the “management approach” to identify its reportable
segments. The management approach requires companies to report
segment financial information consistent with information used by
management for making operating decisions and assessing performance
as the basis for identifying the Company’s reportable segments. The
Company manages its business as a single operating
segment.
Use of Estimates
Preparing
financial statements in conformity with U.S. GAAP requires
management 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 and revenues and expenses during the reported period.
Actual results could differ from those estimates, and those
estimates may be material.
Fair Value of Financial Instruments
The
Company accounts for financial instruments under FASB ASC 820,
Fair Value Measurements. ASC 820 provides a framework for
measuring fair value and requires disclosures regarding fair value
measurements. Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date, based on the Company’s principal or, in absence of a
principal, most advantageous market for the specific asset or
liability.
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
The
Company uses a three-tier fair value hierarchy to classify and
disclose all assets and liabilities measured at fair value on a
recurring basis, as well as assets and liabilities measured at fair
value on a non-recurring basis, in periods subsequent to their
initial measurement. The hierarchy requires the Company to use
observable inputs when available, and to minimize the use of
unobservable inputs, when determining fair value.
The
three tiers are defined as follows:
|
● |
Level
1 —Observable inputs that reflect quoted market prices (unadjusted)
for identical assets or liabilities in active markets; |
|
● |
Level
2—Observable inputs other than quoted prices in active markets that
are observable either directly or indirectly in the marketplace for
identical or similar assets and liabilities; and |
|
● |
Level
3—Unobservable inputs that are supported by little or no market
data, which require the Company to develop its own
assumptions. |
The
determination of fair value and the assessment of a measurement’s
placement within the hierarchy requires judgment. Level 3
valuations often involve a higher degree of judgment and
complexity. Level 3 valuations may require the use of various cost,
market, or income valuation methodologies applied to unobservable
management estimates and assumptions. Management’s assumptions
could vary depending on the asset or liability valued and the
valuation method used. Such assumptions could include estimates of
prices, earnings, costs, actions of market participants, market
factors, or the weighting of various valuation methods. The Company
may also engage external advisors to assist us in determining fair
value, as appropriate.
Although
the Company believes that the recorded fair value of our financial
instruments is appropriate, these fair values may not be indicative
of net realizable value or reflective of future fair
values.
The
Company’s financial instruments, including cash, and accounts
payable and accrued expenses, are carried at historical cost. At
April 30, 2022 and July 31, 2021, respectively, the carrying
amounts of these instruments approximated their fair values because
of the short-term nature of these instruments.
ASC
825-10 “Financial Instruments” allows entities to
voluntarily choose to measure certain financial assets and
liabilities at fair value (“fair value option”). The fair value
option may be elected on an instrument-by-instrument basis and is
irrevocable unless a new election date occurs. If the fair value
option is elected for an instrument, unrealized gains and losses
for that instrument should be reported in earnings at each
subsequent reporting date. The Company did not elect to apply the
fair value option to any outstanding financial
instruments.
Cash and Cash Equivalents
For
purposes of the consolidated statements of cash flows, the Company
considers all highly liquid instruments with a maturity of three
months or less at the purchase date and money market accounts to be
cash equivalents.
At
April 30, 2022 and July 31, 2021, respectively, the Company did not
have any cash equivalents.
Investment
The
Company owns
150,000 shares of iGrow Systems Inc. The shares are valued
at cost $15,000 ($0.10/share). The investment is recorded
on the Company’s balance sheet using the cost method of
accounting.
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
Goodwill and Impairment
In
financial reporting, goodwill is not amortized, but is tested for
impairment annually or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Events
that result in an impairment review include significant changes in
the business climate, declines in our operating results, or an
expectation that the carrying amount may not be recoverable. We
assess potential impairment by considering present economic
conditions as well as future expectations. All assessments of
goodwill impairment are conducted at the individual reporting unit
level.
The
Company uses qualitative factors according to ASC 350-20-35-3 to
determine whether it is more likely than not that the fair value of
goodwill is less than its carrying amount. During the nine months
ended April 30, 2022 and 2021, the Company determined there were no
impairments of goodwill.
Intangible Assets and Impairment
Definite-lived
intangible assets are amortized on a straight-line basis over their
estimated useful lives. Indefinite-lived intangible assets are
reviewed for impairment annually. The Company reviews
definite-lived intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable.
There
were no impairment losses for the three and nine months ended April
30, 2022 and 2021, respectively.
Impairment of Long-lived Assets
Management
evaluates the recoverability of the Company’s identifiable
intangible assets and other long-lived assets when events or
circumstances indicate a potential impairment exists, in accordance
with the provisions of ASC 360-10-35-15 “Impairment or Disposal
of Long-Lived Assets.”
If
impairment is indicated based on a comparison of the assets’
carrying values and the undiscounted cash flows, the impairment to
be recognized is measured as the amount by which the carrying
amount of the assets exceeds the fair value of the
assets.
There
were no impairment losses for the three and nine months ended April
30, 2022 and 2021, respectively.
Property and Equipment
Property
and equipment is stated at cost less accumulated depreciation.
Depreciation is provided on the straight-line basis over the
estimated useful lives of the assets.
Expenditures
for repair and maintenance which do not materially extend the
useful lives of property and equipment are charged to operations.
When property or equipment is sold or otherwise disposed of, the
cost and related accumulated depreciation are removed from the
respective accounts with the resulting gain or loss reflected in
operations.
Management
reviews the carrying value of its property and equipment whenever
events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable.
There
were no impairment losses for the three and nine months ended April
30, 2022 and 2021, respectively.
Income Taxes
The
Company accounts for income tax using the asset and liability
method prescribed by ASC 740, “Income Taxes”. Under this
method, deferred tax assets and liabilities are determined based on
the difference between the financial reporting and tax bases of
assets and liabilities using enacted tax rates that will be in
effect in the year in which the differences are expected to
reverse. The Company records a valuation allowance to offset
deferred tax assets if based on the weight of available evidence,
it is more-likely-than-not that some portion, or all, of the
deferred tax assets will not be realized. The effect on deferred
taxes of a change in tax rates is recognized as income or loss in
the period that includes the enactment date.
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
The
Company follows the accounting guidance for uncertainty in income
taxes using the provisions of ASC 740 “Income Taxes”. Using that
guidance, tax positions initially need to be recognized in the
financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of
April 30, 2022 and July 31, 2021, respectively, the Company had no
uncertain tax positions that qualify for either recognition or
disclosure in the financial statements.
The
Company recognizes interest and penalties related to uncertain
income tax positions in other expense. No interest and penalties
related to uncertain income tax positions were recorded for the
three and nine months ended April 30, 2022 and 2021,
respectively.
Advertising Costs
Advertising
costs are expensed as incurred. Advertising costs are included as a
component of general and administrative expense in the consolidated
statements of operations.
The
Company recognized $0
and $0
in marketing and advertising costs during the three and nine months
ended April 30, 2022 and 2021, respectively.
Stock-Based Compensation
The
Company accounts for our stock-based compensation under ASC 718
“Compensation – Stock Compensation” using the fair
value-based method. Under this method, compensation cost is
measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting
period. This guidance establishes standards for the accounting for
transactions in which an entity exchanges it equity instruments for
goods or services. It also addresses transactions in which an
entity incurs liabilities in exchange for goods or services that
are based on the fair value of the entity’s equity instruments or
that may be settled by the issuance of those equity
instruments.
When
determining fair value of stock options, the Company considers the
following assumptions in the Black-Scholes model:
|
● |
Exercise
price, |
|
● |
Expected
dividends, |
|
● |
Expected
volatility, |
|
● |
Risk-free
interest rate; and |
|
● |
Expected
life of option |
The
Company has no issued or outstanding stock options at April 30,
2022 and July 31, 2021, respectively.
Basic and Diluted Earnings (Loss) per Share
Pursuant
to ASC 260-10-45, basic earnings (loss) per common share is
computed by dividing net income (loss) by the weighted average
number of shares of common stock outstanding for the periods
presented.
Diluted
earnings per share is computed by dividing net income by the
weighted average number of shares of common stock, common stock
equivalents and potentially dilutive securities outstanding during
the period. Potentially dilutive common shares may consist of
common stock issuable for stock options and warrants (using the
treasury stock method), convertible notes and common stock
issuable. These common stock equivalents may be dilutive in the
future. In the event of a net loss, diluted loss per share is the
same as basic loss per share since the effect of the potential
common stock equivalents upon conversion would be
anti-dilutive.
The
Company effected a reverse merger and recapitalization on July 29,
2021, as a result, all share and per share amounts have been
retroactively restated to the earliest period presented (for the
year ended July 31, 2021).
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
For
the nine months ended April 30, 2022 and 2021, the Company had
potentially dilutive equity securities of 35,520,000 and
0, respectively.
These securities consist solely of Series A, convertible preferred
stock, which convert into 1,000
shares of common stock for each 1
share of Series A, convertible preferred stock held.
Related Parties
Parties
are considered to be related to the Company if the parties,
directly or indirectly, through one or more intermediaries,
control, are controlled by, or are under common control with the
Company. Related parties also include principal owners of the
Company, its management, members of the immediate families of
principal owners of the Company and its management and other
parties with which the Company may deal with if one party controls
or can significantly influence the management or operating policies
of the other to an extent that one of the transacting parties might
be prevented from fully pursuing its own separate
interests.
Recent Accounting Standards
Changes
to accounting principles are established by the FASB in the form of
Accounting Standards Updates (“ASUs”) to the FASB’s ASC. We
consider the applicability and impact of all ASUs on our
consolidated financial position, results of operations,
stockholders’ deficit, cash flows, or presentation thereof.
Management has evaluated all recent accounting pronouncements as
issued by the FASB in the form of ASUs through the date these
unaudited financial statements were available to be issued and
found no recent accounting pronouncements issued, but not yet
effective accounting pronouncements, when adopted, will have a
material impact on the consolidated financial statements of the
Company.
Note 3 – Property and
Equipment
Property
and Equipment consisted of the following:
Schedule of Property, Plant and
Equipment
v |
|
|
April
30 |
|
|
$ |
July
31 |
|
|
|
|
|
|
|
|
|
|
|
Estimated
Useful |
|
|
April
30, 2022 |
|
|
July
31, 2021 |
|
|
Lives
(Years) |
|
|
|
|
|
|
|
|
|
Website |
|
$ |
10,836 |
|
|
$ |
10,836 |
|
|
3 |
Accumulated
amortization |
|
|
3,975 |
|
|
|
1,391 |
|
|
|
Website
- net |
|
$ |
6,861 |
|
|
$ |
9,445 |
|
|
|
Amortization
expense for the three months ended April 30, 2022 and 2021 was
$792 and $0, respectively.
Amortization
expense for the nine months ended April 30, 2022 and 2021 was
$2,584
and
$445,
respectively.
These
amounts are included as a component of general and administrative
expenses in the accompanying consolidated statements of
operations.
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
Note 4 – Notes Payable
– Related Parties and Debt Forgiveness
The
following represents a summary of the Company’s notes payable –
related parties, key terms, and outstanding balances at April 30,
2022 and July 31, 2021, respectively:
Schedule of Notes Payable Related
Parties
|
|
Note
Payable |
|
|
|
|
Note
Payable |
|
|
|
|
Note
Payable |
|
|
|
|
|
|
Terms |
|
Related
Parties |
|
|
|
|
Related
Party |
|
|
|
|
Related
Party |
|
|
|
|
|
|
Issuance date of notes |
|
Prior to 2018 |
|
|
|
|
June
29, 2021 |
|
|
|
|
July 9, 2021 |
|
|
|
|
|
|
Maturity date |
|
Due on demand |
|
|
|
|
June 28, 2022 |
|
|
A |
|
June 28, 2022 |
|
|
A |
|
|
|
Interest rate |
|
12% |
|
|
|
|
12% |
|
|
|
|
12% |
|
|
|
|
|
|
Collateral |
|
Unsecured |
|
|
|
|
Unsecured |
|
|
|
|
Unsecured |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal |
|
$ |
112,167 |
|
|
|
|
$ |
25,000 |
|
|
|
|
$ |
25,000 |
|
|
|
|
$ |
162,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- July 31, 2020 |
|
$ |
112,167 |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
112,167 |
|
Proceeds
from issuance of notes |
|
|
- |
|
|
|
|
|
25,000 |
|
|
|
|
|
25,000 |
|
|
|
|
|
50,000 |
|
Balance
- July 31, 2021 |
|
|
112,167 |
|
|
|
|
|
25,000 |
|
|
|
|
|
25,000 |
|
|
|
|
|
162,167 |
|
Forgiveness
of note payable |
|
|
(112,167 |
) |
|
B |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(112,167 |
) |
Stock
issued in conversion of note payable |
|
|
|
|
|
|
|
|
(25,000 |
) |
|
C |
|
|
(25,000 |
) |
|
C |
|
|
(50,000 |
) |
Balance
- April 30, 2022 |
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
A
Due on the earlier of June 28, 2022, or the date which the Company
raises at least $200,000
from investors.
B
These notes were forgiven by the debt holders in February 2022.
Total principal and accrued interest totalled $155,743.
Since these transactions occurred with related parties, gain on
debt forgiveness was recorded as an increase to additional paid-in
capital. See Note 5.
C
The Company issued
135,450 shares of common stock, having a fair value of
$106,274,
to settle the outstanding principal and related accrued interest of
$54,180
on these notes payable - related parties, resulting in a loss on
debt extinguishment of $52,094.
See Note 5.
Note 5 – Stockholders’
Equity (Deficit)
At
April 30, 2022, the Company had two (2) classes of
stock:
Class
A Common Stock
|
- |
10,000,000,000
shares authorized |
|
- |
Par
value - $0.0001 |
|
- |
Voting at 1 vote per
share |
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
Series
A Preferred Stock
|
- |
200,000 shares
authorized |
|
- |
Par
value - $0.0001 |
|
- |
Conversion
ratio – 1 share of Series
A converts into 1,000 shares of
common stock |
|
- |
Voting
on an if converted basis of 1,000 votes per
share |
|
- |
Eligible
for dividends/distributions if declared by the Board of
Directors |
|
- |
Liquidation
preference - none |
Equity Transactions for the Nine Months Ended April 30,
2022
Stock
Issued for Cash
The
Company issued 182,503,736 shares of common
stock for $638,196
($0.0001
– $0.40/share).
Stock
Issued for a Subscription Receivable
The
Company issued 250,000
shares of common stock for $100,000
($0.40/share).
The Company collected the cash in May 2022.
Stock
Issued for Services
Year Ended July 31, 2021
On
July 30, 2021, the Company entered into an employment agreement
with an officer of the Company to grant 1% of the
outstanding common stock on that date (2,593,766 shares) to be
earned over the following six-month period beginning on August 1,
2021. In November 2021, the officer resigned his position with the
Company and executed a termination agreement granting him
1,385,625 shares in place of the shares granted in the
employment agreement.
On
July 30, 2021, the Company entered into an employment agreement
with an officer of the Company to grant 0.5% of the
outstanding common stock on that date (1,296,883
shares) to be earned over the following six-month period beginning
on August 1, 2021. These shares were fully earned as of January 31,
2022 and recorded as a stock payable.
Three Months Ended April 30, 2022
During
the three months ended April 30, 2022, the Company issued 1,645,042
shares of common stock for services rendered in settling the above
stock grants to the former officers having a fair value of
$1,525,637 based
upon the quoted closing trading price on the modified grant
dates.
In
order to reflect the proper compensation related to these
arrangements, the Company adjusted general and administrative
expense by $1,545,936 to reflect the total
fair value of the shares issued.
Stock
Issued in Conversion of Notes Payable and Accrued Interest –
Related Parties
The
Company issued 135,450
shares of common stock, having a fair value of $106,274
($0.70
- $0.87/share),
based upon the quoted closing trading price, in connection with the
conversion of notes payable and related accrued interest totaling
$54,180,
resulting in a loss on debt extinguishment of 52,094. See Note
4.
Forgiveness
of Notes Payable and Accrued Interest – Related
Parties
Certain
debt holders forgave notes payable and related accrued interest
totaling $155,743
(principal of $112,167 and accrued interest of
$43,576). The Company recorded an
increase to additional paid in capital related to the debt
forgiveness.
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
Common
Stock Share Redemptions
The
Company agreed to repurchase common stock from certain
shareholders. The Company redeemed
240,814,962 shares
ranging from $0.0001
- $0.000001/share
for a net amount of $935.
The shares were cancelled and are available for future
issuances.
Preferred
Stock Share Redemptions
The
Company agreed to repurchase common stock from certain
shareholders. The Company redeemed 142,080 shares at $0.0001/share
for a net amount of $2. The shares were
cancelled and are available for future issuances.
Share
Exchange Agreement – Related Parties
In
January 2022, the Company issued 88,800 shares of
Series A preferred stock to ACV in exchange for
88,800,191 shares of common stock, having a fair value of
$8,880
($0.0001/share).
In
January 2022, the Company issued 88,800 shares of
Series A preferred stock to Leone in exchange for
88,800,191 shares of common stock, having a fair value of
$8,880
($0.0001/share).
Note 6 – Subsequent
Events
Subsequent
to April 30, 2022, the Company had the following
transactions:
Stock
Issued for Cash
The
Company issued 162,500 shares of
common stock for $65,000 ($0.40/share).
Stock
Issued for Services
The
Company issued 162,000
shares of common stock for services rendered, having a fair value
of $140,940 ($0.87/share), based upon the
quoted closing trading price.
Acquisitions
and Pro Forma Financial Information
OpenLocker, Inc. (“OL”)
On
May 31, 2022, the Company closed a share exchange agreement with OL
and issued
12,500,000 shares
of common stock, having a fair value of $8,125,000
($0.65/share),
based upon the quoted closing trading price, on the acquisition
date, to purchase
100% of
OL’s, outstanding stock in a transaction treated as a business
combination.
The
Company is in the process of assessing the fair value of the net
assets acquired and, as a result, the fair value of the net assets
acquired may be subject to adjustments pending completion of final
valuations and post-closing adjustments.
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
In
connection with the acquisition of OL, the Company has agreed to
the following pursuant to the share exchange agreement:
In
addition, the Company agreed to the following pursuant to the terms
of the Share Exchange Agreement:
|
1. |
Following
the Closing, the Company reserved
750,000 shares
of Company common stock for issuance to OpenLocker employees as
options, restricted stock or similar incentive compensation, on
terms to be determined by the Company’s Board of Directors (the
“Board”); |
|
2. |
At
the Closing, the Company contributed $300,000
to
the operations of OpenLocker, which funds will generally be used
for working capital uses and for the payment of OpenLocker payables
and costs and expenses incurred by OpenLocker in connection with
the Exchange and related transactions, and not for executive
salaries, cash bonuses, etc.; |
|
3. |
Following
the Closing and prior to September 1, 2022, the Company will fund
at least an additional $250,000 to the operations of
OpenLocker, which will generally be used for working capital uses
and not for executive salaries, cash bonuses, etc.; |
|
4. |
At
the Closing, Mr. Klatsky was named as a member of the Board;
and |
|
5. |
At
the Closing, American Capital Ventures, Inc. (“ACV”), Leone Capital
Group LLC (“Leone”) and Mr. Klatsky entered into a voting agreement
pursuant to which, subject to the terms and conditions therein,
Leone and ACV agreed to vote for Mr. Klatsky as a director of the
Company. |
Both
ACV
and Leone are significant stockholders of the Company. Howard
Gostfrand, the Company’s Chief Executive Officer, Principal
Financial Officer and a member of the Board, is the sole owner of
ACV. Laura Anthony, the Company’s President and a member of the
Board, is the sole owner of Leone.
OpenLocker became one of the core businesses of the Company
following the Closing. OpenLocker is a leading innovator in
utilizing blockchain technology to provide digital ownership of
NFTs for college athletes and thoroughbred racing stars.
The
Share Exchange Agreement includes customary representations,
warranties, and covenants by the respective parties and closing
conditions, including that all SAFEs shall have been converted or
exercised. Consummation of the transactions contemplated under the
Share Exchange Agreement is not subject to a financing
condition.
See
the Current Report on Form 8-K filed with the SEC by the Company on
June 6, 2022 for a complete discussion of the
transaction.
The
table below summarizes preliminary estimated fair value of the
assets acquired and the liabilities assumed at the effective
acquisition date.
Schedule of Assets and Liabilities Effective
on Acquisition
Consideration |
|
|
|
|
Common
stock (12,500,000 shares of
common stock ($0.65/share)) |
|
$ |
8,125,000 |
|
|
|
|
|
|
Fair
value of consideration transferred |
|
|
8,125,000 |
|
|
|
|
|
|
Recognized
amounts of identifiable assets acquired and liabilities
assumed: |
|
|
|
|
|
|
|
|
|
Cash |
|
|
35,725 |
|
Total
assets acquired |
|
|
35,725 |
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
|
91,151 |
|
SAFE
Notes |
|
|
175,000 |
|
Total
liabilities assumed |
|
|
266,151 |
|
|
|
|
|
|
Total
identifiable net liabilities |
|
|
(230,426 |
) |
|
|
|
|
|
Goodwill |
|
$ |
8,355,426 |
|
In
connection with the purchase of OL, there were no additional
transaction costs incurred.
DESCRYPTO
HOLDINGS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL
30, 2022
(UNAUDITED)
Supplemental Pro Forma Information (Unaudited)
The
unaudited pro forma information for the periods set forth below
gives effect to the acquisition as if the transaction had occurred
on August 1, 2021 and 2020, respectively. However, OL was
incorporated in August 2021, therefore there were no pro forma
operations for OL for the year ended July 31, 2021.
For
purposes of presenting the pro forma information for the year ended
July 31, 2021, the data consists solely of the Company, while
giving effect to the issuance of the
12,500,000 shares of common stock as if this occurred on
August 1, 2021.
This
proforma information is presented for informational purposes only
and is not necessarily indicative of the results of operations that
actually would have been achieved had the transactions been
consummated as of that time:
Schedule of Supplemental Proforma
Information
|
|
Nine
Months Ended |
|
|
Year
Ended |
|
|
|
April
30, 2022 |
|
|
July
31, 2021 |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
23,162 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(1,935,104 |
) |
|
$ |
(121,231 |
) |
|
|
|
|
|
|
|
|
|
Loss
per share - basic |
|
$ |
(0.01 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
Loss
per share - diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average number of shares - basic |
|
|
192,945,872 |
|
|
|
271,876,620 |
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares - diluted |
|
|
192,945,872 |
|
|
|
271,876,620 |
|
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of the financial condition and
results of operations of Descrypto Holdings, Inc. (f/k/a W
Technologies, Inc.) and its subsidiary (together, the “Company”)
should be read in conjunction with our consolidated financial
statements and the accompanying notes thereto included elsewhere in
this Quarterly Report on Form 10-Q. References in this Management’s
Discussion and Analysis of Financial Condition and Results of
Operations to “us,” “we,” “our,” and similar terms refer to the
Company. Our discussion includes forward-looking statements based
upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual
results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a
number of factors, including those set forth under the Risk Factors
section of our Transition Report on Form 10-KT for the transition
period from January 1, 2021 to July 31, 2021, filed with the
Securities and Exchange Commission (the “SEC”) on November 15,
2021, as the same may be updated from time to time. We use words
such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions to identify forward-looking
statements
Overview
Descrypto
Holdings, Inc. (“Descrypto,” “we,” “our,” “us,” or the “Company”)
is a holding company focused on blockchain technology and digital
assets, including the world of non-fungible tokens (NFTs) and the
metaverse. Descrypto is currently focused on the sports and
entertainment aspects of NFTs, including building out a creative
studio and NFT platform for the development of crypto art, NFT
development and digital entertainment. Descrypto also intends to
provide consulting and support services related to the development
of decentralized autonomous organizations (“DAOs”). Through its
subsidiary, OpenLocker, Inc. (“OpenLocker”), Descrypto is
connecting fans and athletes with innovative digital collectibles
and through OpenStable, which is part of the OpenLocker ecosystem,
Descrypto is providing the first thoroughbred racing digital
collectibles to a growing next generation of fans. In general,
Descrypto is focused on delivering shareholder value by acquiring
and developing high-quality companies and key personnel while
increasing the value and adoption of blockchain technologies
worldwide.
Recent
Developments
OpenLocker
Share Exchange
On
May 23, 2022, Descrypto entered into a share exchange agreement
(the “Share Exchange Agreement”) with (i) OpenLocker; (ii) all of
the stockholders of OpenLocker (together with the Additional
Stockholders, as defined in the Share Exchange Agreement, referred
to herein as the “OpenLocker Stockholders”); and (iii) Brian
Klatsky, as the representative of the OpenLocker Stockholders (the
“Stockholders’ Representative”). The Additional Stockholders were
holders of certain simple agreements for future equity (“SAFEs”)
which had been issued by OpenLocker, which SAFEs were converted
into shares of OpenLocker stock prior to the closing of the
transactions in the Share Exchange Agreement, and who signed a
joinder to the Share Exchange Agreement at the time of such
conversion.
The
closing of the Share Exchange Agreement occurred on May 31, 2022
(the “Closing”). At the Closing, the Company acquired all of the
issued and outstanding shares of common stock of OpenLocker,
consisting of 7,957,500 shares of common stock, from the OpenLocker
Stockholders in exchange for the issuance to the OpenLocker
Stockholders of 12,500,000 shares of the Company’s common stock
(“Exchanged Shares”). At the Closing, the Exchanged Shares were
issued to the OpenLocker Stockholders pro rata based on the number
of shares of OpenLocker stock held by each OpenLocker
Stockholder.
As a
result of the Closing of the Share Exchange Agreement, OpenLocker
became a wholly owned subsidiary of the Company.
In
addition, at the Closing, and effective as of the same
day:
|
(i) |
The
Company agreed to reserve 750,000 shares of Company common stock
for issuance to OpenLocker employees as options, restricted stock
or similar incentive compensation, as to be determined by the Board
of Directors of the Company (the “Board”); |
|
(ii) |
The
Company agreed to contribute the sum of $300,000 to the operations
of OpenLocker, which funds will generally be used for working
capital uses and for the payment of OpenLocker payables and costs
and expenses incurred by OpenLocker in connection with the Share
Exchange Agreement and related transactions, and not for executive
salaries, cash bonuses, etc.; |
|
(iii) |
The
Board was expanded to be comprised of three persons and Brian
Klatsky was appointed as a director; and |
|
(iv) |
American
Capital Ventures, Inc. (“ACV”), Leone Group LLC (“Leone”) and Mr.
Klatsky entered into a voting agreement pursuant to which Leone and
ACV agreed to vote their shares to provide that the Board will be
comprised of at least three persons, and to vote for Mr. Klatsky as
a director of the Company, in each case for a period of three
years. |
Following
the Closing, on June 2, 2022, Howard Gostfrand, Laura Anthony (who
are each Directors of the Company), and Mr. Klatsky entered into a
similar voting agreement to the voting agreement referenced above,
wherein Mr. Klatsky also agreed to vote his shares to provide that
the Board will be comprised of at least three persons, and to vote
for each of Mr. Gostfrand and Ms. Anthony as directors of the
Company for a period of three years from the date of the agreement
.
In
addition, pursuant to the terms of the Share Exchange Agreement,
the Company agreed to fund OpenLocker’s operations with an
additional sum of $250,000 (bringing the total amount to fund
operations to $550,000) as and when agreed to by the Company and
the Stockholders’ Representative but prior to September 1, 2022.
The additional funds will also be used toward working capital of
OpenLocker and not for executive salaries or cash
bonuses.
Change
of Control
On
November 18, 2021, we entered into that certain Redemption
Agreement (the “2021 Redemption Agreement”), dated as of November
18, 2021, by and among us and the following stockholders of
Descrypto: Balance Labs, Inc. (“Balance Labs”), Lyons Capital, LLC
(“Lyons Capital”), Jessica Beren, 2018 Investor Trust, Aros, LLC,
Rachel Jacobs and Avon Road Associates, LLC (“Avon Road”)
(collectively, the “2021 Redeeming Stockholders”). Pursuant to the
terms of the 2021 Redemption Agreement, on November 18, 2021, the
2021 Redeeming Stockholders sold to us an aggregate of 163,432,468
shares of our common stock (the “2021 Redeemed Shares”),
representing 70% of the shares of common stock held by the 2021
Redeeming Stockholders, for a purchase price of $163 (representing
a purchase price of $0.000001 per share) (the “2021 Redemption”).
The 2021 Redemption closed on November 18, 2021. As a result of the
2021 Redemption, the 2021 Redeemed Shares were cancelled and
returned to the status of authorized and unissued shares of common
stock.
Also
on November 18, 2021, following the 2021 Redemption:
|
(iv) |
Pursuant
to a subscription agreement dated November 18, 2021 (the “MACA
Subscription Agreement”), Mid Atlantic Capital Associates, Inc.
(“MACA”) purchased 17,321,268 shares of common stock from us for a
purchase price of $1,732 (representing a $0.0001 purchase price per
share) (the “MACA Purchase”); |
|
(v) |
Pursuant
to a subscription agreement dated November 18, 2021 (the “Leone
Subscription Agreement”), Leone purchased 81,716,234 shares of our
common stock from us for a purchase price of $8,172 (representing a
$0.0001 purchase price per share) (the “Leone Purchase”);
and |
|
(vi) |
Pursuant
to a subscription agreement dated November 18, 2021 (the “ACV
Subscription Agreement”), ACV purchased 81,716,234 shares of common
stock from us for a purchase price of $8,172 (representing a
$0.0001 purchase price per share) (the “ACV Purchase” and
collectively with the MACA Purchase and the ACV Purchase, the
“Share Purchases”). |
As a
result of the 2021 Redemption and the Share Purchases:
|
(vi) |
Balance
Labs’ percentage ownership of our outstanding common stock
decreased from 46.1% to 13.0%; |
|
(vii) |
Lyons
Capital’s percentage ownership of our outstanding common stock
decreased from 22.0% to 6.2%; |
|
(viii) |
MACA’s
percentage ownership of our outstanding common stock increased from
3.0% to 9.0%; |
|
(ix) |
Leone’s
percentage ownership of our outstanding common stock increased from
2.7% to 32.1%; and |
|
(x) |
ACV’s
percentage ownership of our outstanding common stock increased from
2.7% to 32.1%. |
In
addition, on November 18, 2021, our Board increased the size of the
Board from two members to four members and named Laura Anthony and
Howard Gostfrand as directors to fill the newly created vacancies,
to serve in such positions until their earlier respective death,
resignation or removal from office. Ms. Anthony was also appointed
Chairman of the Board. Ms. Anthony is the sole owner of Leone. Mr.
Gostfrand is the sole owner of ACV. At the same time, the Board
also appointed (i) Mr. Gostfrand to serve as our Chief Executive
Officer and Principal Financial Officer; and (ii) Ms. Anthony to
serve as our President, Chairperson and Secretary. Immediately
thereafter, Aleksandr Rubin and Meir Wexler resigned as members of
the Board and Mr. Rubin resigned from all officer positions with
us.
The
2021 Redemption, the Share Purchases and the officer and director
changes discussed above resulted in a change in control of
Descrypto.
Series
A Preferred Stock
On
January 10, 2022, we filed a Certificate of Designations of
Preferences and Rights of Series A Preferred Stock (the “Series A
Certificate”) with the Delaware Secretary of State, creating the
Series A preferred stock (the “Series A Preferred”), with 200,000
shares authorized for issuance.
Each
share of Series A Preferred is initially convertible into 1,000
shares of common stock at the election of the holder at any time.
On any matter submitted to the holders of common stock for a vote
or on which the holders of common stock have a right to vote, each
share of Series A Preferred will have a number of votes equal to
the number of shares of common stock into which the Series A
Preferred is convertible and the Series A Preferred will vote
together with the common stock as one class.
The
Series A Preferred will participate in any dividends, distributions
or payments to the holders of the common stock on an as-converted
basis. Series A Preferred is not entitled to receive any
distribution of the Company’s assets or surplus funds upon a
liquidation, merger or similar event.
ACV
and Leone Share Exchange Agreements
On
January 13, 2022, we entered into a Share Exchange Agreement (the
“ACV Agreement”) by and between the Company and ACV. Pursuant to
the terms of the ACV Agreement, the Company agreed to acquire from
ACV 88,800,191 shares of common stock owned by ACV in exchange for
the issuance of 88,800 shares of Series A Preferred by the Company
to ACV. Such shares were issued to ACV on January 13,
2022.
Also
on January 13, 2022, the Company entered into a Share Exchange
Agreement (the “Leone Agreement”) by and between the Company and
Leone. Pursuant to the terms of the Leone Agreement, the Company
agreed to acquire from Leone 88,800,191 shares of common stock
owned by Leone in exchange for the issuance of 88,800 shares of
Series A Preferred by the Company to Leone. Such shares were issued
to Leone on January 13, 2022.
2022
Common Stock Redemption Agreements
On
February 18, 2022, we entered into certain Redemption Agreements
(each, a “2022 Redemption Agreement” and collectively, the “2022
Redemption Agreements”), dated as of February 18, 2022, by and
among the Company and each of the following holders of the
Company’s common stock: Balance Labs, Aleksandr Rubin, Ronald Cons,
Avon Road, 2018 Investor Trust, Congregation Boro Minyan, Rachel
Jacobs, Jessica Beren, Aros, LLC, Lyons Capital, MACA, and J and K
Ventures, LLC (collectively, the “2022 Redeeming Stockholders”).
Pursuant to the terms of the 2022 Redemption Agreements, each of
the 2022 Redeeming Stockholders agreed to sell, and the Company
agreed to purchase, 80% of such 2022 Redeeming Stockholders’ common
stock holdings at a purchase price of $0.00001 per
share.
On
February 18, 2022, pursuant to the terms of the 2022 Redemption
Agreements, the Company paid an aggregate of $773.82 to the 2022
Redeeming Stockholders in exchange for the transfer of a total of
77,382,494 shares of common stock (the “2022 Redeemed Shares”),
representing 80% of the shares of common stock held by the 2022
Redeeming Stockholders (the “2022 Redemption”). As a result of the
2022 Redemption, the 2022 Redeemed Shares were returned to the
status of authorized and unissued shares of common
stock.
Prior
to, and after giving effect to, the 2022 Redemption, there were
three greater than 5% common stockholders of the Company: Balance
Labs, Lyons Capital and MACA. Following the 2022 Redemption, such
stockholders’ ownership of the common stock was as
follows:
Name
of Stockholder |
|
No.
of Shares of Common Stock Owned Following Redemption |
|
|
Percentage
of Outstanding Common Stock Held Following Redemption |
|
Balance
Labs |
|
|
7,175,084 |
|
|
|
30.23 |
% |
Lyons
Capital |
|
|
2,016,707 |
|
|
|
8.50 |
% |
MACA |
|
|
5,000,000 |
|
|
|
21.06 |
% |
Pursuant
to the terms of the 2022 Redemption Agreements, the 2022 Redemption
Agreements will be null and void and the 2022 Redeemed Shares will
be reissued to the respective 2022 Redeeming Stockholders if the
Company does not raise at least $1.5 million in financing and enter
into a definitive agreement for the acquisition of a blockchain
based company within 12 months of February 18, 2022.
Series
A Preferred Redemption Agreements
Also
on February 18, 2022, we entered into certain Redemption Agreements
(each, a “Series A Redemption Agreement” and together, the “Series
A Redemption Agreements”), dated as of February 18, 2022, by and
between the Company and each of the following holders of the Series
A Preferred: ACV and Leone Group (together, the “Redeeming Series A
Stockholders”). Pursuant to the terms of the Series A Redemption
Agreements, each of the Redeeming Series A Stockholders agreed to
sell, and the Company agreed to purchase, 80% of such Redeeming
Series A Stockholders’ holdings of Series A Preferred, for a
purchase price of $1.00 in total to each Redeeming Series A
Stockholder.
On
February 18, 2022, pursuant to the terms of the Series A Redemption
Agreements, the Company paid an aggregate of $2.00 to the Redeeming
Series A Stockholders in exchange for the transfer of a total of
142,080 shares of Series A Preferred (the “Redeemed Series A
Shares”). As a result of the Series A Redemption, the Redeemed
Series A Shares were returned to the status of authorized and
unissued shares of Series A Preferred Stock.
Following
the Series A Redemption, such stockholders’ ownership of the Series
A Preferred was as follows:
Name
of Stockholder |
|
No.
of Shares of Series A Preferred Stock Owned Following
Redemption |
|
|
Percentage
of Outstanding Series A Preferred Stock Held Following
Redemption |
|
ACV |
|
|
17,760 |
|
|
|
50.00 |
% |
Leone |
|
|
17,760 |
|
|
|
50.00 |
% |
Pursuant
to the terms of the Series A Redemption Agreements, the Series A
Redemption Agreements will be null and void and the Redeemed Series
A Shares will be reissued to the respective Redeeming Series A
Stockholders if the Company does not raise at least $1.5 million in
financing and enter into a definitive agreement for the acquisition
of a blockchain based company within 12 months of February 18,
2022. The Company acquired OL on May 31, 2022.
Plan
of Operations
Over
the next 12 months, we expect to require approximately $3,000,000
in operating funds to carry out our intended plan of
operations.
We
are planning to obtain the funds necessary to execute our plan of
operations from various capital raises, including potentially
through private placements or our common stock or the issuance and
sales of convertible notes, as well as potentially through a
registration statement or an offering statement filed with the
SEC.
There
can be no assurance that we will be able to obtain the necessary
funds for our foregoing operations on terms that are acceptable to
us or at all, and there can be no assurance that our plan of
operations can be executed as planned, or at all.
RESULTS
OF OPERATIONS
Revenue
During
the three and nine months ended April 30, 2022 and 2021, we
generated no revenue. During this period, we have been working
diligently to pursue our business plans and expect to generate
revenue within the next quarter, primarily due to our acquisition
of OL.
Operating
(Income) Expense
Operating
(income) expenses during the three months ended April 30, 2022 and
2021 were $(1,525,627) and $10,547, respectively. The decrease in
expenses was primarily due to an adjustment to general and
administrative expenses of $1,545,936 to reflect the total fair
value of shares issued to former officers.
Operating
expenses during the nine months ended April 30, 2022 and 2021 were
$1,610,975 and $11,082, respectively. The increase in expenses was
primarily due to stock issued for services, and a loss on debt
extinguishment – related parties.
Net
Income (Loss)
For
the three months ended April 30, 2022 and 2021, we had net income
(loss) of $1,472,853 and $(10,547), respectively. The decrease in
net loss was primarily due to an adjustment to general and
administrative expenses of $1,545,936 to reflect the total fair
value of shares issued to former officers.
For
the nine months ended April 30, 2022 and 2021, we had a net loss of
$1,673,472 and $16,672. The increase in net loss was primarily due
to stock issued for services, and a loss on debt extinguishment –
related parties.
Other
Income (Expense) - Net
Other
income and loss for the three months ended April 30, 2022 and 2021
was $52,774 and $0, respectively. For 2022, other expenses
consisted of loss on debt extinguishment – related parties of
$52,094 and interest expense related party of $680.
Other
income and loss for the nine months ended April 30, 2022 and 2021
was $62,497 and $5,590, respectively. For 2022, other expenses
consisted of loss on debt extinguishment – related parties of
$52,094 and interest expense related party of $10,403. For 2021,
other expenses - net consisted of interest income – related parties
of $1,302 and interest expense related party of $6,892.
There
is significant uncertainty projecting future profitability or
revenues due to our history of losses and early stage of our
business operations.
Liquidity and Capital Resources
As of
April 30, 2022, we had $607,145 in cash and did not have any other
cash equivalents. The following table provides detailed information
about our net cash flow for all financial statement periods
presented in this Quarterly Report on Form 10-Q. To date, we have
financed our operations through the issuance of debt and equity
sourced capital.
The
following table sets forth a summary of our cash flows for the nine
months ended April 30, 2022 and 2021:
|
|
Nine
Months Ended
April
30,
|
|
|
|
2022 |
|
|
2021 |
|
Net cash used in operating
activities |
|
$ |
(83,292 |
) |
|
$ |
(523 |
) |
Net cash used in investing
activities |
|
|
- |
|
|
|
- |
|
Net cash
provided by financing activities |
|
|
637,259 |
|
|
|
- |
|
Net increase (decrease) in cash |
|
|
553,967 |
|
|
|
(523 |
) |
Cash,
beginning |
|
|
53,178 |
|
|
|
523 |
|
Cash, ending |
|
$ |
607,145 |
|
|
$ |
- |
|
Since
inception, we have financed our cash flow requirements through
issuance of common stock and debt financing. As we expand our
activities, we may, continue to experience net negative cash flows
from operations. We anticipate obtaining additional financing to
fund operations through additional common stock offerings, to the
extent available, or to obtain additional financing to the extent
necessary to augment our working capital.
We
anticipate that we will incur operating losses in the next 12
months. Our lack of operating history makes predictions of future
operating results difficult to ascertain. Our prospects must be
considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving
markets. Such risks for us include, but are not limited to, an
evolving and unpredictable business sector and the management of
growth. To address these risks, we must, among other things, obtain
a customer base, implement and successfully execute our business
and marketing strategy, continually develop and upgrade our
website, provide national and regional industry participants with
an effective, efficient and accessible infrastructure on which to
promote their products and services through the Internet and
blockchain technology, respond to competitive developments, and
attract, retain and motivate qualified personnel. There can be no
assurance that we will be successful in addressing such risks, and
the failure to do so can have a material adverse effect.
Effects
of Coronavirus on the Company
If
the current recurring outbreak of the coronavirus continues and its
variations, the effects of such a widespread infectious disease and
epidemic may inhibit our ability to conduct our business and
operations and could materially harm our Company. The coronavirus
may cause us to have to reduce operations as a result of various
lock-down procedures enacted by the local, state or federal
governments. The continued coronavirus outbreak may also restrict
our ability to raise funding when needed and may cause an overall
decline in the economy as a whole. The specific and actual effects
of the spread of coronavirus are difficult to assess at this time
as the actual effects will depend on many factors beyond the
control and knowledge of the Company. However, the spread of the
coronavirus, if it continues, may cause an overall decline in the
economy as a whole and as such may materially harm our
Company.
Critical
Accounting Policies and Estimates
Going
Concern and Management’s Plans
These
consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of
business.
As
reflected in the accompanying consolidated financial statements,
for the nine months ended April 30, 2022, the Company
had:
● |
Net
loss of $1,673,472; and |
● |
Net
cash used in operations of $83,292 |
Additionally,
at April 30, 2022, the Company had:
● |
Accumulated deficit
of $1,824,913 |
● |
Stockholders’ equity of $594,944;
and |
● |
Working capital of $573,083 |
We
manage liquidity risk by reviewing, on an ongoing basis, our
sources of liquidity and capital requirements. The Company has cash
on hand of $607,145 at April 30, 2022. Although the Company intends
to raise additional debt or equity capital, the Company expects to
continue to incur significant losses from operations and have
negative cash flows from operating activities for the near-term.
These losses could be significant as operations ramp up along with
continuing expenses related to compensation, professional fees, and
regulatory are incurred.
The
Company has incurred significant losses since its inception and has
not demonstrated an ability to generate sufficient revenues to
achieve profitable operations. There can be no assurance that
profitable operations will ever be achieved, or if achieved, could
be sustained on a continuing basis. In making this assessment we
performed a comprehensive analysis of our current circumstances
including: our financial position, our cash flows and cash usage
forecasts for the twelve months ended April 30, 2023, and our
current capital structure including equity-based instruments and
our obligations and debts.
The
Company has satisfied its obligations from the issuance of common
stock; however, there is no assurance that such successful efforts
will continue during the twelve months subsequent to the date these
consolidated financial statements are issued.
If
the Company does not obtain additional capital, the Company will be
required to reduce the scope of its business development activities
or cease operations. The Company continues to explore obtaining
additional capital financing and the Company is closely monitoring
its cash balances, cash needs, and expense levels.
These
factors create substantial doubt about the Company’s ability to
continue as a going concern within the twelve-month period
subsequent to the date that these consolidated financial statements
are issued. The consolidated financial statements do not include
any adjustments that might be necessary if the Company is unable to
continue as a going concern. Accordingly, the consolidated
financial statements have been prepared on a basis that assumes the
Company will continue as a going concern and which contemplates the
realization of assets and satisfaction of liabilities and
commitments in the ordinary course of business.
Management’s
strategic plans include the following:
● |
Pursuing additional capital raising opportunities, |
● |
Continuing
to explore and execute prospective partnering or distribution
opportunities; |
● |
Identifying
strategic acquisitions; and |
● |
Identifying
unique market opportunities that represent potential positive
short-term cash flow. |
During
the nine months ended April 30, 2022, the Company’s financial
results and operations were not materially adversely impacted by
the COVID-19 pandemic. The extent to which the Company’s future
financial results could be impacted by the COVID-19 pandemic
depends on future developments that are highly uncertain and cannot
be predicted at this time. The Company is not aware of any specific
event or circumstance that would require an update to its estimates
or judgments or a revision of the carrying value of its assets or
liabilities.
These
estimates may change, as new events occur, and additional
information is obtained. Actual results could differ materially
from these estimates under different assumptions or
conditions.
Use
of Estimates
Preparing
financial statements in conformity with U.S. GAAP requires
management 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 and revenues and expenses during the reported period.
Actual results could differ from those estimates, and those
estimates may be material.
Income
Taxes
The
Company accounts for income tax using the asset and liability
method prescribed by ASC 740, “Income Taxes”. Under this
method, deferred tax assets and liabilities are determined based on
the difference between the financial reporting and tax bases of
assets and liabilities using enacted tax rates that will be in
effect in the year in which the differences are expected to
reverse. The Company records a valuation allowance to offset
deferred tax assets if based on the weight of available evidence,
it is more-likely-than-not that some portion, or all, of the
deferred tax assets will not be realized. The effect on deferred
taxes of a change in tax rates is recognized as income or loss in
the period that includes the enactment date.
The
Company follows the accounting guidance for uncertainty in income
taxes using the provisions of ASC 740 “Income Taxes”. Using
that guidance, tax positions initially need to be recognized in the
financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of
April 30, 2022 and July 31, 2021, respectively, the Company had no
uncertain tax positions that qualify for either recognition or
disclosure in the financial statements.
The
Company recognizes interest and penalties related to uncertain
income tax positions in other expense. No interest and penalties
related to uncertain income tax positions were recorded for the
three and nine months ended April 30, 2022 and 2021,
respectively.
Basic
and Diluted Earnings (Loss) per Share
Pursuant
to ASC 260-10-45, basic earnings (loss) per common share is
computed by dividing net income (loss) by the weighted average
number of shares of common stock outstanding for the periods
presented.
Diluted
earnings per share is computed by dividing net income by the
weighted average number of shares of common stock, common stock
equivalents and potentially dilutive securities outstanding during
the period. Potentially dilutive common shares may consist of
common stock issuable for stock options and warrants (using the
treasury stock method), convertible notes and common stock
issuable. These common stock equivalents may be dilutive in the
future. In the event of a net loss, diluted loss per share is the
same as basic loss per share since the effect of the potential
common stock equivalents upon conversion would be
anti-dilutive.
The
Company effected a reverse merger and recapitalization on July 29,
2021, as a result, all share and per share amounts have been
retroactively restated to the earliest period presented (for the
year ended July 31, 2021).
For
the nine months ended April 30, 2022 and 2021, the Company had
potentially dilutive equity securities of 35,520,000 and 0,
respectively. These securities consist solely of Series A,
convertible preferred stock, which convert into 1,000 shares of
common stock for each 1 share of Series A, convertible preferred
stock held.
Related
Parties
Parties
are considered to be related to the Company if the parties,
directly or indirectly, through one or more intermediaries,
control, are controlled by, or are under common control with the
Company. Related parties also include principal owners of the
Company, its management, members of the immediate families of
principal owners of the Company and its management and other
parties with which the Company may deal with if one party controls
or can significantly influence the management or operating policies
of the other to an extent that one of the transacting parties might
be prevented from fully pursuing its own separate
interests.
Off-Balance
Sheet Arrangements
We do
not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
A
smaller reporting company is not required to provide the
information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the SEC’s rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in
company reports filed or submitted under the Exchange Act is
accumulated and communicated to management, including our Chief
Executive Officer and Principal Financial Officer, to allow timely
decisions regarding required disclosure.
As
required by Rules 13a-15 and 15d-15 under the Exchange Act, our
Chief Executive Officer and Principal Financial Officer carried out
an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of April 30, 2022. Based
upon their evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that, as of April 30, 2022, our
disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) were effective.
We do
not expect that our disclosure controls and procedures will prevent
all errors and all instances of fraud. Disclosure controls and
procedures, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the
disclosure controls and procedures are met. Further, the design of
disclosure controls and procedures must reflect the fact that there
are resource constraints, and the benefits must be considered
relative to their costs. Because of the inherent limitations in all
disclosure controls and procedures, no evaluation of disclosure
controls and procedures can provide absolute assurance that we have
detected all our control deficiencies and instances of fraud, if
any. The design of disclosure controls and procedures also is based
partly on certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future
conditions.
Changes
in Internal Control over Financial Reporting
During
the three and nine months ended April 30, 2022, there has been no
change in our internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From
time to time, we are involved in ordinary routine litigation
typical for companies engaged in our line of business. As of the
date of this Quarterly Report on Form 10-Q, we are not involved in
any pending legal proceedings that we believe would be likely,
individually or in the aggregate, to have a material adverse effect
on our financial condition or results of operations.
ITEM 1A. RISK FACTORS
There
have been no material changes to our risk factors as disclosed in
our Transition Report on Form 10-KT for the transition period from
January 1, 2021 to July 31, 2021, as filed with the SEC on November
15, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
Between
March 22, 2022 and May 5, 2022, the Company issued an aggregate of
1,481,867 shares of restricted common stock. Of this amount, the
Company (i) sold an aggregate of 1,222,450 shares of restricted
common stock to 11 accredited investors at a purchase price of
$0.40 per share, for a total purchase price of $488,980, and (ii)
issued 259,417 shares of restricted common stock to a former
officer and director of the Company, as compensation for prior
services.
In
addition, on May 31, 2022, the Company issued an aggregate of
12,500,000 shares of common stock in exchange for 7,957,500 shares
of OpenLocker common stock.
The
above securities issuances were exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), in
reliance on the exemptions provided by Regulation D and Section
4(a)(2), as applicable under the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not
applicable.
ITEM 5. OTHER INFORMATION
(a)
None.
(b)
There have been no material changes to the procedures by which
security holders may recommend nominees to our Board of Directors
since we last provided disclosure in response to the requirements
of Item 407(c)(3) of Regulation S-K promulgated under the Exchange
Act.
ITEM
6. EXHIBITS
Exhibit
No. |
|
Description |
|
|
|
10.1 |
|
Form of Redemption Agreement (Common
Stock) dated as of February 18, 2022 (incorporated by reference to
Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed
with the SEC on February 25, 2022). |
|
|
|
10.2 |
|
Form of Redemption Agreement (Series
A Preferred Stock) dated as of February 18, 2022 (incorporated by
reference to Exhibit 10.2 to the registrant’s Current Report on
Form 8-K filed with the SEC on February 25, 2022). |
|
|
|
10.3 |
|
Share Exchange Agreement, dated as of
May 23, 2022, by and among Descrypto Holdings, Inc., OpenLocker
Inc., the stockholders of OpenLocker Inc. party thereto and Brian
Klatsky as the stockholders’ representative (incorporated by
reference to Exhibit 10.1 to the registrant’s Current Report on
Form 8-K filed with the SEC on May 24, 2022). |
|
|
|
31.1* |
|
Certification of Chief Executive Officer pursuant to Exchange Act
Rule 15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|
|
|
31.2* |
|
Certification of Principal Financial Officer pursuant to Exchange
Act Rule 15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
|
|
|
32.1** |
|
Certification by the Chief Executive Officer and principal
financial officer pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |
|
|
|
101.INS* |
|
Inline
XBRL Instance Document. |
101.SCH* |
|
Inline
XBRL Taxonomy Extension Schema. |
101.CAL* |
|
Inline
XBRL Taxonomy Extension Calculation Linkbase. |
101.LAB* |
|
Inline
XBRL Taxonomy Extension Label Linkbase. |
101.PRE* |
|
Inline
XBRL Taxonomy Extension Presentation Linkbase. |
101.DEF* |
|
Inline
XBRL Taxonomy Extension Definition Document. |
104* |
|
Cover
Page Interactive Data File (embedded within the Inline XBRL
document). |
* |
Filed
herewith. |
** |
Furnished
herewith. |
SIGNATURES
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
DESCRYPTO
HOLDINGS, INC. |
|
|
|
Date:
June 14, 2022 |
By: |
/s/
Howard Gostfrand |
|
|
Howard
Gostfrand |
|
|
Chief
Executive Officer (principal executive officer, principal financial
officer and principal accounting officer) |
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