美國
證券交易委員會
華盛頓，特區。20549
表格
截至季度結束
或者
過渡期從__________到__________
委員會
文件編號：
（公司章程中指定的準確公司名稱）
| （註冊地或組織所在管轄區） | （美國國稅局僱主號碼） | |
| 文件號碼） | (主要 執行人員之地址) |
(總部地址)
根據交易所法規（17 CFR 240.14a-12）第14a-12規定的招股材料
根據《證券交易所法》第12(b) 章註冊的證券:
| 每一類別的名稱 | 交易符號 | 在每個交易所註冊的名稱 | ||
| 無 | 不適用 | 不適用 |
請勾選標記以指示註冊者是否（1）在過去12個月內（或註冊者需要提交這些報告的更短時間內）已提交證券交易所法案第13或15（d）節要求提交的所有報告，及 （2）是否已被提交要求過去90天的提交要求所制約。
請用勾號表示註冊人是否在過去12個月（或者在註冊人被要求提交此類文件的較短時間內）按照規則405的規定（本章節第§232.405條）電子提交了每個必須提交的互動數據文件。
請用複選標記指示註冊人是大型加速提名人、加速提名人、非加速提名人、較小的報告公司還是新興成長公司。請參閱《交易所法》第120億.2條中對「大型加速提名人」、「加速提名人」、「較小的報告公司」和「新興成長公司」的定義。（選一項）：
| 大型加速歸檔者 ☐ | 加速歸檔者 ☐ | |
| 較小的報告公司 | ||
| 新興成長公司 |
如果是新興成長型企業，請打勾，以表明註冊人已選擇不使用遵守《證券交易法》第13(a)條所規定的任何新的或修訂後的財務會計準則的延長過渡期。 ☐
請勾選適用的圓圈，表示註冊登記者是否是空殼公司(根據交易所法案第12b-2條的定義)。是 ☐ 否
截至2024年11月15日，發行人擁有 每股普通股的面值爲$ 每股，未償還。
目錄
| 頁碼 | ||
| 第一部分財務信息 | 4 | |
| 項目 1. | 精簡財務報表。 | 4 |
| 2024年9月30日（未經審計）和2023年12月31日的簡明合併資產負債表 | 4 | |
| 未經審計的合併運營基本報表截至2024年9月30日和2023年9月30日的九個月 | 5 | |
| 未經審計的合併股東權益缺口基本報表截至2024年9月30日和2023年9月30日的九個月 | 6 | |
| 2024年9月30日和2023年未經審計的簡明合併現金流量表 | 7 | |
| 簡明聯合財務報表附註(未經審計) | 8 | |
| 項目 2. | 分銷計劃 | 22 |
| 項目 3. | 有關市場風險的定量和定性披露 | 24 |
| 項目 4. | 控制和程序 | 24 |
| 第二部分 其他信息 | ||
| 項目 1. | 法律訴訟 | 25 |
| Interest expense, net | 風險因素 | 25 |
| 項目 3. | 對高級證券的違約。 | 25 |
| 項目 4. | 礦山安全披露 | 25 |
| 項目5。 | 其他信息 | 25 |
| 項目 6. | 展示資料 | 25 |
| 簽名 | 26 | |
| 2 |
關於前瞻性聲明的註釋
本季度提交的10-Q表格（「季度報告」）包含前瞻性聲明。除歷史事實陳述外，本 季度報告包含的所有聲明，包括關於我們未來經營業績和財務 狀況、我們的業務策略和計劃，以及我們未來經營目標的聲明，均屬於前瞻性聲明。 「相信」， 「可能」，「將」，「估計」，「持續」，「預期」，「打算」， 「預計」等表達旨在識別前瞻性聲明。我們大部分基於我們對未來事件和趨勢的當前期望和對未來 影響我們財務狀況、經營業績、業務策略、短期和長期業務運營和目標、以及財務需求的投射。 這些前瞻性聲明要受一系列風險、不確定性和假設的影響，包括我們在20 23年12月31日結束的年度報告10-K中描述的那些（「2023年度報告」）文件已提交給美國證券交易委員會（「SEC」）以及與SEC的任何後續備案文件。此外，我們經營在一個競爭激烈且快速 變化的環境中。新的風險不時出現。我們的管理層無法預測所有風險，也無法評估所有 因素對我們業務的影響，或任何因素或組合因素可能造成實際結果與 我們可能提出的任何前瞻性聲明中含有的結果大不相同。基於這些風險、不確定性和假設，本季度報告中討論的未來事件 和趨勢可能不會發生，並且實際結果可能大不相同，且與前瞻性聲明中預期或暗示的結果大相徑庭。
除非另有明示或上下文另有要求，在本文件中「Landbay」、「公司」、「我們」和「我們的」均指紐約公司Landbay Inc。鑑於存在這些風險和不確定性，讀者被告誡不要過分依賴這些前瞻性陳述。我們不承擔任何修訂這些前瞻性陳述並公開發布修訂結果的義務，除非法律要求這樣做。
除非 另有明確說明或上下文另有要求，除非另有明確說明或上下文另有要求，術語「Crypto」， 「公司」，「我們」，「我們」和「我們的」在這些簡明合併基本報表中 指的是The Crypto Company，並在適當情況下指其全資子公司Blockchain Training Alliance, Inc.（「BTA」） 和一間不活躍的子公司Coin Tracking, LLC（「CoinTracking」）。
| 3 |
第I部分。財務信息
項目 1. 基本報表
加密公司
彙編簡明資產負債表
| 2024年9月30日 | 2023年12月31日 | |||||||
| (未經審計) | ||||||||
| 資產 | ||||||||
| 流動資產 | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 應收賬款，淨額 | ||||||||
| 預付費用 | ||||||||
| 總流動資產 | ||||||||
| 固定資產 | ||||||||
| 商譽 | ||||||||
| 無形資產 | ||||||||
| 資產總計 | $ | $ | ||||||
| 負債和股東赤字 | ||||||||
| 流動負債 | ||||||||
| 應付賬款和應計費用 | $ | $ | ||||||
| 應計工資-官員 | ||||||||
| 應付票據，淨額 | ||||||||
| 可轉換債券 | ||||||||
| 總流動負債 | ||||||||
| 可轉換債券 | ||||||||
| 其他應付款 | ||||||||
| 負債合計 | ||||||||
| 股東權益虧損 | ||||||||
| 普通股，每股面值爲 $0.0001； 面值； 授權股份數; 和 截至2024年9月30日和2023年12月31日，已發行和流通股份分別爲 | ||||||||
| 股本溢價 | ||||||||
| 累積赤字 | ( | ) | ( | ) | ||||
| 總股東淨虧損 | ( | ) | ( | ) | ||||
| 基本報表中的負債和股東權益合計 | $ | $ | ||||||
附註是未經審計的簡要合併財務報表不可分割的組成部分。
| 4 |
加密公司
未經審計的 簡明合併利潤表
| 截至三個月結束 | 截至九個月的日期 | |||||||||||||||
| 2024年9月30日 | 2023年9月30日 | 2024年9月30日 | 2023年9月30日 | |||||||||||||
| 收入： | ||||||||||||||||
| 服務 | $ | $ | $ | $ | ||||||||||||
| 服務成本 | ||||||||||||||||
| 毛利率 | ||||||||||||||||
| 運營費用： | ||||||||||||||||
| 一般和行政費用 | ||||||||||||||||
| 攤銷 | ||||||||||||||||
| 員工的基於股份的薪酬 | ||||||||||||||||
| 非員工的基於股份的薪酬 | ( | ) | ||||||||||||||
| 總營業費用 | ||||||||||||||||
| 營業損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收入 | ||||||||||||||||
| 設備出售損失 | ( | ) | ||||||||||||||
| 利息支出 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 稅前虧損 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得稅準備金 | ||||||||||||||||
| 淨損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 每股淨（虧損） | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| 基礎和稀釋後加權平均普通股份 | ||||||||||||||||
附註是未經審計的簡要合併財務報表不可分割的組成部分。
| 5 |
加密公司
未經審計 股東權益簡明合併財務報表
| 普通股 | 額外的 | 累計 | 總計 股東 | |||||||||||||||||
| 股份 | 金額 | 實收資本 | 虧損 | 股權 | ||||||||||||||||
| 2022年12月31日餘額 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| 股票以現金髮行，價格爲$ 每股 | | |||||||||||||||||||
| 與普通股發行相關的股票補償費用 | ||||||||||||||||||||
| 權證的債務折扣 | ||||||||||||||||||||
| 股票用於貸款支付 | ||||||||||||||||||||
| 淨虧損 | ( | ) | ( | ) | ||||||||||||||||
| 餘額，2023年9月30日 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| 普通股 | 額外的 | 累計 | 總計 股東 | |||||||||||||||||
| 股份 | 金額 | 實收資本 | 虧損 | 股權 | ||||||||||||||||
| 2023年12月31日餘額 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| 與發行普通股相關的股票補償費用 | | |||||||||||||||||||
| 往年虧損調整 | ||||||||||||||||||||
| 權證的債務折讓 | ||||||||||||||||||||
| 爲債務轉換髮行的普通股 | ||||||||||||||||||||
| 淨虧損 | ( | ) | ( | ) | ||||||||||||||||
| 餘額，2024年9月30日 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
附註是未經審計的簡要合併財務報表不可分割的組成部分。
| 6 |
加密公司
未經審計的現金流量表彙總全表
| 截至期末 | ||||||||
| 2024年9月30日 | 2023年9月30日 | |||||||
| 經營活動現金流量： | ||||||||
| 淨損失 | $ | ( | ) | $ | ( | ) | ||
| 調整以將淨虧損調節爲經營活動中使用的現金 | ||||||||
| 折舊和攤銷 | ||||||||
| 基於股份的薪酬 | ||||||||
| 權證的債務折扣 | ||||||||
| 設備處置損失 | ||||||||
| 經營性資產和負債的變化： | ||||||||
| 預付費用 | ||||||||
| Accrued payroll -officers | ||||||||
| 應付賬款和應計費用 | ||||||||
| 營業活動中的現金淨流量 | ( | ) | ( | ) | ||||
| 融資活動的現金流： | ||||||||
| 應付貸款的收益 | ||||||||
| 償還應付票據 | ( | ) | ||||||
| 發行應付票據收到的現金 | ||||||||
| 普通股發行的收益 | ||||||||
| 融資活動提供的淨現金 | ||||||||
| 現金及現金等價物的淨（減少）增加額 | ( | ) | ( | ) | ||||
| 期初現金及現金等價物餘額 | ||||||||
| 期末現金及現金等價物 | $ | $ | ||||||
| 現金流量信息補充披露: | ||||||||
| 用於可轉換債務發行的普通股 | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 7 |
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION
Organization and Description of the Business
The Crypto Company was incorporated in the State of Nevada on March 9, 2017. The Company is engaged in the business of providing consulting, training, and educational and related services for distributed ledger technologies (“blockchain”), for corporate and individual clients, enterprises for general blockchain education, as well as for the building of technological infrastructure and enterprise blockchain technology solutions. In recent periods the Company has generated revenues and incurred expenses primarily through these consulting and related operations.
Unless expressly indicated or the context requires otherwise, the terms “Crypto,” the “Company,” “we,” “us,” and “our” in these condensed consolidated financial statements refer to The Crypto Company and, where appropriate, its wholly-owned subsidiary Blockchain Training Alliance, Inc. (“BTA”) and an inactive subsidiary Coin Tracking, LLC (“CoinTracking”).
The Company entered into a Stock Purchase Agreement (the “SPA”) effective as of March 24, 2021 with 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. As a result of this acquisition, the operations of BTA became consolidated with Company operations on April 8, 2021.
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.
The Company’s accounting year-end is December 31.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The
Company’s condensed consolidated financial statements are prepared using the accrual method of accounting in accordance with United
States (“U.S.”) generally accepted accounting principles (“GAAP”) and have been prepared on a going concern basis,
which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has incurred
significant losses and experienced negative cash flows since inception. As of September 30, 2024, the Company had cash of $
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management is evaluating different strategies to obtain financing to fund the Company’s expenses and achieve a level of revenue adequate to support the Company’s current cost structure. Financing strategies may include, but are not limited to, private placements of capital stock, debt borrowings, partnerships and/or collaborations. There can be no assurance that any of these future-funding efforts will be successful. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Management’s Representation of Interim Condensed Consolidated 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”). Certain information and disclosures normally included in the condensed consolidated financial statements prepared in accordance with 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 condensed consolidated financial statements as of December 31, 2023.
The Company prepares its condensed consolidated financial statements based upon the accrual method of accounting, recognizing income when earned and expenses when incurred.
| 8 |
Basis of Presentation and Principles of Consolidation
Use of Estimates
The preparation of these condensed consolidated financial statements in conformity with 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.
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 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. The Company recorded this recovery as other income in its condensed consolidated 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 September 30, 2024, the Company had written off the value of its investments in cryptocurrency.
Investments Non-cryptocurrency
The Company previously invested in simple agreements 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 September 30, 2024, and December 31, 2023, the Company had written-off its investments in non- cryptocurrency.
| 9 |
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 condensed consolidated 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 condensed consolidated 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 September 30, 2024, 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.
| 10 |
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 period ended September 30, 2024, the Company’s main source of revenue was consulting and education services to numerous customers provided by and through BTA. 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 and education services performed during the period ended September 30, 2024, meet more than one of the criteria above.
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 condensed financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options.
| 11 |
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 non-employees 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 expenses 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.
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 and nine month periods ended September 30, 2024, and 2023, 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 condensed 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 -GOODWILL AND INTANGIBLE ASSETS
The
Company entered into a Stock Purchase Agreement (the “SPA”) effective as of March 24, 2021 with 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 $
As
a result of the foregoing, the Company initially recorded goodwill of $
During
the nine months ended September 30, 2024, the Company recorded $
NOTE 5 – NOTES PAYABLE
CoinTracking Note
On
April 3, 2018, CoinTracking entered into a Loan Agreement (the “Loan Agreement”) with CoinTracking GmbH, which provided for
total borrowings of up to $
Interest
expense for Notes Payable was $
2020 SBA Loan
On June 10, 2020, the Company received a loan from the Small Business Administration of $
As of September 30, 2024, the balance remaining under the 2020 SBA Loan is $
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BIT and IDI Notes
Efrat Note
On
April 7, 2022, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “April SPA”) entered
into with Efrat Investments LLC (“Efrat”) and issued a Promissory Note in the principal amount of $
The
maturity date of the Efrat Note was
As
of September 30, 2024, the balancing remaining under the Efrat Note is $
May 2022 AJB Note
On
May 3, 2022, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “May AJB SPA”) entered
into with AJB, and issued a Promissory Note in the principal amount of $
At
the closing the Company repaid all obligations owed to AJB pursuant to a
The
maturity date of the May AJB Note was
As
of September 30, 2024, the balancing remaining under the May AJB Note is $
Coventry Note
On July 27, 2022, The Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Coventry Enterprises,
LLC (“Coventry”), pursuant to which Coventry purchased a
The
Note bears interest at a rate of
Any or all of the principal amount and the Guaranteed Interest may be prepaid at any time and from time to time, in each case without penalty or premium.
In
addition to certain other remedies, if an Event of Default occurs, consistent with the terms of the Note, the Note will bear interest
on the aggregate unpaid principal amount and Guaranteed Interest at the rate of the lesser of
As of September 30, 2024 the Company repaid all obligations owed to Coventry Enterprises pursuant to this Coventry Note.
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January 2023 1800 Diagonal Note
On
January 10, 2023, the Company borrowed funds pursuant to a SPA entered into with Diagonal, and Diagonal purchased a convertible promissory
note (the “Third Diagonal Note”) from the Company in the aggregate principal amount of $
The
maturity date of the Third Diagonal Note was
Pursuant to the Third Diagonal Note, as long as the Company has any obligations under the Third Diagonal Note, the Company cannot without Diagonal’s written consent, sell, lease or otherwise dispose of any significant portion of its assets which would render the Company a “shell company” as such term is defined in SEC Rule 144. Additionally, under the Note, any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
The
Third Diagonal Note contains standard and customary events of default such as failing to timely make payments under the Note when due,
the failure of the Company to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements and the failure
to maintain a listing on the OTC Markets. The occurrence of any of the events of default, entitled Diagonal, among other things, to accelerate
the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Third Diagonal Note.
With
respect to the two outstanding Diagonal Notes, Diagonal has agreed to accept $
As of September 30, 2024 the Company repaid all obligations owed to 1800 Diagonal pursuant to this Third Diagonal Note.
Fast Capital Note
On February 2, 2023, the Company borrowed funds pursuant to a SPA entered into with Fast Capital, LLC (“Fast Capital”), and
Fast Capital purchased a
The
maturity date of the Fast Capital Note was
Fast
Capital has the right at any time after the six-month anniversary of the date of issuance of the Fast Capital Note to convert all or
any part of the outstanding and unpaid principal amount of the Fast Capital Note into Company common stock, subject to a beneficial ownership
limitation. The conversion price of the Fast Capital Note equals
The
Fast Capital Note contains various covenants standard and customary events of default such as failing to timely make payments under the
Fast Capital Note when due, the failure to maintain a listing on the OTC Markets or the Company defaulting on any other note or similar
debt obligation into which the Company has entered and failed to cure within the applicable grace period. The occurrence of any of the
events of default, entitle First Capital, among other things, to accelerate the due date of the unpaid principal amount of, and all accrued
and unpaid interest on, the Fast Capital Note. Upon an “Event of Default”, interest shall accrue at a default interest rate
of
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As
of September 30, 2024, the balancing remaining under the Fast Capital Note is $,
March 2023 1800 Diagonal Note
On March 2, 2023, the Company borrowed funds pursuant to a SPA entered into with Diagonal, and Diagonal purchased a convertible promissory
note (the “Fourth Diagonal Note”) from the Company in the aggregate principal amount of $
The
maturity date of the Fourth Diagonal Note was
Pursuant to the Fourth Diagonal Note, as long as the Company has any obligations under the Fourth Diagonal Note, the Company cannot without Diagonal’s written consent, sell, lease or otherwise dispose of any significant portion of its assets.
The
Fourth Diagonal Note contains standard and customary events of default such as failing to timely make payments under the Note when due,
the failure of the Company to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements and the failure
to maintain a listing on the OTC Markets. The occurrence of any of the events of default, entitled Diagonal, among other things, to accelerate
the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Fourth Diagonal Note.
With
respect to the two outstanding Diagonal Notes, Diagonal has agreed to accept $
As of September 30, 2024 the Company repaid all obligations owed to 1800 Diagonal pursuant to this Fourth Diagonal Note.
June 2023 AJB Note
On
June 23, 2023, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”) entered
into with AJB, and issued a Promissory Note in the principal amount of $
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The
maturity date of the AJB June Note was
As
of September 30, 2024 the balancing remaining under the AJB June Note is $
November 2023 AJB Note
On
November 13, 2023, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “Nov. SPA”) entered
into with AJB, and issued a Promissory Note in the principal amount of $
The
maturity date of the Nov. Note was
As
of September 30, 2024 the balancing remaining under the AJB November Note is $
January 2024 AJB Note
On
January 14, 2024, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”) entered
into with AJB Capital Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $
The
maturity date of the AJB Note was
As
of September 30, 2024 the balancing remaining under the AJB January Note is $
February 23, 2024 AJB Note
On February 23, 2024, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”)
entered into with AJB Capital Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $
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The
maturity date of the AJB Note is
As
of September 30, 2024 the balancing remaining under the AJB February Note is $
February 29, 2024 AJB Note
On
February 29, 2024, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”) entered
into with AJB Capital Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $
The
maturity date of the AJB Note is
As
of September 30, 2024 the balancing remaining under the AJB February Note is $
April 2024 AJB Note
On
April 12, 2024, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”) entered
into with AJB Capital Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $
AJB First Amendment to Note
On
May 1, 2024, the Company and AJB Capital Investments LLC entered into a First Amendment to that certain
Promissory Note dated as of April 12, 2024 (“Existing Note”). The First Amendment to the Promissory Note amends the Existing
Note to (1) increase the principal amount of the Existing Note from $
AJB Second Amendment to Note
On
May 20, 2024, the Company and AJB Capital Investments LLC entered into a Second Amendment, effective
as of May 15, 2024, to that certain Promissory Note dated as of April 12, 2024 (“Promissory Note”). The First Amendment to
the Promissory Note (“First Amendment”) amended the Promissory Note to (1) increase the principal amount of the Promissory
Note from $
June 7, 2024 AJB Note
The Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB
SPA”) entered into with AJB Capital Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount
of $
The
maturity date of the AJB Note is
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June 24, 2024 AJB Note
The Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB
SPA”) entered into with AJB Capital Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount
of $
The
maturity date of the AJB Note is
July 22, 2024 AJB Note
The
Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”) entered into with AJB Capital
Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $
The
maturity date of the AJB Note is January 15, 2025. The AJB Note bears interest at a rate of twelve percent (
August 28, 2024 AJB Note
The
Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”) entered into with AJB Capital
Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $
The
maturity date of the AJB Note is February 28, 2025. The AJB Note bears interest at a rate of twelve percent (
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NOTE 6 – CONVERTIBLE NOTES
The
balance of outstanding Convertible Notes was $
In
June 2020, the Company issued Convertible Notes (“June 2020 Notes”) to an accredited investor for an aggregate amount of
$
In
April 2020, the Company issued three Convertible Notes (“April 2020 Notes”) to three accredited investors for an aggregate
amount of $
In
February 2020, the Company issued three Convertible Notes (“February 2020 Notes”) to three accredited investors for an aggregate
amount of $
Interest
expense for Convertible Notes was $
NOTE 7 – WARRANTS FOR COMMON STOCK
As of September 30, 2024, 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 | ||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
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.
| 19 |
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 years and may be subject to vesting conditions, as determined by the Administrator. . 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 nine-month period ended September 30, 2024, the Company did not issue any stock options.
shares of the Company’s common stock are reserved for issuance under the Plan. As of September 30, 2024, there are outstanding stock option awards issued from the Plan covering a total of shares of the Company’s common stock and there remain reserved for future awards shares of the Company’s common stock.
Weighted Average | ||||||||||||||||
| Weighted | Remaining | |||||||||||||||
| Average | Contractual | Aggregate | ||||||||||||||
Number of Shares | Exercise Price | Term (years) | Intrinsic Value | |||||||||||||
| Options outstanding, on December 31, 2023 | $ | |||||||||||||||
| Options granted | - | - | ||||||||||||||
| Options canceled | - | - | ||||||||||||||
| Options exercised | - | - | ||||||||||||||
| Options outstanding, on September 30, 2024 | $ | $ | ||||||||||||||
| Vested and exercisable | $ | $ | ||||||||||||||
The Company recognized $ for share-based compensation related to stock options for the nine-month period ended September 30, 2024. There were options exercised for the nine months ended September 30, 2024.
The Company granted -- shares of restricted stock during the nine-month period ended September 30, 2024 (although such shares were not issued under the Plan).
The Company recognized $-- for share-based compensation related to restricted stock issued for the nine-month period ended September 30, 2024. As of September 30, 2024, there was $ of unrecognized compensation costs related to stock options issued to employees and non-employees, and the stock options had no intrinsic value since they were all “out of the money” as of September 30, 2024.
NOTE 9- COMMITMENTS AND CONTINGENCIES
Facility
rent expense was $
NOTE 10 – SUBSEQUENT EVENTS
(On
October 14, 2024, Efrat Investments converted the remaining principle balance of $
On
October 21, 2024, AJB Capital converted Fifty-seven thousand seven hundred and ten dollars ($
November 8, 2024 AJB Note
The
Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”) entered into with AJB Capital
Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $
The
maturity date of the AJB Note is May 1, 2025. The AJB Note bears interest at a rate of twelve percent (
| 20 |
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and with our audited consolidated financial statements, including the notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”), as filed with the U.S. Securities and Exchange Commission (“SEC”). In addition to historical consolidated financial information, the following discussion and analysis contain forward-looking statements that reflect our plans, estimates, and beliefs and involve risks and uncertainties. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan” and similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report, as well as risks referenced in our other filings with the SEC.
Overview of Our Business
We are primarily engaged in the business of providing consulting, training, and educational services for distributed ledger technologies (“blockchain”), for individual and corporate clients, enterprises for general blockchain education, as well as for the building of technological infrastructure and enterprise blockchain technology solutions. We currently generate revenues and incur expenses through these consulting and educational operations. We have disposed of our entire ownership interest in CoinTracking GmbH and also divested all of our cryptocurrency assets owned by our former cryptocurrency investment segment, which has ceased operations.
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.
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.
Recent Developments
Effective September 5, 2024, the Company amended its Articles of Incorporation (the “Articles”), to amend and restate Sections 1 and 2 of Article 4 of the Articles to increase the number of authorized shares of the Company’s common stock (“Common Stock”) from 2,000,000,000 to 19,000,000,000 and create a new class of stock, par value $0.001 per share, designated as Series A Preferred Stock consisting of 10 authorized shares, as set forth in Certificate of Amendment to the Articles of Incorporation (the “Amendment”). Pursuant to the Amendment, Common Stock and Preferred Stock are identical in all respects, except that each share of Common Stock is entitled to one vote and each share of Preferred Stock is entitled to 950,000,000 votes.
Effective September 5, 2024, the Company entered into a stock agreement (the “Stock Agreement”) with Ronald Levy (the “Recipient”), pursuant to which the Company issued a total of ten (10) shares of the Company’s Series A preferred stock (“Preferred Stock”) as a bonus to the Recipient. The shares of Preferred Stock were offered and sold in reliance upon exemption from the registration requirements under Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder.
On August 28, 2024, the Company borrowed funds pursuant to the terms of a Securities Purchase Agreement (the “AJB SPA”) entered into with AJB Capital Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $120,000 (the “AJB Note”) to AJB in a private transaction for a purchase price of $108,000, each dated as of August 28, 2024. In connection with the sale of the AJB Note, the Company also paid certain fees and expenses of AJB. After payment of the fees and expenses, the net proceeds to the Company were $98,000, which will be used for working capital, to fund potential acquisitions or other forms of strategic relationships, and other general corporate purposes.
The maturity date of the AJB Note is February 28, 2025. The AJB Note bears interest at a rate of twelve percent (12%) per calendar year from the date of issuance. The interest shall accrue on a monthly basis and is payable on the maturity date or upon acceleration or by prepayment or otherwise. The Company may prepay the AJB Note at any time without penalty. Under the terms of the AJB Note, the Company may not issue additional debt that is not subordinate to AJB, must comply with the Company’s reporting requirements under the Securities Exchange Act of 1934, and must maintain the listing of the Company’s common stock on the OTC Market or other exchange, among other restrictions and requirements. The Company’s failure to make required payments under the AJB Note or to comply with any of these covenants, among other matters, would constitute an event of default. Upon an event of default under the AJB SPA or AJB Note, the AJB Note will bear interest at the lesser of 18% per annum or the maximum amount permitted under law, AJB may immediately accelerate the AJB Note due date, AJB may convert the amount outstanding under the AJB Note into shares of Company common stock at a discount to the market price of the stock, and AJB will be entitled to its costs of collection, among other penalties and remedies.
Effective June 28, 2024, the Company entered into stock agreements (each, a “Stock Agreement”) with five separate recipients (each, a “Recipient”). Pursuant to the terms of the Stock Agreements, the Company issued a total of 910,770,639 shares of Company common stock as a bonus granted to certain Recipients who are employees and as a consideration for certain contractors’ services for the Recipients who are contractors. Ronald Levy, Chief Executive Officer, Interim Chief Financial Officer, Chief Operating Officer, Chairman of the Board and Secretary of the Company, was one the Recipients. The shares of Company common stock were issued in a private transaction. The shares of Company common stock described in this Current Report on Form 8-K were offered and sold in reliance upon exemption from the registration requirements under Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder. Each of the Recipients had access to information about the Company or is a person to whom the Company believes the offer was exempt from registration.
On October 3, 2023, the Company entered into an Intellectual Property Assignment Agreement (the “IP Agreement”) with AllFi Technologies, Inc., a Delaware corporation, and wholly owned subsidiary of the Company (“AllFi Technologies”), pursuant to which the Company assigns to AllFi Technologies: (i) a sublicense of code instance managed by TelBill, LLC under the Code Licensing Commerical Agreement dated as of August 29, 2023, by and between the Company and TelBill, LLC (“Code Licensing Commerical Agreement”), (ii) one runtime SaaS license for use by AllFi Technologies in the conduct of its coupon business for a term of 12 months in accordance with the Company’s sublicense right under Section 2.1 of the Code Licensing Commerical Agreement in exchange for a fee to be mutually agreed to by the Company and AllFi Technologies through the use of such SaaS license, and (iii) one runtime SaaS license for use by AllFi Technologies in the conduct of its banking and marketplace business for a term of 12 months in accordance with the Company’s sublicense right under Section 2.1 of the Code Licensing Commerical Agreement in exchange for a fee to be mutually agreed to by the Company and AllFi Technologies through the use of such SaaS license.
Also on October 3, 2023, the Company entered into a Subscription Agreement (the “Subscription Agreement”) with AllFi Technologies, pursuant to which the Company agreed to purchase from AllFi Technologies an aggregate of 501 shares of AllFi Technologies’ common stock, which represents 50.1% of the current issued and outstanding shares of AllFi Technologies, for a purchase price of $100,000. Upon the execution of the Subscription Agreement, the Company became a shareholder of AllFi Technologies.
| 21 |
In connection with the Company’s investment in AllFi Technologies as described above, on October 7, 2023, the Company sold an aggregate of 22,104,583 shares of the Company’s restricted common stock to AllFi Holdings LLC (the “Investor”), for a total purchase price of $1.00, pursuant to a Subscription Agreement by and between the Company and the Investor (the “Subscription Agreement”).
On February 23, 2024, the Company entered into a License Agreement (“License Agreement”) with AllFi Holdings LLC, a Wyoming limited liability company (“AllFi Holdings”), pursuant to which the Company grants to AllFi Holdings an exclusive license to utilize the Assigned IP (as defined in the License Agreement) associated with the utilization of the AllFi Brand. In consideration of the license granted under the License Agreement, AllFi Holdings will remit royalty payments to the Company for the utilization of the Assigned IP in accordance with the terms of the License Agreement.
On June 7, 2024, the Company completed the sale of AllFi Technologies, a majority owned subsidiary of the Company, to AllFi Holdings. AllFi Holdings purchased all of the issued and outstanding shares of common stock of the Company’s subsidiary, AllFi Technologies. This sale was designed to optimize both companies’ focus on their respective areas of expertise. As a result of this transaction, The Crypto Company received back from AllFi Holdings, its previously issued and committed shares, which totaled approximately 10% of The Crypto Company. In return, AllFi Holdings obtained full ownership of AllFi Technologies, including the trademarks and IP associated therewith.
Voluntary Mutual Termination and Release Agreement
On August 31, 2023, the Company entered into a Code Licensing Commercial Agreement (the “Code Licensing Agreement”) with TelBill, LLC (“TelBill”), pursuant to which TelBill granted the Company a non-exclusive, worldwide, revocable, non-transferable, sublicensable, license to use and market its software and fin-tech products and services to the Company’s customers. In exchange, the Company paid TelBill a sum of $300,000, paid in accordance with the fee schedule set forth in the Code Licensing Agreement. The Company also paid TelBill for all security system infrastructure costs and to manage the code instance, which were both be billed at actual cost with no markup. In addition, TelBill is entitled to share in the revenue generated by the Company through the use of TelBill’s software, at a rate of 15% of net program profits. As additional consideration for the license, the Company provided TelBill with 19.98% equity in the Company in the form of warrants with a 30-year expiration, and which vest in accordance with the vesting schedule set forth in the Code Licensing Agreement.
The Agreement has a one hundred year term or will continue until it is terminated in accordance with the provisions set forth in the Code Licensing Agreement. Each party may terminate the Agreement, upon written notice to the other party. Neither party may assign the Agreement, including through a change of control. The Agreement also contains customary representations, warranties and covenants, and the parties have also agreed to indemnify and hold each other harmless from claims and losses arising directly or indirectly from the Agreement under certain circumstances.
On February 23, 2024, the Company entered into a Voluntary Mutual Termination and Release Agreement (“Termination Agreement”) with TelBill, pursuant to which the Company and TelBill agreed to terminate the Code Licensing Commercial Agreement. The Company and TelBill have made customary representations, warranties, and covenants in the Termination Agreement.
Comparison of the three months ended September 30, 2024 and September 30, 2023
Revenue
Revenues for the three months ended September 30, 2024 and September 30, 2023, were $10,299 and $124,195, respectively. The decrease in revenue was due to less demand for blockchain training services. Revenue for the 2024 period consisted primarily of fees received for blockchain training and consulting generated by the Company’s BTA subsidiary which was acquired in April 2021.
General and Administrative Expenses
For the three months ended September 30, 2024, our general and administrative expenses were $309,364, an increase of $65,181 compared to $244,183 for the period ended September 30, 2023. General and administrative expenses consist primarily of costs relating to professional services, payroll, and payroll-related expenses. Professional services included in general and administrative expenses consist primarily of contracting fees, consulting fees, and accounting fees.
Amortization expense was $-0- for the three months ended September 30, 2024 and $10,833 as of September 30, 2023, respectively. Depreciation expense was $0 and $0 for the three months ended September 30, 2024 and September 30, 2023, respectively.
Share-based compensation was $281,000 and $113,818 for the three months ended September 30, 2024 and September 30, 2023, respectively.
Other Income (Expense)
During the three months ended September 30, 2024 and September 30, 2023, other income was $0.
Interest Expense
During the three months ended September 30, 2024, interest expense was $76,807 compared to $99,306 during the three months ended September 30, 2023. The decrease is primarily attributed to the less issuances of warrant debt discounts during the 2024 period.
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Comparison of the nine months ended September 30, 2024 and September 30, 2023
Revenue
Revenue for the nine months ended September 30, 2024 and September 30, 2023, were $35,946 and $379,107, respectively. The decrease in revenue was due to less of a demand for blockchain training services. Revenue for the 2024 period consisted primarily of fees received for blockchain training and consulting generated by the Company’s BTA subsidiary which was acquired in April 2021.
General and Administrative Expenses
For the nine months ended September 30, 2024, our general and administrative expenses were $996,017, an increase of $16,693 compared to $979,324 for the period ended September 30, 2023. General and administrative expenses consist primarily of costs relating to professional services, payroll, and payroll-related expenses. Professional services included in general and administrative expenses consist primarily of contracting fees, consulting fees, and accounting fees.
Amortization expense was $21,666 and $32,499 for the nine months ended September 30, 2024 and September 30, 2023, respectively. Depreciation expense was $0 and $0 for the nine months ended September 30, 2024 and September 30, 2023, respectively.
Share-based compensation was $1,865,099 and $620,298 for the nine months ended September 30, 2024 and September 30, 2023, respectively.
Other Income (Expense)
During the nine months ended September 30, 2024 and September 30, 2023, other income was $0 and $25,775, respectively.
During the nine months ended September 30, 2024 and September 20, 2023, other expense was $-0- and ($31,000), respectively.
Interest Expense
During the nine months ended September 30, 2024, interest expense was $470,157 compared to $2,416,621 during the nine months ended September 30, 2023. The decrease is primarily attributed to the less issuances of warrant debt discounts during the 2024 period.
Liquidity and Capital Resources
The ability to continue as a going concern is dependent upon us generating profitable operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management is evaluating different strategies to obtain financing to fund our expenses and achieve a level of revenue adequate to support our current cost structure. Financing strategies may include but are not limited to, private placements of capital stock, debt borrowings, partnerships, and/or collaborations. There can be no assurance that any of these future-funding efforts will be successful. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
The following table summarizes the primary sources and uses of cash for the periods presented below:
| Nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash (used in) operating activities | $ | (1,295,798 | ) | $ | (763,615 | ) | ||
| Net cash (used in) investing activities | - | - | ||||||
| Net cash provided by financing activities | 1,329,490 | 673,444 | ||||||
| Net (decrease) in cash and cash equivalents | $ | (66,308 | ) | $ | (90,171 | ) | ||
Operating Activities
Net cash used in operating activities was $1,395,798 for the nine months ended September 30, 2024, compared to net cash used by operating activities of $763,615 for the nine months ended September 30, 2023. The increase in net cash used in operating activities during the 2024 period was primarily due to an increase in accounts payable and accrued expenses of $257,846 for the nine months ended September 30, 2024.
Investing Activities
Net cash used in investing activities was $0 and $0 for the nine months ended September 30, 2024 and September 30, 2023.
Financing Activities
Net cash from financing activities for the nine months ended September 30, 2024, was $1,329,490, compared to $673,444 for the nine months ended September 30, 2023. The increase in net cash from financing activities was mainly due to the resulting issuance of promissory notes during the nine months ended September 30, 2024.
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Trends, Events, and Uncertainties
Blockchain
The blockchain technology market is dynamic and unpredictable. Although we will undertake compliance efforts, including efforts with commercially reasonable diligence, there can be no assurance that there will not be a new or unforeseen law, regulation or risk factor which will materially impact our ability to continue our business as currently operated or raise additional capital to foster our continued growth.
Other than as discussed in this Quarterly Report and our 2023 Annual Report, we are not aware of any other trends, events, or uncertainties that are likely to have a material effect on our financial condition.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent liabilities. We base our judgments on our historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have no material changes to our Critical Accounting Policies and Estimates disclosure as filed in our 2023 Annual Report.
Recent Accounting Pronouncements
See Note 3 to the consolidated financial statements for a discussion of recent accounting pronouncements.
Off-Balance Sheet Transactions
We do not have any off-balance sheet transactions.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.
ITEM 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, including our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2024. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2024, to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the period ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. Other Information
ITEM 1. Legal Proceedings.
The Company is subject, from time to time, to various legal proceedings that are incidental to the conduct of its business. The Company is not involved in any pending legal proceeding that it believes would reasonably be expected to have a material adverse effect on its financial condition or results of operations.
ITEM 1A. Risk Factors.
In evaluating us and our common stock, we urge you to carefully consider the risks and other information in this Quarterly Report on Form 10-Q, the Risk Factors disclosed in Item 1A. of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, that could materially and adversely affect our results of operations or financial condition.
ITEM 3. Defaults upon Senior Securities.
On April 24, 2023, the Company defaulted on the July 27, 2022 Coventry Note. The Company was in violation of covenants in the Coventry Note that require the Company to make the payment of any principal amount, guaranteed interest, or any other interest due under the Coventry Note, when due, subject to a five day cure period. Upon an event of default, consistent with the terms of the Coventry Note, the Coventry Note becomes convertible, in whole or in part, into shares of the Company’s Common Stock at Coventry’s option. On April 24, 2023, the Company received a notice of default in the amount of $17,916.94 of principal and $2,083.06 of interest. As per the terms of the Coventry Note, upon the occurrence and during the continuation of an event of default, the Coventry Note will become immediately due and payable. As of the filing date of this quarterly report on Form 10-Q, the total arrearage is $-0- since the Coventry Note has been paid in full.
ITEM 4. Mine Safety Disclosures.
Not applicable.
ITEM 5. Other Information.
During
the nine months ended September 30, 2024, no director or officer of the Company
On May 3, 2024, the Securities and Exchange Commission entered an order instituting settled administrative and cease-and-desist proceedings against BF Borgers CPA PC (“Borgers”) and its sole audit partner, Benjamin F. Borgers CPA, permanently, barring Mr. Borgers and Borgers (collectively, “BF Borgers”) from appearing or practicing before the Commission as an accountant (the “Order”). As a result of the Order, BF Borgers may no longer serve as the Company’s independent registered public accounting firm, nor can BF Borgers issue any audit reports included in Securities and Exchange Commission filings or provide consents with respect to audit reports. In light of the Order, the Audit Committee of the Board of Directors of the Company (the “Audit Committee”) on May 8, 2024, unanimously approved to dismiss and dismissed BF Borgers as the Company’s independent registered public accounting firm.
On May 8, 2024, the Audit Committee engaged Bush & Associates CPA LLC to serve as the Company’s new independent registered public accounting firm.
ITEM 6. Exhibits.
*Filed herewith.
** Furnished, not filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: November 19, 2024 | THE CRYPTO COMPANY | |
| (Registrant) | ||
| By: | /s/ Ron Levy | |
| Ron Levy | ||
Chief Executive Officer, Interim Chief Financial Officer, Chief Operating Officer and Secretary (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | ||
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