Crypto Co 10-K for FY2020

Crypto Co (CRCW)

10-K 2021-03-30 For: 2020-12-31

Added on April 10, 2026

About this 10-K

Crypto Co filed this 10-K on March 30, 2021, covering the fiscal year ended December 31, 2020 (FY2020).

Headline figures

Fiscal year ended December 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $14.4K; down 78.1% from $65.74K a year earlier
Net loss: $2.82M; compared with a net loss of $1.81M a year earlier

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Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

	Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [ ]	Smaller reporting company [X]
	Emerging growth company [ ]

	Part I
Item 1	Business	3
Item 1A	Risk Factors	6
Item 1B	Unresolved Staff Comments	6
Item 2	Properties	6
Item 3	Legal Proceedings	6
Item 4	Mine Safety Disclosures	6

	Part II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7
Item 6	Selected Financial Data	8
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
Item 7A	Quantitative and Qualitative Disclosure about Market Risk	13
Item 8	Financial Statements and Supplementary Data	13
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	13
Item 9A	Controls and Procedures	13
Item 9B	Other Information	15

	Part III

Item 10	Directors, Executive Officers, and Corporate Governance	15
Item 11	Executive Compensation	17
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	18
Item 13	Certain Relationships and Related Transactions, and Director Independence	19
Item 14	Principal Accountant Fees and Services	20

	Part IV

Item 15	Exhibits, Financial Statement Schedules	21
Item 16	Form 10-K Summary	21

Signatures		22

	●	our ability to execute our business plan and achieve profitability;
	●	our limited operating history;
	●	rapidly advancing technology;
	●	the impact of competitive or alternative services and technologies;
	●	our ability to remediate material weaknesses in our internal control over financial reporting;
	●	our ability to obtain, expand and maintain protection of any intellectual property or propriety software we are currently developing or may develop in the future;
	●	our exposure to and ability to defend third-party claims and challenges to our intellectual property rights;
	●	our ability to obtain adequate financing in the future, as and when we need it;
	●	our ability to continue as a going concern;
	●	our success at managing the risks involved in the foregoing items; and
	●	other factors discussed in this report.

	●	Fraud reduction: Blockchain technology has the potential to positively disrupt most industries since it can work for nearly every type of transaction that involves value, including money, property, and goods. From a business perspective, the technology may be leveraged for process improvement, helping to reduce human error, prevent fraud, and streamline data storage.

	●	Transparency: Financial organizations may use the blockchain to store records digitally and leverage the technology for any type of transaction that needs to be verified by a trusted third party.

	●	Security: Transactions may include transferring digital or physical assets, verifying chain of custody, and protecting intellectual property. In an era with increasing cybercrime and strict regulatory requirements, blockchain offers a highly fraud-resistant technology that can protect and authenticate almost any type of transaction.

	●	Efficiency: Both Permissioned and Public blockchains offer significant improvements in efficiency to retail and business implementations by reducing cost and time in the duplicate databases and ledgers that companies and intermediaries must maintain in the absence of a shared, trusted, and immutable system.

Period	High		Low
2020
First Quarter	$	0.50	$	0.50
Second Quarter	$	2.35	$	1.00
Third Quarter	$	8.10	$	5.00
Fourth Quarter	$	75.00	$	2.15

Period	High		Low
2019
First Quarter	$	12.00	$	10.00
Second Quarter	$	12.00	$	1.05
Third Quarter	$	1.11	$	1.05
Fourth Quarter	$	1.11	$	0.50

					Weighted
					Average
			Weighted		Remaining
			Average		Contractual		Aggregate
	Number		Exercise		Term		Intrinsic
	of Shares		Price		(years)		Value
Options outstanding, at December 31, 2019		346,349	$	8.73		8.38		3,025,003
Options granted		2,130,000		1.10		4.54		2,130,000
Options canceled		-		-
Options exercised		-		-
Options outstanding, at December 31, 2020		2,281,429	$	2.26		5.25	$	5,155,003
Vested and exercisable at December 31,2020		2,281,429	$	2.18		5.25	$	5,155,003

	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 that 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.

	●	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

	●	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

	●	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

	●	we have not performed a risk assessment and mapped our processes to control objectives;

	●	we have not implemented comprehensive entity-level internal controls;

	●	we have not implemented adequate system and manual controls; and

	●	we do not have sufficient segregation of duties.

	●	Implemented a formal quarterly review of financial information with our Chief Executive Officer and each managing director that oversees a portion of the business. These individuals provide a certification that the operating results are accurate to the best of their knowledge.

	●	Account reconciliations are now prepared for all material accounts and independently reviewed.

	●	Expenditures are approved by our Chief Executive Officer.

	●	Perform a risk assessment and map processes to control objectives and, where necessary, implement and document internal controls in accordance with the 2013 Committee of Sponsoring Organizations of the Treadway Commission.

	●	Our entity-level controls are, generally, informal and we intend to evaluate current processes, supplement where necessary, and document requirements.

	●	Evaluate system and manual controls, identify specific weaknesses, and implement a comprehensive system of internal controls.

	●	Assess and remediate personnel weaknesses.

	●	Appoint a Chief Financial Officer with public company experience.

Name	Age	Position

Ronald Levy	61	Director, Chief Executive Officer, Interim Chief Financial Officer, Chief Operating Officer and Secretary
Anthony Strickland	51	Director
Holly Ruxin	51	Director

	●	Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

	●	Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the SEC and in other public communications made by the Company;

	●	Compliance with applicable governmental laws, rules, and regulations;

	●	The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

	●	Accountability for adherence to the code.

Name and Principal Position	Year	Salary			Bonus ($)		Stock Awards ($)⁽⁴⁾		Option Awards ($)⁽⁴⁾		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)		Total ($)
Ron Levy,	2020	$	360,000	⁽³⁾				1,250,000		-		-		-		1,610,000
(Chief Executive, Interim Chief Financial Officer, and Chief Operating Officer⁽¹⁾	2019	$	0			-		-		-		-		-		0

Ivan Ivankovich,	2020		-			-		-		-		-		-		-
Chief Financial Officer⁽²⁾	2019		-			-		-		-		-		-		106,000

	(1)	Appointed as Chief Executive Officer on May 21, 2018.
	(2)	Resigned as Chief Financial Officer on December 6, 2019.
	(3)	Officer salary in the amount of $272,756 was deferred and is recorded in accrued expenses.
	(4)	Reflects the issuance of 1,250,000 fully vested stock options

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Total ($)
Holly Ruxin		80,004		-		80,004	⁽¹⁾
Anthony Strickland		80,004		-		80,004	⁽¹⁾

	●	each stockholder or group of stockholders who, to our knowledge, owns more than 5% of our common stock;
	●	each of our named executive officers;
	●	each director; and
	●	all of our executive officers and directors as a group.

Name of Beneficial Owner	and Nature of Beneficial Ownership		Percentage of Common Stock Outstanding

Ron Levy (2)		6,020,156		28.1	%

Anthony Strickland (3)		500,000		2.3	%

Holly Ruxin (4)		250,000		1.6	%

All Directors and Executive Officers as a Group		6,220,156		29.1	%

Michael Poutre		6,020,156		28.1	%

James Gilbert		7,434,821		34.7	%

Rafael Furst		3,032,309		14.2	%

Redwood Fund LP (1) (2)		3,031,810		14.2	%

Imperial Strategies, LLC (1) (2)		2,988,346		14.0	%

	(1)	Redwood Fund LP is the direct beneficial owner of 3,031,810 shares of Common Stock of the Company. Ladyface Capital, LLC is the General Partner of Redwood Fund LP. Michael Poutre was the Chief Executive Officer and Director of the Company from June 7, 2017 until he resigned on May 14, 2018. Mr. Poutre is the sole owner of MP2 Ventures, LLC, which is a managing member of Ladyface Capital, LLC. Accordingly, Mr. Poutre may be deemed to have voting and investment power over the shares beneficially owned by Redwood Fund LP. Imperial Strategies, LLC is the direct beneficial owner of 2,988,346 shares of Common Stock of the Company. Michael Poutre is the sole owner of MP2 Ventures, LLC, which is a member of Imperial Strategies, LLC, and may be deemed to have voting and investment power over the shares beneficially owned by Imperial Strategies, LLC.

	(2)	Mr. Ron Levy is a beneficial owner of KOL Partners, LLC, which is a managing member of Ladyface Capital, LLC. Accordingly, Mr. Levy may be deemed to have voting and investment power over the shares beneficially owned by Redwood Fund LP. Imperial Strategies, LLC is the direct beneficial owner of 2,988,346 shares of Common Stock of the Company. Ron Levy is the beneficial owner of KOL Partners, LLC, which is a member of Imperial Strategies, LLC with a majority ownership interest and may be deemed may be deemed to have voting and investment power over the shares beneficially owned by Imperial Strategies, LLC. Includes fully vested options to purchase 1,250,000 shares of Common Stock.

	(3)	Includes fully vested options to purchase 500,000 shares of common stock.

	(4)	Includes fully vested options to purchase 350,000 shares of common stock.

	Year Ended December 31,
	2020		2019
Audit fees	$	58,600	$	68,000
Total fees	$	58,600	$	68,000

		Incorporated by Reference
Exhibit No.	Description of Exhibit	Form	Exhibit	Filing Date	File No.
2.1	Share Purchase Agreement, dated as of June 7, 2017, by and among Croe, Inc., The Crypto Company and John B. Thomas P.C., in its sole capacity as representative for certain shareholders of the Croe, Inc. listed on Schedule I thereto	8-K	2.1	6/9/17	000-55726
2.2	Share Purchase Agreement, dated as of June 7, 2017, by and among Croe, Inc., The Crypto Company, Uptick Capital, LLC and John B. Thomas P.C., in its sole capacity as representative for certain shareholders of the Croe, Inc. listed on Schedule I thereto	8-K	2.2	6/9/17	000-55726
2.3	Share Exchange Agreement, dated as of June 7, 2017, by and between Croe, Inc. and Michael Poutre, in his sole capacity as representative for the shareholders of Crypto	8-K	2.3	6/9/17	000-55726
2.4	Equity Purchase Agreement, dated as of December 22, 2017, by and among The Crypto Company, CoinTracking, LLC, Kachel Holding GmbH and Dario Kachel	8-K	2.1	1/16/18	000-55726
2.5	Purchase and assignment of shares, agreements on a purchase price of loan agreement and compensation agreement, dated as of December 28, 2018, by and among CoinTracking, LLC, Kachel Holding GmbH and CoinTracking GmbH	8-K	2.1	1/4/19	000-55726
2.6*	Stock Purchase Agreement by and among The Crypto Company, Blockchain Training Alliance, Inc. and the stockholders named therein, dated March 24, 2021					*
2.7*	Asset Purchase Agreement by and among Aedan Financial Corporation, Eric Fitzgerald and The Crypto Company, dated March 24, 2021					*
3.1	Articles of Conversion (Utah)	8-K	3.1	10/11/17	000-55726
3.2	Articles of Conversion (Nevada)	8-K	3.2	10/11/17	000-55726
3.3	Articles of Incorporation of The Crypto Company	8-K	3.3	10/11/17	000-55726
3.4	Certificate of Amendment to Articles of Incorporation of Crypto Sub, Inc.	8-K	3.4	10/11/17	000-55726
3.5	Amended and Restated Bylaws	8-K	3.1	2/28/18	000-55726
4.1	Description of Securities	10-K	4.1	7/26/19	000-55726
10.1	Consulting Agreement by and between the Company and MP2 Ventures, LLC, dated as of June 22, 2017.	8-K	10.1	6/28/17	000-55726
10.2	Form of Securities Purchase Agreement by and between the Company and each purchaser thereunder (September 8, 2017)	8-K	10.1	9/29/17	000-55726
10.3	Form of Securities Purchase Agreement by and between the Company and each purchaser thereunder (September 20, 2017)	8-K	10.2	9/29/17	000-55726
10.4	Form of Securities Purchase Agreement by and between the Company and each purchaser thereunder (September 25, 2017)	8-K	10.3	9/29/17	000-55726
10.5	Form of Common Stock Purchase Warrant (September 25, 2017)	8-K	10.4	9/29/17	000-55726
10.6	Form of Securities Purchase Agreement by and between the Company and each purchaser thereunder (December 12, 2017)	8-K	10.1	12/13/17	000-55726
10.7	Form of Non-Qualified Stock Option Agreement	8-K	10.1	4/17/18	000-55726	**
10.8	Separation Agreement and General Mutual Release	8-K	10.1	5/25/18	000-55726
10.9	Form of Director Services Agreement	8-K	10.2	5/25/18	000-55726	**
21.1	List of Subsidiaries of The Crypto Company					*
31	Certification of the Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board pursuant to section 302 of the Sarbanes-Oxley Act of 2002					*
32	Certification of the Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board pursuant to section 906 of the Sarbanes-Oxley Act of 2002					*

	THE CRYPTO COMPANY (Registrant)

	By:	/s/ Ron Levy
		Ron Levy
		Chief Executive Officer

Signature		Title

/s/ Ron Levy		Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board
Ron Levy		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

/s/ Anthony Strickland
Anthony Strickland		Director

/s/ Holly Ruxin
Holly Ruxin		Director

	Page

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheet December 31, 2020 and 2019	F-3

Consolidated Statement of Operations For the Years Ended December 31, 2020 and December 31, 2019	F-4

Consolidated Statement of Stockholders’ Equity For the Years Ended December 31, 2020 and December 31, 2019	F-5

Consolidated Statement of Cash Flows For Years Ended December 31, 2020 and 2019	F-6

Notes to Consolidated Financial Statements	F-7 – F-18

	December 31, 2020			December 31, 2019

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	26,326		$	1,611
Accounts receivable, net		3,900			-
Total current assets		30,226			1,611
TOTAL ASSETS	$	30,226		$	1,611

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,933,281		$	1,576,214
Bank Overdraft		-			-
Income taxes payable		-			-
Notes Payable		300,000			300,000
Total current liabilities		2,233,281			1,876,214
Convertible debt		125,000			75,000
Notes Payable - Other		67,592			-
TOTAL LIABILITIES		2,425,873			1,951,214

STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value; 50,000,000 shares authorized, 21,417,841 and 21,400,591 shares issued and outstanding, respectively		21,418			21,401
Additional paid-in-capital		30,665,823			28,294,167
Accumulated deficit		(33,082,888	)		(30,265,171	)
TOTAL STOCKHOLDERS’ EQUITY		(2,395,647	)		(1,949,603	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	30,226		$	1,611

	For the year ended
	December 31, 2020			December 31, 2019
Revenue:
Services	$	14,400		$	65,743
Total Revenue, net		14,400			65,743

Operating expenses:
Cost of services		-			30,500
General and administrative expenses		749,930			1,750,668
Share-based compensation - employee		175,018			-
Share-based compensation - non-employee		2,146,655			-
Total Operating Expenses		(3,071,603	)		1,781,168
Operating loss		(3,057,203	)		(1,715,425	)
Other income/(expense)		307,522			(88,873	)
Interest expense		(68,036	)		(87,573	)
Loss before provision for income taxes		(2,817,717	)		(1,891,871	)
Provision for income taxes		-			1,600
Loss from continuing operations		(2,817,717	)		(1,893,471	)

Income (Loss) from discontinued operations attributable to the Crypto Company		-			84,849
Net loss attributable to the Crypto Company		(2,817,717	)		(1,808,622	)

Net Income (loss)	$	(2,817,717	)	$	(1,808,622	)

Continuing operations:
Net loss attributable to the Crypto Company per common share – basic and diluted	$	(0.13	)	$	(0.09	)
Income/(loss) attributable to the Crypto Company per common share – basic and diluted	$	-		$	0.00
Net loss attributable to the Crypto Company per common share – basic and diluted	$	(0.13	)	$	(0.09	)
Weighted average common shares outstanding – basic and diluted		21,401,204			21,219,382

					Additional						Accumulated Other						Total
	Common stock				paid-in-			Accumulated			Comprehensive			Noncontrolling			Stockholders’
	Shares		Amount		capital			Deficit			Income			Interest			Equity
Balance, December 31, 2018		21,212,860	$	21,213	$	28,219,355		$	(28,456,549	)	$	(743,987	)	$	2,177,108		$	1,217,140
Sale of CoinTracking GmbH		-		-		-						743,987			(2,177,108	)		(1,433,121	)
Warrants issued in connection with Convertible Notes		-		-		75,000			-			-			-			75,000
Stock compensation expense in connection with issuance of options		-		-		-			-			-			-			-
To correct prior year share issuance		187,731		188.00		(188	)
Net loss		-		-		-			(1,808,622	)		-			-			(1,808,622	)
Balance, December 31, 2019		21,400,591	$	21,401	$	28,294,167		$	(30,265,171	)	$	-		$	-		$	(1,949,603	)

					Additional					Accumulated Other				Total
	Common stock				paid-in-		Accumulated			Comprehensive		Noncontrolling		Stockholders’
	Shares		Amount		capital		Deficit			Income		Interest		Equity
Balance, December 31, 2019		21,400,591	$	21,401	$	28,294,167	$	(30,265,171	)	$	-	$	-	$	(1,949,603	)
Warrants issued in connection with Convertible Notes		-		-		50,000		-			-		-		50,000
Stock compensation expense in connection with issuance of options		-		-		1,976,673		-			-		-		1,976,673
Stock compensation expense in connection with issuance of common stock		17,250		17		344983									345,000
Net loss		-		-		-		(2,817,717	)		-		-		(2,817,717	)
Balance, December 31, 2020		21,417,841	$	21,418	$	30,665,823	$	(33,082,888	)	$	-	$	-	$	(2,395,647	)

	For the Twelve Months Ended
	December 31, 2020			December 31, 2019
Cash flows from operating activities:
Net loss	$	(2,817,717	)	$	(1,808,622	)
Adjustments to reconcile net loss to net cash used in operations:
Net realized gain on investment in cryptocurrency		-			(72,634	)
Impairment of investments in cryptocurrency		-			1,951
Impairment of intangible assets		-			20,968
Gain on sale on cryptocurrency		(208,964	)		(14,166	)
Gain on sale of equipment		(971	)		(2,856	)
Loss on fixed asset disposal		-			64,731
Depreciation and amortization		-			22,557
Share-based compensation		2,321,673			-
Financing costs associated with convertible debt		50,000			75,000
Change in operating assets and liabilities:
Accounts receivable		(3,900	)		-
Prepaid expenses		-			79,283
Accounts payable and accrued expenses		358,667			478,484
Income taxes payable		(1,600	)		-
Net cash used in operating activities		(302,812	)		(1,155,304	)

Cash flows from investing activities:
Net cash from sale of CoinTracking GmbH		-			1,000,000
Proceeds from sales of equipment		971			4,899
Proceeds from sales of cryptocurrency		208,964			-
Purchase of investments in cryptocurrency		-			74,568
Capitalized software development		-			-
Net cash used in investing activities		209,935			1,079,467

Cash flows from financing activities:
Proceeds from loans payable		67,592			-
Proceeds from issuance of convertible notes		50,000			75,000
Net cash provided by financing activities		117,592			75,000

Net (decrease) increase in cash and cash equivalents		24,715			(837	)
Cash and cash equivalents at the beginning of the period		1,611			2,448
Cash and cash equivalents at the end of the period	$	26,326		$	1,611

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	-		$	30,950

	●	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

	Level 3
	Non- Cryptocurrency

Balance at December 31, 2018	$	2,005
Transfers to investments in cryptocurrency		-
Purchases, sales, issuances, and settlement, net		-
Impairment		(2,005	)
Balance at December 31, 2019	$	-

	Year ended December 31, 2020
	Ranges
Volatility		36 – 115	%
Expected dividends		0	%
Expected term (in years)		5 – 10 years
Risk-free rate		0.17 – 2.95	%

	Year ended December 31, 2020			Year ended December 31, 2019

Numerator for basic and diluted income per share:
Net loss from continuing operations attributable to the Company		(2,817,717	)	$	(1.808.622	)

Discontinued operations:
Income/(loss) attributable to the Company		-			84,849
Net loss per share attributable to the Company		(2,817,717	)	$	(1,723,773	)

Denominator for basic and diluted income per share:
Weighted average shares (basic)		21,401,204			21,219,382
Common stock equivalents		-			-
Weighted average shares (diluted)		21,401,204			21,219,382

Basic and diluted income (loss) per share:
Net loss from continuing operations attributable to the Company		(0.13	)	$	(0.09	)
Net loss from discontinued operations attributable to the Company		-			(0.00	)
Net loss attributable to the Company		(0.13	)	$	(0.09	)