Organization, Nature of Operations and Going Concern

12 Months Ended

Jul. 31, 2022

Accounting Policies [Abstract]

Organization, Nature of Operations and Going Concern

Note 1 – Organization, Nature of Operations and Going Concern

Organization and Nature of Operations

Descrypto Holdings, Inc. and Subsidiary (collectively, “we,” “us,” “our” or the “Company”) is a holding company that plans to identify and acquire uniquely positioned blockchain technology companies and digital assets with a focus on assets that promote environmental, social and governance (“ESG”) policies. We are focused on digital financial services, NFTs and tokenization of assets which combined provide for a robust ecosystem providing our shareholders an opportunity to invest in an emerging industry with exponential growth opportunity. We aim to partner with best in-class teams and develop collaborative relationships to help execute their vision, drive sustainable growth, and ultimately create long-term value.

The parent (Descrypto Holdings, Inc.) and subsidiary are organized as follows:

Company Name		Incorporation Date	State of Incorporation
Descrypto Holdings, Inc.		1996	Delaware
Descrypto, Inc.	*	2017	Delaware
Descrypto Studio, LLC		2022	Wyoming
Open Locker, Inc.	**	2021	Delaware

* Entity was acquired in a reverse merger on July 29, 2021.

** See Note 6 regarding the acquisition of Open Locker, Inc. 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.

DESCRYPTO HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2022 AND 2021

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 year ended July 31, 2022, the Company had:

● Net loss of $2,556,714; and

● Net cash used in operations of $286,527

Additionally, at July 31, 2022, the Company had:

● Accumulated deficit of $2,708,155

● Stockholders’ equity of $5,719,109; and

● Working capital of $506,260

We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements. The Company has cash on hand of $607,135 at July 31, 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 July 31, 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.

DESCRYPTO HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2022 AND 2021

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 year ended July 31, 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.