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CRYPTYDE, INC.

Date Filed : Aug 12, 2022

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AsFiled with the Securities and Exchange Commission on August 12, 2022

 

RegistrationNo.     

 

 

 

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FormS-1

UNDER

THESECURITIES ACT OF 1933

 

 

CRYPTYDE,INC.

(ExactName of Registrant as Specified in its Charter)

 

 

Delaware   7379   87-2755739
(State or other jurisdiction of incorporation or organization)   (Primary Standard Industrial Classification Code Number)  

(I.R.S. Employer

Identification No.)

 

2009th Avenue North, Suite220

SafetyHarbor, Florida 34695

(866)980-2818

(Address,including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

BrianMcFadden

ChiefExecutive Officer

Cryptyde,Inc.

2009th Avenue North, Suite220

SafetyHarbor, Florida 34695

(866)980-2818

(Name,address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copiesto:

 

RickA. Werner, Esq.

BruceNewsome, Esq.

Haynesand Boone, LLP

30Rockefeller Plaza, 26th Floor

NewYork, New York 10112

(212)659-7300

 

 

Approximatedate of commencement of proposed sale to the public: As soon as practicable after this registration statement is declared effective.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933 check the following box. ☒

 

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check thefollowing box and list the Securities Act registration statement number of the earlier effective registration statement for the sameoffering. ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reportingcompany, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”“smaller reporting company” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer   Accelerated filer
Non-accelerated filer   Smaller reporting company
      Emerging growth company

 

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

 

Theregistrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until theregistrant shall file a further amendment which specifically states that this registration statement shall thereafter become effectivein accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effectiveon such date as the Securities and Exchange Commission acting pursuant to said Section 8(a) may determine.

 

 

 

 
 

 

Theinformation in this prospectus is not complete and may be changed. The selling stockholder named in this prospectus may not sellthese securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus isnot an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or saleis not permitted.

 

Subjectto Completion, dated August 12, 2022

 

PROSPECTUS

 

 

Cryptyde,Inc.

71,276,725Shares of Common Stock

 

 

Thisprospectus relates to the resale by the selling stockholder named in this prospectus from time to time of up to 71,276,725 sharesof our common stock, par value $0.001 per share. These 71,276,725 shares of common stock consist of:

 

15,050,315 shares of common stock (the “Additional January 2022 Note Shares”) issuable upon the conversion of the note (the “January 2022 Note”) that was issued pursuant to the securities purchase agreement (“January 2022 Purchase Agreement”), as amended by the amendment agreement (the “2022 Amendment Agreement”) between us and Hudson Bay Master Fund, Ltd. (“Hudson Bay”). The Additional January 2022 Note Shares being registered are in addition to those 3,333,333 shares issuable upon conversion of the January 2022 Note and previously registered on Form S-1, Registration No. 333-264777 (as amended, the “June 2022 S-1”) prior to the amendment of the January 2022 Note and the registration rights of Hudson Bay, which now require the registration of the Additional January 2022 Note Shares.
   
56,226,410 shares of common stock (the “Additional January 2022 Warrant Shares”) issuable upon the exercise of the warrant (the “January 2022 Warrant”) that was issued pursuant to the January 2022 Purchase Agreement. The Additional January 2022 Warrant Shares being registered are in addition to those 6,666,666 shares issuable upon exercise of the January 2022 Warrant and previously registered on the June 2022 S-1 prior to an adjustment to the number of shares common stock issuable upon the exercise of the January 2022 Warrant and the amendment of the registration rights of Hudson Bay, which now require the registration of the Additional January 2022 Warrant Shares.

 

TheJanuary 2022 Note and January 2022 Warrant were issued in reliance upon the exemption from the registration requirements in Section4(a)(2) of the Securities Act. We are registering the Additional January 2022 Note Shares and Additional January 2022 Warrant Sharesissuable upon the conversion or exercise, as applicable, of the January 2022 Note and January 2022 Warrant, respectively, to allow theselling stockholder named herein to, from time to time, offer and sell or otherwise dispose of the shares of our common stock coveredby this prospectus.

 

Ourregistration of the shares of common stock covered by this prospectus does not mean that the selling stockholder will offer or sell anyof such shares of common stock. The selling stockholder named in this prospectus, or their donees, pledgees, transferees or other successors-in-interest,may resell the shares of common stock covered by this prospectus through public or private transactions at prevailing market prices,at prices related to prevailing market prices or at privately negotiated prices. For additional information on the possible methods ofsale that may be used by the selling stockholder, you should refer to the section of this prospectus entitled “Plan of Distribution.”

 

Wewill not receive any of the proceeds from the sale of common stock by the selling stockholder. However, we will receive proceeds from the exercise of the January 2022 Warrant if the January 2022 Warrant is exercisedfor cash.

 

Anyshares of common stock subject to resale hereunder will have been issued by us and acquired by the selling stockholder prior to any resaleof such shares pursuant to this prospectus.

 

Nounderwriter or other person has been engaged to facilitate the sale of the common stock in this offering. We will bear all costs, expensesand fees in connection with the registration of the common stock. The selling stockholder will bear all commissions and discounts, ifany, attributable to their respective sales of our common stock.

 

Ourcommon stock is currently listed on the Nasdaq Capital Market under the symbol “TYDE.” On August 11, 2022, the lastreported sale price of our common stock was $1.12.

 

Investmentin our common stock involves risk. See “Risk Factors” contained in this prospectus, in our periodic reports filed from timeto time with the Securities and Exchange Commission, which are incorporated by reference in this prospectus and in any applicable prospectussupplement. You should carefully read this prospectus and the documents we incorporate by reference, before you invest in our commonstock.

 

Neitherthe Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passedupon the adequacy or the accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

Thedate of this prospectus is August    , 2022.

 

 
 

 

TABLEOF CONTENTS

 

ABOUT THIS PROSPECTUS 1
PROSPECTUS SUMMARY 2
THE OFFERING 4
RISK FACTORS 5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 22
USE OF PROCEEDS 22
SELLING STOCKHOLDER 22
DESCRIPTION OF SECURITIES BEING REGISTERED 25
PLAN OF DISTRIBUTION 25
LEGAL MATTERS 27
EXPERTS 27
THE SEPARATION 28
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS 30
NOTES TO PRO FORMA FINANCIAL STATEMENTS 36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 38
BUSINESS 46
MANAGEMENT 52
EXECUTIVE AND DIRECTOR COMPENSATION 59
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 61
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 62
WHERE YOU CAN FIND MORE INFORMATION 64

 

i
 

 

ABOUTTHIS PROSPECTUS

 

Thisprospectus is part of the registration statement that we filed with the Securities and Exchange Commission pursuant to which the sellingstockholder named herein may, from time to time, offer and sell or otherwise dispose of the shares of our common stock covered by thisprospectus. As permitted by the rules and regulations of the Securities and Exchange Commission, the registration statement filed byus includes additional information not contained in this prospectus.

 

Thisprospectus and the documents incorporated by reference into this prospectus include important information about us, the securities beingoffered and other information you should know before investing in our securities. You should not assume that the information containedin this prospectus is accurate on any date subsequent to the date set forth on the front cover of this prospectus or that any informationwe incorporate by reference is correct on any date subsequent to the date of the document incorporated by reference, even though thisprospectus is delivered or shares of common stock are sold or otherwise disposed of on a later date. It is important for you to readand consider all information contained in this prospectus, including the documents incorporated by reference therein, in making yourinvestment decision. You should also read and consider the information in the documents to which we have referred you under “WhereYou Can Find More Information” in this prospectus.

 

Youshould rely only on this prospectus and the information incorporated or deemed to be incorporated by reference in this prospectus. Wehave not, and the selling stockholder has not, authorized anyone to give any information or to make any representation to you other thanthose contained or incorporated by reference in this prospectus. If anyone provides you with different or inconsistent information, youshould not rely on it. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy securities in anyjurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.

 

Wefurther note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any documentthat is incorporated by reference in this prospectus were made solely for the benefit of the parties to such agreement, including, insome cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation,warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly,such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.

 

Unlessotherwise indicated, information contained or incorporated by reference in this prospectus concerning our industry, including our generalexpectations and market opportunity, is based on information from our own management estimates and research, as well as from industryand general publications and research, surveys and studies conducted by third parties. Management estimates are derived from publiclyavailable information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to bereasonable. In addition, assumptions and estimates of our and our industry’s future performance are necessarily uncertain due toa variety of factors, including those described in “Risk Factors” beginning on page 5 of this prospectus. These andother factors could cause our future performance to differ materially from our assumptions and estimates.

 

1
 

 

 

PROSPECTUSSUMMARY

 

Thissummary provides an overview of selected information contained elsewhere in this prospectus and does not contain all of the informationyou should consider before investing in our securities. You should carefully read the prospectus, the information incorporated by referenceand the registration statement of which this prospectus is a part in their entirety before investing in our securities, including theinformation discussed under “Risk Factors” in this prospectus and the documents incorporated by reference and our financialstatements and related notes that are incorporated by reference in this prospectus. In this prospectus, unless the context indicatesotherwise, “Cryptyde,” “Tyde,” the “Company,” the “registrant,” “we,” “us,”“our,” or “ours” refer to Cryptyde, Inc. and its consolidated subsidiaries.

 

Overview

 

Weare a comprised of three main businesses, our Web3 Business, our Bitcoin Mining Services Business and our Packaging Business (collectively,the “Cryptyde Businesses”). Our Web3 Business plans to use decentralized blockchain technology in established consumer facingindustries such as video games, music, and art. Our Bitcoin Mining Services Business is focused on bringing Bitcoin mining to the consumerlevel by offering Bitcoin mining equipment and co-location services. Our Packaging Business manufactures and sells custom packaging fora wide variety of products and through packaging helps customers generate brand awareness and promote brand image. Our Web3 Businessexpects to launch its first product in 2022, our Bitcoin Mining Services Business began making sales in the first quarterof 2022, and our Packaging Business has been in operation for over 50 years.

 

OnJune 29, 2022, the Company separated from its former parent company, Vinco Ventures Inc. (“Vinco”). As previously announced,we concluded a spin-off from Vinco (the “Separation”) and continue operating our Web3 Business, our Bitcoin Mining ServicesBusiness and our Packaging Business. The Separation occurred concurrently with the distribution (the “Distribution”) of ourcommon stock to stockholders of Vinco as of May 18, 2022 (the “Record Date”) at a ratio of one share of our common stockfor every ten shares of Vinco common stock held by the Vinco stockholders. Following the Separation, we are an independent, publiclytraded company, and Vinco retains no ownership interest in our Company.

 

Inconnection with the Separation, we entered into a Separation and Distribution Agreement and other agreements with Vinco to effect theSeparation and provide a framework for our relationship with Vinco after the Separation. These agreements provide for the allocationbetween us and our subsidiaries, on the one hand, and Vinco and its subsidiaries, on the other hand, of the assets, liabilities, legalentities, and obligations associated with the Cryptyde Businesses, on the one hand, and Vinco’s other current businesses, on theother hand, and govern the relationship between our Company and our subsidiaries, on the one hand, and Vinco and its subsidiaries, onthe other hand, following the Separation. In addition to the Separation and Distribution Agreement, the other principal agreements enteredinto with Vinco include a Tax Matters Agreement and certain commercial agreements.

 

Formore information regarding risks associated with the Separation, see “Risk Factors.”

 

 

2
 

 

 

RecentFinancings

 

OnJanuary 26, 2022, the Company entered into the January 2022 Purchase Agreementwith Hudson Bay for the issuance and sale of the January 2022 Note with an initial principal amount of $33,333,333 at a conversion priceof $10.00 per share (“January 2022 Note Shares”), and the January 2022 Warrant to purchase up to 3,333,333 shares of our commonstock with an initial exercise price of $10.00 per share (the “January 2022 Warrant Shares”), for consideration of $30,000,000(the “January 2022 Offering”). The January 2022 Offering closed on May 5, 2022.

 

Inconnection with the January 2022 Offering, Cryptyde also entered into aregistration rights agreement (the “Registration Rights Agreement”) with the same investor. This registration statement isbeing filed in accordance with the Registration Rights Agreement. In accordance with the Registration Rights Agreement, prior to amendmentby the 2022 Amendment Agreement, Cryptyde filed the June 2022 S-1, which included all of the common stock underlying the January 2022Note (3,333,333 shares of common stock at such time), and 200% of the common stock underlying the January 2022 Warrant (6,666,666 sharesof common stock at such time).

 

Inconnection with the January 2022 Offering, Cryptyde, and its subsidiaries, as applicable, entered into guarantee agreements, a pledgeagreement (the “Pledge Agreement”), a control agreement and all financing statements, security agreements, pledges, assignments,opinions of counsel, and other documents requested by the collateral agent in the January 2022 Offering.

 

OnJuly 28, 2022, the Company entered into the 2022 Amendment Agreement withHudson Bay to amend the January 2022 Purchase Agreement, the January 2022 Note and the Registration Rights Agreement.

 

Pursuantto the 2022 Amendment Agreement, the Company released an aggregate of $29,000,000 (the “Released Funds”) from therestricted funds account maintained in accordance with the January 2022 Purchase Agreement (the “Restricted Funds Account”)and, going forward, must deposit 50% of any Warrant Exercise Cash (as defined in the 2022 Amendment Agreement) into the RestrictedFunds Account. As required by the 2022 Amendment Agreement, the Company used $22,000,000 of the Released Funds to repurchase fromHudson Bay $22,000,000 of the principal of the January 2022 Note. Pursuant to the 2022 Amendment Agreement, the conversion price of thebalance of the January 2022 Note that remains was voluntarily adjusted to $1.06 (the “Adjustment”) and in accordance withthe terms of the January 2022 Warrant, the exercise price of the warrant was adjusted to $1.06 as a result of the Adjustment. The 2022Amendment Agreement also amended the Registration Rights Agreement to require the Company to register (i) the number of shares of commonstock equal to 200% of the shares issuable upon conversion of the January 2022 Note and (ii) the number of shares of common stock equalto 200% of the shares issuable upon exercise of the January 2022 Warrant, assuming all cash has been released from the Restricted FundsAccount and the number of shares of common stock issuable upon exercise of the January 2022 Warrant has been adjusted in accordance withSection 3(c) of the January 2022 Warrant.

 

Asa result of the Adjustment, the Company is required to register 15,050,315 Additional January 2022 Note Shares and 56,226,410Additional January 2022 Warrant Shares, in addition to those shares of common stock registered by the Company in the June 2022 S-1.

 

OnJanuary 26, 2022, the Company entered into a securities purchase agreement(the “Equity Private Placement”) with an accredited investor (the “Equity Investor”) for the issuance of 1,500,000shares of Cryptyde’s common stock, and warrants (the “Equity Investor Warrants”) to purchase up to 1,500,000 sharesof Common Stock with an exercise price of $8.00 per share of common stock. The Equity Private Placement closed on May 20, 2022. In accordancewith the provisions of the Equity Private Placement, the Company registered the shares of common stock underlying the Equity InvestorWarrants in the June 2022 S-1. In connection with the closing of the Equity Private Placement, the Company issued warrants exercisableinto 240,000 shares of the Company’s common stock at an exercise price of $8.00 per share to Palladium Capital Group, LLC (“Palladium”)in connection with their role as placement agent. The Company registered the shares underlying the warrants issued to Palladium in theJune 2022 S-1. In connection with the Adjustment, under the terms of the Equity Investor Warrants and the warrants issued to Palladium,the exercise price of such warrants have been reduced to match the conversion price of $1.06 applicable to the January 2022 Note.

 

OnNovember 11, 2021, the Company entered into an amendment agreement (the “2021 Amendment Agreement”) by and among Vinco, HudsonBay and the Company. In connection with the 2021 Amendment Agreement on May 18, 2022, the Company issued to Hudson Bay warrants exercisableinto 8,652,419 shares of the Company’s common stock with an exercise price of $0.001 per share.

 

OnMay 18, 2022, in connection with its spin-off and based upon Vinco warrants exercisable into Vinco common stock, the Company issued toPalladium, CVI Investments, Inc. and Armistice Capital Master Fund Ltd. warrants exercisable into 767,774, 500,000 and 300,000 shares,respectively, of the Company’s common stock at an exercise price of $0.001 per share.

 

Copiesof each of the January 2022 Purchase Agreement, Registration Rights Agreement, form of Pledge Agreement, 2022 Amendment Agreement, EquityPrivate Placement, form of Equity Investor Warrant, Hudson Bay Master Fund Ltd. Warrants dated May 18, 2022, Palladium Capital Group,LLC Warrants dated May 18, 2022, CVI Investments, Inc. Warrants dated May 18, 2022, Armistice Capital Master Fund Ltd Warrants datedMay 18, 2022, and BHP Capital NY, Inc. Warrants dated May 20, 2022 are attached to the registration statement of which this prospectusforms a part as Exhibits 10.10, 10.11, 10.14, 10.15, 10.16, 10.17, 10.19, 10.20, 10.21, 10.22 and 10.23, respectively.

 

CorporateInformation

 

Cryptyde,Inc., was incorporated in the State of Nevada on September 21, 2021, and is currently listed on the Nasdaq Capital Market under the tradingsymbol to “TYDEV.” Upon completion of the Separation, our common stock will be listed on the Nasdaq Capital Market underthe symbol “TYDE.” On March 9, 2022, we changed our state of domicile to the State of Delaware. Our principal executive officeis located at 200 9th Avenue North, Suite 220, Safety Harbor, Florida 34695, and our telephone number is (866) 980-2818. Our websiteis www.cryptyde.com, and the information included in, or linked to our website is not part of this prospectus. We have included our websiteaddress in this prospectus solely as a textual reference.

 

 

3
 

 

THEOFFERING

 

Common Stock to be Offered by

the Selling Stockholder

  Up to 71,276,725 shares of our common stock, which are comprised of 15,050,315 Additional January 2022 Note Shares and 56,226,410 Additional January 2022 Warrant Shares.
     
Use of Proceeds   All shares of our common stock offered by this prospectus are being registered for the account of the selling stockholder and we will not receive any proceeds from the sale of these shares. However, we will receive proceeds from the exercise of the January 2022 Warrants if the January 2022 Warrants are exercised for cash. We intend to use those proceeds, if any, for general corporate purposes. See “Use of Proceeds” beginning on page 22 of this prospectus for additional information.
     
Plan of Distribution  

The selling stockholder named in this prospectus, or its pledgees, donees, transferees, distributees, beneficiaries or other successors-in-interest, may offer or sell the shares of common stock from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. The selling stockholder may also resell the shares of common stock to or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions.

 

See “Plan of Distribution” beginning on page 25 of this prospectus for additional information on the methods of sale that may be used by the selling stockholder.

     
Nasdaq Capital Market Symbol   Our common stock is currently listed on the Nasdaq Capital Market under the symbol “TYDE.”
     
Risk Factors   Investing in our common stock involves significant risks. See “Risk Factors” beginning on page 5 of this prospectus and the documents incorporated by reference in this prospectus.

 

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RISKFACTORS

 

Aninvestment in our securities involves certain risks. Before deciding to invest in our common stock, you should consider carefully thefollowing discussion of risks and uncertainties affecting us and our securities, together with other information in this prospectus.Our business, business prospects, financial condition or results of operations could be seriously harmed as a result of these risks.This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment. Additionalrisks and uncertainties not presently known to us or that we currently deem immaterial also may materially and adversely affect our business,financial condition and results of operations. Please also read carefully the section below entitled “Special Note Regarding Forward-LookingStatements.”

 

Summaryof our Risk Factors

 

RisksRelated to Our Business Generally

 

  We are a recently formed entity, led by management that has limited experience operating a public company, with little track record and limited historical financial information available;
  We are operating in highly competitive industries that could be affected by a decline in discretionary consumer spending or general economic conditions;
  We must retain our key management personnel;
  We may not be able to raise adequate capital to fund our business, and our ability to raise capital may be negatively affected by the COVID-19 pandemic. We are also subject to the expenses of operating a public company;
  We face cyber security risks and our insurance coverage may not be adequate to cover losses from both cyber security and other losses; and
  COVID-19 or another pandemic may negatively impact our ability to operate the Cryptyde Businesses Risks.

 

Relatedto Our Web 3 Business

 

  We need to innovate and provide Web3 products and services that are attractive to our users;
  The success of our Web3 Business is substantially dependent on the entertainment professionals we partner with and consumer tastes and preferences for Web3 products;
  If the crypto assets we create are determined to be a “security,” we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties;
  Our Web3 Business intends to rely on the Ethereum blockchain, which we have no control over; and
  We are subject to current and future legislation and rulemaking regarding digital assets that may result in extraordinary, non-recurring expenses.

 

RisksRelated to Our Bitcoin Mining Services Business

 

  Bitcoin mining is capital intensive and if our customers have a decline in discretionary spending, or the price of Bitcoin goes down, they may not engage in Bitcoin mining or buy our products; and
  We are subject to shifting public and governmental positions on digital asset mining activity could reduce our revenue and profitability.

 

RisksRelated to Our Packaging Business

 

  We are subject to the costs and availability of raw materials, and we rely on a limited number of third-party suppliers of raw materials; and
  We may be affected by interruptions in the transportation of the materials we require to produce packaging.

 

RisksRelated to Our Securities

 

  We do not expect to issue dividends;
  An active trading market for our securities may never develop, and the price of our securities may be volatile; and
  We may issue shares of preferred or common stock in the future, which could dilute your percentage ownership of the Company.

 

RisksRelated to the Separation

 

  We may not realize the anticipated benefits from the Separation, and the Separation could harm our business;
  We may have indemnification liabilities to Vinco under the Separation and Distribution Agreement; and
  The combined post-Separation value of Vinco and Cryptyde shares may not equal or exceed the pre-Separation value of Vinco shares.

 

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RisksRelated to Our Business Generally

 

Weare a recently formed entity with little track record and limited historical financial information available.

 

Cryptyde,Inc. was formed on September 21, 2021, in the State of Nevada and converted to a Delaware corporation on March 9, 2022. Our PackagingBusiness was formed in 1966, however the rest of our businesses were recently started. Because we are in the early stages of executingour business strategy, we cannot provide assurance that, or when, we will be profitable. We will need to make significant investmentsto develop and operate the Company and expect to incur significant expenses in connection with operating components, including costsfor developing technology, talent fees, marketing, and salaries. We expect to incur significant capital, operational and marketing expensesfor a few years in connection with our strategy and growth plan. Any failure to achieve or sustain profitability may have a materialadverse impact on the value of the shares of our common stock.

 

Wemust retain our key management personnel.

 

Weaim to recruit the most qualified candidates and strive for a diverse and well-balanced workforce. While we expect to reward and supportemployees through competitive pay, benefits, and perquisite programs that allow employees to thrive, due to our size we may not be ableto provide compensation equal to our more established competitors and may not be able to attract qualified management personnel. If weare unable to retain the key management personnel at our Company, the underlying business could suffer.

 

Wecould be adversely affected by declines in discretionary consumer spending, consumer confidence and general and regional economic conditions.

 

Oursuccess depends to a significant extent on discretionary consumer spending, which is heavily influenced by general economic conditionsand the availability of discretionary income. We believe the markets that all of the Cryptyde Businesses depend on are heavily relianton discretionary consumer spending. The current economic environment as a result of COVID-19, coupled with high volatility and uncertaintyas to the future global economic landscape, may have an adverse effect on consumers’ discretionary income and consumer confidence.Future volatile, negative, or uncertain economic conditions and recessionary periods or periods of significant inflation may adverselyimpact consumer spending on our products and services, which would materially adversely affect our business, financial condition andresults of operations. Such effects can be especially pronounced during periods of economic contraction or slow economic growth.

 

TheCompany will operate in highly competitive industries and our revenues, profits or market share could be harmed if we are unable to competeeffectively.

 

Eachof the Cryptyde Businesses will face competition from existing competitors. Our competitors in the Web3 business will depend on whatWeb3 products we develop or acquire. We expect competition for Freespace, our video game we are developing and expect to launch in 2022,to include Decentraland, Sandbox and Fluf World. With respect to our Bitcoin Mining Services Business, our competitors include CompassMining, Miners Dep and Alliance. With respect to the Packaging Business, our competitors include Sutherland Packaging, Acme CorrugatedBox Company, and Trenton Corrugated Products, Inc.

  

Competitionin each of these areas may increase as a result of technological developments, changes in consumer preferences, economic conditions,changes in market structure, and other factors. Increased competition may divert consumers from our products, which could reduce ourrevenue or increase our marketing costs. Our competitors may have substantially greater financial resources than we do, and they maybe able to adapt more quickly to changes in consumer preferences or devote greater resources to promotion of their offerings and servicesor to development or acquisition of offerings and services that are perceived to be of a higher quality or value than our offerings andservices. As a result, we may not be able to compete successfully against such competitors.

 

Wemay not be able to fund capital expenditures and investment in projects and offerings.

 

Aprincipal competitive factor for a large portion of the Cryptyde Businesses is the originality and perceived quality of our productsand offerings. We will need to make continued capital investments to adapt to constantly changing consumer preferences. Our ability tofund capital expenditures will depend on our ability to generate sufficient cash flow from operations and to raise capital from thirdparties. We cannot assure you that our operations will be able to generate sufficient cash flow to fund such costs, or that we will beable to obtain sufficient financing on adequate terms, or at all, which could cause us to delay or abandon certain projects or plans.

 

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Continuinggeneral market uncertainties resulting from the COVID-19 Pandemic may affect our ability to raise capital.

 

Sincethe outset of the COVID-19 pandemic, the United States and worldwide national securities markets have undergone unprecedented stressdue to the uncertainties of the COVID-19 pandemic and the resulting reactions and outcomes of government, business, and the general population.These uncertainties have resulted in declines in many market sectors. As a result, until the pandemic has stabilized, the markets maynot be available to the Company for purposes of raising required capital. Should we not be able to obtain financing when required, inthe amounts necessary to execute on our plans in full, or on terms which are economically feasible we may be unable to sustain the necessarycapital to pursue our strategic plan and may have to reduce the planned future growth and/or scope of our operations.

 

Adeterioration in the domestic and international economic environment, whether by way of current inflationary conditions or potentialrecessionary conditions, could adversely affect our operating results, cash flow and financial condition.

 

Currentinflationary conditions in the United States and other parts of the world have increased some of our costs, including our cost of materialsand labor. While we thus far have been largely successful in mitigating the impact of current inflationary conditions, we may need toincrease our own prices on goods and services sufficiently to offset cost increases, we may not be able to maintain acceptable operatingmargins and achieve profitability. Additionally, competitors operating in regions with less inflationary pressure may be able to competemore effectively which could further impact our ability to increases prices and/or result in lost sales. 

 

Recessionaryeconomic conditions could lower discretionary spending of our consumers, which could result in a loss of sales. Recessionary economicconditions may cause difficulty in collecting accounts receivable and reduce the availability of credit and spending power for our customers,both of which may negatively impact our business.

 

Geopoliticalrisks, such as those associated with Russia’s invasion of Ukraine, could result in a decline in the outlook for the U.S. and globaleconomies.

 

Theuncertain nature, magnitude, and duration of hostilities stemming from Russia’s recent military invasion of Ukraine, includingthe potential effects of sanctions and retaliatory cyber-attacks on the world economy and markets, have contributed to increased marketvolatility and uncertainty, and such geopolitical risks could have an adverse impact on macroeconomic factors which affect our businesses,as well as our access to capital.

 

Cybersecurity risks and the failure to maintain the integrity of internal, partner, and consumer data could result in damages to our reputation,the disruption of operations and/or subject us to costs, fines or lawsuits.

 

Wehave and will continue to collect and retain large volumes of internal, partner and consumer data, including credit card numbers andother personally identifiable information, for business purposes, including for transactional or target marketing and promotional purposes,and our various information technology systems enter, process, summarize and report such data. We also maintain personally identifiableinformation about our employees. Additionally, our Web 3 Business is predominately digital in nature and relies heavily on our abilityto maintain the integrity of our computer systems. The integrity and protection of our customer, employee, and company data is criticalto our business and our customers and employees are likely to have a high expectation that we will adequately protect their personalinformation. The regulatory environment, as well as the requirements imposed on us by the credit card industry, governing information,security and privacy laws is increasingly demanding and continues to evolve. Maintaining compliance with applicable security and privacyregulations may increase our operating costs and/or adversely impact our ability to market our products and services.

 

Wealso rely on accounting, financial and operational management information technology systems to conduct our operations. If these informationtechnology systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issuesin a timely manner, our business, financial condition and results of operations could be materially adversely affected.

 

Wemay face various security threats, including cyber security attacks on our data (including our vendors’ and customers’ data)and/or information technology infrastructure. Although we utilize various procedures and controls to monitor and mitigate these threats,there can be no assurance that these procedures and controls will be sufficient to prevent penetrations or disruptions to our systems.Furthermore, a penetrated or compromised data system or the intentional, inadvertent or negligent release or disclosure of data couldresult in theft, loss, fraudulent or unlawful use of customer, employee, or company data which could harm our reputation or result inremedial and other costs, fines or lawsuits and require significant management attention and resources to be spent. In addition, ourinsurance coverage and indemnification arrangements that we enter into, if any, may not be adequate to cover all the costs related tocyber security attacks or disruptions resulting from such events.

 

Ourinsurance coverage may not be adequate to cover all possible losses that we could suffer and our insurance costs may increase.

 

Weseek to maintain comprehensive insurance coverage at commercially reasonable rates. There can be no assurance that our insurance willbe sufficient to cover the full extent of all losses or liabilities for which we are insured, and we cannot guarantee that we will beable to obtain insurance policies on favorable terms, or at all.

 

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COVID-19or another pandemic may negatively impact our ability to operate the Cryptyde Businesses which could decrease or eliminate the valueof our common stock.

 

COVID-19has resulted in significant uncertainty in many areas of our businesses. We do not know how long these conditions will last. This uncertaintymay negatively impact our operations. We may experience labor shortages, particularly in our Packaging Business, if our employees areunable or unwilling to come to work. If our suppliers cannot deliver the supplies we need to operate our business or if we are unableto ship our products due to trucking or rail shipping disruptions, we may be forced to suspend operations or reduce production. If weare unable to operate the Packaging Business at or near its historical rate, it may result in unfavorable operating results. Any shutdown of operations or reduction in production, especially for an extended period of time, could reduce the value of our common stock.

 

Ourmanagement has limited experience in operating a public company.

 

Ourexecutive officers have limited experience in the management of a publicly traded company. Our management team may not successfully oreffectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligationsunder federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companiescould be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities,which will result in less time being devoted to the management and growth of our business. We may not have adequate personnel with theappropriate level of knowledge, experience and training in the accounting policies, practices or internal controls over financial reportingrequired of public companies in the U.S. The development and implementation of the standards and controls necessary for us to achievethe level of accounting standards required of a public company in the U.S. may require costs greater than expected. It is possible thatwe will be required to expand our employee base and hire additional employees to support our operations as a public company, which willincrease our operating costs in future periods.

 

Therequirements of being a public company may strain our resources and distract management.

 

Weincur significant costs associated with our public company reporting requirements and costs associated with applicable corporate governancerequirements. These applicable rules and regulations are expected to significantly increase our legal and financial compliance costsand to make some activities more time consuming and costly than those for privately owned companies that are not registrants with theSEC. Compliance with these rules and regulations may divert management’s attention from other business concerns.

 

Ourbusiness plan may require additional liquidity and capital resources that might not be available on terms that are favorable to us, orat all.

 

Wecurrently obtain a portion of the capital required for the development and operations of the Company from various forms of public andprivate financing. We may require additional capital and/or cash flow from future operations to fund the Company, our debt service obligationsand our ongoing business. There is no assurance that we will be able to raise sufficient additional capital or generate sufficient futurecash flow from our future operations to fund our ongoing business. If the amount of capital we are able to raise, together with any incomefrom future operations, is not sufficient to satisfy our liquidity and capital needs, including funding our current debt obligations,we may be required to abandon or alter our plans for the Company. The Company may also have to raise additional capital through the equitymarket, which could result in substantial dilution to existing stockholders.

 

Ourability to obtain necessary financing may be impaired by factors such as the health of and access to capital markets, our limited trackrecord and the limited historical financial information available, or the substantial doubt about our ability to continue as a goingconcern. Any additional capital raised through the sale of additional shares of our capital stock, convertible debt or other equity maydilute the ownership percentage of our stockholders.

 

RisksRelated to Our Web3 Business

 

Ifwe do not innovate and provide Web3 based products and services that are attractive to our users, our business could be harmed.

 

Oursuccess depends on our continued innovation to provide products and services that are attractive to potential users and customers. Asa result, we must invest significant resources in research and development to first create then improve the attractiveness and comprehensivenessof our products and services and effectively incorporate new Web3 technologies into them. If we are unable to provide products and servicesthat users and customers want to use, then users may become dissatisfied and use competitors’ products and services. If we areunable to continue offering innovative products and services, we may be unable to attract users, which could harm our business, resultsof operations and financial condition.

 

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Thesuccess of our Web3 Business is substantially dependent upon the continued success of the entertainment professionals we partner withand our ability to continue to secure favorable contracts with and maintain a good working relationship with these individuals.

 

OurWeb3 business includes partnerships with entertainment professionals to help them use Web3 technology to distribute, manage, and receivepayment for their art, music, or other content. Our ability to secure partnerships, and maintain a good working relationship, with artists,celebrities, athletes, and other public figures - through agreements, alliances, opportunities and otherwise – is of critical importanceto our long-term success.

 

Aparticular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertaintyand if we are unable to properly characterize a crypto asset we develop in our Web3 Business as not a security, we may be subject toregulatory scrutiny, inquiries, investigations, fines, and other penalties, which may adversely affect our business, operating results,and financial condition.

 

TheSEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under theU.S. federal securities laws. The legal test for determining whether any given crypto asset is a security is a highly complex, fact-drivenanalysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmationon the status of any particular crypto asset as a security. Furthermore, the SEC’s views in this area have evolved over time andit is difficult to predict the direction or timing of any continuing evolution. It is also possible that a change in the governing administrationor the appointment of new SEC commissioners could substantially impact the views of the SEC and its staff. For example, Chair Gary Genslerrecently remarked on the need for further regulatory oversight on crypto assets, crypto trading, and lending platforms by the SEC. Publicstatements by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin or Ethereum are securities(in their current form). Bitcoin and Ethereum are the only crypto assets as to which senior officials at the SEC have publicly expressedsuch a view. Moreover, such statements are not official policy statements by the SEC and reflect only the speakers’ views, whichare not binding on the SEC or any other agency or court and cannot be generalized to any other crypto asset. With respect to all othercrypto assets, there is currently no certainty under the applicable legal test that such assets are not securities, notwithstanding theconclusions we may draw based on our assessment regarding the likelihood that a particular crypto asset could be deemed a “security”under applicable laws. Similarly, though the SEC’s Strategic Hub for Innovation and Financial Technology published a frameworkfor analyzing whether any given crypto asset is a security in April 2019, this framework is also not a rule, regulation, or statementof the SEC and is not binding on the SEC.

 

Severalforeign jurisdictions have taken a broad-based approach to classifying crypto assets as “securities,” while other foreignjurisdictions, such as Switzerland, Malta, and Singapore, have adopted a narrower approach. As a result, certain crypto assets may bedeemed to be a “security” under the laws of some jurisdictions but not others. Various foreign jurisdictions may, in thefuture, adopt additional laws, regulations, or directives that affect the characterization of crypto assets as “securities.”

 

Theclassification of a crypto asset as a security under applicable law has wide-ranging implications for the regulatory obligations thatflow from the offer, sale, trading, and clearing of such assets. For example, a crypto asset that is a security in the United Statesmay generally only be offered or sold in the United States pursuant to a registration statement filed with the SEC or in an offeringthat qualifies for an exemption from registration. Persons that effect transactions in crypto assets that are securities in the UnitedStates may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasersand sellers to trade crypto assets that are securities in the United States are generally subject to registration as national securitiesexchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an ATS in compliance with rulesfor ATSs. Persons facilitating clearing and settlement of securities may be subject to registration with the SEC as a clearing agency.Foreign jurisdictions may have similar licensing, registration, and qualification requirements.

 

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Weanalyze each crypto asset we develop under our Web3 Business to determine its likeliness to be deemed to be a “security”under applicable laws. Regardless of our conclusions, we could be subject to legal or regulatory action in the event the SEC, a foreignregulatory authority, or a court were to determine that a crypto asset we developed under our Web3 Business is a security under applicablelaws. Because our Web3 platforms will not be registered or licensed with the SEC or foreign authorities as a broker-dealer, nationalsecurities exchange, or ATS (or foreign equivalents), and we do not seek to register or rely on an exemption from such registration orlicense to facilitate the offer and sale of crypto assets on our Web3 platforms, we will only develop and distributed digital assetsfor which we determine there are reasonably strong arguments to conclude that the crypto asset is not a security. We recognize that theapplication of securities laws to the specific facts and circumstances of crypto assets may be complex and subject to change, and thata listing determination does not guarantee any conclusion under the U.S. federal securities laws.

 

Therecan be no assurances that we will properly characterize any given crypto asset we develop under our Web3 Business as a security or non-securityfor purposes of determining whether we will distribute it on a Web3 platform. If the SEC, foreign regulatory authority, or a court wereto determine that a crypto asset offered, sold, or traded on one of our future Web3 platform is a security, we would not be able to offerthe Web3 product associated with the crypto asset until we are able to do so in a compliant manner. A determination by the SEC, a foreignregulatory authority, or a court that an asset that we support in the future for trading on our platform constitutes a security may alsoresult in us determining that it is advisable to remove assets from our platform that have similar characteristics to the asset thatwas determined to be a security. In addition, we could be subject to judicial or administrative sanctions for failing to offer or sellthe crypto asset in compliance with the registration requirements, or for acting as a broker, dealer, or national securities exchangewithout appropriate registration. Such an action could result in injunctions, cease and desist orders, as well as civil monetary penalties,fines, and disgorgement, criminal liability, and reputational harm.

 

OurWeb3 Business intends to rely on the Ethereum blockchain, which we have no control over.

 

OurWeb3 Business intends to operate on the Ethereum blockchain. Like other blockchains, Ethereum blockchain relies on a network of computersto run certain software programs to solve complex transactions in competition with other mining operations and to process transactions.We have no control over these networks, which subjects us to certain risks. For example, to the extent that any miners cease to recordtransactions in solved blocks, such transactions will not be recorded on the Ethereum blockchain. Currently, there are no known incentivesfor miners to elect to exclude the recording of transactions in solved blocks; however, to the extent that any such incentives arise(e.g., a collective movement among miners or one or more mining pools forcing Ethereum users to pay transaction fees as a substitutefor or in addition to the award of new Ethereum upon the solving of a block), actions of miners solving a significant number of blockscould delay the recording and confirmation of transactions on the Ethereum blockchain. Such delay could harm our business, results ofoperations, and financial condition.

 

Incidentsor adverse publicity concerning the Company or our public-figure partners could harm our reputation as well as negatively impact ourrevenues and profitability.

 

Ourreputation is an important factor in the success of our Web3 Business. Our ability to attract and retain both partners and customersdepends, in part, upon the external perceptions of our Company, the brands and individuals we are associated with, and our corporateand management integrity. If market recognition or the perception of the Company diminishes, there may be a material adverse effect onour revenues, profits, and cash flow. In addition, changing public perception of the brand and public figures we partner with could negativelyimpact our business and results of operations.

 

Changesin consumer tastes and preferences for Web3 products could reduce demand for our offerings and products and adversely affect the profitabilityof our Web3 Business.

 

Thesuccess of our Web3 Business depends on our ability to consistently provide, maintain and innovate Web3 products that meet changing consumerpreferences. Our success depends in part on the continued and increasing popularity of Web3 products and on our ability to successfullypredict and adapt to tastes and preferences of this consumer group. If our Web3 products do not achieve sufficient consumer acceptanceor if consumer preferences change or consumers are drawn to other products, our business, financial condition, or results of operationscould be materially adversely affected.

 

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Blockchaintechnology may expose us to specially designated nationals or blocked persons or cause it to violate provisions of law.

 

Weare subject to the rules enforced by OFAC, including regarding sanctions and requirements not to conduct business with persons namedon its specially designated nationals list. However, because of the pseudonymous nature of blockchain transactions, we may inadvertentlyand without our knowledge engage in transactions with persons named on OFAC’s specially designated nationals list, which may exposeus to regulatory sanctions and adversely affect our business, financial condition, and results of operations.

 

Currentand future legislation and rulemaking regarding digital assets may result in extraordinary, non-recurring expenses and could have a materialadverse effect on our business, financial condition and results of operations.

 

Currentand future legislation and rulemaking by the Commodity Futures Trading Commission (the “CFTC”) and SEC or other regulators,including interpretations released by a regulatory authority, may impact the manner in which digital assets are treated. For example,digital assets derivatives are not excluded from the definition of “commodity future” by the CFTC. Furthermore, accordingto the CFTC, digital assets fall within the definition of a commodity under the Commodities Exchange Act (the “CEA”) andas a result, we may be required to register and comply with additional regulations under the CEA, including additional periodic reportingand disclosure standards and requirements. We may also be required to register as a commodity pool operator and to register as a commoditypool with the CFTC through the National Futures Association. If we are required to register with the CFTC or another governmental orself-regulatory authority, we may seek to cease certain of our operations to avoid the registration requirement. Modifying our businessto avoid a registration requirement with the CFTC or another governmental or self-regulatory authority may have a material adverse effecton our business, financial condition, and results of operations.

 

RisksRelated to Our Bitcoin Mining Services Business

 

Thebusiness of the end users of our Bitcoin mining equipment is capital intensive and declines in discretionary income could limit the marketfor our Bitcoin mining equipment, which could have a material adverse effect on our business, financial condition, and results of operations.

 

OurBitcoin Mining equipment is intended to lower the costs of constructing, developing, operating and maintaining digital asset mining andhosting facilities. However, users of our Bitcoin mining equipment may still face substantial costs associated with electricity usage,equipment replacement and upgrading, and other factors. A decline in discretionary income could prevent our intended end users from engagingin Bitcoin mining, and in turn from purchasing our Bitcoin mining equipment.

 

Iffuture prices of Bitcoin are not sufficiently high, our business, results of operations, and financial condition could be materiallyand adversely affected, which may have a negative impact on the trading price of our securities.

 

OurBitcoin mining equipment allows users to engage in Bitcoin mining. If future prices of Bitcoin are not sufficiently high to cause ourtarget customers to engage in Bitcoin mining and in turn purchase our products and services, our sales of Bitcoin mining equipment maybe affected and our business, results of operations, and financial condition could be materially and adversely affected.

 

Ourbusiness is heavily impacted by social, political, economic and other events and circumstances in the United States and abroad. Shiftingpositions on digital asset mining activity could reduce our revenue and profitability.

 

Ourbusiness is heavily impacted by social, political, economic, and other events and circumstances in the United States and abroad. Theseevents and circumstances are largely outside of our influence and control. For example, we believe that historically China was a locationof significant digital asset mining at low electric power rates. Recently, China and other foreign governments have taken action to prohibitor significantly restrict digital asset mining. Should China or other countries that currently restrict digital asset mining eliminatesuch restrictions or actually seek to enhance such mining activity, the demand for our Bitcoin mining equipment may be lowered, whichwould likely reduce the revenue and profitability of our Bitcoin Mining Services Business.

 

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Weare subject to risks associated with our customers’ need for significant electric power and the limited availability of power resources,which could have a material adverse effect on our business, financial condition and results of operations.

 

Ourcustomers using our Bitcoin mining equipment require a significant amount of electric power. Energy costs and availability are vulnerableto seasonality, with increased costs primarily in the summer months and risks of outages and power grid damage as a result of inclementweather, animal incursion, sabotage, and other events out of our control. Although we aim to offer energy efficient Bitcoin mining equipment,there can be no assurance that there will be sufficient energy availability to meet the needs of our Bitcoin mining equipment customers.

 

Governmentsand government regulators, at the federal, state, and local levels, may potentially restrict the ability of electricity suppliers toprovide electricity to users of our Bitcoin mining equipment, which could have a material adverse effect on our business, financial conditionand results of operations.

 

Governmentsor government regulators, at the federal, state, and local levels, may potentially restrict electricity suppliers from providing electricityto Bitcoin mining hosting facilities, including facilities used by our Bitcoin mining equipment target customers and facilities offeredas part of our co-location services. For example, on May 14, 2018, the Chelan County Public Utility District in Washington approved athree-month extension of a moratorium on the approval of electric service for new digital asset transaction operators in Chelan County.In March 2018, the City of Plattsburgh, New York, placed an 18-month moratorium on transaction processing to preserve natural resources,the health of its residents and the “character and direction” of the city after residents complained about significantlyhigher electricity bills. In the event government regulators issue moratoriums or impose bans or restrictions involving transaction processingin jurisdictions in which our target Bitcoin mining equipment customers operate, the sales of our Bitcoin mining equipment may be negativelyimpacted and could have a material adverse effect our business, financial condition, and results of operations.

 

RisksRelated to Our Packaging Business

 

Anincrease in the cost or a reduction in the availability of wood fiber, other raw materials, energy and transportation may have an adverseeffect on our profitability and results of operations.

 

Woodfiber, including old corrugated containers (“OCC”) is the principal raw material in many parts of the paper and packagingindustry, including the corrugated cardboard on which our Packaging Business relies. Wood fiber is a commodity, and prices historicallyhave been cyclical and have varied on a regional basis. Environmental litigation and regulatory developments have caused, and may causein the future, significant reductions in the amount of timber available for commercial harvest in the United States. In addition, futuredomestic or foreign legislation and litigation concerning the use of timberlands, the protection of endangered species, the promotionof forest health and the response to and prevention of catastrophic wildfires could also affect timber supplies. Availability of harvestedtimber may further be limited by fire, insect infestation, disease, ice storms, windstorms, flooding and other causes, thereby reducingsupply and increasing prices. Demand for OCC, especially from China, could result in shortages or spikes in the cost of OCC.

 

Industrysupply of commodity paper and wood products is also subject to fluctuation, as changing industry conditions can influence producers toidle or permanently close individual machines or entire mills. Oversupply in these markets can also result from producers introducingnew capacity in response to favorable short-term pricing trends. Industry supply of commodity papers and wood products is also influencedby overseas production capacity, which has grown in recent years and is expected to continue to grow. Wood fiber pricing is subject toregional market influences, and the cost of wood fiber may increase in particular regions due to market shifts in those regions. In addition,the ability to obtain wood fiber from foreign countries may be impacted by economic, legal and political conditions in those countriesas well as transportation difficulties.

 

Energyis a significant input cost for the paper and packaging industry. Increases in energy prices can be expected to adversely impact businesses.

 

Becausewe rely on a supply of corrugated sheets of cardboard to produce packaging, these uncertainties in the supply and cost of raw materialsused to produce paper product could affect the availability of the corrugated sheets of cardboard we rely on. Increases in costs mayneed to be passed on to our customers, and ultimately may negatively affect our business.

 

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Disruptionsin transportation could adversely affect our supply of raw materials and could have an adverse effect on our results of operations, profitability,and liquidity.

 

Sincewe receive our supply of raw material from suppliers that use third-party shippers that rely on truck, rail, and other forms of transportation,the reduced availability of those modes of transportation could limit our ability to promptly produce products for our customers, whichcould have an adverse effect on our operations, financial condition, and liquidity. In addition, the increased cost of transportationof raw material from our suppliers may reduce our profitability if we are not able to recover those costs through price increases forour products.

 

Paperand packaging companies face strong competition.

 

Weface competition from numerous competitors, domestic as well as foreign. Some of our competitors are larger, more vertically integratedcompanies that have greater financial and other resources, greater manufacturing economies of scale, greater energy self-sufficiency,and/or lower operating costs.

 

Certainpaper and wood products are vulnerable to long-term declines in demand due to competing technologies or materials.

 

Companiesin the paper and packaging industry are subject to possible declines in demand for their products as the use of alternative materialsand technologies grows and the prices of such alternatives become more competitive. Any substantial shift in demand from wood and paperproducts to competing technologies or materials could result in a material decrease in sales of our products and could adversely affectour results of operations, cash flows, and financial position. We cannot ensure that any efforts we might undertake to adapt our productofferings to such changes would be successful or sufficient.

 

Becausewe service customers in a variety of industries, we may be particularly impacted by general economic downturns.

 

OurPackaging Business provides packaging for third-party customers in a variety of industries, including pharmaceutical and e-commerce companies.Certain of our Packaging Business customers provide goods that are discretionary items for consumers. Therefore, their business, andin turn our Packaging Business, depends on the strength of the retail, commercial, and industrial sectors of the economy in various partsof the world, and trends therein. During a downturn in the economy, consumer purchases of discretionary items are affected, which couldmaterially lower our customers’ demand for our packaging products, and negatively affect our profitability and financial condition.

 

Weincur significant expenses to maintain our manufacturing equipment and any interruption in the operations of our facilities may harmour operating performance.

 

Weregularly incur significant expenses to maintain our manufacturing equipment and facilities. The machines and equipment that we use toproduce our products are complex, interdependent, and have many parts. We must perform routine maintenance on our equipment and willhave to periodically replace a variety of parts.

 

Disruptionsto our Packaging Business could occur due to any number of circumstances, including prolonged power outages, mechanical or process failures,shortages of raw materials, natural catastrophes, disruptions in the availability of transportation, labor disputes, terrorism, changesin or non-compliance with environmental or safety laws, and the lack of availability of services from any of our facilities’ keysuppliers. Any facility shutdowns may be followed by prolonged startup periods, regardless of the reason for the shutdown. Any prolongeddisruption in operations at any of our facilities could cause significant lost production, which would have a material adverse effecton our results of operations.

 

Werely on a limited number of third-party suppliers for certain raw materials required for the production of our products.

 

Ourdependence on a limited number of third-party suppliers, and the challenges we may face in obtaining adequate supplies of raw materials,involve several risks, including limited control over pricing, availability, quality and delivery schedules. We cannot be certain thatour current suppliers will continue to provide us with the quantities of these raw materials that we require or will continue to satisfyour anticipated specifications and quality requirements. Any supply interruption in limited raw materials could materially harm our abilityto manufacture our products until a new source of supply, if any, could be identified and qualified. Although we believe there are othersuppliers of these raw materials, we may be unable to find a sufficient alternative supply channel in a reasonable time or on commerciallyreasonable terms. Any performance failure on the part of our suppliers could interrupt production of our products, which would have amaterial adverse effect on our business.

 

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RisksRelated to Our Securities

 

Wecurrently do not intend to pay dividends on our common stock. Consequently, our stockholders’ ability to achieve a return on theirinvestment will depend on appreciation in the price of our common stock.

 

Wedo not expect to pay cash dividends on our common stock. Any future dividend payments are within the absolute discretion of our boardof directors and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements,financial condition, level of indebtedness, contractual restrictions with respect to payment of dividends, business opportunities, anticipatedcash needs, provisions of applicable law and other factors that our board of directors may deem relevant.

 

 

Asa result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reportingin order to comply with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). We may not complete ouranalysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined to beeffective, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

 

Asa result of being a public company we are subject to SEC reporting and other regulatory requirements. We will incur expenses and diversionof our management’s time in its efforts to comply with Section 404 of the Sarbanes-Oxley Act regarding internal controls over financialreporting. Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, togetherwith adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls,or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testingby us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered publicaccounting firm when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be materialweaknesses or that may require prospective or retrospective changes to our consolidated financial statements or identify other areasfor further attention or improvement. If we are unable to assert that our internal controls over financial reporting are effective, wecould lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stockto decline, and we may be subject to investigation or sanctions by the SEC.

 

Oneof our companies, Ferguson Containers, has material weaknesses in its controls over financial reporting, which could negatively impactinvestor confidence in the accuracy and completeness of our financial reports, and cause the price of our common stock to decline.

 

ForFerguson Containers’s fiscal years ended December 31, 2019, 2020, and 2021, respectively, Ferguson Containers had the followingmaterial weakness in internal controls over financial reporting:

 

Primarily due to the small size of Ferguson Containers, it does not maintain sufficient segregation of duties to ensure the processing, review and authorization of all transactions including non-routine transactions.
   
Ferguson Containers’s processes lacked timely and complete reviews and analysis of information used to prepare its financial statements and disclosures in accordance with accounting principles generally accepted in the United States of America.

 

Thematerial weaknesses of Ferguson Containers’s internal control over financial reporting could negatively impact investor confidencein the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline.

 

Anactive, liquid trading market for our common stock may not develop, which may limit your ability to sell your shares.

 

Althoughour common stock is listed on the Nasdaq under the trading symbol “TYDE,” an active trading market for our common stock maynever develop or be sustained. A public trading market having the desirable characteristics of depth, liquidity and orderliness dependsupon the existence of willing buyers and sellers at any given time, such existence being dependent upon the individual decisions of buyersand sellers over which neither we nor any market maker has control. The failure of an active and liquid trading market to develop andcontinue would likely have a material adverse effect on the value of our common stock, and you may not be able to sell your shares ofour common stock.  

 

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Wemay issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwiseadversely affect holders of our common stock, which could depress the price of our common stock.

 

OurCertificate of Incorporation authorizes us to issue one or more series of preferred stock. Our board of directors has the authority todetermine the preferences, limitations and relative rights of the shares of preferred stock and to fix the number of shares constitutingany series and the designation of such series, without any further vote or action by our stockholders. Our preferred stock could be issuedwith voting, liquidation, dividend and other rights superior to the rights of our common stock. The potential issuance of preferred stockmay delay or prevent a change in control of us, discouraging bids for our common stock at a premium to the market price, and materiallyadversely affect the market price and the voting and other rights of the holders of our common stock.

 

Thetrading price of our securities will likely be, and continue to be, volatile and you could lose all or part of your investment.

 

Thetrading price of our securities could be volatile and subject to wide fluctuations in response to various factors, some of which arebeyond our control, including but not limited to our general business condition, the release of our financial reports and general economicconditions and forecasts. Broad market and industry factors may materially harm the market price of our securities irrespective of ouroperating performance. The stock market in general, and Nasdaq, have experienced price and volume fluctuations that have often been unrelatedor disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks,and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investorsperceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results ofoperations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities andour ability to obtain additional financing in the future. Any of these factors could have a material adverse effect on our stockholders’investment in our securities, and our securities may trade at prices significantly below the price they paid for them. In such circumstances,the trading price of our securities may not recover and may experience a further decline.

 

Anti-takeoverprovisions contained in our Certificate of Incorporation and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

 

Cryptyde’sCertificate of Incorporation, Bylaws, and Delaware law contain, provisions that are intended to deter coercive takeover practices andinadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirersto negotiate with Cryptyde’s board of directors rather than to attempt a hostile takeover. These provisions are expected to include,among others:

 

  rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings;
     
  the right of Cryptyde’s board of directors to issue preferred stock without stockholder approval;
     
  the ability of Cryptyde’s directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of the board of directors) on Cryptyde’s board of directors;
     
  the division of Cryptyde’s board of directors into three classes of directors, with each class serving a staggered term; and
     
  a provision that directors serving on a classified board may be removed by stockholders only for cause.

 

Inaddition Cryptyde is subject to Section 203 of the Delaware General Corporation Law (the “DGCL”). Section 203 provides that,subject to limited exceptions, persons that (without prior board approval) acquire, or are affiliated with a person that acquires, morethan 15 percent of the outstanding voting stock of a Delaware corporation shall not engage in any business combination with that corporation,including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which that personor its affiliate becomes the holder of more than 15 percent of the corporation’s outstanding voting stock.

 

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Cryptydebelieves these provisions will protect its stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirersto negotiate with Cryptyde’s board of directors and by providing Cryptyde’s board of directors with more time to assessany acquisition proposal. These provisions are not intended to make Cryptyde immune from takeovers. However, these provisions will applyeven if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that Cryptyde’s boardof directors determines is not in the best interests of Cryptyde and its stockholders. These provisions may also prevent or discourageattempts to remove and replace incumbent directors.

 

Inaddition, an acquisition or further issuance of Cryptyde’s stock could trigger the application of Section 355(e) of the Code. Fora discussion of Section 355(e), see the section entitled “Material United States Federal Income Tax Consequences of the Distribution”.

 

Theseanti-takeover provisions may also limit the opportunity for our stockholders to receive a premium for their shares of our common stockand could also affect the price that some investors are willing to pay for our common stock. For a discussion of the anti-takeover provisions,See “Description of Capital Stock – Anti-Takeover Provisions.”

 

OurCertificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantiallyall disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forumfor disputes with us or our directors, officers, or employees.

 

OurCertificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the (i) Court of Chancery(the “Chancery Court”) of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusiveforum for: (A) any derivative action or proceeding brought on behalf of Cryptyde, (B) any action asserting a claim of breach of a fiduciaryduty owed by any director, officer, stockholder, employee or agent of Cryptyde to Cryptyde or Cryptyde’s stockholders, (C) anyaction asserting a claim against the Cryptyde or any director, officer, stockholder, employee or agent of the Cryptyde arising out ofor relating to any provision of the DGCL, Cryptyde’s Certificate of Incorporation or Cryptyde’s Bylaws, or (D) any actionasserting a claim against the Corporation or any director, officer, stockholder, employee or agent of Cryptyde governed by the internalaffairs doctrine of the State of Delaware. Notwithstanding the foregoing, in the event that the Chancery Court lacks subject matter jurisdictionover any such action or proceeding, including in the event claims are brought under the Securities Exchange Act of 1934, as amended (the“Exchange Act”), the sole and exclusive forum for such action or proceeding shall be another state or federal court locatedwithin the State of Delaware.

 

Thechoice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputeswith us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, andother employees. Alternatively, if a court were to find the choice of forum provision contained in the proposed charter to be inapplicableor unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which couldharm our business, results of operations, and financial condition.

 

Ifsecurities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock priceand trading volume could decline.

 

Thetrading market for our securities will depend in part on the research and reports that securities or industry analysts publish aboutus or our business. If only a limited number of securities or industry analysts commence coverage of our Company, the trading price forour securities would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more ofthe analysts who covers us downgrades our stock or publishes unfavorable research about our business, our stock price may decline. Ifone or more of these analysts ceases coverage of our Company or fails to publish reports on us regularly, demand for our securities coulddecrease, which might cause our stock price and trading volume to decline.

 

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Weare an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and we are taking advantageof certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this couldmake our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

 

Weare an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our BusinessStartups Act of 2012 (the “JOBS Act”), and are taking advantage of certain exemptions from various reporting requirementsthat are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being requiredto comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regardingexecutive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisoryvote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

Further,Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accountingstandards until private companies (that is, those that have not had a registration statement under the Securities Act declared effectiveor do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accountingstandards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirementsthat apply to non-emerging growth companies, but any such an election to opt out is irrevocable. We have elected not to opt out of suchextended transition period, which means that when a standard is issued or revised and it has different application dates for public orprivate companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the newor revised standard. This may make comparison of our financial statements with another public company, which is neither an emerging growthcompany nor an emerging growth company that has opted out of using the extended transition period, difficult or impossible because ofthe potential differences in accounting standards used.

 

Wewill remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversaryof the closing of the Company’s initial public offering, (b) in which we have total annual revenue of at least $1.07 billion, or(c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliatesexceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued morethan $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growthcompany” have the meaning associated with it in the JOBS Act.

 

Additionally,we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may takeadvantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.We will remain a smaller reporting company until the last day of any fiscal year for so long as either (1) the market value of our sharesof common stock held by non-affiliates did not equal or exceed $250 million as of the prior June 30, or (2) our annual revenues did notequal or exceed $100 million during such completed fiscal year and the market value of our shares of common stock held by non-affiliatesdid not equal or exceed $700 million as of the prior December 31.

 

Becausewe subject the above listed reduced reporting requirements, investors may not be able to compare us to other companies, this could makeour securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

 

Yourpercentage ownership in our company may be diluted in the future.

 

Inthe future, your percentage ownership in our company may be diluted because of equity issuances for warrant exercises, acquisitions,strategic investments, capital market transactions, or otherwise, including equity compensation awards that we grant to our directors,officers and employees. Our Compensation Committee can be expected to grant additional equity compensation awards to our employees afterthe Separation. These awards would have a dilutive effect on our earnings per share, which could adversely affect the market price ofour common stock. From time to time, we may issue additional equity compensation awards to our employees under our employee benefitsplans.

 

Inaddition, our Certificate of Incorporation authorizes our board of directors to create and issue, without the approval of our stockholders,one or more series of preferred stock having such powers, preferences, and rights, if any, and such qualifications, limitations, andrestrictions, if any, as established by our board of directors. The terms of one or more series of preferred stock that is so createdand issued by our board of directors may dilute the voting power or reduce the value of our common stock. For example, our board of directorscould create and issue one or more series of preferred stock having the right to elect one or more of our directors (in all events oron the happening of specified events) and/or the right to veto specified transactions. Similarly, the repurchase or redemption rightsor dividend, distribution, or liquidation rights of a series of preferred stock created and issued by our board of directors could affectthe residual value of the common stock. See “Description of Capital Stock—Preferred Stock.”

 

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Ourcommon stock will be subordinate to all of our future indebtedness and any series of preferred stock, and effectively subordinated toall indebtedness and preferred equity claims against our subsidiaries.

 

Sharesof our common stock will rank junior to all of our future indebtedness and other liabilities. Additionally, holders of our common stockmay become subject to the prior dividend and liquidation rights of holders of any series of preferred stock that our board of directorsmay designate and issue without any action on the part of the holders of our common stock. Furthermore, our right to participate in adistribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’screditors.

 

Investorsare subject to litigation risk and their respective investments in the shares of our common stock may be lost as a result of our legalliabilities or the legal liabilities of our affiliates.

 

Weor our affiliates may from time to time be subject to claims by third parties and may be plaintiffs or defendants in civil proceedings.There can be no assurance that claims will not be brought in the future if we cannot generate the revenue that we forecast or raise sufficientcapital to pay our liabilities. The expense of prosecuting claims, for which there is no guarantee of success, and/or the expense ofdefending against claims by third parties and paying any amounts pursuant to settlements or judgments, would generally be borne by theCompany and could result in the reduction or complete loss of all of the assets of the Company, and investors in our common stock couldlose all or a part of their investment.

 

RisksRelated to the Separation

 

Wemay not realize the anticipated benefits from the Separation, and the Separation could harm our business.

 

Wemay not be able to achieve the full strategic and financial benefits expected to result from the Separation and such benefits may bedelayed or not occur at all. The Separation was designed to enhance strategic and management focus, provide a distinct corporate identity,and allow us to efficiently allocate resources and deploy capital. We may not achieve these and other anticipated benefits for a varietyof reasons, including the following:

 

  matters subsequent to, but related to, the Separation will require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing our business;
     
  following the Separation, we may be more susceptible to economic downturns and other adverse events than if we were still a part of Vinco;
     
  following the Separation, our business is less diversified than Vinco’s business prior to the Separation;
     
  following the Separation, our business has experienced a loss of scale and access to certain financial, managerial, and professional resources as well as product and brand power influence and recognition with some customers from which we have benefited in the past; and
     
  actions related to the Separation could disrupt our operations in the future.

 

Ifwe fail to achieve some or all of the benefits expected to result from the Separation, or if such benefits are delayed, our businesscould be harmed.

 

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Wehave little history operating as an independent company, and our historical financial information is not necessarily representative ofthe results that we would have achieved as an independent, publicly traded company and may not be a reliable indicator of our futureresults.

 

Ourhistorical financial information included in this prospectus has been derived from Vinco’s consolidated financial statements andaccounting records and is not necessarily indicative of our future operating results, financial condition, or cash flows, nor do theyreflect what our operating results, financial condition, or cash flows would have been as an independent public company during the periodspresented. In particular, the historical financial information included in this prospectus is not necessarily indicative of our futureoperating results, financial condition, or cash flows primarily because of the following factors:

 

  prior to the Separation, our business was operated by Vinco as part of its broader corporate organization rather than as an independent company, and Vinco or one of its affiliates provided support for various corporate functions for us, such as information technology, medical insurance, procurement, logistics, marketing, human resources, compliance, legal, finance, and internal audit;
     
  our historical financial results reflect the direct, indirect, and allocated costs for such services historically provided by Vinco, and these costs may significantly differ from the comparable expenses we would have incurred as an independent company;
     
  our working capital requirements and capital expenditures historically have been satisfied as part of Vinco’s corporate-wide cash management and centralized funding programs, and our cost of debt and other capital may significantly differ from that which is reflected in our historical combined financial statements;
     
  the historical financial information may not fully reflect the costs associated with the Separation, including the costs related to being an independent company;
     
  our historical financial information does not reflect our obligations under the various transitional and other agreements entered into with Vinco in connection with the Separation, though costs under such agreements are expected to be broadly similar to what was charged to the business in the past; and.
     
  our business previously was integrated with that of Vinco, and we historically have benefitted from Vinco’s size and scale in costs, employees, and vendor and customer relationships and the costs we will incur as an independent company may significantly exceed comparable costs we would have incurred as part of Vinco and some of our customer relationships may be weakened or lost.  

 

Webased the pro forma adjustments included in this prospectus on available information and assumptions that we believe are reasonable andfactually supportable. Actual results, however, may vary. In addition, our unaudited pro forma financial information included in thisprospectus may not give effect to various ongoing additional costs that we may incur in connection with being an independent public company.Accordingly, our unaudited pro forma combined financial statements do not reflect what our operating results, financial condition, orcash flows would have been as an independent public company and are not necessarily indicative of our future financial condition or futureoperating results.

 

See“Unaudited Pro Forma Combined Financial Statements” and the notes thereto, and “Management’s Discussion and Analysisof Financial Condition and Results of Operations” included elsewhere in this prospectus.

 

Potentialindemnification liabilities to Vinco pursuant to the Separation and Distribution Agreement could materially and adversely affect ourfinancial condition, results of operations, and cash flows.

 

TheSeparation and Distribution agreement, among other things, provides for indemnification obligations designed to make Cryptyde financiallyresponsible for certain liabilities that may exist relating to its business activities. If Cryptyde is required to indemnify Vinco underthe circumstances set forth in the Separation and Distribution Agreement, Cryptyde may be subject to substantial liabilities.

 

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Cryptydemay be subject to certain contingent liabilities of Vinco following the Separation.

 

Afterthe Separation, there is now the possibility that certain liabilities of Vinco could become Cryptyde’s obligations. For example,under the Code and the related rules and regulations, each corporation that was a member of the Vinco United States consolidated groupduring a taxable period or portion of a taxable period ending on or before the effective time of the Distribution is jointly and severallyliable for the United States federal income tax liability of the entire Vinco United States consolidated group for that taxable period.Consequently, if Vinco is unable to pay the consolidated United States federal income tax liability for a prior period, Cryptyde couldbe required to pay the entire amount of such tax which could be substantial and in excess of the amount allocated to it under the TaxMatters Agreement between it and Vinco Other provisions of federal law establish similar liability for other matters, including lawsgoverning tax-qualified pension plans as well as other contingent liabilities.

 

Inconnection with the Separation, Vinco will indemnify Cryptyde for certain liabilities. However, there can be no assurance that the indemnitywill be sufficient to insure Cryptyde against the full amount of such liabilities, or that Vinco’s ability to satisfy its indemnificationobligation will not be impaired in the future.

 

Vincoagreed to indemnify Cryptyde for certain pre-spin-off liabilities. However, third parties could also seek to hold Cryptyde responsiblefor liabilities that Vinco has agreed to retain, and there can be no assurance that the indemnity from Vinco will be sufficient to protectCryptyde against the full amount of such liabilities, or that Vinco will be able to fully satisfy its indemnification obligations. Inaddition, Vinco’s insurers may attempt to deny coverage to Cryptyde for liabilities associated with certain occurrences of indemnifiedliabilities prior to the Separation.

 

Followingthe Separation, now that we only have limited access to the insurance policies maintained by Vinco for events occurring prior to theSeparation, Vinco’s insurers may deny or attempt to deny coverage to us under such policies, there can be no assurance that wewill be able to obtain insurance coverage following the Separation on terms that justify its purchase, and any such insurance may notbe adequate to offset costs associated with certain events.

 

Inconnection with the Separation, we entered into agreements with Vinco to address various matters associated with the Separation, includinginsurance coverage. The Separation and Distribution Agreement provides that following the Separation, we no longer have insurance coverageunder Vinco insurance policies in connection with events occurring before, as of, or after the Separation, other than coverage for (i)events occurring prior to the Separation and covered by occurrence-based policies of Vinco as in effect as of the Separation and (ii)events or acts occurring prior to the Separation and covered by claims-made policies of Vinco for which a claim was received prior tothe Separation. However, now that the Separation has concluded, Vinco’s insurers may deny or attempt to deny coverage to us forlosses associated with occurrences or claims made prior to the Separation. Accordingly, we may be required to temporarily or permanentlybear the costs of such lost coverage. In addition, we now have to maintain our own insurance policies following the Separation. Althoughwe have had insurance policies in place since the date of the Separation that cover certain, but not all, hazards that could arise fromour operations, we can provide no assurance that we will be able to maintain such coverage, that the cost of such coverage will be similarto that incurred by Vinco, or that such coverage will be adequate to protect us from costs incurred with certain events. The occurrenceof an event that is not insured or not fully insured could have a material adverse effect on our business, operating results, and financialcondition. See “The Separation—Agreements with Vinco.”

 

Followingthe Separation, some of our directors and officers may now have actual or potential conflicts of interest because of their equity ownershipin Vinco.

 

Becauseof their former positions with Vinco, following the Separation, some of our directors and executive officers may own shares of Vincocommon stock, and the individual holdings may be significant for some of these individuals compared to their total assets. This ownershipmay create, or may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that couldhave different implications for Vinco or us. For example, potential conflicts of interest could arise in connection with the resolutionof any dispute that may arise between Vinco and us regarding the terms of the agreements governing the Separation and the relationshipthereafter between the companies.

 

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Wepotentially could have received better terms from unaffiliated third parties than the terms we received in our agreements with Vinco.

 

Theagreements we entered into with Vinco in connection with the Separation were negotiated while we were still part of Vinco’s business.See “The Separation—Agreements with Vinco.” The terms of the agreements negotiated in the context of the Separationrelate to, among other things, the allocation of assets, intellectual property, liabilities, rights, and other obligations between Vincoand us as well as services to be provided to us by Vinco on an interim basis. Arm’s-length negotiations between Vinco and an unaffiliatedthird-party in another form of transaction, such as a buyer in a sale of a business transaction, may have resulted in more favorableterms to the unaffiliated third-party.

 

Weare subject to significant restrictions on our actions following the Separation in order to avoid triggering significant tax-relatedliabilities.

 

TheTax Matters Agreement generally prohibits us from taking certain actions that could cause the Transfer and the Distribution to fail toqualify as tax-free transactions, including the following:

 

  during the two-year period following the Distribution Date (or otherwise pursuant to a “plan” within the meaning of Section 355(e) of the Code), we may not cause or permit certain business combinations or transactions to occur;
     
  during the two-year period following the Distribution Date, we may not discontinue the active conduct of our business (within the meaning of Section 355(b)(2) of the Code);
     
  during the two-year period following the Distribution Date, we may not liquidate or merge, consolidate, or amalgamate with any other person;
     
  during the two-year period following the Distribution Date, we may not sell or otherwise dispose of more than 30% of our consolidated gross assets;
     
  during the two-year period following the Distribution Date, we may not purchase any of our common stock, other than pursuant to certain open market repurchases of less than 20% of our common stock (in the aggregate);
     
  during the two-year period following the Distribution Date, we may not amend our Certificate of Incorporation (or other organizational documents) or take any other action affecting the voting rights of our common stock; and
     
  more generally, we may not take any action that could reasonably be expected to cause the Transfer and the Distribution to fail to qualify as tax-free transactions for U.S. federal income tax purposes.

 

Dueto these restrictions and indemnification obligations under the Tax Matters Agreement, we may be limited in our ability to pursue strategictransactions, equity or convertible debt financings, or other transactions that may otherwise be in our best interests. In addition,our potential indemnity obligation to Vinco might discourage, delay, or prevent a change of control that our stockholders may considerfavorable.

 

Ouraccounting and other management systems and resources may not be robust enough to meet the financial reporting and other requirementsto which we will be subject following the Separation.

 

Priorto the Separation, our financial results were included within the consolidated results of Vinco, and we were not directly subject toreporting and other requirements of the Exchange Act. These and other obligations will place significant demands on our management, administrative,and operational resources, including accounting and information technology resources. To comply with these requirements, we anticipatethat we will need to duplicate information technology infrastructure; implement additional financial and management controls, reportingsystems, and procedures; and hire additional accounting, finance, tax, treasury, and information technology staff. If we are unable todo this in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that applyto independent public companies could be impaired and our business could be harmed.

 

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SPECIALNOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Thisprospectus and the information incorporated by reference in this prospectus contain “forward-looking statements,” which includeinformation relating to future events, future financial performance, strategies, expectations, competitive environment and regulation.Our use of the words “may,” “will,” “would,” “could,” “should,” “believes,”“estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,”“intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,”“impacts,” “forecasts,” “target,” “outlook,” “initiative,” “objective,”“designed,” “priorities,” “goal” or the negative of those words or other similar expressions is intendedto identify forward-looking statements that represent our current judgment about possible future events. Forward-looking statements shouldnot be read as a guarantee of future performance or results and will probably not be accurate indications of when such performance orresults will be achieved. All statements included or incorporated by reference in this prospectus, and in related comments by our management,other than statements of historical facts, including without limitation, statements about future events or financial performance, areforward-looking statements that involve certain risks and uncertainties.

 

Thesestatements are based on certain assumptions and analyses made in light of our experience and perception of historical trends, currentconditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. While thesestatements represent our judgment on what the future may hold, and we believe these judgments are reasonable, these statements are notguarantees of any events or financial results. Whether actual future results and developments will conform with our expectations andpredictions is subject to a number of risks and uncertainties, including the risks and uncertainties discussed in this prospectus, anyprospectus supplement and the documents incorporated by reference under the captions “Risk Factors” and “Special NoteRegarding Forward-Looking Statements” and elsewhere in those documents.

 

Consequently,all of the forward-looking statements made in this prospectus as well as all of the forward-looking statements incorporated by referenceto our filings under the Exchange Act, are qualified by these cautionary statements and there can be no assurance that the actual resultsor developments that we anticipate will be realized or, even if realized, that they will have the expected consequences to or effectson us and our subsidiaries or our businesses or operations. We caution investors not to place undue reliance on forward-looking statements.We undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information,future events, or other such factors that affect the subject of these statements, except where we are expressly required to do so bylaw.

 

USEOF PROCEEDS

 

All shares of our common stock offered by this prospectus are being registeredfor the accounts of the selling stockholder and we will not receive any proceeds from the sale of these shares. However, we will receiveproceeds from the exercise of the January 2022 Warrants if the January 2022 Warrants are exercised for cash. We intend to use those proceeds,if any, for general corporate purposes.

 

SELLINGSTOCKHOLDER

 

January2022 Note, January 2022 Warrant and 2022 Amendment Agreement

 

OnJanuary 26, 2022, we entered into the January 2022 Purchase Agreement withHudson Bay for the issuance and sale in the January 2022 Offering of the January 2022 Note, originally convertible into 3,333,333 January2022 Note Shares and the January 2022 Warrant, originally exercisable into 3,333,333 January 2022 Warrant Shares. We received total considerationof $30,000,000 in the January 2022 Offering. The January 2022 Note was originally convertible at a conversion price of $10.00 per share,is immediately convertible and has a term of exercise equal to three years from the date of issuance. The exercise price of the January2022 Warrant was originally $10.00 per share. The exercise price of the January 2022 Warrant adjusts down to match the issuance priceof common stock issued by the Company at a lower price than the exercise price of the January 2022 Warrant, or match the exercise or conversionprice of convertible securities issued by the Company.

 

Aholder of the January 2022 Note or the January 2022 Warrant may not convert its January 2022 Note or January 2022 Warrant, as applicable,to the extent that the holder, together with its affiliates, would beneficially own more than 9.99% of our outstanding shares of commonstock immediately after conversion or exercise, as applicable, except that the holder may decrease or, upon at least 61days’ prior notice from the holder to us, increase the beneficial ownership limitation of the numberof shares of common stock outstanding immediately after giving effect to the conversion or exercise, as applicable.

 

OnJuly 28, 2022, the Company entered into the 2022 Amendment Agreement withHudson Bay to amend the January 2022 Purchase Agreement, the January 2022 Note and the Registration Rights Agreement.

 

Pursuantto the 2022 Amendment Agreement, the Company released an aggregate of $29,000,000 of Released Funds from the Restricted FundsAccount and, going forward, must deposit 50% of any Warrant Exercise Cash (as defined in the 2022 Amendment Agreement) into the RestrictedFunds Account. The Company used $22,000,000 of the Released Funds to repurchase from Hudson Bay $22,000,000 of the principal of theJanuary 2022 Note. Pursuant to the Amendment Agreement, the conversion price of the balance of the January 2022 Note that remains wasvoluntarily adjusted to $1.06 (the “Adjustment”) and in accordance with the terms of the January 2022 Warrant, the exerciseprice of the warrant was adjusted to $1.06 as a result of the Adjustment. The Amendment Agreement also amended the Registration RightsAgreement to require the Company to register (i) the number of shares of common stock equal to 200% of the shares issuable upon conversionof the January 2022 Note and (ii) the number of shares of common stock equal to 200% of the shares issuable upon exercise of the January2022 Warrant, assuming all cash has been released from the Restricted Funds Account and the number of shares of common stock issuableupon exercise of the January 2022 Warrant has been adjusted in accordance with Section 3(c) of the January 2022 Warrant.

 

Asa result of the Adjustment, the Company is required to register 15,050,315 Additional January 2022 Note Shares and 56,226,410Additional January 2022 Warrant Shares, in addition to those shares of common stock registered by the Company in the June 2022 S-1.

 

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InformationAbout Selling Stockholder Offering

 

Theshares of common stock being offered by the selling stockholder are AdditionalJanuary 2022 Note Shares and Additional January 2022 Warrant Shares. For additional information regarding the issuance of the January2022 Note and January 2022 Warrant, see “January 2022 Note, January 2022 Warrant and 2022 Amendment Agreement” above.

 

Exceptfor the ownership of the January 2022 Note, the January 2022 Warrants,Warrants issued pursuant to the 2021 Amendment Agreement, and its involvement with us with respect to the 2022 Amendment Agreement, HudsonBay has not had any material relationship with us within the past three years.

 

Inaddition, in the past three years, Vinco has entered into three privateplacements with Hudson Bay. In July 2021, Vinco issued a convertible note for the purchase price of $100,000,000 and five-year warrantsto purchase shares of common stock. In February 2021, Vinco issued a convertible note for the purchase price of $10,000,000 and five-yearwarrants to purchase shares of common stock. In January 2021, Vinco issued a convertible note for a purchase price of $12,000,000 anda five-year warrants to purchase shares of common stock.

 

Thetable below lists the selling stockholder and other information regardingthe beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulationsthereunder) of the shares of common stock held by the selling stockholder. The second column lists the number of shares of common stockbeneficially owned by the selling stockholder, based on their ownership of shares of common stock, notes and warrants, as of August 11,2022, assuming conversion of the January 2022 Note and January 2022 Warrant held by the selling stockholder on that date but not takingaccount of any limitations on conversion or exercise set forth therein.

 

Thethird column lists the shares of common stock being offered by this prospectusby the selling stockholder and does not take in account any limitations on conversion or exercise of the January 2022 Note or January2022 Warrant.

 

Inaccordance with the terms of the Registration Rights Agreement with Hudson Bay, as amended by the 2022 Amendment Agreement, this prospectusgenerally covers the resale of 200% of the maximum number of shares of common stock issued or issuable pursuant to the January2022 Note and January 2022 Warrant. Because the conversion price of the January 2022 Note, including payment of interest on the notesthrough the maturity date of the notes, determined as if the outstanding notes were converted in full (without regard to any limitationson conversion contained therein solely for the purpose of such calculation) at a conversion price calculated immediately preceding thedate this registration statement was initially filed with the SEC and January 2022 Warrant, may be adjusted, the number of shares thatwill actually be issued may be more or less than the number of shares being offered by this prospectus. Additionally, in accordance withthe terms of the Registration Rights Agreement, as amended by the 2022 Amendment Agreement, the maximum number of shares of common stockthat may be sold pursuant to this prospectus includes shares of common stock that may become issuable upon adjustment of the conversionand exercise price of the January 2022 Note and January 2022 Warrant. The fourth column assumes the sale of all of the shares offeredby Hudson Bay pursuant to this prospectus. Under the terms of the January 2022 Note, Hudson Bay may not convert the January 2022 Noteto the extent (but only to the extent) that Hudson Bay or any of its affiliates would beneficially own a number of shares of our commonstock which would exceed 9.99% of the outstanding shares of the Company. The number of shares in the second column does not reflect theselimitations. Hudson Bay may sell all, some or none of their shares in this offering.

 

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Name of Selling Stockholder  Number of Shares of Common Stock Owned Prior to Offering   Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus   Number of Shares of Common Stock Owned After Offering   Percentage of Common Stock Owned After Offering(1) 
Hudson Bay Master Fund Ltd (2)   12,525,157(3)(4)   71,276,725(5)   0    0%

 

(1) The beneficial ownership percentages set forth in the table below are based on approximately 31,267,585 shares of Cryptyde common stock issued and outstanding as of the date of this prospectus. All shares reported are shares of the Company’s Common Stock.
   
(2) Hudson Bay Capital Management LP is the investment manager of Hudson Bay. SanderGerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management LP, and SanderGerber has sole voting and investment power over these securities. Each of Hudson Bay and Sander Gerber disclaims beneficial ownershipover these securities. The selling stockholder’s address is c/o Hudson Bay Capital Management LP, 28 Havemeyer Place, 2ndPlace, Greenwich, CT 06830. All shares reported are shares of the Company’s Common Stock.
   
(3) Includes 9,191,824 shares of common stock issuable upon conversion of the January 2022 Note, as amended by the 2022 Amendment Agreement and 3,333,333 shares of Common Stock issuable upon exercise of the January 2022 Warrant.
   
(4) Pursuant to the terms of the notes and warrants in footnote (3) above, Hudson Baymay not convert such notes or exercise such warrants to the extent (but only to the extent) Hudson Bay or any of its affiliates wouldbeneficially own upon such conversion or exercise a number of shares of the Company’s common stock which would exceed 9.99% of theoutstanding shares of common stock of the Company. The number of shares and percentage do not reflect this limitation. All shares reportedare shares of the Company’s Common Stock.
   
(5) Includes 15,050,315 Additional January 2022 Note Shares and 56,226,410 Additional January 2022 Warrant Shares. All shares reported are shares of the Company’s Common Stock.

 

Unlessthe context otherwise requires, as used in this prospectus, “selling stockholder” includes the selling stockholderlisted above and donees, pledgees, transferees or other successors-in-interest selling shares received after the date of this prospectusfrom the selling stockholder as a gift, pledge or other non-sale related transfer.

 

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DESCRIPTIONOF SECURITIES TO BE REGISTERED

 

CommonStock

 

Authorization.We have 250,000,000 shares of common stock, par value $0.001 per share, authorized.

 

VotingRights. Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders,including the election of directors. Our stockholders do not have cumulative voting rights. Because of this, the holders of a majorityof the common stock entitled to vote in any election of directors will be able elect all of the directors standing for election.

 

DividendRights. Subject to preferences that may be applicable to any then-outstanding preferred stock, holders of our common stock willbe entitled to receive ratably those dividends, if any, as may be declared from time to time by the board of directors out of legallyavailable funds.

 

Liquidation.In the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in thenet assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities and the satisfactionof any liquidation preference granted to the holders of any then-outstanding preferred stock.

 

Rightsand Preferences. Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption orsinking fund provisions applicable to our common stock. The rights, preferences and privileges of the holders of common stock are subjectto, and may be adversely affected by, the rights of the holders of any series of preferred stock that we may designate in the future.

 

January2022 Note

 

Wecurrently have the January 2022 Note outstanding. The principal amountof the January 2022 Note is $11,333,333 and is convertible into shares of Cryptyde common stock at a conversion price of $1.06 per sharefollowing the Adjustment, subject to adjustment for stock splits, combinations or similar events. The January 2022 Note is immediatelyconvertible.

 

Theentire outstanding principal balance and any outstanding fees or interestare due and payable in full on May 5, 2025. The January 2022 Note does not bear interest, provided, however, that the January 2022 Notewill bear interest at 18% per annum upon the occurrence of an event of default.

 

Aholder of the January 2022 Note may not convert its January 2022 Note to the extent that the holder, together with its affiliates, wouldbeneficially own more than 9.99% of our outstanding shares of common stock immediately after conversion, except that the holder maydecrease or, upon at least 61 days’ prior notice from the holder to us, increase the beneficialownership limitation of the number of shares of common stock outstanding immediately after giving effect to the conversion.

 

January2022 Warrants

 

TheJanuary 2022 Warrant to purchase up to 3,333,333 January 2022 Warrant Shares is currently outstanding. The exercise price of the January2022 Warrants is $1.06 per share, after adjusting down in accordance with the terms of the January 2022 Warrant to match the conversionprice of the January 2022 Note after the Adjustment. The January 2022 Warrants are exercisable from their issuance date through May 16,2027.

 

Aholder of the January 2022 Warrants may not exercise its January 2022 Warrants to the extent that the holder, together with its affiliates,would beneficially own more than 9.99% of our outstanding shares of common stock immediately after exercise, except that the holdermay decrease or, upon at least 61 days’ prior notice from the holder to us, increase the beneficialownership limitation of the number of shares of common stock outstanding immediately after giving effect to the exercise.

 

Theexercise price of the January 2022 Warrant is also subject to anti-dilution adjustment which, in the event that Cryptyde issues or isdeemed to have issued certain securities at a price lower than the then applicable exercise price, immediately reduces the exercise priceof the January 2022 Warrant to equal the price at which Cryptyde issues or is deemed to have issued its common stock. The anti-dilutionadjustment of the January 2022 Warrant also provides that upon the release of all the cash held in the Restricted Funds Account, thenumber of shares of common stock issuable upon exercise of the January 2022 Warrant will be adjusted to such amount equal to the aggregateexercise price of the January 2022 Warrant prior to any anti-dilution adjustment, divided by the exercise price per share of the January2022 Warrant after anti-dilution adjustments. The Registration Rights Agreement, as amended by the 2022 Amendment Agreement, requiresCryptyde to register the number of shares of common stock in this registration statement issuable upon exercise of the January2022 Warrant as though all the cash held in the Restricted Funds Account has been released and the anti-dilution adjustment has occurred.Accordingly, we are registering the 56,226,410 Additional January 2022 Warrant Shares to account for the additional shares of our commonstock issuable upon conversion of the January 2022 Warrant after its exercise price was adjusted to $1.06 in accordance with its termsand as a result of the Adjustment.

 

PLANOF DISTRIBUTION

 

We are registering the Additional January 2022 Note Shares and AdditionalJanuary 2022 Warrant Shares issuable upon the conversion or exercise, as applicable, of the January 2022 Note and January 2022 Warrant,respectively, to allow the selling stockholder named herein to, from time to time, offer and sell or otherwise dispose of the shares ofour common stock covered by this prospectus.

 

Weare registering the shares of common stock issuable upon conversion of the January 2022 Note to permit the resale of these shares ofcommon stock by the selling stockholder from time to time after the date of this prospectus. We will not receive any of the proceedsfrom the sale by the selling stockholder of the shares of common stock. However, we will receive proceeds from the exercise ofthe January 2022 Warrant if the January 2022 Warrant is exercised for cash. We will bear all fees and expenses incident to our obligationto register the shares of common stock.

 

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The selling stockholder may sell all or a portion of the shares of commonstock held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If theshares of common stock are sold through underwriters or broker-dealers, the selling stockholder will be responsible for underwriting discountsor commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailingmarket prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effectedin transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:

 

  on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
     
  in the over-the-counter market;
     
  in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
     
  through the writing or settlement of options, whether such options are listed on an options exchange or otherwise;
     
  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
     
  block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
     
  purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
     
  an exchange distribution in accordance with the rules of the applicable exchange;
     
  privately negotiated transactions;
     
  short sales made after the date the Registration Statement is declared effective by the SEC;
     
  broker-dealers may agree with a selling security holder to sell a specified number of such shares at a stipulated price per share;
     
  a combination of any such methods of sale; and
     
  any other method permitted pursuant to applicable law.

 

The selling stockholder may also sell shares of common stock under Rule144 promulgated under the Securities Act, if available, rather than under this prospectus. In addition, the selling stockholder may transferthe shares of common stock by other means not described in this prospectus. If the selling stockholder effects such transactions by sellingshares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissionsin the form of discounts, concessions or commissions from the selling stockholder or commissions from purchasers of the shares of commonstock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particularunderwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection withsales of the shares of common stock or otherwise, the selling stockholder may enter into hedging transactions with broker-dealers, whichmay in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholdermay also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positionsand to return borrowed shares in connection with such short sales. The selling stockholder may also loan or pledge shares of common stockto broker-dealers that in turn may sell such shares.

 

The selling stockholder may pledge or grant a security interest in someor all of the notes, warrants or shares of common stock owned by them and, if they default in the performance of their secured obligations,the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendmentto this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of sellingstockholders to include the pledgee, transferee or other successors in interest as a selling stockholder under this prospectus. The sellingstockholder also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgeesor other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

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Tothe extent required by the Securities Act and the rules and regulationsthereunder, the selling stockholder and any broker-dealer participating in the distribution of the shares of common stock may be deemedto be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowedto, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particularoffering of the shares of common stock is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregateamount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents,any discounts, commissions and other terms constituting compensation from the selling stockholder and any discounts, commissions or concessionsallowed or re-allowed or paid to broker-dealers.

 

Underthe securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokersor dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualifiedfor sale in such state or an exemption from registration or qualification is available and is complied with.

 

Therecan be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registrationstatement, of which this prospectus forms a part.

 

The selling stockholder and any other person participating in such distributionwill be subject to applicable provisions of the Exchange Act, and the rules and regulations thereunder, including, without limitation,to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares ofcommon stock by the selling stockholder and any other participating person. To the extent applicable, Regulation M may also restrict theability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect tothe shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any personor entity to engage in market-making activities with respect to the shares of common stock.

 

We will pay all expenses of the registration of the shares of common stockpursuant to the registration rights agreement, estimated to be $50,000 in total, including, without limitation, Securities and ExchangeCommission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, a selling stockholderwill pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholder against liabilities, includingsome liabilities under the Securities Act in accordance with the registration rights agreements or the selling stockholder will be entitledto contribution. We may be indemnified by the selling stockholder against civil liabilities, including liabilities under the SecuritiesAct that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, inaccordance with the related registration rights agreements or we may be entitled to contribution.

 

Oncesold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in thehands of persons other than our affiliates.

 

LEGALMATTERS

 

Thevalidity of the securities offered by this prospectus will be passed upon by Haynes and Boone, LLP, New York, New York.

 

EXPERTS

 

Thefinancial statements of (i) Ferguson Containers as of December 31, 2021 and for the year ended December 31, 2021 included in the registrationstatement which this prospectus forms a part, and (ii) Cryptyde, Inc. as of December 31, 2021 and for the period from September 21, 2021(inception) through December 31, 2021 have been audited by Morison Cogen LLP, independent registered public accounting firm, as set forthin their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firmas experts in accounting and auditing.

 

Thefinancial statements of Ferguson Containers as of December 31, 2020 and for the year ended December 31, 2020 included in the registrationstatement which this prospectus forms a part, have been audited by Marcum LLP, independent registered public accounting firm, as setforth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of suchfirm as experts in accounting and auditing.

 

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THESEPARATION

 

General

 

Priorto the Separation, we were a wholly owned subsidiary of Vinco. As described in this section, “The Separation”, wehave separated from Vinco and have become a separate company traded on the Nasdaq. The effective date of the Separation was June 29,2022.

 

Vincohas distributed 100% of the shares of our common stock held by Vinco to holders of shares of Vinco common stock, subject to certain conditions.The distribution of our common stock took place on June 29, 2022 (the “Distribution Date”). On the Distribution Date, eachholder of Vinco common stock received one share of Cryptyde common stock for every ten shares of Vinco common stock held at the closeof business on the Record Date.

 

Agreementswith VINCO

 

Inconnection with the Separation, we entered into a Separation and Distribution Agreement and other agreements with Vinco to effect theSeparation and provide a framework for our relationship with Vinco after the Separation. These agreements provide for the allocationbetween us and our subsidiaries, on the one hand, and Vinco and its subsidiaries, on the other hand, of the assets, liabilities, legalentities, and obligations associated with the Spin-Off Businesses, on the one hand, and the other current Vinco businesses, on the otherhand, and govern the relationship between our company and our subsidiaries, on the one hand, and Vinco and its subsidiaries, on the otherhand, subsequent to the Separation.

 

TheSeparation and Distribution Agreement contains many of the key provisions related to our Separation from Vinco and the Distribution ofour shares of common stock to Vinco stockholders.

 

Theforms of the principal agreements described below have been filed as exhibits to the registration statement of which this prospectusforms a part. The following descriptions of these agreements are summaries of the material terms of these agreements.

 

Separationand Distribution Agreement

 

TheSeparation and Distribution Agreement governs the overall terms of the Separation. Generally, the Separation and Distribution Agreementincludes Vinco’s and our agreements relating to the internal restructuring steps taken to complete the Separation, including theassets, legal entities, and rights transferred, liabilities assumed, and related matters.

 

Subjectto the receipt of required governmental and other consents and approvals and the satisfaction of other closing conditions, in order toaccomplish the Separation, the Separation and Distribution Agreement provides, as applicable, for Vinco and us to transfer specifiedassets between the companies that operate the Cryptyde Businesses, on the one hand, and Vinco’s other current businesses, on theother hand, after the Distribution Date. The determination of the assets transferred between the companies has been made by Vinco inits sole discretion. The Separation and Distribution Agreement requires Vinco and us to use reasonable efforts to obtain consents, approvals,and amendments required to assign the assets, legal entities, and liabilities that are transferred pursuant to the Separation and DistributionAgreement.

 

Unlessotherwise provided in the Separation and Distribution Agreement or any of the related ancillary agreements, all assets have been transferredon an “as is, where is” basis. Generally, if the transfer of any assets or any claim or right or benefit arising thereunderrequired a consent that was not obtained before the Distribution, or if the transfer or assignment of any such asset or such claim orright or benefit arising thereunder was ineffective or adversely affected the rights of the transferor thereunder so that the intendedtransferee did not in fact receive all such rights, the party retaining any asset that otherwise would have been transferred now holdssuch asset in trust for the use and benefit of the party entitled thereto and retains such liability for the account of the party bywhom such liability is to be assumed, and has taken such other action as has been reasonably requested by the party to which such assetwas to be transferred, or by whom such liability was to be assumed, as the case may be, in order to place such party, insofar as reasonablypossible, in the same position as would have existed had such asset or liability been transferred prior to the consummation of the Distribution.

 

Inaddition, Vinco was given the right to determine the date and terms of the Separation and was given the right, at any time until completionof the Distribution, to determine to abandon or modify the Distribution and to terminate the Separation and Distribution Agreement.

 

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Inaddition, the Separation and Distribution Agreement governs the treatment of indemnification, insurance, and litigation responsibilityand management of the Spin-Off Businesses, on the one hand, and Vinco’s other current businesses, on the other hand, after theDistribution Date. Generally, the Separation and Distribution Agreement provides for uncapped cross-indemnities primarily designed toplace financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligationsand liabilities of Vinco’s other current businesses with Vinco, in either case after applicable insurance coverage (which generallyare occurrence policies) intended to cover such obligations and liabilities and whether incurred prior to, on, or after the DistributionDate. We and Vinco have each agreed to indemnify the other for any liabilities caused by a material misstatement or omission in materialssupplied by one of us to the other regarding the business, operations, financial results, stockholder communications, risks, management,management compensation levels, and stock ownership of the applicable company. The Separation and Distribution Agreement also establishesprocedures for handling claims subject to indemnification and related matters.

 

TaxMatters Agreement

 

Inconnection with the Separation, we and Vinco entered into a Tax Matters Agreement that contains certain tax matters arrangements (the“Tax Matters Agreement”) and governs the parties’ respective rights, responsibilities, and obligations with respectto taxes, including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of the failure of the Transferand the Distribution to qualify for tax-free treatment for U.S. federal income tax purposes. The Tax Matters Agreement also sets forththe respective obligations of the parties with respect to the filing of tax returns, the administration of tax contests, and assistanceand cooperation on tax matters.

 

Ingeneral, the Tax Matters Agreement governs the rights and obligations that we and VINCO have after the Separation with respect to taxesfor both pre-closing and post-closing periods. Under the Tax Matters Agreement, we generally are responsible for (i) any of our taxesfor all periods prior to and after the Distribution and (ii) any taxes of Vinco for periods prior to the Distribution to the extent attributableto the Cryptyde Businesses. Vinco generally is responsible for any of the taxes of Vinco other than taxes for which we are responsible.

 

TheTax Matters Agreement further provides as follows:

 

  We will generally indemnify Vinco against taxes arising in the ordinary course of business for which we are responsible under the Tax Matters Agreement; and
     
  VINCO will indemnify us against any taxes of VINCO other than taxes for which we are responsible.

 

Inaddition to the indemnification obligations described above, the indemnifying party generally is required to indemnify the indemnifiedparty against any interest, penalties, additions to tax, losses, assessments, settlements, or judgments arising out of or incident tothe event giving rise to the indemnification obligation, along with costs incurred in any related contest or proceeding.

 

TheTax Matters Agreement also generally prohibits us and our affiliates from taking certain actions that could cause the Transfer and theDistribution to fail to qualify for their intended tax treatment, including the following:

 

  during the two-year period following the Distribution Date (or otherwise pursuant to a “plan” within the meaning of Section 355(e) of the Code), we may not cause or permit certain business combinations or transactions to occur;
     
  during the two-year period following the Distribution Date, we may not discontinue the active conduct of our business (within the meaning of Section 355(b)(2) of the Code);
     
  during the two-year period following the Distribution Date, we may not liquidate or merge, consolidate, or amalgamate with any other person;

 

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  during the two-year period following the Distribution Date, we may not sell or otherwise dispose of more than 30% of our consolidated gross assets;
     
  during the two-year period following the Distribution Date, we may not purchase any of our common stock, other than pursuant to certain open market repurchases of less than 20% of our common stock (in the aggregate);
     
  during the two-year period following the Distribution Date, we may not amend our Certificate of Incorporation (or other organizational documents) or take any other action affecting the voting rights of our common stock; and
     
  more generally, we may not take any action that could reasonably be expected to cause the Transfer and the Distribution and to fail to qualify as tax-free transactions for U.S. federal income tax purposes.

 

Inthe event that the Transfer and the Distribution fail to qualify for their intended tax treatment, in whole or in part, and Vinco issubject to tax as a result of such failure, the Tax Matters Agreement will determine whether Vinco must be indemnified for any such taxby us.

 

UNAUDITEDPRO FORMA COMBINED FINANCIAL STATEMENTS

 

Theunaudited pro forma consolidated balance sheets as of March 31, 2022 and the related unaudited pro forma condensed consolidated statementsof operations for the three months ended March 31, 2022 and the year ended December 31, 2021, are presented as if the separation of ourbusiness (the “Separation”) from Vinco Ventures, Inc., our former parent company, had occurred on January 1, 2020.

 

Thefinancial statements of the Company, which includes Ferguson Containers, Cryptyde, Inc., Cryptyde Shared Services, LLC, CW Machines,LLC, and BlockHiro, LLC, have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to eventsthat are directly attributable to the acquisition, are factually supportable and are expected to have a continuing impact on the combinedcompany. The unaudited pro forma condensed combined financial statements have been presented for informational purposes only. The unauditedpro forma condensed combined financial statements are not necessarily indicative of what the combined company’s financial positionor results of operations actually would have been had the acquisition been completed as of the dates indicated. In addition, the unauditedpro forma condensed combined financial statements do not purport to project the future financial position or operating results of thecombined company.

 

Theunaudited pro forma condensed combined financial statements should be read in conjunction with the audited financial statements of FergusonContainers for the years ended December 31, 2021 and 2020, and audited financial statements of Cryptyde, Inc. for the period from September21, 2021 (inception) through December 31, 2021. The unaudited pro forma condensed combined financial statements do not reflect any costsavings from operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisition and theeffects of the foregoing items could, individually or in the aggregate, materially impact the unaudited pro forma condensed combinedfinancial statements.

 

30
 

 

CRYPTYDE,INC., AND SUBSIDIARIES

UNAUDITEDPRO FORMA COMBINED BALANCE SHEET

March31, 2022

 

   Ferguson Containers   Cryptyde, Inc.   Cryptyde Shared Services, LLC   CW Machines, LLC.   BlockHiro, LLC   Pro Forma Adjustments   Combined Cryptyde, Inc. 
                             
Assets                                   
Current assets:                                   
Cash and cash equivalents  $966,071   $46,859   $         -   $5   $          -   $37,600,000(1)  $38,612,935 
Accounts receivable   969,806    -    -    -    -    -    969,806 
Inventory   82,635    -    -    -    -    -    82,635 
Prepaid expenses and other current assets   81,910    258,518    -    7,527,164    -    -    7,867,592 
Total current assets   2,100,422    305,377    -    7,527,169    -    37,600,000    47,532,968 
Property and equipment, net   955,173         -    -    -    -    955,173 
Intangible assets, net   -    -    -    -    -    -    - 
Loan held for investment   -    4,000,000    -    -    -    -    4,000,000 
Due from Former Parent   418,004    -    -    -         (418,004)(2)   - 
Total assets  $3,473,599   $4,305,377   $-   $7,527,169   $    $37,181,996   $52,488,141 
              -    -                
Liabilities and stockholders’ equity                                   
Current liabilities:                                   
Accounts payable  $74,092   $2,500   $-   $96,040   $-   $-   $172,632 
Accrued expenses and other current liabilities   22,107    67,045    -    7,493,608    -    -    7,582,760 
Customer deposits   -    -    -    -    -    -    - 
Income tax payable   130,000    -    -    -    -    -    130,000 
Current portion of notes payable   -    -    -    -    -    -    - 
Total current liabilities   226,199    69,545    -    7,589,648    -    -    7,885,392 
              -    -                
Notes payable, net of debt issuance costs of $5,733,333, net of current portion   -    -    -    -    -    27,600,000(3)   27,600,000 
Deferred tax liabilities   82,104    -    -    -    -    -    82,104 
Due to Former Parent   -    5,845,259    -    459,182         (6,304,441)(2)   - 
Total liabilities  $308,303   $5,914,804   $-   $8,048,830   $    $21,295,559   $35,567,496 
Stockholders’ equity                                   
Common stock, no par value, 400 shares authorized as of December 31, 2021  $50,000   $-   $-   $-   $-   $(29,695)(4)  $20,305 
Additional paid-in-capital   -    -    -    -    -    15,916,132(3)(4)   15,916,132 
Retained earnings (accumulated deficit)   3,115,296    (1,609,427)   -    (521,661)   -         984,208 
Total stockholders’ equity   3,165,296    (1,609,427)   -    (521,661)   -    15,886,437    16,920,645 
Total liabilities and stockholders’ equity  $3,473,599   $4,305,377   $-   $7,527,169   $-   $37,181,996   $52,488,141 

 

Theaccompanying notes are an integral part of these financial statements.

 

31
 

 

CRYPTYDE,INC., AND SUBSIDIARIES

UNAUDITEDPRO FORMA COMBINED BALANCE SHEET

December31, 2021

 

   Ferguson Containers   Cryptyde, Inc.   Cryptyde Shared Services, LLC   CW Machines, LLC.   BlockHiro, LLC   Pro Forma Adjustments   Combined Cryptyde, Inc. 
                             
Assets                                   
Current assets:                                   
Cash and cash equivalents  $844,619   $66,485   $-   $90   $-   $37,600,000(1)  $38,511,194 
Accounts receivable   867,027    -    -    -    -    -    867,027 
Inventory   110,664    -    -    -    -    -    110,664 
Prepaid expenses and other current assets   48,343    33,395    -    6,999,955    -    -    7,081,693 
Total current assets   1,870,653    99,880    -    7,000,045    -    37,600,000    46,570,578 
Property and equipment, net   1,007,770    -    -    -    -    -    1,007,770 
Intangible assets, net   -    -    -    -    -    -    - 
Loan held for investment   -    4,000,000    -    -    -    -    4,000,000 
Due from Former Parent   418,004    -    -    -         (418,004)(2)   - 
Total assets  $3,296,427   $4,099,880   $-   $-   $    $37,181,996   $51,578,348 
              -    -                
Liabilities and stockholders’ equity                                   
Current liabilities:                                   
Accounts payable  $44,547   $120   $-   $98,547   $-   $-   $143,214 
Accrued expenses and other current liabilities   7,551    27,960    -    -    -    -    35,511 
Customer deposits   -    -    -    6,999,980    -    -    6,999,980 
Income tax payable   319,997    -    -    -    -    -    319,997 
Current portion of notes payable   15,530    -    -    -    -    -    15,530 
Total current liabilities   387,625    28,080    -    7,098,527    -    -    7,514,232 
              -    -                
Notes payable, net of debt issuance costs of $5,733,333, net of current portion   12,114    -    -    -    -    27,600,000(3)   27,612,114 
Deferred tax liabilities   82,104    -    -    -    -    -    82,104 
Due to Former Parent   -    4,452,053    -    164,498         (4,616,551)(2)   - 
Total liabilities  $481,843   $4,480,133   $-   $7,263,025   $    $25,983,449   $35,208,450 
Stockholders’ equity                                   
Common stock, no par value, 400 shares authorized as of December 31, 2021  $50,000   $-   $-   $-   $-   $(29,625)(4)  $20,305 
Additional paid-in-capital   -    -    -    -    -    14,228,642(3)(4)   14,228,242 
Retained earnings (accumulated deficit)   2,764,584    (380,253)   -    (262,980)   -         2,121,351 
Total stockholders’ equity   2,814,584    (380,253)   -    (262,980)   -    14,198,547    16,369,898 
Total liabilities and stockholders’ equity  $3,296,427   $4,099,880   $-   $7,000,045   $-   $39,581,996   $51,578,348 

 

Theaccompanying notes are an integral part of these financial statements.

 

32
 

 

CRYPTYDE,INC., AND SUBSIDIARIES

UNAUDITEDPRO FORMA COMBINED STATEMENTS OF OPERATIONS

Forthe Three Months Ended March 31, 2022

 

   Ferguson Containers   Cryptyde, Inc.   Cryptyde Shared Services, LLC   CW Machines, LLC.   BlockHiro, LLC   Pro Forma Adjustments   Cryptyde, Inc. 
Revenues, net  $2,113,305   $-   $-   $1,606,342   $-   $-   $3,719,647 
Cost of revenues   1,601,542    -    -    1,572,841    -    -    3,174,383 
Gross profit   511,763    -    -    33,501         -    545,264 
                                    
Operating expenses:                                   
Selling, general and administrative   350,919    1,278,694    -    292,182    -    160,000(13)   2,081,795 
Operating income   160,844    (1,278,694)   -    (258,182)   -    (160,000)   (1,536,531)
                                    
Other (expense) income:                                   
Rental income   -    -    -    -    -    -    - 
Interest income (expense)   (129)   49,519    -    -    -    -    49,390 
Other income   -    -    -    -    -    -    - 
Total other income, net   (129)   49,519    -    -    -    -    49,390 
Income (loss) before income taxes   160,715    (1,229,175)   -    (258,681)   -    (160,000)   (1,487,141)
Income tax expense   (189,997)   -    -    -    -    189,997(14)   - 
Net income (loss)  $350,712   $(1,229,175)  $-   $(258,681)  $-    (349,997)  $(1,487,141)
Net income (loss) per share:                                   
Net income (loss) per share – basic   876.78    (122.92)                       (0.07)
Net income (loss) per share – diluted   876.78    (122.92)                       (0.04)
Weighted average number of common shares outstanding – basic   400    10,000                        20,305,259 
Weighted average number of common shares outstanding – diluted   400    10,000                        39,225,452 

 

Theaccompanying notes are an integral part of these financial statements

 

33
 

 

CRYPTYDE,INC., AND SUBSIDIARIES

UNAUDITEDPRO FORMA COMBINED STATEMENTS OF OPERATIONS

Forthe Year Ended December 31, 2021

 

   Ferguson Containers   Cryptyde, Inc.   Cryptyde Shared Services, LLC   CW Machines, LLC.   BlockHiro, LLC   Pro Forma Adjustments   Cryptyde, Inc. 
Revenues, net  $7,874,285   $-   $-   $-   $-   $-   $7,874,285 
Cost of revenues   5,682,117    -    -    -    -    -    5,682,117 
Gross profit   2,192,168    -    -    -         -    2,192,168 
                                    
Operating expenses:                                   
Selling, general and administrative   1,946,832    413,648    -    262,980    -    770,000(5)(6)   3,393,460 
Operating income   245,336    (413,648)   -    (262,980)   -    (770,000)   (1,201,292)
                                    
Other (expense) income:                                   
Rental income   71,543    -    -    -    -    (71,543)(7)   - 
Interest income (expense)   (44,816)   33,395    -    -    -    -    (11,421)
Other income   481,090    -    -    -    -    (475,419)(7)   5,671 
Total other income, net   507,817    33,395    -    -    -    (546,962)   (5,750)
Income (loss) before income taxes   753,153    (380,253)   -    (262,980)   -    (1,316,962)   (1,207,042)
Income tax expense   210,000    -    -    -    -    (210,000)(8)   - 
Net income (loss)  $543,153   $(380,253)  $-   $(262,980)  $-    (1,106,562)  $(1,207,042)
Net income (loss) per share:                                   
Net income (loss) per share – basic   1,357.88    (38.03)                       (0.06)
Net income (loss) per share – diluted   1,357.88    (38.03)                       (0.03)
Weighted average number of common shares outstanding – basic   400    10,000                        20,305,259 
Weighted average number of common shares outstanding – diluted   400    10,000                        39,225,452 

 

Theaccompanying notes are an integral part of these financial statements

 

34
 

 

CRYPTYDE,INC., AND SUBSIDIARIES

UNAUDITEDPRO FORMA COMBINED STATEMENTS OF OPERATIONS

Forthe Year Ended December 31, 2020

 

   Ferguson Containers   Cryptyde, Inc.   Cryptyde Shared Services, LLC   CW Machines, LLC.   BlockHiro, LLC   Pro Forma Adjustments   Cryptyde, Inc. 
Revenues, net  $6,719,894   $-   $-   $-   $    $-   $6,719,894 
Cost of revenues   4,691,451    -    -    -         -    4,691,451 
Gross profit   2,028,443    -    -    -         -    2,028,443 
                                    
Operating expenses:                                   
Selling, general and administrative   1,759,117    -    -    -         560,000(9)(10)   2,319,117 
Operating income (loss)   269,326    -    -    -         (560,000)   (290,674)
                                    
Other (expense) income:                                   
Rental income   102,815    -    -    -         (102,815)   - 
Interest expense   (112,295)   -    -    -         -(11)   (112,295)
Total other (expense)   (9,480)   -    -    -         (102,815)   (112,295)
Income (loss) before income taxes   259,846    -    -    -         (662,815)   (402,969)
Income tax expense   67,399    -    -    -         (67,399)(12)   - 
Net income (loss)  $192,447   $-   $-   $-         (595,416)  $(402,969)
Net loss per share:                                   
Net loss per share – basic   481.12    -    -    -              (0.02)
Net loss per share – diluted   481.12    -    -    -              (0.02)
Weighted average number of common shares outstanding – basic and diluted   400    -    -    -              18,805,259 

 

35
 

 

NOTESTO PRO FORMA FINANCIAL STATEMENTS

 

1.BASIS OF PRESENTATION

 

Asused herein, the Company refers to Ferguson Containers, a New Jersey corporation incorporated on September 14, 1966 under the laws ofthe state of New Jersey, Cryptyde, Inc., a Nevada corporation incorporated on September 21, 2021, Cryptyde Shared Services, LLC, a Nevadalimited liability company formed on September 16, 2021, CW Machines, LLC, a Nevada limited liability company formed on October 2, 2021and BlockHiro, LLC, a Nevada limited liability company formed on November 8, 2021. The unaudited pro forma condensed combined financialstatements are based on Ferguson Container, Inc.’s historical financial statements and the newly formed Cryptyde, Inc., CryptydeShared Services, LLC, CW Machines, LLC, and BlockHiro, LLC as adjusted to give effect to the Separation. The unaudited pro forma combinedstatements of operations for the years ended December 31, 2021 and 2020, respectively, give effect to the Separation as if it had occurredon January 1, 2020. The unaudited pro forma combined balance sheet as of December 31, 2021, gives effect to the Separation as if it hadoccurred on January 1, 2021. The Company has historically operated as part of Vinco Ventures, Inc. (“Former Parent”) andnot as a standalone company. Financial statements representing the historical operations of the Packaging Business have been derivedfrom the Former Parent’s historical accounting records and are presented on a carve-out basis. All revenues and costs as well asassets and liabilities directly associated with the business activity of the Company are included in the financial statements. The financialstatements also include allocations of certain general, administrative, sales and marketing expenses and cost of sales from Former Parent.However, amounts recognized by the Company are not necessarily representative of the amounts that would have been reflected in the financialstatements had the Company operated independently of Former Parent. Former Parent allocations are discussed further in Note 2. As partof Former Parent, the Company has historically been dependent upon Former Parent for a majority of its working capital and financingrequirements as the Former Parent uses a centralized approach to cash management and financing of its operations. Financial transactionsrelating to the Company are accounted for through the Former Parent due to/from account. Accordingly, none of Former Parent’s cash,cash equivalents or debt at the corporate level have been assigned to the Company in the financial statements. All significant transactionsbetween the Company and Former Parent have been included in the accompanying combined financial statements. Transactions with FormerParent are reflected in the accompanying Unaudited Pro-Forma Combined Balance Sheets within “Due From Former Parent and Due ToFormer Parent.”

 

2.PRO FORMA ADJUSTMENTS

 

Proforma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following are correspondingto the footnotes in the above financial statements.

 

BalanceSheet – March 31, 2022

 

  1) Reflects the $30,000,000 of cash from senior convertible note less fees of $2,400,000 to the Placement Agent, $12,000,000 of cash from equity private placement and $2,000,000 cash payment to the Former Parent upon the Distribution;
  2) Reflects the elimination of the due to/from Former Parent upon the Separation;
  3) Reflects the adjustment for the senior convertible note of $33,333,333 with a purchase price of $30,000,0000; and
  4) Reflects the anticipated shares to be issued upon the Distribution to the shareholders of Vinco Ventures, Inc on or about the end of the second quarter of 2022 and based on the number of shares outstanding of 188,052,593 as of May 18, 2022 and giving effect to one share of common stock to be received for every ten shares of Vinco Ventures, Inc. common stock. In addition, the number of Cryptyde shares expected to be outstanding includes 1,500,000 anticipated shares to be issued related to the equity private placement of $12,000,000.

 

36
 

 

BalanceSheet – December 31, 2021

 

  1) Reflects the $30,000,000 of cash from senior convertible note less fees of $2,400,000 to the Placement Agent, $12,000,000 of cash from equity private placement and $2,000,000 cash payment to the Former Parent upon the Distribution;
  2) Reflects the elimination of the due to/from Former Parent upon the Separation;
  3) Reflects the adjustment for the senior convertible note of $33,333,333 with a purchase price of $30,000,0000; and
  4) Reflects the anticipated shares to be issued upon the Distribution to the shareholders of Vinco Ventures, Inc on or about the end of the second quarter of 2022 and based on the number of shares outstanding of 188,052,593 as of May 18, 2022 and giving effect to one share of common stock to be received for every ten shares of Vinco Ventures, Inc. common stock. In addition, the number of Cryptyde shares expected to be outstanding includes 1,500,000 anticipated shares to be issued related to the equity private placement of $12,000,000.

 

Statementsof Operations – March 31, 2022

 

  13) Reflects the anticipated salaries of two additional C-level employees annual salaries $400,000 and $45,000 of benefits and corporate office rent expenses of $60,000;
  14) Reflects the elimination of income taxes due to proforma loss before income taxes after adjustments.

 

Statementsof Operations – December 31, 2021

 

  5) Reflects the elimination of portion of the management fee for the salaries of the CEO and CFO included below and employees remaining with Vinco Ventures, Inc. of $130,000;
  6) Reflects the anticipated salaries of the CEO, CFO and COO of $700,000 and $140,000 of benefits and corporate office rent expenses of $60,000;
  7) Reflects the elimination of income from rental operations and the gain on the sale of the building which is non-recurring; and
  8) Reflects the elimination of income taxes due to proforma loss before income taxes after adjustments.

 

Statementsof Operations – December 31, 2020

 

  9) Reflects the elimination of portion of the management fee for the salaries of the CEO and CFO included below and employees remaining with Vinco Ventures, Inc. of $160,000.;
  10) Reflects the anticipated salaries of the CEO, CFO, and COO of $700,000 and $140,000 of benefits;
  11) Reflects the elimination of income from rental operations which is non-recurring; and
  12) Reflects the elimination of income taxes due to proforma loss before income taxes after adjustments.

 

37
 

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Asexplained above, unless otherwise indicated, the terms “we,” “us,” “our,” “our Company,”“TYDE”and “the Company” refer to Cryptyde, Inc., together with its consolidated subsidiaries. The following discussion and analysisof the Company’s financial condition and results of operations should be read together with the Company’s financial statementsand related notes appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forthelsewhere in this prospectus, including information with respect to the Company’s plans and strategy for the Company’s businessand related financing, includes forward-looking statements involving risks and uncertainties and should be read together with the “RiskFactors” and “Cautionary Note Regarding Forwarding- Looking Statements” sections of this prospectus. Such risks anduncertainties could cause actual results to differ materially from the results described in or implied by the forward-looking statementscontained in the following discussion and analysis.

 

Overview

 

Vincohas successfully completed a spin-off of its Packaging Business, Web3 Business, and Bitcoin Mining Services Business. To accomplish thisspin-off, Vinco transferred those businesses to us, then Vinco distributed all of its equity interest in us, consisting of all of theoutstanding shares of our common stock, to Vinco’s stockholders on a pro rata basis (the “Distribution”). Followingthe Separation, Vinco does not own any equity interest in us, and we operate independently from Vinco.

 

Ourfinancial statements have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accountingrecords of Vinco. Our financial statements reflect our financial position, results of operations and cash flows as we were historicallymanaged, in conformity with GAAP. Our financial statements include certain assets and liabilities that have historically been held atthe Vinco corporate level but are specifically identifiable or otherwise attributable to us.

 

Allintercompany transactions between us and Vinco have been included in our financial statements and are considered to be settled in ourconsolidated financial statements at the time the Separation became effective. The total net effect of the settlement of these intercompanytransactions is reflected in our unaudited pro forma combined balance sheets as “Due to/from Former Parent.”

 

Thehistorical costs and expenses reflected in our financial statements for Ferguson Containers include an allocation for certain corporateshared service functions historically provided by Vinco including executive oversight, accounting, treasury, tax, legal, human resources,occupancy, procurement, information technology and other shared services. These expenses have been allocated to us on the basis of directusage when identifiable, with the remainder allocated on a pro rata basis based on sales, headcount, tangible assets or other measuresconsidered to be a reasonable reflection of the historical utilization levels of these services.

 

Ourmanagement believes the assumptions underlying our Ferguson Containers financial statements, including the assumptions regarding theallocation of general corporate expenses from Vinco are reasonable. Nevertheless, our financial statements may not include all of theactual expenses that would have been incurred had we operated as a stand-alone company during the periods presented and may not reflectwhat our actual results of operations, financial position and cash flows would have been if we had operated as a stand-alone companyduring the periods presented. Actual costs that would have been incurred if we had operated as a stand-alone company would depend onmultiple factors, including organizational structure and strategic decisions made in various areas, including information technologyand infrastructure. Following the Separation, we now perform these functions using our own resources or purchased services.

 

Cryotydeis comprised of the Packaging Business, the Web3 Business, and the Bitcoin Mining Services Business. The Packaging Business includesFerguson Containers and has been operating for over 50 years. The Bitcoin Mining Services Business is a joint venture through CW Machines,LLC and began operating in October 2021. The joint venture is expected to be accounted for as a variable interest entity and will befully consolidated with Cryptyde, Inc. The Web3 business expects to begin offering Web3 products in 2022.

 

ThePackaging Business – Ferguson Containers

 

FergusonContainers manufactures and sells custom packaging for a variety of products. In our experience, packaging has the capability to “tell”the products’ story, generating increased product awareness, promote brand image, and drive unit growth. Senior management hasmore than 100 years of combined experience marketing, producing and delivering packaging materials. A hallmark of our operation is ourquick production cycle. We can often begin a production run within minutes of receipt of an order. Many of our products are manufacturedfrom 100% post-consumer recycled material. When production is complete, we typically ship the product using our own trucks rather thanrelying on a common carrier. Ferguson Containers does not have long-term agreements with its customers, and instead manufactures andsells its packaging products subject to purchase orders from its customers.

 

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TheWeb3 Business – BlockHiro, LLC

 

BlockHiro,LLC, a Nevada limited liability company was formed on November 8, 2021, was formed to hold the Web3 Business. The Web3 Business plansto use decentralized blockchain technology in established consumer facing industries such as video games, music, and art. TYDE intendsto finalize a digital coin minting platform in 2022. TYDE believes its digital coin minting platform will enable TYDE to, together withpartners and clients, quickly and efficiently create digital coins for use with projects in established consumer facing industries.

 

BitcoinMining Services Business – CW Machines, LLC

 

CWMachines, LLC, a Nevada limited liability company formed on October 2, 2021, was formed to hold the Bitcoin Mining Services Business.The Bitcoin Mining Services Business, CW Machines, LLC, through a joint venture with Wattum Management Inc. and BBA Technology Inc.,is focused on bringing Bitcoin mining to the consumer level by offering Bitcoin mining equipment and co-location services.

 

Financing

 

OnNovember 11, 2021, the Company entered into the 2021 Amendment Agreement. In connection with the 2021 Amendment Agreement on May 18,2022, the Company issued to Hudson Bay warrants exercisable into 8,652,419 shares of the Company’s common stock with an exerciseprice of $0.001 per share.

 

OnJanuary 26, 2022, the Company, entered into a Securities Purchase Agreement (the “Note Securities Purchase Agreement”) withan accredited investor (the “Note Investor”) for the issuance and sale of a Senior Convertible Note with an initial principalamount of $33,333,333 (the “Note”) at a conversion price of $10.00 per share of Cryptyde’s common stock, par value$0.001 (the “Common Stock”), a warrant (the “Warrant”) to purchase up to 3,333,333 shares of Common Stock withan initial exercise price of $10.00 per share of Common Stock (the “Note Private Placement”). The entire outstanding principalbalance and any outstanding fees or interest is due and payable in full on the third anniversary of the date the note was issued, May5, 2022 (the “Maturity Date”). The Note shall not bear interest, provided, however, that the Note will bear interest at 18%per annum upon the occurrence of an event of default. Cryptyde and the Note Investor closed on the transactions contemplated by the NoteSecurities Purchase Agreement on May 5, 2022. At the closing, Cryptyde issued to the Note Investor the Warrant to purchase up to 3,333,333shares of Cryptyde Common Stock with an exercise price of $10.00 per share. In connection with the Note Private Placement, Cryptyde alsoentered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Note Investor, and on May 5,2022, entered into a Security Agreement, a Pledge Agreement and various ancillary certificates, disclosure schedules and exhibits insupport thereof prior to the closing of the Purchase Agreement.

 

OnJanuary 26, 2022, the Company, entered into a Securities Purchase Agreement (the “Equity Private Placement”) with an accreditedinvestor (the “Equity Investor”) for the issuance of (i) 1,500,000 shares of Common Stock, and (ii) a warrant (the “EquityInvestor Warrant”) to purchase up to 1,500,000 shares of Common Stock with an exercise price of $8.00 per share of Common Stock(the “Equity Private Placement”). The consideration paid to Cryptyde under the Equity Private Placement was $12,000,000.Cryptyde and the Equity Investor closed on the transactions contemplated by the Equity Private Placement on May 20, 2022. At the closing,Cryptyde issued to the Equity Investor 1,500,000 shares of Cryptyde Common Stock and a warrant to purchase up to 1,500,000 shares ofCryptyde Common Stock with an exercise price of $8.00 per share. The Equity Private Placement contains covenants on the part of Cryptyde,including that Cryptyde will reserve for the purpose of issuance at least 100% of the maximum number of shares of Common Stock issuableupon conversion of the Equity Investor Warrant. In addition, under the Equity Private Placement, Cryptyde granted the Equity Investorcertain rights to participate in any Subsequent Placements for the same duration as the participation right pursuant to the Note SecuritiesPurchase Agreement.

 

OnMay 18, 2022, in connection with its spin-off and based upon Vinco warrants exercisable into Vinco common stock, the Company issued toPalladium, CVI Investments, Inc. and Armistice Capital Master Fund Ltd. warrants exercisable into 767,774, 500,000 and 300,000 shares,respectively, of the Company’s common stock at an exercise price of $0.001 per share.

 

KeyComponents of our Results of Operations

 

Revenues

 

Wesell corrugated custom packaging to a wide array of customers. In addition, we will generate revenues from the sales of Bitcoin miningequipment offered through CW Machines, LLC and Web3 Products and services offered through BlockHiro, LLC.

 

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Costof Revenues

 

Ourcost of revenues includes inventory costs, materials and supplies costs, internal labor costs and related benefits, subcontractor costs,depreciation, overhead and shipping and handling costs. In addition, we will incur costs to purchase Bitcoin mining equipment which willbe resold to customers and costs from the development of Web3 products and services.

 

Selling,General and Administrative Expenses

 

Selling,general and administrative expenses consist of selling, marketing, advertising, payroll, administrative, finance and professional expenses.

 

RentalIncome

 

Weearned rental income from a month-to-month lease on a portion of the building located in Washington, New Jersey that we previously owned.The building was sold in August 2021.

 

InterestExpense and Income, Net

 

Interestexpense includes the cost of our borrowings under our debt arrangements. Interest income includes the interest earned under our notesreceivable.

 

OtherIncome

 

Otherincome includes the gain on disposal of the building located in Washington, New Jersey.

 

Resultsof Operations

 

ThreeMonths Ended March 31, 2022 versus Three Months Ended March 31, 2021

 

Thefollowing table sets forth information comparing the components of net (loss) income for the three months ended March 31, 2022 and 2021:

 

   Three Months Ended March 31,   Period over Period Change 
   2022   2021   $   % 
                 
Revenues, net  $3,719,647   $1,757,652   $1,961,995    111.63%
Cost of revenues   3,174,383    1,283,158    1,891,225    147.39%
Gross profit   545,264    474,494    70,770    14.91%
                     
Operating expenses:                    
Selling, general and administrative   1,921,795    494,055    1,427,740    288.98%
Operating (loss)   (1,376,531)   (19,561)   (1,356,770)   6937.12%
                     
Other (expense) income:                    
Rental income   -    25,704    (25,704)   -100.00%
Interest (expense)   (129)   (46,492)   46,363    -99.72%
Other income   49,519    -    49,519    100.00%
Total other income (loss), net   49,390    (20,788)   70,178    -337.59%
Loss before income taxes   (1,327,141)   (40,349)   (1,286,792)   3189.15%
Income tax expense (benefit)   (189,997)   (11,342)   (178,655)   1575.16%
Net loss   (1,137,144)   (29,007)   (1,108,137)   3820.24%

 

Revenue

 

Forthe three months ended March 31, 2022, revenues increased by $1,961,995 or 111.63%, as compared to the three months ended March 31, 2021.The increase was primarily the result of increased sales due to shipment of goods to customers related to the sale of mining equipment.

 

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Costof Revenues

 

Forthe three months ended March 31, 2022, cost of revenues increased by $1,891,225 or 147.39%, as compared to the three months ended March31, 2021. The increase was primarily attributable to the increase in total revenues as well as increased costs of materials and production.

 

GrossProfit

 

Forthe three months ended March 31, 2022, gross profit increased by $70,770, or 14.91%, as compared to the three months ended March 31,2021. The increase was primarily a result of the increase in revenues offset by the increased costs of materials and production.

 

OperatingExpenses

 

Selling,general and administrative expenses were $1,921,795 and $494,055 for the three months ended March 31, 2022 and 2021, respectively, representingan increase of $1,427,740, or 288.98%. The increase was primarily the result of an increase in payroll costs and operating costs as astandalone public company.

 

RentalIncome

 

Rentalincome was $0 and $25,704 for the three months ended March 31, 2022 and 2021, respectively representing a decrease of $25,704. The decreasewas related to no longer receiving rental income due to the sale of the building in Washington, New Jersey in August 2021.

 

Interestexpense

 

Interestexpense was $129 for the three months ended March 31, 2022, versus $46,492 for the year ended March 31, 2021. The decrease in interestexpense was related to repayment of outstanding lines of credit as well as the outstanding notes payable.

 

Otherincome

 

Otherincome was $49,519 for the three months ended March 31, 2022 versus $0 for the three months ended March 31, 2021. The increase was relatedto the interest earned on the notes receivable with Wattum Management.

 

Incometax expense

 

Incometax benefit was $189,997 for the three months ended March 31, 2022, versus $11,342 for the three months ended March 31, 2021, respectively.The increase was a result of the increase in loss before income taxes.

 

Netloss

 

NetLoss was $1,137,144 and $29,007 for the three months ended March 31, 2022 and 2021, respectively. The increase in net loss was a resultof the increase in selling, general and administrative expenses.

 

FergusonContainers

 

YearEnded December 31, 2021 versus Year Ended December 31, 2020

 

Thefollowing table sets forth information comparing the components of net (loss) income for the years ended December 31, 2021 and 2020:

 

   Years Ended December 31,   Period over Period Change 
   2021   2020   $   % 
                 
Revenues, net  $7,874,285   $6,719,894   $1,154,391    17.18%
Cost of revenues   5,682,117    4,691,451    990,666    21.12%
Gross profit   2,192,168    2,028,443    163,725    8.07%
                     
Operating expenses:                    
Selling, general and administrative   1,946,832    1,759,117    187,715    10.67%
Operating income   245,336    269,326    (23,990)   -8.91%
                     
Other (expense) income:                    
Rental income   71,543    102,815    (31,272)   -30.42%
Interest (expense)   (44,816)   (112,295)   67,479    -60.09%
Other income   481,090    -    481,090    100.00%
Total other (loss) income, net   507,817    (9,480)   517,297    -5,456.72%
Income before income taxes   753,153    259,846    493,307    189.85%
Income tax expense (benefit)   210,000    67,399    142,601    211.58%
Net income (loss)   543,153    192,447    350,706    182.24%

 

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Revenue

 

Forthe year ended December 31, 2021, revenues increased by $1,154,391 or 17.18%, as compared to the year ended December 31, 2020. The increasewas primarily the result of increased sales due to more demand for packaging materials related to increased shipment of goods by customers.

 

Costof Revenues

 

Forthe year ended December 31, 2021, cost of revenues increased by $990,666 or 21.12%, as compared to the year ended December 31, 2020.The increase was primarily attributable to the increase in total revenues as well as increased costs of materials and production.

 

GrossProfit

 

Forthe year ended December 31, 2021, gross profit increased by $163,725, or 8.07%, as compared to the year ended December 31, 2020. Theincrease was primarily a result of the increase in revenues offset by the increased costs of materials and production.

 

OperatingExpenses

 

Selling,general and administrative expenses were $1,946,832 and $1,759,117 for the year ended December 31, 2021 and 2020, respectively, representingan increase of $187,715, or 10.67%. The increase was primarily the result of an increase in payroll costs related to stock-based compensationof $144,000 allocated to Ferguson Containers from the Former Parent.

 

RentalIncome

 

Rentalincome was $71,543 and $102,815 for the years ended December 31, 2021 and 2020, respectively representing a decrease of $31,272,or 30.42%. The decrease was related to the sale of the building in Washington, New Jersey in August 2021.

 

Interestexpense

 

Interestexpense was $44,816 for the year ended December 31, 2021, versus $112,295 for the year ended December 31, 2020. The decrease in interestexpense was related to repayment of outstanding lines of credit.

 

Otherincome

 

Otherincome was $475,418 for the year ended December 31, 2021 versus $0 for the year ended December 31, 2020. The increase was related tothe sale of the building in Washington, New Jersey in August 2021.

 

Incometax expense

 

Incometax expense was $210,000 for the year ended December 31, 2021, versus $67,399 for the year ended December 31, 2020, respectively. Theincrease was a result of income before income taxes.

 

Cryptyde,Inc.

 

YearEnded December 31, 2021

 

Cryptyde,Inc. was formed on September 21, 2021. The results of operations are presented from September 21, 2021 through December 31, 2021. Therewere no operations prior to September 21, 2021.

 

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Thefollowing table sets forth information from September 21, 2021 through December 31, 2021.

 

  

For the Period from

September 21, 2021

(inception) to

December 31, 2021

 
     
Revenues, net  $- 
Cost of revenues   - 
Gross profit   - 
      
Operating expenses:     
Selling, general and administrative   676,628 
Operating loss   (676,628)
      
Other income:     
Interest income   33,395 
Total other income, net   33,395 
Income before income taxes   (643,233)
Income tax expense   - 
Net income   (643,233)

 

Revenue

 

Cryptyde,Inc. was formed on September 21, 2021 and the Company does not currently generate any revenues.

 

OperatingExpenses

 

Selling,general and administrative expenses were $676,628 for the period from September 21, 2021 through December 31, 2021. The components ofoperating expenses were the result of payroll and related benefits and consulting and developmental expenses.

 

Interestincome

 

Interestincome was $33,395 for the period from September 21, 2021 through December 31, 2021. The components of interest income were the resultof interest earned on the note receivable from Wattum Management, Inc..

 

Incometax expense

 

Incometax expense was $0 for the period from September 21, 2021 through December 31, 2021. No income taxes or benefit were recognized due tothe Company’s loss before income taxes.

 

Liquidityand Capital Resources

 

Cryptyde,Inc. has required funding from the Former Parent to fund its operations. In addition, other than those that relate to the Note PrivatePlacement, the Company has no significant debt obligations.

 

TheCompany currently has approximately $40 million in cash from Vinco, the Equity Private Placement, and the Note Private Placement. TheCompany believes it will have sufficient funds for the next 12 months to accomplish its strategic plan.

 

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CashFlows

 

Sinceinception, Cryptyde, Inc. and its subsidiaries have primarily used its available cash to fund its operations. The following table setsforth a summary of cash flows for the periods presented:

 

  

For the Three Months Ended

March 31,

 
   2022   2021 
Cash (used in) provided by:          
Operating Activities  $(1,551,911)  $31,773 
Investing Activities   (6,595)   (18,228)
Financing Activities   1,660,247    43,958 
Net increase in cash and restricted cash  $101,741   $57,503 

 

CashFlows for the Three Months Ended March 31, 2022 and 2021

 

OperatingActivities

 

Netcash used in operating activities was $1,551,911 during the three months ended March 31, 2022, which consisted primarily of a net lossof $1,137,144, decreases in changes in operating assets and liabilities $520,664 offset by non-cash depreciation expense of $59,192 andprovision for bad debts of $46,705. Net cash used in operating activities was $31,773 during the three months ended March 31, 2021, whichconsisted primarily of a net loss of $29,007 offset by non-cash depreciation expense of $32,812, and an increase in changes inoperating assets and liabilities of $27,968.

 

InvestingActivities

 

Netcash used by investing activities decreased to $6,595 during the three months ended March 31, 2022 from net cash used of $18,228 duringthe three months ended March 31, 2021. This decrease consisted of less cash used for property and equipment purchases during the threemonths ended March 31, 2022 and 2021, respectively.

 

FinancingActivities

 

Netcash provided by financing activities was $1,660,247 during the three months ended March 31, 2022 compared to $43,958 for the three monthsended March 31, 2021. This increase consisted of increase in cash received from Former Parent of $1,272,307 and by changes in repaymentsunder lines of credit and notes payable of $343,982.

 

FergusonContainers has historically been positive cash flows from operations. In addition, the Company has no significant debt obligations. Sinceinception, Ferguson Containers Inc.’s operations have been funded principally through its operations.

 

Cryptyde,Inc. has required funding from the Former Parent to launch operations.

 

Atthe Distribution, the Company had approximately $40 million in cash from Vinco and other sales of securities, including the Note PrivatePlacement. The Company believes it will have sufficient funds for the next 12 months to accomplish its strategic plan.

 

CashFlows

 

FergusonContainers

 

Sinceinception, Ferguson Containers has primarily used its available cash to fund its operations. The following table sets forth a summaryof cash flows for the periods presented:

 

  

For the Years Ended

December 31,

 
   2021   2020 
Cash (used in) provided by:          
Operating Activities  $352,817   $193,075 
Investing Activities   294,244    (276,478)
Financing Activities   20,799    181,461 
Net increase (decrease) in cash and restricted cash  $667,860   $98,058 

 

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CashFlows for the Years Ended December 31, 2021 and 2020

 

OperatingActivities

 

Netcash provided by operating activities was $352,817 during the year ended December 31, 2021, which consisted primarily of a net incomeof $537,487 offset by a gain on disposal of $475,418, non-cash depreciation expense of $144,765, increases in changes in operating assetsand liabilities $144,317. Net cash provided by operating activities was $193,075 during the year ended December 31, 2020, which consistedprimarily of net income of $192,447, non-cash depreciation expense of $95,861, amortization of note discounts of $15,573, and a decreasein changes in operating assets and liabilities of $110,806.

 

InvestingActivities

 

Netcash provided by investing activities increased to $294,244 during the year ended December 31, 2021 from net cash used of $276,478 duringthe year ended December 31, 2020. This increase consisted of proceeds from the sale of a building of $808,395 offset by cash used forproperty and equipment purchases of $514,151 compared to $276,478 during the years ended December 31, 2021 and 2020, respectively.

 

FinancingActivities

 

Netcash provided by financing activities was $20,799 during the year ended December 31, 2021 compared to net cash provided by financingactivities of $181,461 for the year ended December 31, 2020. This decrease consisted of changes in cash received from Former Parent of$103,641 offset by changes in repayments under lines of credit of $263,650.

 

Cryptyde,Inc.

 

Sinceinception, Cryptyde, Inc. has required funding from the Former Parent to fund its operations. The following table sets forth a summaryof cash flows for the periods presented:

 

  

For the Period from

September 21, 2021

(inception) to

December 31, 2021

 
     
Cash (used in) provided by:     
Operating Activities  $(549,976)
Investing Activities   (4,000,000)
Financing Activities   4,616,551 
Net increase (decrease) in cash and restricted cash  $66,575 

 

CashFlows for the Year Ended December 31, 2021

 

OperatingActivities

 

Netcash used in operating activities was $549,976 during the period from September 21, 2021 (inception) to December 31, 2021, which consistedprimarily of net loss of $643,233, offset by operating assets and liabilities of $93,257.

 

InvestingActivities

 

Netcash used in investing activities was $4,000,000 during the period from September 21, 2021 (inception) to December 31, 2021. This consistedsolely of cash used for a loan provided to Wattum Management, Inc., a partner in CW Machines, LLC.

 

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FinancingActivities

 

Netcash provided by financing activities was $4,616,551 during the period from September 21, 2021 (inception) to December 31, 2021 solelyfrom cash provided by the Former Parent to fund the note and operations.

 

ContractualObligations and Commitments

 

TheCompany has no debt covenants that require certain financial information to be met.

 

Off-BalanceSheet Arrangements

 

TheCompany did not have any off-balance sheet arrangements as of March 31, 2022.

 

CriticalAccounting Policies and Significant Judgments and Estimates

 

Thisdiscussion and analysis of the Company’s financial condition and results of operations is based on the Company’s combinedfinancial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America,or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amountsof assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amountsof revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experienceand on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimatesunder different assumptions or conditions.

 

Forinformation on the Company’s significant accounting policies please refer to Note 2 to the Company’s Financial Statementsincluded in this prospectus.

 

BUSINESS

 

Wewere formed in 2021 and are comprised of our Web3 Business, Bitcoin Mining Services Business, and Packaging Business, which we acquiredfrom our former parent, Vinco Ventures, Inc., in anticipation of the Separation. The businesses we acquired have longer operating historiesthan us. Accordingly, our discussion of the businesses includes information related to their operations prior to our existence and acquisitionsof them.

 

Weare headquartered in Safety Harbor, Florida. Our common stock is currently listed on the Nasdaq Capital Market under the symbol “TYDE.”

 

Web3Business

 

BlockHiro,LLC was formed in November 2021 to do business as a Web3 company. BlockHiro had no activity through December 31, 2021. The Web3 Businessplans to use decentralized blockchain technology in established consumer facing industries such as video games, music, and art. We intendto finalize a digital coin minting platform in 2022. We believes our digital coin minting platform will enable us to, together with partnersand clients, quickly and efficiently create digital coins for use with projects in established consumer facing industries.

 

Web3is the tokenized web, which includes blockchains and the tokens on blockchains. Web3 is decentralized. On Web3, transaction are conductedpeer-to-peer and can have high degrees of privacy. Blockchains can be used to create smart contracts, which take real world contactsand program onto a blockchain allowing for the automatic execution of contracts. Blockchains, under the umbrella of Web3, provide theplatform for managing transactions using tokens that represent digital and physical assets, such as music, art, money, collectibles,and real estate. We believe our digital coin minting platform will allow us to create solutions for moving established consumer facingindustries on to blockchains through use of smart contracts other blockchain applications.

 

OurWeb3 Business includes our upcoming game Freescape. Freescape is a character driven virtual ecosystem comprised of themed interactiveenvironments. Freescape will allow users the ability to explore and experience a wide range of activities in the Metaverse includingconcerts, movies, and more. The initial launch of Freescape will begin with the “Space Cowboys” character launch targetedfor release in the second quarter of 2022. Freescape characters will be minted in-house by us through its our platform on the Ethereumblockchain. End consumers will then store their NFTs in their personal wallets.

 

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Weintend to grow the Web3 Business in to a portfolio company with a portfolio of products that use decentralized blockchain technologyin established consumer facing industries. We are in the early stages of investigating Web3 uses in music, movies, digital art, ticketingand event services, and gaming.

 

TheWeb3 Business expects to take payment in the form of the digital currency Ethereum. We will store the Ethereum we receive in a digitalwallet. We intend to adopt a policy for the conversion of Ethereum into fiat currency in accordance with industry standards.

 

TheWeb3 Business has not had any revenues. The Web3 Business does not currently have any material commitments for capital expenditures.In the event the Web3 Business requires a material capital expenditure, we expect to fund it through capital raises.

 

BitcoinMining Services Business

 

CWMachines, LLC, a Nevada limited liability company formed on October 2, 2021, was formed to hold the Bitcoin Mining Services Business.The Bitcoin Mining Services Business, CW Machines, LLC, through a joint venture with Wattum Management Inc. and BBA Technology Inc.,is focused on bringing Bitcoin mining to the consumer level by offering Bitcoin mining equipment and co-location services. Cryptyde holdsa 51% interest in CW Machines, LLC.

 

CWMachines, LLC is a reseller of Bitcoin mining equipment and services. The equipment sales primarily focus on Bitcoin mining equipmentincluding Antminer S19s, Antminer S19 Pros, Whatsminer, and Canaan. Our Bitcoin mining services include reselling co-location services,which offer a physical location and ancillary services allowing Bitcoin miners to mine for Bitcoin. These services are provided by third-parties.

 

TheBitcoin Mining Services Business was formed in the fourth quarter of 2021 and began receiving revenue after December 31, 2021. The BitcoinMining Services Business does not currently have any material commitments for capital expenditures. In the event the Bitcoin Mining ServicesBusiness requires a material capital expenditure, we expect to fund it through capital raises.

 

PackagingBusiness

 

ThePackaging Business, through Ferguson Containers, manufactures and sells custom packaging for a wide variety of products. In our experience,packaging has the capability to “tell” the products story, generating increased product awareness, promote brand image, anddrive unit growth. Senior management has more than 100 years of combined experience marketing, producing and delivering packaging materials.A hallmark of our operation is our quick production cycle. We can often begin a production run within minutes of receipt of an order.Many of our products are manufactured from 100% post-consumer recycled material. When production is complete, we typically ship the productusing our own trucks rather than relying on a common carrier. Ferguson Containers does not have long-term agreements with its customers,and instead manufactures and sells its packaging products subject to purchase orders from its customers.

 

Inthe fiscal years ended December 31, 2021 and 2020, the Packaging Business had revenue of $7,874,285 and $6,719,894, respectively.

 

BusinessStrategy

 

Deriverevenue from a diverse group of industries and sources to allow us to focus resources toward the best opportunities. We intendfor our businesses to derive revenue from established industries such as consumer packaging, as well as newly emerging markets such asWeb3, Bitcoin mining equipment and services, and creating NFTs. Our revenue is expected to come from a wide variety of sources. Our PackagingBusiness and Bitcoin Mining Services Business earn revenue from the sale of goods and related services. Products under our Web3 Businessesare expected to generate revenue from several sources including fees for using services developed by us, in-game sales for games we create,advertising integrated into the products expected to be offered by the Web3 Business, and transaction fees for various services.

 

Continuallyassess our businesses to best allocate resources. We expect our diverse group of industries and sources of revenue will allowour management to evaluate how to best allocate resources, and ultimately grow the Company. Because the industries that we expect toparticipate in include traditional and recently formed industries, our management believes we will be well prepared for changing economicconditions and customer preferences.

 

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Expandthrough a combination of organic growth and strategic acquisition. We believe the Packaging Business and Bitcoin Mining ServicesBusiness are positioned well to grow organically. The Packaging Business has been operating for over 50 years and has a track recordof expanding. The Bitcoin Mining Services Business is tapping into a relatively new market of less-established Bitcoin miners who traditionallycould not enter the space due to economic and logistical hurdles. Our management may seek strategic acquisitions for Packaging Businessand Bitcoin Mining Services Business but believes these two businesses can be grown organically through continued sales efforts. TheWeb3 Business is expected to grow both organically, and through strategic acquisitions. Our management believes that our future abilityto quickly and efficiently mint digital tokens will allow us to make acquisitions and quickly add value by integrating blockchain intothe existing consumer facing industries.

 

Maintaindedicated customer focus. We believe that maintaining a close partnership with our customers will allow us to effectively focusour efforts and respond to their changing demands. Our customers will expect us to offer products and services that remain relevant inindustries that are constantly evolving. Our management believes listening to our customers will allow us to adapt to their needs andpreferences.

 

Employees

 

Asof August 11, 2022, the companies that comprise Cryptyde had 35 employees that perform various administrative, finance and accounting,technology, and corporate management functions. Of the 35 employees, 14 employees were employed by Ferguson Containers and 21 employeeswere employed by Cryptyde Shared Services, LLC. None of our employees are represented by a union in collective bargaining with us. Weconsider relations with our employees to be good.

 

Properties,Facilities, and Distribution

 

Wecurrently lease office space located in Safety Harbor, FL pursuant a lease that expires on July 31, 2024. In addition, we lease officespace in Alpha, NJ on a month-to-month basis.

 

LegalProceedings

 

Duringthe normal course of its business, the Company may be subject to occasional legal proceedings and claims. There are currently no legalproceedings or claims asserted against the Company or its subsidiaries.

 

SupplyChain and Production

 

OurPackaging Business does not have long-term contractual arrangements with any of our suppliers that guarantee us production capacity,prices, lead times, or delivery schedules. Our reliance on independent party suppliers exposes us to vulnerability because of our dependenceon a few sources of supply. We believe, however, that other sources of supply are available. In addition, we continually strive to developrelationships with other sources of supply in order to reduce our dependence on any one source of supply. As a result, we believe thatour current and other available suppliers will ensure that we obtain a sufficient supply of goods built to our specifications in a timelymanner and on satisfactory economic terms. The main raw material used by our Packaging Business is corrugated cardboard. Our main suppliersof corrugated cardboard are Corrugated Supplies Company, Georgia Pacific, and Freedom Corrugated. We also purchased certain finishedproducts from Delta Packaging for resale to end users.

 

OurBitcoin Mining Services Business is reliant on third-party suppliers. We are a reseller and require the availability of the productswe purchase at wholesale, then distribute to final customers. We do not have long-term contractual arrangements with any of our suppliersthat guarantee us adequate supply of Bitcoin mining equipment to satisfy the needs of our Bitcoin Mining Services Business. Our mainsuppliers of Bitcoin mining equipment sold under the Bitcoin Mining Services Business is Wattum Management, Inc.

 

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Patents,Trademarks, and Copyrights

 

Werecognize the importance of innovation and protecting our intellectual property. We will apply for patents whenever we develop innovativenew products, unique designs, or processes of commercial importance and seek trademark protection when we believe they provide a marketingadvantage. We do not believe that our business is materially dependent on any single patent or trademark.

 

Werely on a combination of trade secrets, trademarks, trade dress, customer records, monitoring, brand protection services, confidentialityagreements, and other contractual provisions to protect our intellectual property.

 

Weintend to vigorously pursue and challenge infringements of our patents, trademarks, service marks, trade dress, and copyrights, as webelieve the goodwill associated with them is a cornerstone of our branding strategy.

 

InformationSystems

 

Ourinformation systems use software enterprise resource platforms, including procurement, inventory management, receivables management,and accounting. We utilize QuickBooks Enterprise as our ERP system.

 

Afterthe Separation, we will either convert to our own instance of QuickBooks Enterprise or we will implement a new ERP system. Regardlessof which decision is made, we believe our information systems infrastructure will support our growth strategy in the future.

 

Competition

 

Weoperate and plan to operate in a competitive markets and encounter competition from both domestic and foreign participants. We believewe can effectively compete with our present competitors. We compete, and plan to compete, primarily based upon innovation, performance,price, quality, reliability, durability, consumer brand awareness, and customer service and support. Our competitors include a largenumber of private companies that directly compete with a number of our brands. Certain of our competitors may have more established brandnames and stronger distribution channels than we do and have, or have through their owners, access to financial and marketing resourcesthat are greater than we possess that may afford them the ability to invest more than we can in product development, intellectual propertyand marketing.

 

Competitorsto our Packaging Business include Sutherland Packaging, based in Andover, New Jersey, Acme Corrugated Box Company, based in Hatboro Pennsylvania,and Trenton Corrugated Products, Inc., based in Ewing, Pennsylvania. Competitors for our Bitcoin Mining Services Business include CompassMining, Miners Dep, and Alliance Miners. Our competitors in the Web3 business will depend on what Web3 products we develop or acquire.We expect competition for Freespace to include Decentraland, Sandbox and Fluf World.

 

Seasonality

 

Ourbusiness is not seasonal and there are not large fluctuations with our operations between quarterly revenues based on the time of year.

 

GovernmentRegulation

 

PackagingBusiness

 

Likeother manufacturers and distributors of consumer products, we are required to comply with a wide variety of federal, state, and internationallaws, rules, and regulations, including those related to consumer products and consumer protection, advertising and marketing, laborand employment, data protection and privacy, intellectual property, workplace health and safety, the environment, the import and exportof products, and tax matters. Our failure to comply with applicable federal, state, and international laws, rules, and regulations mayresult in our being subject to claims, lawsuits, fines, and adverse publicity that could have a material adverse effect on our business,operating results, and financial condition. These laws, rules, and regulations currently impose significant compliance requirements onour business, and more restrictive laws rules and regulations may be adopted in the future.

 

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Web3Business and Bitcoin Mining Services Business

 

Thelaws and regulations applicable to digital assets, including those we intend to produce under our Web3 Business and the Bitcoins minedby our Bitcoin Mining Services Business customers, are evolving and subject to interpretation and change. Governments around the worldhave reacted differently to digital assets; certain governments have deemed them illegal, and others have allowed their use and tradewithout restriction, while in some jurisdictions, such as in the U.S., digital assets are subject to extensive, and in some cases overlapping,unclear and evolving regulatory requirements. As digital assets have grown in both popularity and market size, the U.S. Congress anda number of U.S. federal and state agencies, including FinCEN, the CFTC, the SEC, FINRA, the CFPB, the Department of Justice, the Departmentof Homeland Security, the Federal Bureau of Investigation, the IRS and state financial regulators, have been examining the operationsof digital assets networks, digital assets users and digital assets exchange markets. Ongoing and future regulatory actions may alter,perhaps to a materially adverse extent, the nature of digital assets markets and our digital assets operations. Additionally, U.S. stateand federal and foreign regulators and legislatures have taken responsive action against digital assets businesses or enacted restrictiveregimes in response to hacks, consumer harm, or criminal activity stemming from digital assets activity. There is also increasing attentionbeing paid by U.S. federal, state, and local energy regulatory authorities as the total electricity consumption of cryptocurrency-mininggrows and potentially alters the supply and dispatch functionality of the wholesale grid and retail distribution systems. Many statelegislative bodies are also actively reviewing the impact of cryptocurrency-mining in their respective states.

 

Dueto the relatively short history of Bitcoin and digital assets, and their emergence as a new asset class, government regulation of blockchainand digital assets is constantly evolving, with increased interest expressed by U.S. and international regulators.

 

Governmentregulation of blockchains and digital assets is under active consideration by the United States federal government via its agencies andregulatory bodies, as well as by similar entities in other countries and transnational organizations. State and local regulations alsomay impact our activities and other activities in which we may participate in the future. Other governmental regulatory bodies have shownan interest in regulating or investigating companies engaged in blockchain or digital asset businesses.

 

Theeffect of any regulatory change, either by the federal, state, local or foreign governments or any self-regulatory agencies on us isimpossible to predict, but such change could be substantial and may have a material adverse effect on our business, financial condition,and results of operations. While we are unaware of significant adverse governmental or regulatory action adverse to Bitcoin mining inthe United States, there is no guarantee that future regulation or adverse action will not take place and interpretation of existingregulations in a manner adverse to our business is possible.

 

Inaddition, various foreign jurisdictions either have adopted, or may adopt, laws, regulations or directives that affect digital assets,digital asset networks, and their users and participants. Such laws, regulations or directives may conflict with those of the UnitedStates, may negatively impact the acceptance of digital assets by users, merchants, and service providers outside of the United States,and may therefore impede the growth of digital assets. Several Eastern European and Asian countries have a more restrictive posture towarddigital assets and, thereby, have reduced the rate of expansion of digital asset use, as well as mining, in each of those countries.Presently, we do not believe any U.S. federal or state regulatory body has taken any action or position adverse to Bitcoin, with respectto its production, sale, and use as a medium of exchange; however, future changes to existing regulations or entirely new regulationsmay affect our business in ways it is not presently possible for us to predict with any reasonable degree of reliability.

 

Weare unable to predict the effect that any future regulatory change, or any overlapping or unclear regulations, may have on us, but suchchange, overlap or lack of clarity could be substantial and make it difficult for us to operate our business or materially impact themarket for digital assets that we mine or may mine in the future. FinCEN has issued guidance stating its position that it does not differentiatebetween fiat currency (which FinCEN calls “real currency”) and digital assets that are convertible into fiat currency orother forms of convertible virtual currencies (which FinCEN calls “virtual currency”) for purposes of determining whethera person or entity is engaging in “money transmission services”. Persons and entities engaging in virtual currency activitiesthat amount to “money transmission services,” or otherwise cause them to be deemed a “money services business”under FinCEN’s regulations, must register with FinCEN as a money services business, implement an “effective” anti-moneylaundering program and comply with FinCEN’s reporting and recordkeeping requirements.

 

InMay 2019, FinCEN issued guidance relating to how the Bank Secrecy Act (“BSA”) and its implementing regulations relating tomoney services businesses apply to certain businesses that transact in convertible virtual currencies. Although the guidance generallyindicates that certain mining and mining pool operations will not be treated as money transmission services, the guidance also addresseswhen certain activities, including certain services offered in connection with operating mining pools such as hosting convertible virtualcurrency wallets on behalf of pool members or purchasers of computer mining power, may be subject to regulation. Although we believethat our activities under the Web3 Business and the Bitcoin Mining Services Business do not presently trigger FinCEN registration requirementsunder the BSA, if our activities cause us to be deemed a “money transmitter,” “money services business” or equivalentdesignation, under federal law, we may be required to cease certain of our operations. Ceasing such operating could have a material adverseeffect on our financial position, results of operations and cash flows.

 

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Backlog

 

Wecurrently do not have a material backlog of orders through our Packaging Business. A backlog consists of orders for which purchase ordershave been received and which are generally scheduled for shipment within six months or subject to capacity constraints, including lackof available product. We allow orders received that have not yet shipped to be cancelled; therefore, our backlog may not be indicativeof future sales.

 

EmergingGrowth Company

 

Asa company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company”as defined in the Jumpstart Our Business Startups Act of 2012 the (“JOBS Act”). We will continue to be an emerging growthcompany until the earliest to occur of the following:

 

  the last day of the fiscal year following the fifth anniversary of the Distribution;
     
  the last day of the fiscal year with at least $1.07 billion in annual revenue;
     
  the last day of the fiscal year in which we are deemed to be a large accelerated filer, which means that we have been public for at least 12 months, have filed at least one annual report, and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our then-most recently completed second fiscal quarter; or
     
  the date on which we have issued more than $1 billion of non-convertible debt during the prior three-year period.

 

Untilwe cease to be an emerging growth company, we plan to take advantage of reduced reporting requirements generally unavailable to otherpublic companies. Those provisions allow us to do the following:

 

  provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other disclosures regarding our executive compensation;
     
  not provide an auditor attestation of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”); and
     
  not hold a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

Wehave elected to adopt the reduced disclosure requirements described above for purposes of this prospectus. In addition, for so long aswe qualify as an emerging growth company, we expect to take advantage of certain of the reduced reporting and other requirements of theJOBS Act with respect to the periodic reports we will file with the SEC and proxy statements that we use to solicit proxies from ourstockholders. As a result of these elections, the information that we provide in this prospectus may be different than the informationyou may receive from other public companies in which you hold equity interests. In addition, it is possible that some investors willfind our common stock less attractive as a result of these elections, which may result in a less active trading market for our commonstock and higher volatility in our stock price.

 

Inaddition, the JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revisedaccounting standards applicable to public companies. We have elected to take advantage of the extended transition period that allowsan emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to privatecompanies.

 

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IndependentAccountant

 

FergusonContainers

 

EffectiveFebruary 21, 2022, Marcum LLP (“Marcum”) was dismissed by Ferguson Containers as its independent registered public accountingfirm. For Ferguson Containers’s fiscal years ended December 31, 2019 and 2020, Marcum’s reports on the balance sheets asof December 31, 2020 and 2019 and the statements of operations, changes in stockholders’ equity and cash flows for the years thenended of Ferguson Containers did not contain any adverse opinions or a disclaimers of opinion, and no report was qualified or modifiedas to uncertainty, audit scope, or accounting principles.

 

ForFerguson Containers’s fiscal years ended December 31, 2019 and 2020, respectively, and the subsequent interim periods through September30, 2021, there were no disagreements between Marcum and Ferguson Containers on any matter of accounting principles or practices, financialstatement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Marcum, would havecaused Marcum to make reference to the subject matter of the disagreements in connection with its report of Ferguson Containers for suchperiods.

 

ForFerguson Containers’s fiscal years ended December 31, 2019 and 2020, respectively, and the subsequent interim periods through September30, 2021, there were no reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K, other than a material weaknessin internal controls related to limited accounting personnel and segregation of duties to ensure that all material transactions and developmentsimpacting its financial statements are reflected.

 

OnJanuary 27, 2022, Ferguson Containers engaged Morison Cogen.

 

Priorto engaging Morison Cogen, Ferguson Containers did not consult Morison Cogen regarding the application of accounting principles to aspecified transaction, completed or proposed, the type of audit opinion that might be rendered on Ferguson Containers’s financialstatements or a reportable event, nor did Ferguson Containers consult with Morison Cogen regarding any disagreements with Ferguson Containers’sprior auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure, whichdisagreements, if not resolved to the satisfaction of the prior auditor, would have caused it to make a reference to the subject matterof the disagreements in connection with its reports.

 

MANAGEMENT

 

ExecutiveOfficers Following the Separation

 

Thefollowing table sets forth information regarding certain individuals who currently serve as, and are expected to continue to serve asfollowing the Separation, our directors and executive officers.

 

TheCompany’s current directors and executive officers, are as follows:

 

Name   Age   Position
Brian McFadden   36   President and Chief Executive Officer, Director
Brett Vroman   42   Chief Financial Officer
Kevin O’Donnell   45   Chairman
Frank Jennings   49   Director
Louis Foreman   52   Director
Mary Ann Halford   56   Director

 

BrianMcFadden. Mr. McFadden has served as a member of the board of directors since October 13, 2021. Mr. McFadden also serves as Presidentand Chief Executive Officer of the Company. Mr. McFadden previously served as the Chief Strategy Officer for Vinco Ventures, Inc. A serialentrepreneur himself, Mr. McFadden is charged with identifying and targeting company acquisitions to ensure long term growth and scale.Mr. McFadden served as a Managing Member of MAC Capital Holdings, a marketing and consulting firm, from 2019 to 2020, and as Presidentand Chief Executive Officer of Stealth Technologies Inc, a direct response distribution company, from 2012 to 2019. Mr. McFadden bringswith him a wealth of knowledge in the media acquisitions, and consumer products markets. Mr. McFadden recently was involved in the acquisitionand merger of a large social platform in the short form content space. A Hamilton College graduate, Mr. McFadden supports entrepreneursin their early-stage growth efforts.

 

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BrettVroman Mr. Vroman has served as Chief Financial Officer since October 13, 2021. Mr. Vroman served as Vinco Venture, Inc.’sChief Financial Officer from June 2019 to November 22, 2021, and previously served as its Controller from May 2018 through May 2019.From October 2014 to May 2018, Mr. Vroman was Director of Financial Reporting at Avantor, Inc., a global manufacturer and distributorof high-quality products, services and solutions to customers and suppliers in the life science, advanced technology, and applied materialsindustries. From March 2011 to October 2014, Mr. Vroman was employed as an Assurance Senior Manager at BDO USA, LLP, a public accounting,tax, consulting. Mr. Vroman is a certified public accountant and holds a Bachelor of Science in Accounting from York College of Pennsylvania.Mr. Vroman bring to Tyde accounting and management experience.

 

KevinO’Donnell. Mr. O’Donnell has served as Chairman of the board of directors since October 15, 2021. Mr. O’Donnellfounded Poptop Partners, LLC, a boutique operating and investment firm specializing in small to mid-market companies with an emphasison the retail sector in April 2011 and continues to serve as its Managing Partner. From May 2007 to June 2010, Mr. O’Donnell servedas the Founder/President of KOR Capital, LLC, a private equity and consulting firm specializing in turn around management of mid-marketcompanies. Mr. O’Donnell has been an early-stage investor in multiple industries including hospitality, beverage, cannabis, hempand technology. Mr. O’Donnell has served or continues to serve on numerous private and public boards including but not limitedto SRM Entertainment, Vinco Ventures, Inc., Lakeside Alternatives Hospital Foundation, and The University Club. Mr. O’Donnell willbring to Cryptyde close to 25 years of strategic corporate growth, financial structuring, leadership, and business development initiativesto emerging growth companies.

 

FrankJennings. Mr. Jennings has served as a member of the board of directors since October 13, 2021. Since 2019, Mr. Jennings has servedas the Chief Sales Officer at Castlight Health. From August 2014 to 2019, Mr. Jennings was employed as the Vice President of Sales, NorthAmerica by Doctor on Demand, Inc., an innovative healthcare telemedicine provider. He currently serves as an advisor at Aptihealth andCovera Health and is on the board of directors for Vinco Ventures, Inc. Mr. Jennings is a co-founder of the CMK Foundation, a charitableorganization which has been helping people in local communities since 2009. Mr. Jennings brings to Cryptyde 30 years of experience inbusiness development and management of sales professionals in a variety of technology-adjacent industries.

 

MaryAnn Halford. Ms. Halford has served as a member of the board of directors since October 13, 2021. She is currently a Partner in theTelecommunications, Media, and Technology (“TMT”) strategy consultancy Altman Solon. Previously she was a Senior Advisorto OC&C Strategy Consultants from December 2017 to December 2020. From March 2012 to April 2017, Ms. Halford was both a ManagingDirector and then a Senior Managing Director in FTI Consulting’s TMT Group working both in NY and London. Ms. Halford built outthe digital operations for ITN Networks from 2008 – 2009 and from 1997 through 2002, Ms. Halford built and developed the platformfor the Fox International Channels Group. In addition, from 2007 through 2014, Ms. Halford served on the board of directors of TritonDigital. Ms. Halford received her Bachelor of Arts degree in Government and Economics from Georgetown University and her Master’sin Business Administration from Harvard University. Ms. Halford brings to Cryptyde over 30 years of experience as both an operator andconsultant to the global media and entertainment industry.

 

LouisForeman. Louis Foreman has served as a member of the board of directors since October 15, 2021. Mr. Foreman is the founder and ChiefExecutive of Enventys, an integrated product design and engineering firm. Over the past 34 years Louis has created 10 successful start-upsand has been directly responsible for the creation of over 20 others. In 2013, Mr. Foreman was appointed by the SBA Administrator toserve on the National SBDC Advisory Board until the end of 2022. In 2008, Mr. Foreman was appointed by United States Secretary of CommerceCarlos M. Gutierrez to serve for a three-year term on the nine-person Patent Public Advisory Committee (PPAC) of the United States Patentand Trademark Office. In 2011, he was appointed by Secretary Gary Locke to serve an additional three-year term. In addition to beingan inventor, Mr. Foreman was the creator of the Emmy® Award winning PBS TV show, Everyday Edisons, and served as the ExecutiveProducer and lead judge. Mr. Foreman currently serves as Chairman of the board of directors of the James Dyson Foundation, the IntellectualProperty Owners Association (IPO), New Dominion Bank, The Federal Reserve Bank Industry Roundtable, Beyond Campus Innovations, VincoVentures, Inc., and the Intellectual Property Owners Educational Foundation (IPOEF). Mr. Foreman has a Bachelor of Arts degree in Economicsfrom the University of Illinois. Mr. Foreman brings to Cryptyde significant experience with start-ups and knowledge of intellectual propertymatters.

 

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CorporateGovernance

 

DirectorNominations Process

 

Eachyear the board of directors is expected to nominate a slate of directors for election by stockholders at the annual meeting of stockholdersbased on the recommendations of the Nominating and Corporate Governance Committee. In identifying prospective director candidates, theNominating and Corporate Governance Committee may seek referrals from other members of the board of directors, management, stockholdersand other sources, including third-party recommendations.

 

Directorand Executive Officer Qualifications

 

Underour Corporate Governance Guidelines, our Nominating and Corporate Governance Committee is responsible for reviewing with our board ofdirectors, on an annual basis, the appropriate experience, skills and characteristics for the board of directors as a whole and its individualmembers. In evaluating the suitability of individuals for board of directors membership, our Nominating and Corporate Governance Committee,pursuant to our Corporate Governance Guidelines, takes into account many factors, including but not limited to: the individual’squalification as independent, as well as consideration of diversity, skills, age, education and experience and the general needs of theboard of directors. Our Nominating and Corporate Governance Committee evaluates each individual in the context of the board of directorsas a whole, with the objective of recommending a group of directors that can best perpetuate the success of the business and representstockholder interests through the exercise of sound judgment, using its diversity of experience. In determining whether to recommenda director for re-election, our Nominating and Corporate Governance Committee considers the director’s past attendance at meetingsand participation in and contributions to the activities of the board of directors.

 

TheCompany’s officers and board of directors is composed of a diverse group of leaders in their respective fields. Many of these officersor directors have senior leadership experience at various companies. In these positions, they have also gained experience in core managementskills, such as strategic and financial planning, public company financial reporting, compliance, risk management, and leadership development.Many of the Company’s officers and directors also have experience serving on boards of directors and/or board committees of otherpublic companies and private companies and have an understanding of corporate governance practices and trends, which provides an understandingof different business processes, challenges, and strategies. Further, these officers and directors have other experience that makes themvaluable, such as managing and investing assets or facilitating the consummation of business investments and combinations.

 

TheCompany, along with its officers and directors, believe that the above-mentioned attributes, along with the leadership skills and otherexperiences of the Company’s directors and executive officers described above, provide the Company with a diverse range of perspectivesand judgment necessary to facilitate the Company’s goals of stockholder value appreciation through organic and acquisition growth.

 

BoardStructure, Number and Terms of Office of Officers and Directors

 

Ourboard of directors consists of five Directors. In accordance with our Certificate of Incorporation, the minimum number of directors wemay have is five and maximum number of Directors is eleven. The number of Directors may be increased or decreased by our board of directorsfrom time to time. In accordance with our Bylaws and Delaware law, our board of directors will oversee the management of the businessand affairs of the Company. Our Directors will be elected by our stockholders at our annual stockholders meeting for three-year termsand to serve until their successors are duly elected and qualified or until their earlier death, resignation, or removal. Stockholderswill not be entitled to cumulative voting in the election of our directors. Our board of directors will be classified, meaning the directorswill be divided into three classes each consisting of as close to 1/3 of the total Directors as possible. At each annual meeting of thestockholders, one class of Directors will be up for election. Directors will serve three-year terms. No determination has been made regardingthe directors to be in the individual classes. This classification of the board of directors may delay or prevent a change in controlof our company or our management.

 

DirectorIndependence

 

Nasdaqlisting standards require that a majority of the Company’s board of directors be independent. An “independent director”is defined generally as a person other than an officer or employee of the Company or its subsidiaries or any other individual havinga relationship that, in the opinion of the Company’s board of directors, would interfere with the director’s exercise ofindependent judgment in carrying out the responsibilities of a director. The board of directors intends to affirmatively determine thatFrank Jennings, Louis Foreman, and Mary Ann Halford qualify as independent directors in accordance with the Nasdaq listing rules.

 

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BoardLeadership Structure

 

Ourboard of directors is not expected to have a formal policy regarding the combination of the roles of Chairman of the board of directorsand Chief Executive Officer because the board of directors believes that it is in the best interests of the Company to have the flexibilityto determine, from time to time, whether the positions should be held by the same person or by separate persons. The board of directorsbelieves that it is currently in the best interest of our stockholders that the role of Chairman be held by Kevin O’Donnell.

 

Theboard of directors may reconsider this leadership structure from time to time based on the leadership needs of our board of directorsand the Company at any particular time. The Nominating and Corporate Governance Committee is expected to evaluate on an ongoing basiswhether the board of directors’s leadership structure is appropriate to effectively address the evolving needs of the Company’sbusiness and the long-term interests of our stockholders. The committee is expected to then makes recommendations to the board of directorsconcerning the board of directors’ leadership structure, including whether the roles of Chairman and Chief Executive Officer shouldbe separated or combined.

 

LeadIndependent Director

 

Underour Corporate Governance Guidelines, if the Chairman of the board of directors is not an independent director, as determined by the Nominatingand Governance Committee and the board of directors, the independent directors will annually appoint one independent director to be theLead Independent Director in accordance with the Director Nominating Agreement. Given that our Chairman will not be an independent director,our independent directors have appointed Frank Jennings as our Lead Independent Director. The Lead Independent Director’s responsibilitiesare to: (i) preside over executive sessions of the independent directors and at all meetings at which the Chairman of the board of directorsis not present; (ii) call meetings of the independent directors as he or she deems necessary; (iii) serve as a liaison between the Chairmanof the board of directors and the independent directors; (iv) propose agendas and schedules for board of directors meetings in consultationwith the Chairman of the board of directors; and (v) be available for consultation and communication if requested by stockholders.

 

Board’sRole in Risk Oversight

 

Ourmanagement is responsible for identifying risks facing our Company, including strategic, financial, operational, and regulatory risks,implementing risk management policies and procedures and managing our day-to-day risk exposure. The board of directors is expected tohave overall responsibility for risk oversight, including, as part of regular board of directors and committee meetings, general oversightof executives’ management of risks relevant to the Company. While the full board of directors has overall responsibility for riskoversight and is currently overseeing the Company’s business continuity risks, it is expected to be supported in this functionby its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee once the committees have been formed.The committees are expected to be formed prior to the Distribution, and each of the committees is expected to regularly reports to theboard of directors.

 

TheAudit Committee will review and discuss with management and the Company’s auditors, as appropriate, the risks faced by the Companyand the policies, guidelines, and process by which management assesses and manages the Company’s risks, including the Company’smajor financial risk exposures and the steps management has taken to monitor and control such exposures.

 

TheCompensation Committee will review the Company’s incentive compensation arrangements to determine whether they encourage excessiverisk-taking, to review and discuss at least annually the relationship between risk management policies and practices and compensation,and to evaluate compensation policies and practices that could mitigate any such risk.

 

TheNominating and Corporate Governance Committee will be responsible for developing and recommending to the board of directors for approvalan officer succession plan (the “Succession Plan”), reviewing the Succession Plan periodically with the Chief Executive Officer,evaluating potential candidates for executive positions and recommending to the board of directors any changes to and any candidatesfor succession under the Succession Plan.

 

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Inaddition, the board of directors will be presented with information at its regularly scheduled and special meetings regarding risks facingour Company, and management will provide more frequent, informal communications to the board of directors between regularly scheduledmeetings which will be designed to give the board of directors regular updates about our business. The board of directors will considerthis information and will provide feedback, will make recommendations, and, as appropriate, will authorize or direct management to addressparticular exposures to risk.

 

Committeesof the Board of Directors

 

Ourboard of directors has three standing committees: Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.Frank Jennings, Mary Ann Halford and Louis Foreman, have been appointed to serve on the Company’s Audit Committee, with Louis Foremanserving as the chair and qualifying as an audit committee financial expert, as such term is defined in Item 407(d)(5) of Regulation S-K.Frank Jennings, Mary Ann Halford, Louis Foreman have been appointed to serve on the Company’s Compensation Committee, with FrankJennings serving as the chair. Frank Jennings, Mary Ann Halford, Louis Foreman have been appointed to serve on the Company’s Nominatingand Corporate Governance Committee, with Frank Jennings serving as the chair. Each of the committee charters is available on the Company’swebsite at www.cryptyde.com.

 

AuditCommittee

 

TheAudit Committee’s duties, which are specified in its charter include, but are not limited to:

 

  reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board of directors whether the audited financial statements should be included in our annual reports;

 

  discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements;

 

  discussing with management major risk assessment and risk management policies;

 

  monitoring the independence of the independent auditor;
     
  verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;

 

  reviewing and approving all related-party transactions;

 

  inquiring and discussing with management our compliance with applicable laws and regulations;

 

  pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed;

 

  appointing or replacing the independent auditor;

 

  determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; and

 

  establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies.

 

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Nominatingand Corporate Governance Committee

 

TheNominating and Corporate Governance Committee’s duties, which are specified in its charter, include, but are not limited to:

 

  identifying, evaluating, and selecting, or recommending that the board of directors approve, nominees for election to the board of directors;

 

  evaluating the performance of the board of directors and of individual directors;

 

  reviewing developments in corporate governance practices;

 

  evaluating the adequacy of corporate governance practices and reporting;

 

  reviewing management succession plans; and

 

  developing and making recommendations to the board of directors regarding corporate governance guidelines and matters.

 

CompensationCommittee

 

TheCompensation Committee has overall responsibility for determining and approving the compensation of the Company’s Chief ExecutiveOfficer and reviewing and approving the annual base salaries and annual incentive opportunities of the Company’s executive officers.The Company may utilize the services of independent consultants to perform analyses and to make recommendations relative to executivecompensation matters. These analyses and recommendations will be conveyed to the Compensation Committee, and the Compensation Committeetakes such information into consideration in making its compensation decisions.

 

CompensationCommittee Interlocks and Insider Participation

 

Mr.Jennings, Ms. Halford and Mr. Foreman comprise our Compensation Committee. None of these individuals have any material contractual orother relationships with our company except as directors. None of our executive officers served on the compensation committee or boardof directors of any entity whose executive officers will serve as a member of our board of directors or our Compensation Committee.

 

ExecutiveSessions

 

Independentdirectors are expected to regularly meet in executive session at board of directors meetings without any members of management beingpresent. The Lead Independent Director will preside over the executive sessions, and may, as applicable, call executive sessions as appropriate.

 

Boardand Board Committee Meetings and Attendance

 

OurCorporate Governance Guidelines provide that directors are expected to prepare themselves for and attend all board of directors meetings,the annual meeting of stockholders and the meetings of the board of directors’ standing committees on which they serve.

 

Anti-HedgingPolicy

 

Ourboard of directors adopted an Insider Trading Policy, which prohibits, among other things, our directors, officers, and employees fromengaging in any hedging or monetization transactions with respect to the Company’s securities. In addition, our Insider TradingPolicy prohibits our directors, officers, and employees from engaging in certain short-term or speculative transactions in the Company’ssecurities, such as short-term trading, short sales, and publicly traded options, which could create heightened legal risk and/or theappearance of improper or inappropriate conduct by our directors, officers, and employees.

 

CorporateCode of Conduct and Ethics and Whistleblower Policy

 

Theboard of directors adopted a Corporate Code of Conduct and Ethics and Whistleblower Policy that applies to all of the Company’sdirectors, officers, and employees. The Corporate Code of Conduct and Ethics and Whistleblower Policy covers areas such as conflictsof interest, insider trading and compliance with laws and regulations. The Code of Conduct and Ethics is available on our website atwww.cryptyde.com. We intend to post any amendments to or waivers from our Code of Conduct and Ethics and Whistleblower Policy at thislocation on our website.

 

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StockholderCommunications

 

Stockholderswho wish to communicate with the board of directors may do so by writing the Company’s Office of the Secretary by mail at 200 9thAvenue, Suite 220, Safety Harbor, Florida 34695, Attention: Office of the Secretary or by email at investors@cryptyde.com. Allcommunications that relate to matters within the scope of the responsibilities of the board of directors and its standing committeeswill be forwarded to the Chairman of the board of directors. Communications that relate to ordinary business matters that are not withinthe scope of the responsibilities of the board of directors are to be sent to the appropriate executive officer or employee.

 

Our“whistleblower” policy prohibits our Company or any of our employees from retaliating or taking any adverse action againstanyone for raising a concern. If a stockholder or an employee nonetheless prefers to raise his or her concern in a confidential or anonymousmanner, he or she may call our external service provider, toll-free at 866-980-2818.

 

CertainLegal Proceedings

 

Tothe knowledge of the Company’s management, there is no litigation currently pending or contemplated against any of its officersor directors in their capacity as such.

 

BoardDiversity

 

Itis anticipated that we will seek diversity in experience, viewpoint, education, skill, and other individual qualities and attributesto be represented on our board of directors. We believe directors should have various qualifications, including individual characterand integrity; business experience; leadership ability; strategic planning skills, ability, and experience; requisite knowledge of ourindustry and finance, accounting, and legal matters; communications and interpersonal skills; and the ability and willingness to devotetime to our company. We also believe the skill sets, backgrounds, and qualifications of our anticipated directors, taken as a whole,should provide a significant mix of diversity in personal and professional experience, background, viewpoints, perspectives, knowledge,and abilities. Nominees will not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability,or any other basis proscribed by law. It is anticipated that the assessment of prospective directors will be made in the context of theperceived needs of our board of directors from time to time.

 

Weexpect that all of our directors will be individuals of high character and integrity, able to work well with others, and committed todevote sufficient time to the business and affairs of our company. In addition to these attributes, the description of each anticipateddirector’s background set forth above indicates the specific qualifications, skills, perspectives, and experience necessary toconclude that each individual should serve as a director of our company.

 

BoardLeadership Structure

 

Webelieve that effective board leadership structure can depend on the experience, skills, and personal interaction between persons in leadershiproles as well as the anticipated needs of our company at any point in time. Our anticipated Corporate Governance Guidelines will supportflexibility in the structure of our board of directors by not requiring the separation of the roles of Chief Executive Officer and Chairmanof the board of directors.

 

Ourboard of directors is not expected to have a formal policy regarding the combination of the roles of Chairman of the board of directorsand Chief Executive Officer. It is anticipated that our Chief Executive Officer will be responsible for setting our strategic directionand day-to-day leadership and performance of our company. Our Bylaws will provide that the Chairperson of our board of directors will,when present, preside over all meetings of our stockholders, unless another person is so designated by the board of directors, and boardof directors. We anticipate that the Chairperson of the board of directors will provide input to the Chief Executive Officer and setthe agenda for board meetings of our board of directors.

 

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ClawbackPolicy

 

Wemaintain a compensation recovery, or clawback, policy. In the event we are required to prepare an accounting restatement of our financialresults as a result of a material noncompliance by us with any financial reporting requirement under the federal securities laws causedby misconduct of any officer of the Company or its subsidiaries, we will have the right to use reasonable efforts to recover from anythen-current or then-former executive officers whose misconduct was a material factor in causing the misstatement and who have receivedincentive compensation (whether cash or equity) from us during the three-year period preceding the date on which we will have been requiredto prepare the accounting restatement, any excess incentive compensation awarded as a result of the misstatement. It is anticipated thatthis policy will be administered by the board of directors or a board of directors committee of our board of directors. Once final rulesare adopted by the SEC regarding clawback requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, orthe Dodd-Frank Act, it is anticipated that we will review this policy and make any amendments necessary to comply with the new rules.

 

EXECUTIVEAND DIRECTOR COMPENSATION

 

Weare an “emerging growth company” and a “smaller reporting company” under applicable federal securities laws andtherefore permitted to take advantage of certain reduced public company reporting requirements. As such, we provide in this prospectusthe scaled disclosure permitted under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, including the compensation disclosuresrequired of a “smaller reporting company,” as that term is defined in Rule 12b-2 promulgated under the Exchange Act.

 

Thissection discusses the material components of the executive compensation program for our executive officers who are named in the “SummaryCompensation Table” below.

 

SummaryCompensation Table.

 

Thefollowing table presents summary information regarding the total compensation incurred by Vinco Ventures, Inc. for the years ended December31, 2021 and 2020, for the named executive officers of the Company.

 

Name and Principal Position  Year   Salary
($)
   Bonus
($)
   Stock
Awards
($)
   Non-Equity
Incentive Plan
Compensation
($)
   All Other
Compensation
($)
   Total
($)
 
Brian McFadden   2021    207,245    -    2,139,328    -    480,000    2,826,573 
Chief Operating Officer   2020    -    -    -    -    -    - 
                                    
Brett Vroman   2021    246,247    -    1,819,173    -    480,000    2,545,420 
Chief Financial Officer   2020    176,924    -    -    -    -    176,924 

 

Overview

 

TheCompany expects to provide total compensation packages that are competitive, tailored to the unique characteristics and needs of theCompany within its industry, and adequately reward its executives for their roles in creating value for our stockholders. The Companyexpects that it will be competitive in its executive compensation with other similarly situated companies in its industry. The compensationdecisions regarding the Company’s executives are expected to be based on its need to attract individuals with the skills necessaryto achieve its business plan, to reward those individuals fairly over time and to retain those individuals who continue to perform ator above the Company’s expectations.

 

TheCompany’s executive compensation program is expected to consist of three primary components: salary, incentive bonus and stock-basedawards issued under an equity incentive plan. The Company determines the appropriate level for each compensation component based in part,but not exclusively, on its view of internal equity and consistency, individual performance, the Company’s performance, and otherinformation deemed relevant and timely.

 

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EmploymentAgreements

 

BrianMcFadden Employment Agreement

 

OnMarch 8, 2022, Cryptyde entered into an employment agreement with Brian McFadden (the “McFadden Employment Agreement”). Pursuantto the McFadden Employment Agreement, Mr. McFadden will serve as Chief Executive Officer of the Company and receive a base salary of$250,000 cash per year and 150,000 shares of Cryptyde common stock. Mr. McFadden will also receive a cash bonus of up to 150% of hisbase salary based on the satisfaction of performance targets to be set by mutual agreement between the board of directors and Mr. McFadden.Mr. McFadden may receive an equity bonus upon certain milestones relating to acquisitions, market capitalization, and cash flow. Mr.McFadden will be eligible to participate in all health, medical, dental and life insurance policies offered to employees of the Company,and the Company will pay all applicable premiums. The Company will reimburse Mr. McFadden up to $10,000 per year as a car allowance,and reimburse Mr. McFadden for all reasonable out-of-pocket expenses incurred by him in the conduct of the Company’s business.The McFadden Employment Agreement provides Mr. McFadden with four (4) weeks of paid vacation and five (5) days of paid personal time.The initial term of the McFadden Employment Agreement is from January 1, 2022 (retroactive) through January 31, 2024, and will automaticallyrenew for one-year terms unless either party provides notice of intent to terminate the McFadden Employment Agreement to the other partynot more than 270 days and not less than 180 days before the end of the then-existing term of employment. In the event the Company terminatesMr. McFadden’s employment without cause (as defined in the McFadden Employment Agreement) or Mr. McFadden terminates his employmentas a result of a constructive termination (as defined in the McFadden Employment Agreement), the Company shall pay Mr. McFadden severancein the amount of two times his then-existing base salary and previous year’s bonus, cause the vesting of all Cryptyde common stockheld by Mr. McFadden and cause him to retain all benefits he received under the McFadden Employment agreement for the remainder of theterm of the applicable benefit plan and as permitted by the benefit plan.

 

Acomplete copy of the McFadden Employment Agreement is included as Exhibit 10.4 to the Company’s registration statement on FormS-1, which this prospectus forms a part.

 

BrettVroman Employment Agreement

 

OnMarch 8, 2022, the Company entered into an employment agreement with Brett Vroman (the “Vroman Employment Agreement”). Pursuantto the Vroman Employment Agreement, Mr. Vroman will serve as Chief Financial Officer of the Company and receive a base salary of $250,000cash per year and 135,000 shares of Cryptyde common stock. Mr. Vroman will also receive a cash bonus of up to 150% of his base salarybased on the satisfaction of performance targets to be set by mutual agreement between the board of directors and Mr. Vroman. Mr. Vromanmay receive an equity bonus upon certain milestones relating to acquisitions, market capitalization, and cash flow. Mr. Vroman will beeligible to participate in all health, medical, dental and life insurance policies offered to employees of the Company, and the Companywill pay all applicable premiums. The Company will reimburse Mr. Vroman up to $10,000 per year as a car allowance, and reimburse Mr.Vroman for all reasonable out-of-pocket expenses incurred by him in the conduct of the Company’s business. The Vroman EmploymentAgreement provides Mr. Vroman with four (4) weeks of paid vacation and five (5) days of paid personal time. The initial term of the VromanEmployment Agreement is from January 1, 2022 (retroactive) through January 31, 2024, and will automatically renew for one-year termsunless either party provides notice of intent to terminate the Vroman Employment Agreement to the other party not more than 270 daysand not less than 180 days before the end of the then-existing term of employment. In the event the Company terminates Mr. Vroman’semployment without cause (as defined in the Vroman Employment Agreement) or Mr. Vroman terminates his employment as a result of a constructivetermination (as defined in the Vroman Employment Agreement), the Company shall pay Mr. Vroman severance in the amount of two times histhen-existing base salary and previous year’s bonus, cause the vesting of all Cryptyde common stock held by Mr. Vroman and causehim to retain all benefits he received under the Vroman Employment agreement for the remainder of the term of the applicable benefitplan and as permitted by the benefit plan.

 

Acomplete copy of the Vroman Employment Agreement is included as exhibit 10.6 to the Company’s registration statement on Form 10,which this prospectus forms a part.

 

RetirementBenefits

 

TheCompany expects to maintain a tax-qualified defined contribution plan that meets the requirements of Section 401(k) of the Internal RevenueCode (the “Code”), commonly called a 401(k) plan, for substantially all of its employees. The 401(k) plan will be made availableon the same basis to all employees, including the named executive officers. Each participant in the 401(k) plan will be able to electto defer from 0% to 100% of compensation, subject to limitations under the Code and Employee Retirement Income Security Act.

 

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DirectorCompensation

 

TheCompany’s board of directors’ compensation program is expected to be designed to provide competitive compensation necessaryto attract and retain high quality non-employee directors and to encourage ownership of Company stock to further align their interestswith those of our stockholders.

 

Thedirector annual compensation program is expected to provide the following compensation for independent, non-employee directors followingthe Business Combination:

 

  A quarterly retainer (the “Quarterly Retainer”) of $10,000, and 10,000 shares of the Company common stock, a supplemental $10,000 annual retainer for each of the Audit Committee Chair, the Compensation Committee Chair, and the Nominating and Governance Committee Chair;

 

  Meeting attendance fees (the “Meeting Attendance Fees”) of $1,000 per in-person meeting attended; and

 

  Additional compensation for ad hoc services on a case-by-case basis.

 

The2022 Annual Retainer and Meeting Attendance Fees are expected to be paid in equal installments in arrears as soon as practicable afterthe last business day of each calendar quarter.

 

CERTAINRELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

Proceduresfor Approval of Related Person Transactions

 

TheCompany’s board of directors has adopted a written related person transaction policy that sets forth the following policies andprocedures for the review and approval or ratification of related person transactions.

 

A“Related Party Transaction” is a transaction, arrangement, or relationship in which the Company or any of its subsidiarieswas, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related party had, has or will havea direct or indirect material interest. A “Related Party” means:

 

  any person who is, or at any time during the applicable period was, one of the Company’s executive officers or a member of or nominee for the board of directors;

 

  any person (including any entity or group) who is known by the Company to be the beneficial owner of more than five percent (5%) of our voting stock;

 

  any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, officer, or a beneficial owner of more than five percent (5%) of our voting stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer, or beneficial owner of more than five percent (5%) of our voting stock;
     
  any of the foregoing persons that qualify as such at any time during the fiscal year in which a transaction that would otherwise be subject to this the policy occurs, even if such person has ceased to have such status during such fiscal year; and
     
  any firm, corporation, or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a ten percent (10%) or greater beneficial ownership interest.

 

Inaddition, we will have in place policies and procedures designed to minimize potential conflicts of interest arising from any dealingsthe Company may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflictsof interest that may exist from time to time. Specifically, pursuant to the Audit Committee charter, the Audit Committee will have theresponsibility to review related party transactions.

 

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TheSeparation from Vinco Ventures, Inc.

 

Inconnection with the Separation, we entered into a Separation and Distribution Agreement and other agreements with Vinco to effect theSeparation and provide a framework for our relationship with Vinco after the Separation. These agreements provide for the allocationbetween us and our subsidiaries, on the one hand, and Vinco and its subsidiaries on the other hand, of the assets, liabilities, legalentities, and obligations associated with the Cryptyde Businesses, on the one hand, and Vinco’s other current businesses, on theother hand, and governs the relationship between our company and our subsidiaries, on the one hand, and Vinco and its subsidiaries, onthe other hand, subsequent to the Separation (including with respect to transition services, employee matters, intellectual propertymatters, tax matters, and certain other commercial relationships).

 

OtherRelated Party Transactions

 

Wehave entered into indemnification agreements with each of our directors and executive officers. These agreements require us to indemnifyand advance litigation expenses incurred by such individuals by reason of (i) their status as directors and/or officers of the Company,(ii) acts or omissions made in good faith, (iii) their service in any capacity with respect to an employee benefit plan of our companyor one or more of our majority owned subsidiaries, or (iv) their service as directors, officers, managers, general partners, trustees,employees, or agents of another entity (including a majority owned subsidiary of our company) at our request while directors and/or officersof our company to the fullest extent permitted by applicable law. See “Limitations on Personal Liability of Directors, Indemnificationand Advancement Rights of Directors and Officers, and Director and Officer Insurance” for more detail on the extent to which Delawarelaw permits the indemnification of Directors and Officers under the indemnification agreement.

 

Pursuantto the indemnification agreements, the Company will advance all reasonable expenses to be incurred by the indemnitee related to a proceedingfor which the indemnitee is entitled to indemnification. The indemnitee shall repay to the Company any expenses advance to the indemniteeif it is ultimately be determined that indemnitee is not entitled to be indemnified against such expenses.

 

SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Thefollowing table sets forth certain information regarding the beneficial ownership of our common stock as of August 11, 2022 by(1) each named executive officer and director of our company, (2) all directors and executive officers of our company as a group, and(3) each person known by us to own more than 5% of our common stock.

 

Thefollowing table sets forth information regarding the beneficial ownership of our common stock as of August 11, 2022:

 

  each person known by the Company to be an expected beneficial owner of more than 5% of the common stock of the Company;

 

  each of the Company’s officers and directors; and

 

  all executive officers and directors of the Company as a group.

 

Theaddresses of the executives officers and directors is 200 9th Avenue North, Suite 220, Safety Harbor, Florida, 34695.

 

Beneficialownership is determined according to the rules of the Securities and Commission, which generally provide that a person has beneficialownership of a security if he, she, or it possesses sole or shared voting or investment power over that security, including options andwarrants that are currently exercisable or exercisable within 60 days. The information below is based upon information provided by Vinco.

 

Thebeneficial ownership percentages set forth in the table below are based on approximately 31,267,585 shares of common stock issuedand outstanding as of August 11, 2022.

 

Unlessotherwise indicated, the Company believes that all persons named in the table have sole voting and investment power with respect to allshares of common stock beneficially owned by them.

 

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      Beneficial Ownership  
Name and Address of Beneficial Owner(1)     Number of Shares       Percentage  
5% Stockholders                
Hudson Bay Master Fund, Ltd. (2)     3,435,682       9.99 %
BHP Capital NY, Inc. (3)     3,000,000     9.16 %
Current Executive Officers and Directors                
Brian McFadden(4)     81,686     *  
Brett Vroman(5)     141,962     *  
Kevin O’Donnell(6)     70,316     *  
Frank Jennings(7)     40,750        
Louis Foreman(8)     73,286     *  
Mary Ann Halford(9)     33,250     *  
Total Executive Officers and Directors     441,250     * %

 

(1) Based on 31,267,585 shares of common stock issued and outstanding as of August 11, 2022. All shares reported are shares of the Company’s Common Stock.
   
(2) Includes: (1) 102,349 shares of common stock issuable upon conversion of the January 2022 Note, and (2) 3,333,333 shares of common stock issuable upon exercise of January 2022 Warrant, and excludes 9,089,475 shares of common stock issuable upon conversion of the January 2022 Note. Pursuant to the terms of the January 2022 Note, Hudson Bay may not convert the January 2022 Note to the extent (but only to the extent) Hudson Bay or any of its affiliates would beneficially own upon such conversion or exercise a number of shares of our common stock which would exceed 9.99% of the outstanding shares of common stock of the Company. The number of shares and percentage reflect this limitation as of August 11, 2022. Hudson Bay Capital Management LP is the investment manager of Hudson Bay Sander Gerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management LP, and Sander Gerber has sole voting and investment power over these securities. Each of Hudson Bay and Sander Gerber disclaims beneficial ownership over these securities. The selling stockholder’s address is c/o Hudson Bay Capital Management LP, 28 Havemeyer Place, 2nd Place, Greenwich, CT 06830. All shares reported are shares of the Company’s Common Stock.
   
(3) Includes 1,500,000 shares of common stock issuable upon the exercise of warrants issued to BHP Capital NY, Inc. (“BHP”). Bryan Pantofel is the President of BHP and has sole voting and investment power over these securities. The selling stockholder’s address is 45 SW 9th Street, Suite 1603, Miami, Florida 33130. All shares reported are shares of the Company’s Common Stock.
   
(4) Mr. McFadden’s address is 200 9th Avenue North, Suite 220, Safety Harbor, Florida 34695. All shares reported are shares of the Company’s Common Stock.
   
(5) Mr. Vroman’s address is 200 9th Avenue North, Suite 220, Safety Harbor, Florida 34695. All shares reported are shares of the Company’s Common Stock.
   
(6) Mr. O’Donnell’s address is 200 9th Avenue North, Suite 220, Safety Harbor, Florida 34695. All shares reported are shares of the Company’s Common Stock.
   
(7) Mr. Jennings’ address is 200 9th Avenue North, Suite 220, Safety Harbor, Florida 34695. All shares reported are shares of the Company’s Common Stock.
   
(8) Mr. Foreman’s address is 200 9th Avenue North, Suite 220, Safety Harbor, Florida 34695. All shares reported are shares of the Company’s Common Stock.
   
(9) Ms. Halford’s address is 200 9th Avenue North, Suite 220, Safety Harbor, Florida 34695. All shares reported are shares of the Company’s Common Stock.
   
* Less than 1%.

  

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WHEREYOU CAN FIND MORE INFORMATION

 

Wehave filed a registration statement on Form S-1 with the SEC with respect to the registration of the common stock offered for sale withthis prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits tothe registration statement. For further information about us, the common stock we are offering by this prospectus, and related matters,you should review the registration statement, including the exhibits filed as a part of the registration statement. Statements containedin this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statementare not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registrationstatement.

 

Weare subject to the information and periodic reporting requirements of the Securities Act, and, in accordance with such requirements,we file periodic reports, proxy statements, and other information with the SEC. These periodic reports, proxy statements, and other informationwill be available for inspection and copying at the SEC’s website at www.SEC.gov. We also maintain a website at www.cryptyde.comat which you may access our SEC filings free of charge as soon as reasonably practicable after they are electronically filed with, orfurnished to, the SEC. The information contained in, or that can be accessed through, our website is not incorporated by reference in,and is not part of, this prospectus. We intend to furnish our stockholders with annual reports containing consolidated financial statementsaudited by our independent registered accounting firm.

 

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INDEXTO FINANCIAL STATEMENTS

 

    Page
Audited Financial Statements of Ferguson Containers    
     
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 00536)   F-2
     
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 00688)   F-3
     
Balance Sheets as of December 31, 2021 and 2020   F-4
     
Statements of Comprehensive Income for the years ended December 31, 2021 and 2020   F-5
     
Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020   F-6
     
Statements of Cash Flows for the years ended December 31, 2021 and 2020   F-7
     
Notes to the Financial Statements   F-8
     
Audited Financial Statements of Cryptyde, Inc.    
     
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 00536)   F-15
     
Balance Sheets as of December 31, 2021   F-16
     
Statements of Comprehensive Income For the Period from September 21, 2021 (inception) to December 31, 2021   F-17
     
Statements of Changes in Stockholders’ Equity For the Period from September 21, 2021 (inception) to December 31, 2021   F-18
     
Statements of Cash Flows For the Period from September 21, 2021 (inception) to December 31, 2021   F-19
     
Notes to the Financial Statements   F-20
     
Unaudited Financial Statements of Cryptyde, Inc.    
     
Condensed Consolidated Balance Sheet as of March 31, 2022 and December 31, 2021   F-26
     
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021   F-27
     
Condensed Consolidated Statements of Stockholder’s Equity for the three months ended March 31, 2022 and 2021   F-28
     
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021   F-29
     
Notes to Condensed Consolidated Financial Statements   F-30

 

F-1
 

 

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Tothe Stockholder and Board of Directors of

FergusonContainers

 

Opinionon the Financial Statements

 

Wehave audited the accompanying consolidated balance sheet of Ferguson Containers (the “Company”) as of December 31, 2021,the related consolidated statements of comprehensive income, changes in stockholder’s equity and cash flows for the year then ended,and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidatedfinancial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31,2021, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generallyaccepted in the United States of America.

 

Basisfor Opinion

 

Theseconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinionon the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the PublicCompany Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commissionand the PCAOB.

 

Weconducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As partof our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressingan opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Ouraudit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether dueto error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidenceregarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principlesused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.We believe that our audit provides a reasonable basis for our opinion.

 

/s/ Morison Cogen LLP  

 

Wehave served as the Company’s auditor since 2022.

 

BlueBell, Pennsylvania

March8, 2022

 

F-2
 

 

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Tothe Shareholders and Board of Directors of

FergusonContainers, Inc.

 

Reporton the Financial Statements

 

Wehave audited the accompanying balance sheet of Ferguson Containers, Inc. (the “Company”) as of December 31, 2020, the relatedstatements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2020, and the relatednotes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly,in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cashflows for the year in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United Statesof America.

 

Basisfor Opinion

 

Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sfinancial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federalsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

Weconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Companyis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our auditswe are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Ouraudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to erroror fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regardingthe amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our auditsprovide a reasonable basis for our opinion.

 

/s/ Marcum LLP  

MarcumLLP

 

Wehave served as the Company’s auditor from September 2021 through February 21, 2022.

 

NewYork, NY

November5, 2021

 

F-3
 

 

FERGUSONCONTAINERS

CONSOLIDATEDBALANCE SHEETS

Asof December 31, 2021 and 2020

 

   2021   2020 
ASSETS          
Current assets:          
Cash and cash equivalents  $844,619   $176,759 
Accounts receivable   867,027    836,153 
Inventories   110,664    114,198 
Prepaid expenses and other current assets   48,343    7,209 
Total current assets   1,870,653    1,134,319 
Property and equipment, net   1,007,770    967,361 
Due from parent   418,004    821,627 
Total assets  $3,296,427   $2,923,307 
           
LIABILITIES AND STOCKHOLDER’S EQUITY          
Current liabilities:          
Line of credit  $-   $367,976 
Note payable, current portion   15,530    14,848 
Accounts payable   44,547    38,507 
Accrued expenses   7,551    10,799 
Income tax payable   319,997    109,998 
Total current liabilities   387,625    542,128 
Note payable, less current portion   12,114    27,644 
Deferred tax liabilities   82,104    82,104 
Total liabilities   481,843    651,876 
           
Stockholder’s equity:          
Common stock, 400 shares authorized and outstanding, no par value   50,000    50,000 
Retained earnings   2,764,584    2,221,431 
Total stockholder’s equity   2,814,584    2,271,431 
Total liabilities and stockholder’s equity  $3,296,427   $2,923,307 

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

F-4
 

 

FERGUSONCONTAINERS

CONSOLIDATEDSTATEMENTS OF COMPREHENSIVE INCOME

Forthe Years Ended December 31, 2021 and 2020

 

   2021   2020 
         
Revenues, net  $7,874,285   $6,719,894 
Cost of revenues   5,682,117    4,691,451 
Gross profit   2,192,168    2,028,443 
           
Selling, general and administrative expenses   1,946,832    1,759,117 
           
Operating income   245,336    269,326 
           
Non-operating income (expense):          
Interest expense, net   (44,816)   (112,295)
Rental income   71,543    102,815 
Other income   481,090    - 
Total non-operating income (expense)   507,817    (9,480)
           
Net income before income tax expense   753,153    259,846 
           
Income tax expense   210,000    67,399 
           
Net income  $543,153   $192,447 
Earnings per share:          
Earnings per share – basic and diluted  $1,357.88   $481.12 
Weight average number of common shares outstanding – basic and diluted   400    400 

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

F-5
 

 

FERGUSONCONTAINERS

CONSOLIDATEDSTATEMENTS OF STOCKHOLDER’S EQUITY

Forthe Years Ended December 31, 2021 and 2020

 

   Common Stock   Retained     
   Shares   Amount   Earnings   Total 
                 
Balance, January 1, 2020   400   $50,000   $2,028,984   $2,078,984 
                     
Net income        -    192,447    192,447 
                     
Balance, December 31, 2020   400    50,000    2,221,431    2,271,431 
                     
Net income        -    543,153    543,153 
                     
Balance, December 31, 2021   400   $50,000   $2,764,584   $2,814,584 

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

F-6
 

 

FERGUSONCONTAINERS

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

Forthe Years Ended December 31, 2021 and 2020

 

   2021   2020 
         
Cash flows from operating activities:          
Net income  $543,153   $192,447 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   140,765    95,861 
Amortization of debt issuance costs   -    15,573 
Gain on sale of building   (475,418)   - 
Changes in assets and liabilities:          
Accounts receivable   (30,874)   (140,091)
Inventories   3,534    (24,958)
Prepaid expenses and other current assets   (41,134)   (290)
Accounts payable   6,040    9,100 
Accrued expenses and other current liabilities   206,751    45,433 
           
Net cash provided by operating activities   352,817    193,075 
           
Cash flows from investing activities:          
Purchases of property and equipment   (514,151)   (276,478)
Proceeds from sale of land and building   808,395    - 
Net cash provided by (used in) investing activities   294,244    (276,478)
           
Cash flows from financing activities:          
Repayments under lines of credit   (367,976)   - 
Borrowings under lines of credit   -    (104,326)
Repayments under notes payable   (14,848)   (14,196)
Due from parent   403,623    299,983 
Net cash provided by financing activities   20,799    181,461 
Net increase in cash and cash equivalents   667,860    98,058 
           
Cash and cash equivalents, beginning of the year   176,759    78,701 
Cash and cash equivalents, end of the year  $844,619   $176,759 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $47,688   $112,295 
Cash paid for income taxes  $-   $- 

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

F-7
 

 

FERGUSONCONTAINERS

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

1.NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Asused herein, “Fergco” and the “Company” refer to Ferguson Containers and/or where applicable, its management,a New Jersey corporation incorporated on September 14, 1966 under the laws of the State of New Jersey. The Company produces and sellsa variety of container board, corrugated products and specialty paper products in North America. The Company is 100% owned by Vinco Ventures,Inc. (“Vinco” or “Parent”).

 

Asof December 31, 2021, Fergco’s wholly-owned subsidiary included Cryptyde Shared Services, LLC (“Cryptyde Shared”),which was formed on September 16, 2021. All of Cryptyde Shared Services, LLC costs are paid by and billed to Cryptyde, Inc. and thereforeCryptyde Shared had no assets or activity as of December 31, 2021. The accompanying consolidated financial statements exclude EVNT Platform,LLC which was transferred to Fergco on September 16, 2021, and the transfer was rescinded on January 24, 2022, with an effective rescissiondate of September 16, 2021.

 

During2021, the Parent announced it plans to spin-off (the “Separation”) certain of its businesses. The Parent plans to includeFerguson Containers as well as other subsidiaries of the Parent (the “Spin-Off Businesses”) as part of the spin-off. In anticipationof the Separation, the Parent has placed its assets and legal entities comprising the Spin-Off Businesses to facilitate the Separation.As a result of the Separation, the Company will become an independent, publicly traded company comprised of the Spin-Off Businesses.The Separation is expected to be completed upon the distribution of the common stock of the Spin-Off Businesses to stockholders of theParent on or about the end of the second quarter of 2022.

 

Basisof Presentation.

 

Theaccompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally acceptedin the United States of America (“US GAAP”). All significant intercompany transactions and balances have been eliminatedin consolidation.

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Useof Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptionsthat affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.The Company’s significant estimates used in these consolidated financial statements include, but are not limited to, revenue recognitionand the determination of the economic useful life of depreciable property and equipment. Certain of the Company’s estimates couldbe affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possiblethat these external factors could have an effect on the Company’s estimates and could cause actual results to differ from thoseestimates.

 

Cashand Cash Equivalents. The Company considers all highly liquid, short-term investments with original maturities of three months orless when purchased to be cash equivalents.

 

AccountsReceivable. Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. Managementestimates the allowance for bad debts based on existing economic conditions, historical experience, the financial conditions of the customers,and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual duedate. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted.All accounts receivable is currently deemed collectible and no allowance for doubtful account was required as of December 31, 2021 andDecember 31, 2020, respectively. There was one customer who represented 27% of total accounts receivable as of December 31, 2021.

 

F-8
 

 

FERGUSONCONTAINERS

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

Inventories.Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying valueof inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technologydevelopments, or other economic factors.

 

Propertyand Equipment. Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencingat the in-service date using the straight-line method over the estimated useful lives of the assets, as follows: 3 to 5 years for officeequipment, 5 to 7 years for furniture and fixtures, 6 to 10 years for machinery and equipment, 10 to 15 years for building improvements,5 years for software, 5 years for molds, 5 to 7 years for vehicles and 40 years for buildings. When fixed assets are retired or otherwisedisposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statementsof operations for the respective period. Minor additions and repairs are expensed in the period incurred. Major additions and repairswhich extend the useful life of existing assets are capitalized and depreciated using the straight-line method over their remaining estimateduseful lives.

 

OnAugust 25, 2021, the Company sold the building located in Washington, NJ for gross proceeds of $858,730. The net proceeds of $763,665were used to partially payoff the note on the Parent Company, Vinco Ventures, Inc. to the Ferguson Family of $876,500. The note payablewas related to the September 30, 2018 acquisition of Ferguson Containers

 

Thetable below presents the gain on sale of building:

 

   August 25, 2021 
Proceeds  $858,730 
Less: Land   (79,100)
Less: Building, net   (253,877)
Less: Fees   (50,335)
Gain on sale of building  $475,418 

 

Impairmentof Long-lived Assets. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate thatthe carrying amount of the asset may not be recoverable. The Company assesses the recoverability of its long-lived assets using undiscountedcash flows. If an asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carryingvalue and the asset’s fair value. The Company did not record any impairment charges related to long-lived assets during the yearsended December 31, 2021 and 2020.

 

ContingentLiabilities. The Company, from time to time, may be involved in certain legal proceedings. Based upon consultation with outside counselhandling its defense in these matters and the Company’s analysis of potential outcomes, if the Company determines that a loss arisingfrom such matters is probable and can be reasonably estimated, an estimate of the contingent liability is recorded in its consolidatedfinancial statements. If only a range of estimated loss can be determined, an amount within the range that, based on estimates, assumptionsand judgments, reflects the most likely outcome, is recorded as a contingent liability in the consolidated financial statements. In situationswhere none of the estimates within the estimated range is a better estimate of probable loss than any other amount, the Company recordsthe low end of the range. Any such accrual would be charged to expense in the appropriate period. Litigation expenses for these typesof contingencies are recognized in the period in which the litigation services were provided.

 

F-9
 

 

FERGUSONCONTAINERS

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

RevenueRecognition. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)606, Revenue from Contracts with Customers, the Company recognizes revenue when it satisfies performance obligations, by transferringpromised goods or services to customers, in an amount that reflects the consideration to which the Company expects to be entitled inexchange for fulfilling those performance obligations. Revenue for product sales is recognized upon receipt by the customer. There areno contract assets or contract liabilities and therefore no unsatisfied performance obligations. The Company does not offer any warranties,however; damaged products can be returned for credit or refund.

 

Disaggregationof Revenue. The Company’s primary revenue streams include the sale of corrugated packaging materials. There are no other materialoperations that were separately disaggregated for segment purposes. The Company has income from rental operations which is included aspart of other income in the statements of operations.

 

Costof Revenues. Cost of revenues includes freight charges, purchasing and receiving costs, depreciation and inspection costs.

 

Comprehensiveincome. The Company follows Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income. Comprehensiveincome is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historicallyhas not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income, comprehensiveincome is equal to net income.

 

EarningsPer Share. The Company follows ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earningsper share. Because the Company does not have any common stock equivalents, such as stock options and warrants, the amounts reported forbasic and diluted earnings per share were the same.

 

IncomeTaxes. The Company accounts for income taxes under the provisions of the FASB ASC Topic 740 “Income Taxes” (“ASCTopic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items thathave been included or excluded in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determinedon the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporarydifferences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Companyutilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position takenor expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiringrecognition in the Company’s consolidated financial statements as of December 31, 2021 and 2020. The Company does not expect anysignificant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classifyassessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the consolidatedstatements of comprehensive income. The Company is subject to routine audits by taxing jurisdictions; however, there are currently noaudits for any tax periods in progress.

 

F-10
 

 

FERGUSONCONTAINERS

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

FairValue Measurements. The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “FairValue Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fairvalue, and expands disclosures about fair value measurements.

 

ASC820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in theprincipal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurementdate. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimizethe use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level1 — quoted prices in active markets for identical assets or liabilities

Level2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

 

Thecarrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable and other currentliabilities approximate fair values due to the short-term nature of these instruments.

 

Concentrationof Credit Risks. Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents,accounts receivable and revenues. Cash and cash equivalents are invested in deposits with certain financial institutions and may, attimes, exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents.

 

RecentAccounting Pronouncements. As of December 31, 2021, there were no recently adopted accounting pronouncements that had a materialeffect on the Company’s consolidated financial statements.

 

F-11
 

 

FERGUSONCONTAINERS

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

SubsequentEvents. The Company has evaluated subsequent events through March 8, 2022, the date the consolidated financial statements were availableto be issued. Based upon the evaluation, except for items described in Note 11, the Company did not identify any recognized or non-recognizedsubsequent events that would have required adjustment or disclosure in the consolidated financial statements.

 

SegmentReporting. The Company uses “the management approach” in determining reportable operating segments. The management approachconsiders the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisionsand assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operatingdecision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to makedecisions about allocating resources and assessing performance for the entire Company. The Company’s primary revenue streams includethe sale of corrugated packaging materials and therefore the Company only identifies one reportable operating segment.

 

3.ACCOUNTS RECEIVABLE

 

Accountsreceivable consist of the following at December 31, 2021 and 2020:

 

   2021   2020 
         
Trade accounts receivable  $867,027   $836,153 
Less: allowance for doubtful accounts   -    - 
Total accounts receivable  $867,027   $836,153 

 

4.INVENTORIES

 

Inventoriesconsist of the following at December 31, 2021 and 2020:

 

   2021   2020 
         
Raw materials  $13,366   $71,484 
Finished goods   97,298    42,714 
Total inventories  $97,298   $114,198 

 

5.PROPERTY AND EQUIPMENT, NET

 

Propertyand equipment consist of the following at December 31, 2021 and 2020:

 

   2021   2020 
         
Land  $-   $79,100 
Building and building improvements   781,985    1,263,861 
Equipment and machinery   4,621,878    4,119,632 
Furniture and fixtures   260,426    260,426 
Vehicles   533,867    521,962 
    6,198,156    6,244,981 
Less: accumulated depreciation   (5,190,386)   (5,277,620)
Total property and equipment, net  $1,007,770   $967,361 

 

Depreciationand amortization expense was $140,765 and $95,861 for the years ended December 31, 2020 and 2019, respectively.

 

6.DUE TO AND FROM PARENT

 

Asof December 31, 2021 and December 31, 2020, due from parent consists of net amounts due from Vinco Ventures, Inc. related to borrowingsfor working capital needs and management fees charged by Vinco Ventures, Inc. to Ferguson Containers as well as other operating expensesthat were paid for on behalf of one to the other. As of December 31, 2021 and 2020, the net amount due from parent was $418,004 and $821,627,respectively. Such amounts are not due currently. The Parent billed the Company management fees of $316,500 and $200,000 for the yearsended December 31, 2021 and 2020, respectively. The due to and from Parent will be considered to be settled at the time of the anticipatedSpin-Off of Ferguson Containers

 

F-12
 

 

FERGUSONCONTAINERS

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

7.DEBT

 

Principaldue under the line of credit and note payable was as follows as of December 31, 2021 and 2020:

 

   2021   2020 
         
Line of credit  $-   $367,976 
           
Note payable   27,644    42,492 
Less: note payable, current portion   (15,530)   (14,848)
Note payable, net of current portion  $12,114   $27,644 

 

OnFebruary 21, 2020, the Company entered into a receivables financing line of credit arrangement (the “Factoring Agreement”)for certain receivables of the Company not to exceed $1,250,000 at any one time. The agreement allows for borrowings up to 85% of theoutstanding receivable based on the credit quality of the customer. The fee is between 1% and 2% of the total invoices financed. Thebalance at December 31, 2020 was $367,976. On March 31, 2021, the Company fully paid off the remaining balance of the Factoring Agreement.

 

8.INCOME TAXES

 

FergusonContainers is taxed as a corporation and pays corporate federal, state and local taxes on income.

 

Componentsof income before income taxes were as follows:

 

   2021   2020 
         
United States  $753,153   $259,846 
Income before income tax expense  $753,153   $259,846 

 

Thetax effects of temporary differences that give rise to deferred tax assets or liabilities are presented below:

 

   2021   2020 
         
Deferred tax assets:          
Net operating loss carryforwards  $-    - 
Net deferred tax assets  $-   $- 
           
Deferred tax liabilities:          
Property and equipment  $(82,104)   (82,104)
Net deferred tax liabilities  $(82,104)  $(82,104)
Net deferred taxes  $(82,104)  $(82,104)

 

Theincome tax provision consists of the following:

 

   2021   2020 
         
Current:          
Federal  $142,845   $33,315 
State   67,155    9,244 
Total current   210,000    42,559 
Deferred:          
Federal   -    16,887 
State   -    7,953 
Total deferred   -    24,840 
Total income tax provision  $210,000   $67,399 

 

F-13
 

 

FERGUSONCONTAINERS

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

Areconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

 

   2021   2020 
         
Tax at federal statutory rate   21.0%   21.0%
State and local income taxes   7.1%   4.7%
Other   0.2%   0.2%
Total income tax provision   27.9%   25.9%

 

9.STOCKHOLDER’S EQUITY

 

CommonStock. Vinco Ventures, Inc. owns 100% of the issued and outstanding common stock of Ferguson Containers As of December 31, 2021 and2020, the Company has 400 shares of common stock issued and outstanding, respectively.

 

10.COMMITMENTS AND CONTINGENCIES

 

OperatingLeases. The Company leases certain office space from an entity affiliated through common ownership under an operating lease agreementon a month-to-month basis.

 

Rentexpense for the years ended December 31, 2021 and 2020 was $106,800 and $106,800, respectively. Rental payments are expensed in the statementsof comprehensive income in the period to which they relate.

 

11.SUBSEQUENT EVENTS

 

OnJanuary 24, 2022, Vinco Ventures, Inc. rescinded the transfer of the ownership units of EVNT Platform, LLC to Ferguson Containers and100% of the ownership units of EVNT Platform, LLC reverted back to Vinco Ventures, Inc. with an effective rescission date of September16, 2021.

 

F-14
 

 

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Tothe Stockholder and Board of Directors of

Cryptyde,Inc.

 

Opinionon the Financial Statements

 

Wehave audited the accompanying consolidated balance sheet of Cryptyde, Inc. (the “Company”) as of December 31, 2021, the relatedconsolidated statements of comprehensive loss, changes in stockholder’s deficit and cash flows for the period from September 21,2021 (inception) to December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Companyas of December 31, 2021, and the results of their operations and their cash flows for the period from September 21, 2021 (inception)to December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

 

Basisfor Opinion

 

Theseconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinionon the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the PublicCompany Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commissionand the PCAOB.

 

Weconducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As partof our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressingan opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Ouraudit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether dueto error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidenceregarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principlesused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.We believe that our audit provides a reasonable basis for our opinion.

 

/s/ Morison Cogen LLP  

 

Wehave served as the Company’s auditor since 2022.

 

BlueBell, Pennsylvania

March8, 2022

 

F-15
 

 

CRYPTYDE,INC.

CONSOLIDATEDBALANCE SHEET

Asof December 31, 2021

 

      
ASSETS     
Current assets:     
Cash and cash equivalents  $66,575 
Other current assets   7,033,350 
Total current assets   7,099,925 
      
Loan held-for-investment, related party   4,000,000 
Total assets  $11,099,925 
      
LIABILITIES AND STOCKHOLDER’S DEFICIT     
Current liabilities:     
Accounts payable and accrued expenses   126,627 
Customer deposit   6,999,980 
Total current liabilities   7,126,607 
Due to parent   4,616,551 
Total liabilities   11,743,158 
      
Commitments and contingencies   - 
      
Stockholder’s deficit:     
Common stock, 10,000 shares authorized and outstanding, $0.001 par value   10 
Additional paid-in capital   (10)
Accumulated deficit   (514,373)
Total stockholder’s deficit attributable to Cryptyde, Inc.   (514,373)
Non-controlling interest   (128,860)
Total stockholder’s deficit   (643,233)
Total liabilities and stockholder’s deficit  $11,099,925 

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

F-16
 

 

CRYPTYDE,INC.

CONSOLIDATEDSTATEMENT OF COMPREHENSIVE LOSS

Forthe Period from September 21, 2021 (inception) to December 31, 2021

 

      
Revenues, net  $- 
Cost of revenues   - 
Gross profit   - 
      
Selling, general and administrative expenses   676,628 
      
Operating loss   (676,628)
      
Non-operating income:     
Interest income, net   33,395 
      
Total non-operating income   33,395 
      
Net loss before income tax expense (benefit)   (643,233)
      
Income tax expense (benefit)   - 
      
Net loss   (643,233)
Net loss attributable to non-controlling interest   (128,860)
Net loss attributable to Cryptyde, Inc.  $(514,373)
Net loss per share:     
Net loss per share – basic and diluted  $(51.44)
      
Weight average number of common shares outstanding – basic and diluted   10,000 

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

F-17
 

 

CRYPTYDE,INC.

CONSOLIDATEDSTATEMENT OF STOCKHOLDER’S DEFICIT

Forthe Period from September 21, 2021 (inception) to December 31, 2021

 

                               
   Common Stock   Additional Paid in   Non controlling   Accumulated     
   Shares   Amount   Capital   Interest   deficit   Total 
                         
Balance, September 21, 2021 (Inception)   -   $-   $-   $-   $-   $- 
                               
Contributions   10,000    10    (10)   -    -    - 
                               
Net loss        -    -    (128,860)   (514,373)   (643,233)
                               
Balance, December 31, 2021   10,000   $10   $(10)  $(128,860)  $(514,373)  $(643,233)

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

F-18
 

 

CRYPTYDE,INC.

CONSOLIDATEDSTATEMENT OF CASH FLOWS

Forthe Period from September 21, 2021 (inception) to December 31, 2021

 

      
Cash flows from operating activities:     
Net loss  $(643,233)
      
Changes in assets and liabilities:     
Prepaid expenses and other current assets   (7,033,350)
Accounts payable and accrued expenses   126,627 
Customer deposit   6,999,980 
Net cash used in operating activities   (549,976)
      
Cash flows from investing activities:     
Loan-held for investment, related party   (4,000,000)
Net cash used in investing activities   (4,000,000)
      
Cash flows from financing activities:     
      
Due to parent   4,616,551 
Net cash provided by financing activities   4,616,551 
Net increase in cash and cash equivalents   66,575 
      
Cash and cash equivalents, beginning of the period   - 
Cash and cash equivalents, end of the period  $66,575 
      
Supplemental disclosure of cash flow information:     
Cash paid for interest  $- 
Cash paid for income taxes   - 

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

F-19
 

 

CRYPTYDE,INC.

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

1.NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Asused herein, “Cryptyde” and the “Company” refer to Cryptyde, Inc. and/or where applicable, its management, aNevada corporation incorporated on September 21, 2021 (date of inception) under the laws of the State of Nevada. The Company sells miningequipment in the blockchain. The Company is 100% owned by Vinco Ventures, Inc. (“Vinco” or “Parent”).

 

Asof December 31, 2021, Cryptyde, Inc. had one wholly-owned subsidiary: BlockHiro, LLC (“BH”). Cryptyde owns 51% of CW Machines,LLC which is consolidated under the voting interest entity model. Under the voting interest entity model, control is presumed by theholder of a majority voting interest unless noncontrolling shareholders have substantive participating rights.

 

During2021, the Parent announced it plans to spin-off (the “Separation”) certain of its businesses. The Parent plans to includeCryptyde, Inc. as well as other subsidiaries of the Parent (the “Spin-Off Businesses”) as part of the spin-off. In anticipationof the Separation, the Parent has placed its assets and legal entities comprising the Spin-Off Businesses into or under to facilitatethe Separation. As a result of the Separation, the Company will become an independent, publicly traded company comprised of the Spin-OffBusinesses. The Separation is expected to be completed upon the distribution of the common stock of the Company to stockholders of theParent in early 2022.

 

Basisof Presentation. The accompanying consolidated financial statements of the Company have been prepared in accordance with accountingprinciples generally accepted in the United States of America (“US GAAP”). All significant intercompany transactions andbalances have been eliminated in consolidation.

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Useof Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptionsthat affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.The Company’s significant estimates used in these consolidated financial statements include, but are not limited to, revenue recognitionand the determination of the economic useful life of depreciable property and equipment. Certain of the Company’s estimates couldbe affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possiblethat these external factors could have an effect on the Company’s estimates and could cause actual results to differ from thoseestimates.

 

Cashand Cash Equivalents. The Company considers all highly liquid, short-term investments with original maturities of three months orless when purchased to be cash equivalents.

 

ContingentLiabilities. The Company, from time to time, may be involved in certain legal proceedings. Based upon consultation with outside counselhandling its defense in these matters and the Company’s analysis of potential outcomes, if the Company determines that a loss arisingfrom such matters is probable and can be reasonably estimated, an estimate of the contingent liability is recorded in its consolidatedfinancial statements. If only a range of estimated loss can be determined, an amount within the range that, based on estimates, assumptionsand judgments, reflects the most likely outcome, is recorded as a contingent liability in the consolidated financial statements. In situationswhere none of the estimates within the estimated range is a better estimate of probable loss than any other amount, the Company recordsthe low end of the range. Any such accrual would be charged to expense in the appropriate period. Litigation expenses for these typesof contingencies are recognized in the period in which the litigation services were provided.

 

F-20
 

 

CRYPTYDE,INC.

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

RevenueRecognition. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)606, Revenue from Contracts with Customers, the Company recognizes revenue when it satisfies performance obligations, by transferringpromised goods or services to customers, in an amount that reflects the consideration to which the Company expects to be entitled inexchange for fulfilling those performance obligations. There are no contract assets or contract liabilities and therefore no unsatisfiedperformance obligations.

 

Disaggregationof Revenue. The Company’s primary revenue streams will include the sale of mining equipment. There are no material operationsthat were disaggregated for segment purposes.

 

Comprehensiveincome (loss). The Company follows ASC 220 in reporting comprehensive income (loss). Comprehensive income (loss) is a more inclusivefinancial reporting methodology that includes disclosure of certain financial information that historically has not been recognized inthe calculation of net income (loss). Since the Company has no items of other comprehensive income (loss), comprehensive loss is equalto net loss.

 

Earnings(Loss) Per Share. The Company follows ASC 260 when reporting Earnings (Loss) Per Share resulting in the presentation of basic anddiluted earnings (loss) per share. Because the Company does not have any common stock equivalents, such as stock options and warrants,the amounts reported for basic and diluted net loss per share were the same.

 

IncomeTaxes. The Company accounts for income taxes under the provisions of the FASB ASC Topic 740 “Income Taxes” (“ASCTopic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items thathave been included or excluded in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determinedon the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporarydifferences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Companyutilizes a recognition threshold and measurement process for consolidated financial statement recognition and measurement of atax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertaintax positions requiring recognition in the Company’s consolidated financial statements as of December 31, 2021. The Company doesnot expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policyis to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expensesin the consolidated statements of comprehensive loss. The Company is subject to routine audits by taxing jurisdictions; however, thereare currently no audits for any tax periods in progress.

 

FairValue Measurements. The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “FairValue Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fairvalue, and expands disclosures about fair value measurements.

 

ASC820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in theprincipal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurementdate. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimizethe use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level1 — quoted prices in active markets for identical assets or liabilities

Level2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

 

F-21
 

 

CRYPTYDE,INC.

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

Thecarrying amounts of the Company’s financial instruments, such as cash, accounts payable and other current liabilities approximatefair values due to the short-term nature of these instruments.

 

Concentrationof Credit Risks. Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents.Cash and cash equivalents are invested in deposits with certain financial institutions and may, at times, exceed federally insured limits.The Company has not experienced any significant losses on its deposits of cash and cash equivalents.

 

RecentAccounting Standards. The recent accounting pronouncements that the Company identified that could have an impact on its consolidatedfinancial statements were as follows:

 

InAugust 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06, Debt – Debt with Conversion and OtherOptions (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting forConvertible Instruments and Contracts in an Entity’s Own Equity. The amendments in this Update affect entities that issue convertibleinstruments and/or contracts in an entity’s own equity. For convertible instruments, the instruments primarily affected are thoseissued with beneficial conversion features or cash conversion features because the accounting models for those specific features areremoved. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements in thisUpdate. For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded featuresthat are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivativesscope exception related to certain requirements of the settlement assessment. The Board simplified the settlement assessment by removingthe requirements (1) to consider whether the contract would be settled in registered shares, (2) to consider whether collateral is requiredto be posted, and (3) to assess shareholder rights. Those amendments also affect the assessment of whether an embedded conversion featurein a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this Update affect the dilutedEPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in this Updateare effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entitieseligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interimperiods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15,2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning afterDecember 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidanceas of the beginning of its annual fiscal year. The Board decided to allow entities to adopt the guidance through either a modified retrospectivemethod of transition or a fully retrospective method of transition. The adoption of this standard did not have a material effect on theCompany’s consolidated financial statements.

 

InMay 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50),Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic815-40), Issuer’s Accounting for Certain Modifications or Exchanges or Freestanding Equity – Classified Written Call Options.The amendments in this Update clarify an issuer’s accounting for modifications or exchanges of freestanding equity – classifiedwritten call options (for example, warrants) that remain equity classified after modification or exchange. The amendments are effectivefor all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity shouldapply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoptionis permitted for all entities, including adoption in an interim period. If an entity elects to early adopt the amendments in this Updatein an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. The Companyearly adopted this standard on the date of inception. The adoption of this standard did not have a material effect on the Company’sconsolidated financial statements.

 

SubsequentEvents. The Company has evaluated subsequent events through March 8, 2022, the date the consolidated financial statements were availableto be issued. Based upon the evaluation, except for items described in Note 10, the Company did not identify any recognized or non-recognizedsubsequent events that would have required adjustment or disclosure in the consolidated financial statements.

 

F-22
 

 

CRYPTYDE,INC.

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

3.OTHER CURRENT ASSETS

 

Othercurrent assets consist of the following at December 31, 2021:

 

      
Vendor deposits, related party  $6,999,955 
Interest receivable, related party   33,395 
Total other assets  $7,033,350 

 

Asof December 31, 2021, the Company had deposits with a vendor, Wattum Management, Inc., of $6,999,955 related to a contract for the deliveryof mining equipment. Wattum Management, Inc. is a partner in CW Machines, LLC.

 

4.LOAN HELD-FOR-INVESTMENT, RELATED PARTY

 

Loanheld-for-investment, related party, represents a senior secured promissory note (“Note”) from Wattum Management Inc., a non-controllingmember of CW Machines, LLC, a related party. The note bears interest of 5% per annum and matures on October 12, 2026 with the entireoutstanding principal and accrued interest due at maturity date. The Note is secured by assets of Wattum Management, Inc.

 

F-23
 

 

CRYPTYDE,INC.

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

5.CUSTOMER DEPOSITS

 

Asof December 31, 2021, the Company had deposits from a customer of $6,999,980 related to a contract to deliver mining equipment.

 

6.DUE TO PARENT

 

Asof December 31, 2021, due to parent consists of net amounts due to Vinco related to borrowings for financing needs of Cryptyde, Inc.as well as other operating expenses that were paid for on behalf of one to the other. As of December 31, 2021, the net amount due toparent was $4,616,551. Such amounts are not due currently. The due to Parent will be settled at the time the anticipated Spin-Off ofCryptyde, Inc. from Vinco Ventures, Inc. becomes effective.

 

7.INCOME TAXES

 

Cryptyde,Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income.

 

CWMachines, LLC is a limited liability company for income tax purposes and is owned 51% by Cryptyde, Inc. The Company pays corporate federal,state and local taxes on income allocated to it from CW Machines, LLC.

 

Componentsof net loss before income taxes were as follows:

 

   2021 
     
United States  $(643,233)
Net loss before income taxes  $(643,233)

 

Thetax effects of temporary differences that give rise to deferred tax assets or liabilities are presented below:

 

   2021 
     
Deferred tax assets:     
Net operating loss carryforwards  $108,018 
Less: valuation allowance   (108,018)
Net deferred tax assets  $- 

 

F-24
 

 

CRYPTYDE,INC.

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

Theincome tax benefit consists of the following:

   2021 
     
Current:     
Federal  $- 
State   - 
Total current   - 
Deferred:     
Federal   (108,018)
State   - 
Less: valuation allowance   108,018 
Total deferred   - 
Total income tax provision (benefit)  $- 

 

Areconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

 

   2021 
     
Tax at federal statutory rate   21.0%
U.S. income taxes subject to valuation allowance   -16.8%
State and local income taxes   0.0%
Losses attributable to noncontrolling interests   -4.2%
Total income tax provision (benefit)   0.0%

 

8.STOCKHOLDER’S EQUITY

 

CommonStock. Vinco Ventures, Inc. owns 100% of the issued and outstanding common stock of Cryptyde, Inc. As of December 31, 2021, the Companyhas 10,000 shares of issued and outstanding shares of common stock.

 

9.COMMITMENTS AND CONTINGENCIES

 

OperatingLeases. The Company does not have any leases that extend beyond one year.

 

10.SUBSEQUENT EVENTS

 

OnJanuary 26, 2022, the Company, entered into a Securities Purchase Agreement (the “Note Securities Purchase Agreement”) withan accredited investor (the “Note Investor”) for the issuance and sale of a Senior Convertible Note with an initial principalamount of $33,333,333 (the “Note”) at a conversion price of $10.00 per share of Cryptyde’s common stock, par value$0.001 (the “Common Stock”), a warrant (the “Warrant”) to purchase up to 3,333,333 shares of Common Stock withan initial exercise price of $10.00 per share of Common Stock (the “Note Private Placement”). The entire outstanding principalbalance and any outstanding fees or interest shall be due and payable in full on the third anniversary of the date the note is issued(“Maturity Date”). The Note shall not bear interest, provided, however, that the Note will bear interest at 18% per annumupon the occurrence of an event of default. The Note Investor may terminate its obligations under the Note Securities Purchase Agreementif the closing has not occurred by June 30, 2022. In connection with the Note Private Placement, Cryptyde also entered into a RegistrationRights Agreement (the “Registration Rights Agreement”) with the Note Investor, and will enter into a Security Agreement,a Pledge Agreement and various ancillary certificates, disclosure schedules and exhibits in support thereof prior to the closing of thePurchase Agreement.

 

OnJanuary 26, 2022, the Company, with respect to certain sections, entered into a Securities Purchase Agreement (the “Equity PrivatePlacement”) with an accredited investor (the “Equity Investor”) for the issuance of a (i) 1,500,000 shares of CommonStock, and (ii) a warrant (the “Equity Investor Warrant”) to purchase up to 1,500,000 shares of Common Stock with an exerciseprice of $8.00 per share of Common Stock. The consideration to be paid to Cryptyde under the Equity Private Placement is $12,000,000.The Equity Private Placement will close upon the satisfaction of certain conditions of the Equity Investor and Cryptyde, as well as:(i) closing conditions to the Spin-Off have been satisfied or waived, and (ii) the Common Stock shall be approved for Trading on theNYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange. TheEquity Private Placement contains covenants on the part of Cryptyde, including that Cryptyde will reserve for the purpose of issuanceat least 100% of the maximum number of shares of Common Stock issuable upon conversion of the Equity Investor Warrant. In addition, underthe Equity Private Placement, Cryptyde will grant the Equity Investor certain rights to participate in any Subsequent Placements forthe same duration as the participation right pursuant to the Note Securities Purchase Agreement.

 

F-25
 

 

CRYPTYDE,INC.

CONDENSEDCONSOLIDATED BALANCE SHEET

As of March 31, 2022 and December 31, 2021

 

   2022   2021 
ASSETS          
Current assets:          
Cash and cash equivalents  $1,012,935   $911,194 
Accounts receivable, net   969,806    867,027 
Inventories   82,635    110,664 
Prepaid expenses and other current assets   7,867,592    7,081,693 
Total current assets   9,932,968    8,970,578 
Property and equipment, net   955,173    1,007,770 
Loan held-for-investment   4,000,000    4,000,000 
Total assets  $14,888,141   $13,978,348 
           
LIABILITIES AND STOCKHOLDER’S EQUITY          
Current liabilities:          
Note payable, current portion  $-   $15,530 
Accounts payable   172,632    171,174 
Accrued expenses and other current liabilities   7,582,760    7,007,531 
Income tax payable   130,000    319,997 
Total current liabilities   7,885,392    7,514,232 
Note payable, less current portion   -    12,114 
Deferred tax liabilities   82,104    82,104 
Due to parent   5,886,437    4,198,546 
Total liabilities   13,853,933  

 

11,806,996 
           
Stockholder’s equity:          
Common stock, 10,000shares authorized and outstanding, no par value   10    10 
Additional paid-in capital   (10)   (10)
Retained earnings   1,289,822    2,300,212 
Total stockholder’s equity attributable to Cryptyde, Inc.   1,289,822    2,300,212 
Non-controlling interest   (255,614)   (128,860)
Total stockholder’s equity   1,034,208    2,171,352 
Total liabilities and stockholder’s equity  $14,888,141   $13,978,348 

 

Seethe accompanying notes to the condensed consolidated financial statements.

 

F-26
 

 

CRYPTYDE,INC.

CONDENSEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Forthe Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

   2022   2021 
         
Revenues, net  $3,719,647   $1,757,652 
Cost of revenues   3,174,383    1,283,158 
Gross profit   545,264    474,494 
           
Selling, general and administrative expenses   1,921,795    494,055 
           
Operating loss   (1,376,531)   (19,561)
           
Non-operating income (expense):          
Interest expense, net   (129)   (46,492)
Rental income   -    25,704 
Other income   49,519    - 
Total non-operating income (expense)   49,390    (20,788)
           
Net loss before income tax expense   (1,327,141)   (40,349)
           
Income tax benefit   (189,997)   (11,342)
           
Net loss  $(1,137,144)  $(29,007)
Net loss attributable to non-controlling interest   (126,754)   - 
Net loss attributable to Cryptyde, Inc.   (1,010,390)   (29,007)
Earnings (loss) per share:          
Loss per share – basic and diluted  $(101.04)  $(2.90)
Weight average number of common shares outstanding – basic and diluted   10,000    10,000 

 

Seethe accompanying notes to the condensed consolidated financial statements.

 

F-27
 

 

CRYPTYDE,INC.

CONDENSEDCONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

Forthe Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

   Shares   Amount   Capital   Interest   deficit   Total 
   Common Stock  

Additional

Paid in

  

Non

controlling

   Retained     
   Shares   Amount   Capital   Interest  

earnings

   Total 
                         
Balance, December 31, 2021   10,000         10          (10)   (128,860)   2,300,212    2,171,352 
                               
Net loss   -    -    -    

(126,754

)   

(1,010,390

)   

(1,137,144

)
Contributions   -    -    -    -    -    - 
                               
Balance, March 31, 2022   10,000   $10   $(10)  $(255,614)  $1,289,822   $1,034,208 

 

   Common Stock  

Additional

Paid in

  

Non

controlling

   Retained     
   Shares   Amount   Capital   Interest   earnings   Total 
                         
Balance, January 1, 2021   10,000   $    10   $  (10)  $         -   $2,271,431   $  2,271,431 
Net loss        -    -    -    (29,007)   (29,007)
Balance, March 31, 2021   10,000   $10   $(10)  $-   $2,242,424   $2,242,424 

 

Seethe accompanying notes to the condensed consolidated financial statements.

 

F-28
 

  

CRYPTYDE,INC.

CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS

Forthe Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

   2022   2021 
Cash flows from operating activities:          
Net loss  $(1,137,144)  $(29,007)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   59,192    32,812 
Provision for bad debts   46,705      
Changes in assets and liabilities:          
Accounts receivable   (149,484)   (4,934)
Inventories   28,029    2,865 
Prepaid expenses and other current assets   (785,899)   (10,011)
Accounts payable   1,458    22,592 
Accrued expenses and other current liabilities   385,232    17,456 
           
Net cash used in operating activities   (1,551,911)   31,773 
           
Cash flows from investing activities:          
Purchases of property and equipment   (6,595)   (18,228)
           
Net cash provided by (used in) investing activities   (6,595)   (18,228)
           
Cash flows from financing activities:          
Borrowings under lines of credit   -    (367,976)
Repayments under notes payable   (27,644)   (3,650)
Due from parent   1,687,891    415,584 
Net cash provided by financing activities   1,660,247    43,958 
           
Net increase in cash and cash equivalents   101,741    57,503 
Cash and cash equivalents, beginning of the year   911,194    176,759 
Cash and cash equivalents, end of the period  $1,012,935   $234,262 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $192   $46,492 
Cash paid for income taxes  $-   $- 

 

Seethe accompanying notes to the condensed consolidated financial statements.

 

F-29
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

As used herein, “Cryptyde” and the“Company” refer to Cryptyde, Inc. and subsidiaries and/or where applicable, its management, a Nevada corporationincorporated on September 21, 2021 (date of inception) under the laws of the State of Nevada. The Company sellsmining equipment in the blockchain. The Company is 100%owned by Vinco Ventures, Inc. (“Vinco” or “Parent”).

 

Asof March 31, 2022, Cryptyde, Inc. had two wholly-owned subsidiary: Ferguson Containers, Inc. and BlockHiro, LLC (“BH”).Ferguson Containers, Inc. owns 100%of Cryptyde Shared Services, LLC. Cryptyde owns 51%of CW Machines, LLC which is consolidated under the voting interest entity model. Under the voting interest entity model, control ispresumed by the holder of a majority voting interest unless noncontrolling shareholders have substantive participating rights.

 

During 2021, the Parent announced it plans to spin-off (the “Separation”)certain of its businesses. The Parent plans to include Cryptyde, Inc. as well as other subsidiaries of the Parent (the “Spin-OffBusinesses”) as part of the spin-off. In anticipation of the Separation, the Parent has placed its assets and legal entities comprisingthe Spin-Off Businesses into or under to facilitate the Separation. As a result of the Separation, the Company will become an independent,publicly traded company comprised of the Spin-Off Businesses. The Separation is expected to be completed upon the distribution of thecommon stock of the Company to stockholders of the Parent on or about the end of the second quarter of 2022.

 

OnMarch 29, 2022, Ferguson Containers, Inc. ownership was assigned by the Parent to the Company. This transaction between entities undercommon control resulted in a change in reporting entity and required retrospective combination of the entities for all periods presented,as if the combination had been in effect since the inception of common control. Accordingly, the condensed consolidated financial statementsof the Company reflect the accounting of the combined acquired subsidiaries at historical carrying values, except that equity reflectsthe equity of Cryptyde, Inc.

 

Basisof Presentation. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordancewith accounting principles generally accepted in the United States of America (“US GAAP”). All significant intercompany transactionsand balances have been eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction withthe consolidated financial statements of Ferguson Containers, Inc. and Cryptyde, Inc. and related notes thereto included in the Company’sRegistration Statement on Form S-1 (Registration No. 333-264777) of which these Cryptyde, Inc, Notes to Financial Condensed ConsolidatedFinancial Statements form a part (the “Cryptyde S-1”). The Company’s accounting policies are described in the Notesto Consolidated Financial Statements of Ferguson Containers, Inc. and Cryptyde, Inc. in the Cryptyde S-1, and updated as necessary intheses Cryptyde, Inc. Notes to Condensed Consolidated Financial Statements. These statements include all adjustments (consisting onlyof normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been preparedon a consistent basis using the accounting policies described in the summary of accounting policies included in Note 2. All significantintercompany transactions and balances have been eliminated in consolidation. Certain information and note disclosures normally includedin the financial statements prepared in accordance with US GAAP have been condensed, or omitted pursuant to such rules and regulations,although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. Operatingresults for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year endingDecember 31, 2022.

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Useof Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptionsthat affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.The Company’s significant estimates used in these condensed consolidated financial statements include, but are not limited to,revenue recognition and the determination of the economic useful life of depreciable property and equipment. Certain of the Company’sestimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonablypossible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ fromthose estimates.

 

Cashand Cash Equivalents. The Company considers all highly liquid, short-term investments with original maturities of three months orless when purchased to be cash equivalents.

 

AccountsReceivable.Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. Management estimates the allowancefor bad debts based on existing economic conditions, historical experience, the financial conditions of the customers, and the amountand age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past dueaccounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted. The allowancefor doubtful account was $46,705and $0as of March 31, 2022 and December 31, 2021, respectively.There were two customers who represented 22%and 13%of total accounts receivable as of March 31, 2022.

 

F-30
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Inventories.Inventory is recorded at the lower of cost or net realizable value on a first-in, first-out basis. The Company reduces the carrying valueof inventories for those items that are potentially excess, obsolete, or slow moving based on changes in customer demand, technologydevelopments, or other economic factors.

 

Propertyand Equipment. Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencingat the in-service date using the straight-line method over the estimated useful lives of the assets, as follows: 3 to 5 years for officeequipment, 5 to 7 years for furniture and fixtures, 6 to 10 years for machinery and equipment, 10 to 15 years for building improvements,5 years for software, 5 years for molds, 5 to 7 years for vehicles and 40 years for buildings. When fixed assets are retired or otherwisedisposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statementsof operations for the respective period. Minor additions and repairs are expensed in the period incurred. Major additions and repairswhich extend the useful life of existing assets are capitalized and depreciated using the straight-line method over their remaining estimateduseful lives.

 

Impairmentof Long-lived Assets. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate thatthe carrying amount of the asset may not be recoverable. The Company assesses the recoverability of its long-lived assets using undiscountedcash flows. If an asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carryingvalue and the asset’s fair value. The Company did not record any impairment charges related to long-lived assets during the threemonths ended March 31, 2022 and 2021.

 

ContingentLiabilities. The Company, from time to time, may be involved in certain legal proceedings. Based upon consultation with outside counselhandling its defense in these matters and the Company’s analysis of potential outcomes, if the Company determines that a loss arisingfrom such matters is probable and can be reasonably estimated, an estimate of the contingent liability is recorded in its condensed consolidatedfinancial statements. If only a range of estimated loss can be determined, an amount within the range that, based on estimates, assumptionsand judgments, reflects the most likely outcome, is recorded as a contingent liability in the condensed consolidated financial statements.In situations where none of the estimates within the estimated range is a better estimate of probable loss than any other amount, theCompany records the low end of the range. Any such accrual would be charged to expense in the appropriate period. Litigation expensesfor these types of contingencies are recognized in the period in which the litigation services were provided.

 

F-31
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

RevenueRecognition. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)606, Revenue from Contracts with Customers, the Company recognizes revenue when it satisfies performance obligations, by transferringpromised goods or services to customers, in an amount that reflects the consideration to which the Company expects to be entitled inexchange for fulfilling those performance obligations. Revenue for product sales is recognized upon receipt by the customer. There areno contract assets or contract liabilities and therefore no unsatisfied performance obligations.

 

Disaggregationof Revenue. The Company’s primary revenue streams include the sale of corrugated packaging materials and the sale of miningequipment. There are no other material operations that were separately disaggregated for segment purposes. The Company previously hadincome from rental operations which is included as part of other income in the statements of operations for the three months ended March31, 2021.

 

Costof Revenues. Cost of revenues includes freight charges, purchasing and receiving costs, depreciation and inspection costs.

 

Comprehensiveincome. The Company follows Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income. Comprehensiveincome is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historicallyhas not been recognized in the calculation of net income. Since the Company has no items of other comprehensive loss, comprehensive incomeis equal to net loss.

 

EarningsPer Share. TheCompany follows ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Becausethe Company does not have any common stock equivalents, such as stock options and warrants, the amounts reported for basic and dilutedloss per share were the same.

 

IncomeTaxes. The Company accounts for income taxes under the provisions of the FASB ASC Topic 740 “Income Taxes” (“ASCTopic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items thathave been included or excluded in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilitiesare determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reportingamounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expectedto reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurementof a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertaintax positions requiring recognition in the Company’s condensed consolidated financial statements as of March 31, 2022 and December31, 2021. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reportingdate. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as generaland administrative expenses in the consolidated statements of comprehensive income. The Company is subject to routine audits by taxingjurisdictions; however, there are currently no audits for any tax periods in progress.

  

F-32
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

FairValue Measurements. The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “FairValue Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fairvalue, and expands disclosures about fair value measurements.

 

ASC820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in theprincipal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurementdate. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimizethe use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level1 — quoted prices in active markets for identical assets or liabilities

Level2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

 

Thecarrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accounts payable and other currentliabilities approximate fair values due to the short-term nature of these instruments.

 

Concentrationof Credit Risks. Financial instruments that potentially subject the Company to concentrations of credit risk are cash equivalents,accounts receivable and revenues. Cash and cash equivalents are invested in deposits with certain financial institutions and may, attimes, exceed federally insured limits. The Company has not experienced any significant losses on its deposits of cash and cash equivalents.

 

RecentAccounting Pronouncements. As of March 31, 2022, there were no recently adopted accounting pronouncements that had a material effecton the Company’s condensed consolidated financial statements.

 

F-33
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Subsequent Events. The Company has evaluatedsubsequent events through June 6, 2022, the date the condensed consolidated financial statements were available to be issued. Based uponthe evaluation, except for items described in Note 10, the Company did not identify any recognized or non-recognized subsequent eventsthat would have required adjustment or disclosure in the condensed consolidated financial statements.

 

SegmentReporting. The Company uses “the management approach” in determining reportable operating segments. The management approachconsiders the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisionsand assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operatingdecision maker is the Chairman and Chief Executive Officer (“CEO”) of the Company, who reviews operating results to makedecisions about allocating resources and assessing performance for the entire Company. The Company’s primary revenue streams includethe sale of corrugated packaging materials and therefore the Company only identifies one reportable operating segment.

 

3.ACCOUNTS RECEIVABLE

 

Accountsreceivable consist of the following at March 31, 2022 and December 31, 2021:

 

   2022   2021 
         
Trade accounts receivable  $1,016,511   $867,027 
Less: allowance for doubtful accounts   (46,705)   - 
Total accounts receivable  $969,806   $867,027 

 

4.INVENTORIES

 

Inventoriesconsist of the following at March 31, 2022 and December 31, 2021:

 

    2022     2021  
             
Raw materials   $ 9,980     $ 13,366  
Finished goods     72,655       97,298  
Total inventories   $ 82,635     $ 110,664  

 

5.OTHER CURRENT ASSETS

 

Othercurrent assets consist of the following at March 31, 2022 and December 31, 2021:

 

    2022     2021  
             
Vendor deposits   $ 7,527,164     $ 6,999,955  
Prepaid software deposit     242,200       -  
Other     98,228       81,738  
Total other current assets   $ 7,867,592     $ 7,081,693  

 

Asof March 31, 2022 and December 31, 2021, the Company had deposits with a vendor, Wattum Management, Inc., of $7,527,164 and $6,999,955,respectively, related to a contract for the delivery of mining equipment. Wattum Management, Inc. is a partner in CW Machines, LLC.

 

6.LOAN HELD-FOR-INVESTMENT, RELATED PARTY

 

Loanheld-for-investment, related party, represents a senior secured promissory note (“Note”) from Wattum Management Inc., a non-controllingmember of CW Machines, LLC, a related party. The note bears interest of 5%per annum and matures on October12, 2026 with the entire outstanding principaland accrued interest due at maturity date. The Note is secured by assets of Wattum Management, Inc.

 

F-34
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

7.PROPERTY AND EQUIPMENT, NET

 

Propertyand equipment consist of the following at March 31, 2022 and December 31, 2021:

 

    2022     2021  
             
Land   $ -     $ -  
Building and building improvements     781,985       781,985  
Equipment and machinery     4,628,473       4,621,878  
Furniture and fixtures     260,426       260,426  
Vehicles     533,867       533,867  
Property, plant and equipment, gross     6,204,751       6,198,156  
Less: accumulated depreciation     (5,249,578 )     (5,190,386 )
Total property and equipment, net   $ 955,173     $ 1,007,770  

 

Depreciationand amortization expense was $59,192 and $32,812 for the three months ended March 31, 2022 and 2021, respectively.

 

8.ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

Accruedexpenses and other current liabilities consist of the following at March 31, 2022 and December 31, 2021:

 

    2022     2021  
             
Customer deposits   $ 7,493,608     $ 6,999,980  
Other     89,152       7,551  
Total accrued expenses and other current liabilities   $ 7,582,760     $ 7,007,531  

 

9.DUE TO AND FROM PARENT

 

Asof March 31, 2022 and December 31, 2021, due to parent consists of net amounts due to Vinco related to management fees andborrowings for working capital and financing needs of Cryptyde, Inc. as well as other operating expenses that were paid for onbehalf of one to the other. As of March 31, 2022 and December 31, 2021, the net amount due to parent was $5,886,437 and$4,198,546,respectively. Such amounts are not due currently. The due to Parent will be settled at the time the anticipated Spin-Off ofCryptyde, Inc. from Vinco Ventures, Inc. becomes effective.

 

F-35
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

10.DEBT

 

Principaldue under the line of credit and note payable was as follows at March 31, 2022 and December 31, 2021:

 

    2022     2021  
             
Note payable     -       27,644  
Less: note payable, current portion     -       (15,530 )
Note payable, net of current portion   $ -     $ 12,114  

 

OnJanuary 29, 2022, the Company fully paid off the remaining balance of the Note payable.

 

11.INCOME TAXES

 

Cryptyde,Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income.

 

BlocHiro,LLC and Cryptyde Shares Services, LLC are limited liability companies which are disregarded entities for income tax purposes and areowned 100% by Cryptyde, Inc. and Ferguson Containers, Inc., respectively. The Company pays corporate federal, state and local taxes onincome allocated to it from BlockHiro, LLC and Cryptyde Shared Services, LLC.

 

CWMachines, LLC is a limited liability company for income tax purposes and is owned 51% by Cryptyde, Inc. The Company pays corporate federal,state and local taxes on income allocated to it from CW Machines, LLC.

 

FergusonContainers is taxed as a corporation and pays corporate federal, state and local taxes on income.

 

Income tax benefit for the three months endedMarch 31, 2022 and 2021 is $189,997 and $11,342, respectively. The income tax benefit is related to losses generated from Cryptyde, Inc.The Company has recorded a full valuation allowance on net operating losses.

 

There are no unrecognized tax benefits andno accruals for uncertain tax positions.

 

F-36
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

12.STOCKHOLDER’S EQUITY

 

CommonStock. Vinco Ventures, Inc. owns 100%of the issued and outstanding common stock of Cryptyde, Inc. As of March 31, 2022 and December 31, 2021, the Company has 10,000 sharesof issued and outstanding shares of common stock.

 

13.COMMITMENTS AND CONTINGENCIES

 

OperatingLeases. The Company leases certain office space from an entity affiliated through common ownership under an operating lease agreementon a month-to-month basis.

 

Rentexpense for the three months ended March 31, 2022 and 2021 was $33,700 and $26,700, respectively. Rental payments are expensed in thestatements of comprehensive income in the period to which they relate.

 

EmmersiveSellers: On April 17, 2021, The Parent entered into (and closed on) a certain Asset Contribution Agreement (“AssetContribution Agreement”) with Emmersive Entertainment, Inc. (“Emmersive”), pursuant to which Emmersivecontributed/transferred to the Company the assets used for Emmersive’s business, which include digital assets, software andcertain physical assets (the “Contributed Assets”) in consideration for, among other things, the Parent assuming certainobligations of Emmersive, hiring certain employees, and issuing preferred membership units (“Preferred Units”) in EVNTPlatform, LLC to Emmersive and/or its shareholders (“Preferred Members”) pursuant to a First Amended and RestatedOperating Agreement for the Parent dated as of April 17, 2021 (“Amended Operating Agreement”). Certain put rights areassociated with Preferred Units, which if exercised by the Preferred Members, obligates the Parent to purchase the Preferred Unitsin exchange for shares of the Parent’s common stock (“Put Rights”). In addition, the Preferred Members have theopportunity to earn Conditional Preferred Units if certain conditions are satisfied for earn out targets (“Earn-OutTargets”).

 

OnFebruary 25, 2022, the Parent and Emmersive entered into a Termination and Release Agreement, terminating certain transaction documentsdated April 17, 2021, and a Milestone Agreement for the earnout shares to be earned and any remaining consideration to be paid by Cryptyde,Inc. with an effective date of the agreements upon the spin-off being declared effective (“Effective Date”) Upon the spinoff,the agreements release the Company of the opportunity to earn the additional shares of common stock of the Parent from the Asset ContributionAgreement. The contingent consideration to be paid by Cryptyde, Inc. upon the successful completion of the spin-off are described below:

 

EarnedShares: Issuance of 300,000 shares of common stock of Cryptyde, Inc. (“Cryptyde Shares”).

 

Milestone1: In the event that the Company generates a minimum of $5,500,000 in annualized booked revenues from the operation of the Musician &Artist Platform (“Attributed Revenue”) ending eight (8) months following the Effective Date (“Tranche 1 Milestone Date”),the Emmersive Parties shall receive 100,000 restricted Cryptyde Shares (“Tranche One”) within thirty (30) after the Tranche1 Milestone Date. In the event that the Company does not satisfy this milestone for any reason by the Tranche 1 Milestone Date, the EmmersiveParties shall have no rights to the additional Cryptyde Shares.

 

Milestone2: After the Effective Date, in the event the Company generates a minimum of $26,500,000 in annualized Attributed Revenues in any three-calendarmonth period ending on or before September 30, 2023, from the Musician & Artist Platform, the Emmersive Parties shall receive anadditional 100,000 restricted Cryptyde Shares (“Tranche Two”). In the event Milestone Two is achieved, then Milestone Oneshall also be deemed to have been achieved. In the event that the Company does not satisfy Milestone Two for any reason by September30, 2023, the Emmersive Parties shall have no rights to Tranche Two.

 

Milestone3: Afterthe Effective Date in the event that Buyer generates a minimum of $60,000,000 in annualized Attributed Revenues in any three-calendar-monthperiod ending on or before September 30, 2024, from the Musician & Artist Platform, Emmersive Parties shall receive anadditional 100,000 restricted Cryptyde Shares (“Tranche Three”). In the event Milestone Three is achieved, then MilestonesOne and Two shall also be deemed to have been achieved. In the event that the Company does not satisfy Milestone Three for any reasonby September 30, 2024, time being of the essence, the Emmersive Parties shall have no rights to Tranche Three. In the event that theCompany satisfies Milestone Three in the time prescribed they shall have the right to receive an additional 100,000 restricted sharesof Cryptyde Shares (“Bonus Tranche”). In the event that the Company does not satisfy Milestone Three for any reason, theEmmersive Parties shall have no rights to the Bonus Tranche.

 

F-37
 

 

CRYPTYDE,INC.

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

14.SUBSEQUENT EVENTS

 

On January 26, 2022, the Company, enteredinto a Securities Purchase Agreement (the “Note Securities Purchase Agreement”) with an accredited investor (the“Note Investor”) for the issuance and sale of a Senior Convertible Note with an initial principal amount of $33,333,333(the “Note”) at a conversion price of $10.00per share of Cryptyde’s common stock, par value $0.001(the “Common Stock”), a warrant (the “Warrant”) to purchase up to 3,333,333shares of Common Stock with an initial exercise price of $10.00per share of Common Stock (the “Note Private Placement”). The entire outstanding principal balance and any outstandingfees or interest shall be due and payable in full on the third anniversary of the date the note is issued(“Maturity Date”). The Note shall not bear interest, provided, however, that the Note will bear interest at 18%per annum upon the occurrence of an event of default. The Note Investor may terminate its obligations under the NoteSecurities Purchase Agreement if the closing has not occurred by June 30, 2022. In connection with the Note Private Placement,Cryptyde also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Note Investor,and will enter into a Security Agreement, a Pledge Agreement and various ancillary certificates, disclosure schedules and exhibitsin support thereof prior to the closing of the Purchase Agreement.

 

On January 26, 2022, the Company, withrespect to certain sections, entered into a Securities Purchase Agreement (the “Equity Private Placement”) with anaccredited investor (the “Equity Investor”) for the issuance of a (i) 1,500,000 sharesof Common Stock, and (ii) a warrant (the “Equity Investor Warrant”) to purchase up to 1,500,000 sharesof Common Stock with an exercise price of $8.00 pershare of Common Stock (the “Equity Private Placement”). The consideration to be paid to Cryptyde under the EquityPrivate Placement is $12,000,000.The Equity Private Placement will close upon the satisfaction of certain conditions of the Equity Investor and Cryptyde, as well as:(i) closing conditions to the Spin-Off have been satisfied or waived, and (ii) the Common Stock shall be approved for Trading on theNYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange.The Equity Private Placement contains covenants on the part of Cryptyde, including that Cryptyde will reserve for the purpose ofissuance at least 100% of the maximum number of shares of Common Stock issuable upon conversion of the Equity Investor Warrant. Inaddition, under the Equity Private Placement, Cryptyde will grant the Equity Investor certain rights to participate in anySubsequent Placements for the same duration as the participation right pursuant to the Note Securities Purchase Agreement.

 

Cryptyde and the Note Investorclosed on the transactions contemplated by the Note Securities Purchase Agreement on May 5, 2022. At the closing, Cryptyde issued to theNote Investor the Warrant to purchase up to 3,333,333 shares of Cryptyde Common Stock with an exercise price of $10.00 per share.

 

Cryptyde and the Equity Investor closed on the transactionscontemplated by the Equity Private placement on May 20, 2022. At the closing, Cryptyde issued to the Equity Investor 1,500,000 sharesof Cryptyde Common Stock and a warrant to purchase up to 1,500,000 shares of Cryptyde Common Stock with an exercise price of $8.00 pershare.

 

OnApril 26, 2022, the Company entered into an assignment and assumption agreement with Vinco Ventures, Inc. whereby the parties agreedto transfer and assign to Cryptyde, Inc. the lease agreement dated July 16, 2021 by and between Abdi R. Boozer-Jomehri (d/b/a SafetyHarbor Centre, Inc.) and Edison Nation, LLC, a 100% owned subsidiary of Vinco Ventures, Inc. (the “Safety Harbor Lease”).

 

F-38
 

 

71,276,725Shares

 

 

Cryptyde,Inc.

71,276,725Shares of Common Stock

 

COMMONSTOCK

 

PROSPECTUS

 

 

 

 

PARTII:

 

INFORMATIONNOT REQUIRED IN PROSPECTUS

 

Item13. Other Expenses of Issuance and Distribution

 

Thefollowing table sets forth the various costs and expenses payable by us in connection with the sale of the securities being registered.All such costs and expenses shall be borne by us. Except for the Securities and Exchange Commission registration fee, all the amountsshown are estimates.

 

Securities and Exchange Commission Registration Fee  $ 6,937.72 
Printing and engraving costs     
Legal fees and expenses  $ 10,000 
Accounting fees and expenses    7,500 
Miscellaneous Fees and Expenses     
       
Total  $ 24,437.72 

 

Item14. Indemnification of Directors and Officers

 

TheDGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetarydamages for breaches of directors’ fiduciary duties as directors, and our certificate of incorporation includes such an exculpationprovision. Our Certificate of Incorporation, Bylaws and indemnification agreements with each of our directors and officers include provisionsthat indemnify, to the fullest extent allowable under the DGCL, the personal liability of directors or officers for monetary damagesfor actions taken as a director or officer of Cryptyde, or for serving at Cryptyde’s request as a director or officer or anotherposition at another corporation or enterprise, as the case may be. Our Certificate of Incorporation, Bylaws and indemnification agreementswith each of our directors and officers also provide that we must indemnify and advance reasonable expenses to our directors and officers,subject to our receipt of an undertaking from the indemnified party as may be required under the DGCL. Cryptyde’s Bylaws expresslyauthorizes Cryptyde to carry directors’ and officers’ insurance to protect Cryptyde, its directors, officers, and certainemployees against certain liabilities.

 

Thelimitation of liability and indemnification provisions that are in our Certificate of Incorporation, Bylaws and indemnification agreementswith each of our directors and officers may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciaryduty. These provisions may also have the effect of reducing the likelihood of derivative litigation against our directors and officers,even though such an action, if successful, might otherwise benefit Cryptyde and its stockholders. Your investment may be adversely affectedto the extent that, in a class action or direct suit, Cryptyde pays the costs of settlement and damage awards against directors and officerspursuant to these indemnification provisions. However, these provisions will not limit or eliminate our rights, or those of any stockholder,to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director’s duty of care. The provisionswill not alter the liability of directors under the federal securities laws.

 

II-1
 

 

Wehave purchased and currently intend to maintain insurance on behalf of each and any person who is or was our director or officer againstany loss arising from any claim asserted against him or her and incurred by him or her in any such capacity, subject to certain exclusions.

 

Seealso the undertakings set out in response to Item 17 herein.

 

Item15. Recent Sales of Unregistered Securities.

 

Thefollowing is a summary of all securities that we have sold during the last three years without registration under the Securities Act.

 

Priorto the Distribution, we issued shares of our common stock to Vinco pursuant to Section 4(a)(2) of the Securities Act, which shares weredistributed to Vinco stockholders in the Distribution. We did not register the issuance of the shares under the Securities Act becausethe issuance did not constitute a public offering.

 

OnJanuary 26, 2022, we entered into the January 2022 Purchase Agreement. On May 5, 2022, we closed the January 2022 Purchase Agreementand issued warrants under the January 2022 Purchase Agreement (the “January 2022 Warrants”) and the January 2022 Note. Thesale of securities under the January 2022 Purchase Agreement was pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) promulgatedby the SEC thereunder. On May 5, 2022, in connection with the closing of the January 2022 Purchase Agreement, we issued warrants exercisableinto 533,333 shares of our common stock as a part of Palladium’s compensation for serving as executive placement agent in connectionwith the January 2022 Purchase Agreement pursuant to Section 4(a)(2) of the Securities Act.

 

OnJuly 28, 2022, we entered into the 2022 Amendment Agreement with Hudson Bay to amend the January 2022 Purchase Agreement, the January2022 Note and the Registration Rights Agreement.

 

Pursuantto the 2022 Amendment Agreement, the Company released (i) on the Closing Date (as defined in the 2022 Amendment Agreement), $25,533,332and (ii) on the Nasdaq Approval Date (as defined in the 2022 Amendment Agreement), $3,466,668 plus 50% of any Warrant Exercise Cash (asdefined in the 2022 Amendment Agreement) deposited into the Control Account prior to the Nasdaq Approval Date (collectively, the “ReleasedFunds”) from the Restricted Funds Account, as defined in the January 2022 Purchase Agreement, and used $22,000,000 of the ReleasedFunds to repurchase $22,000,000 of the principal of the January 2022 Note. The conversion price of the balance of the January 2022 Notethat remains has been voluntarily adjusted to $1.06.

 

Asa result of the Adjustment, we are required to register 7,044,026 additional shares of common stock issuable upon the conversion of theJanuary 2022 Note. For more information on the January 2022 Note and the 2022 Amendment Agreement, see “Selling Stockholder –January 2022 Note and 2022 Amendment Agreement”

 

OnJanuary 26, 2022, we entered into the Equity Private Placement with the Equity Investor for the issuance of 1,500,000 shares of Cryptyde’scommon stock, and the Equity Investor Warrant to purchase up to 1,500,000 shares of our common stock with an exercise price of $8.00per share of common stock. The Equity Private Placement includes provisions requiring us to register the shares issued under the EquityPrivate Placement and the shares of stock underlying the Equity Investor Warrant and cause such registration agreement to be declaredeffective by the SEC within thirty days of the closing of the Equity Private Placement. The sale of securities under the Equity PrivatePlacement was pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated by the SEC thereunder. In connection withthe closing of the Equity Private Placement on May 20, 2022, we issued warrants exercisable into 240,000 BHP SPA Palladium Warrant Sharesas a part of Palladium’s compensation for serving as executive placement agent in connection with the Equity Private Placementpursuant to Section 4(a)(2) of the Securities Act.

 

InApril 2022, we entered into to a Milestone Agreement (the “Emmersive Milestone Agreement”) with Emmersive Entertainment,Inc. (“Emmersive”), and certain former shareholders of Emmersive (the “Emmersive Shareholders, and together with Emmersive,the “Emmersive Parties”), in connection with a Termination and Release Agreement between Emmersive, certain former shareholdersof Emmersive, EVNT Platform, LLC and VINCO (the “Emmersive Release Agreement”). Under the Emmersive Milestone Agreement,in consideration for entering into the Emmersive Release Agreement, we must issue the Emmersive Parties 300,000 registered shares ofour common stock within 30 days after the effectiveness of our first registration statement following the Separation. In addition, uponsatisfying certain revenue milestones through September 30, 2024, we must issue up to 400,000 additional shares of our unregistered commonstock to the Emmersive Parties. The issuance of our unregistered shares under the Emmersive Milestone Agreement will be made pursuantto Section 4(a)(2) of the Securities Act.

 

OnNovember 11, 2021, we entered into an Amendment Agreement (the “2021 Amendment Agreement”) by and among Vinco Ventures, Inc.,Hudson Bay and the Company. In connection with the 2021 Amendment Agreement on May 18, 2022, we issued to Hudson Bay and Palladium warrantsexercisable into 8,652,419 and 767,774 shares of our common stock, respectively, each with an exercise price of $0.001 per share pursuantto Section 4(a)(2) of the Securities Act.

 

OnMay 18, 2022, in connection with our spin-off and based upon Vinco warrants exercisable into Vinco common stock, we issued to CVI Investments,Inc. and Armistice Capital Master Fund Ltd. warrants exercisable into 500,000 and 300,000 shares, respectively, of our common stock atan exercise price of $0.001 per share pursuant to Section 4(a)(2) of the Securities Act.

 

(a)Financial Statements

 

Theinformation required by this item is contained under the sections of the prospectus entitled “Unaudited Pro Forma Combined FinancialStatements” and “Index to Financial Statements” (and the statements referenced therein). Those sections are incorporatedherein by reference.

 

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(b)Exhibits

 

Thefollowing documents are filed as exhibits hereto:

 

Exhibit No.   Description
     
2.1#   Separation and Distribution Agreement, dated May 5, by and between Vinco Ventures, Inc. and the Registrant (previously filed with the Securities and Exchange Commission as Exhibit 2.1 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022)
     
3.1   Certificate of Incorporation (previously filed with the Securities and Exchange Commission as Exhibit 3.1 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
3.2   Bylaws (previously filed with the Securities and Exchange Commission as Exhibit 3.2 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
5.1   Opinion of Haynes and Boone, LLP
     
10.1   Amended and Restated Tax Matters Agreement, dated June 7, 2022 by and between Vinco Ventures, Inc. and the Registrant (previously filed with the Securities and Exchange Commission as Exhibit 10.1 to the Registrant’s Amendment No. 1 to Form S-1 dated June 7, 2022, with a filing date of June 8, 2022)
     
10.2+   2022 Incentive Compensation Plan (previously filed with the Securities and Exchange Commission as Exhibit 10.2 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022)
     
10.3+   Form of Restricted Stock Unit Award Grant Notice and Agreement to the 2022 Incentive Compensation Plan (previously filed with the Securities and Exchange Commission as Exhibit 10.3 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022)
     
10.4+   Employment Agreement by and between the Registrant and Brian McFadden (previously filed with the Securities and Exchange Commission as Exhibit 10.5 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.5+   Employment Agreement by and between the Registrant and Brett Vroman (previously filed with the Securities and Exchange Commission as Exhibit 10.6 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.6   Form of Indemnification Agreement entered into between the Registrant and each of its directors and executive officers (previously filed with the Securities and Exchange Commission as Exhibit 10.6 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022)
     
10.7   Form of Amendment Agreement between Cryptyde, Inc., Vinco Ventures, Inc., and Hudson Bay Master Fund Ltd., dated November 11, 2021 (previously filed with the Securities and Exchange Commission as Exhibit 10.11 to the Registrant’s Amendment No. 1 to Form 10 on January 25, 2022)
     
10.7.1   First Amendment to the Amendment Agreement between Cryptyde, Inc., Vinco Venture. Inc., and Hudson Bay Master Fund Ltd., dated May 5, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.1.7 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022)
     
10.8   Form of Cryptyde, Inc. Warrant to Purchase Common Stock (previously filed with the Securities and Exchange Commission as Exhibit 10.12 to the Registrant’s Amendment No. 1 to Form 10 on January 25, 2022)
     
10.9   Form of Registration Rights Agreement between Cryptyde, Inc. and Hudson Bay Master Fund Ltd., dated November 11, 2021 (previously filed with the Securities and Exchange Commission as Exhibit 10.13 to the Registrant’s Amendment No. 1 to Form 10 on January 25, 2022)
     
10.10#   Note Securities Purchase Agreement, dated January 26, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 12 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.10.1   First Amendment to Note Securities Purchase Agreement between Hudson Bay Master Fund Ltd., and Cryptyde, Inc., dated May 5, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.10.1 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022)

 

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10.11   Registration Rights Agreement, dated January 26, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.13 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.12   Form of Note related to the January 26, 2022 Note Securities Purchase Agreement (previously filed with the Securities and Exchange Commission as Exhibit 10.14 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.13   Form of Warrant related to the January 26, 2022 Note Securities Purchase Agreement (previously filed with the Securities and Exchange Commission as Exhibit 10.15 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.14   Form of Pledge Agreement related to the January 26, 2022 Note Securities Purchase Agreement (previously filed with the Securities and Exchange Commission as Exhibit 10.16 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.15   Amendment Agreement, dated July 28, 2022, by and between Cryptyde, Inc. and Hudson Bay Master Fund Ltd. (previously filed with the Securities and Exchange Commission as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated July 28, 2022)
     
10.16#   Equity Private Placement, dated January 26, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.17 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.16.1   Amendment to Securities Purchase Agreement,by and among Cryptyde, Inc. and BHP Capital NY, Inc., dated April 18, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.15.1 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022)
     
10.17   Form of Warrant related to the January 26, 2022 Equity Private Placement (previously filed with the Securities and Exchange Commission as Exhibit 18 to the Registrant’s Amendment No. 2 to Form 10 dated March 18, 2022)
     
10.18#   Milestone Agreement, entered into in April 2022, between Cryptyde, Inc., Emmersive Entertainment, Inc., and certain former shareholders of Emmersive Entertainment, Inc. identified therein. (previously filed with the Securities and Exchange Commission as Exhibit 10.17 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022)
     
10.19   Hudson Bay Master Fund Ltd. Warrants dated May 18, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 24, 2022)
     
10.20   Palladium Capital Group, LLC Warrants dated May 18, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed May 24, 2022)
     
10.21   CVI Investments, Inc. Warrants dated May 18, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed May 24, 2022)
     
10.22   Armistice Capital Master Fund Ltd Warrants dated May 18, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed May 24, 2022)
     
10.23   BHP Capital NY, Inc. Warrants dated May 20, 2022 (previously filed with the Securities and Exchange Commission as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed May 24, 2022)
     
16.1   Letter from Marcum LLP regarding change in certifying accountant of Ferguson Containers
     
21.1   Subsidiaries of the Registrant (previously filed with the Securities and Exchange Commission as Exhibit 21.1.1 to the Registrant’s Registrations Statement on Form S-1 filed May 9, 2022 with a filing date of June 8, 2022)
     
23.1   Consent of Haynes and Boone, LLP (included in Exhibit 5.1)
     
23.2   Consent of Marcum LLP
     
23.3   Consent of Morison Cogen LLP
     
107   Filing Fees

 

+ Management contract or compensatory plan or arrangement.

 

# Schedules and/or exhibits have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. We agree to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

 

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Item17. Undertakings.

 

Theundersigned registrant hereby undertakes:

 

(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i)To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

 

(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effectiveamendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registrationstatement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securitiesoffered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering rangemay be reflected in the form of prospectus filed with the Securities and Commission pursuant to Rule 424(b) if, in the aggregate, thechanges in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculationof Registration Fee” table in the effective registration statement.

 

(iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement orany material change to such information in the registration statement;

 

Provided,however, that:

 

Paragraphs(1)(i), (1)(ii) and (1)(iii) of this section do not apply if the information required to be included in a post-effective amendment bythose paragraphs is contained in reports filed with or furnished to the Securities and Commission by the registrant pursuant to section13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is containedin a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

 

(2)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemedto be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shallbe deemed to be the initial bona fide offering thereof.

 

(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at thetermination of the offering.

 

(4)The undersigned registrant hereby undertakes that:

 

(i)For purposes of determining any liability under the Securities Act of 1933, as amended, the information omitted from a form of prospectusfiled as part of this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrantpursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933, as amended, shall be deemed to be part of this registrationstatement as of the time it was declared effective.

 

(ii)For the purpose of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that containsa form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offeringof such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(5)That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual reportpursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefitplan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in theregistration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offeringof such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(6)Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controllingpersons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion ofthe Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is,therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrantof expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, theregistrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriatejurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 andwill be governed by the final adjudication of such issue.

 

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SIGNATURES

 

Pursuantto the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe thatit meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf bythe undersigned, thereunto duly authorized, in the City of Safety Harbor, State of Florida, on August 12, 2022.

 

  Cryptyde, Inc.
     
  By: /s/ Brian McFadden
  Name: Brian McFadden
  Title: Chief Executive Officer and President

 

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POWEROF ATTORNEY

 

Eachperson whose signature appears below hereby appoints each of Brian McFadden and Brett Vroman, severally, acting alone and without theother, his or her true and lawful attorney-in-fact, with full power of substitution, and with the authority to execute in the name ofeach such person, any and all amendments (including without limitation, post-effective amendments) to this registration statement onForm S-1, to sign any and all additional registration statements relating to the same offering of securities as this registration statementthat are filed pursuant to Rule 462(b) of the Securities Act of 1933, and to file such registration statements with the Securities andExchange Commission, together with any exhibits thereto and other documents therewith, necessary or advisable to enable the registrantto comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission in respectthereof, which amendments may make such other changes in the registration statement as the aforesaid attorney-in-fact executing the samedeems appropriate.

 

Pursuantto the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons inthe capacities and on the dates indicated.

 

Signature   Title   Date
         
/s/ Brian McFadden   Chief Executive Officer, President and Director   August 12, 2022
Brian McFadden   (principal executive officer)    
         
/s/ Brett Vroman   Chief Financial Officer   August 12, 2022
Brett Vroman   (principal financial and principal accounting officer)    
         
/s/ Kevin O’Donnell   Chairman   August 12, 2022
Kevin O’Donnell        
         
/s/ Frank Jennings   Director   August 12, 2022
Frank Jennings        
         
/s/ Louis Foreman   Director   August 12, 2022
Louis Foreman        
         
/s/ Mary Ann Halford   Director   August 12, 2022
Mary Ann Halford        

 

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