What changed in this filing

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Item 1. Business

2022-03-11 compared with 2021-01-26 · 324 added, 295 removed, 40 unchanged (94% of the section changed)

are an early entrant in the Digital Asset market and one of the first U.S.

publicly traded companies to be involved with Digital

Assets and blockchain technologies.

To our knowledge, we are one of a few public companies intending to acquire both Digital

Assets and a controlling interest in one or more businesses in the Digital Asset and blockchain industries.

Asset Initiatives

Company acquires Digital Assets to provide investors with indirect ownership of Digital Assets that are not securities, such as

bitcoin and ether.

The Company acquires Digital Assets through open market purchases.

We are not limiting our assets to a single

type of Digital Asset and may purchase a variety of Digital Assets that appear to benefit our investors, subject to the limitations

contained within this report regarding Digital Securities.

of December 31, 2020, the Company had the following Digital Assets:

Digital Asset

Bitcoin (BTC)

Ethereum (ETH)

of January 22, 2021, the Company had the following Digital Assets:

Company has not participated in any initial coin offerings as it believes most of the offerings entail the offering of Digital

Securities and require registration under the Securities Act and under state securities laws or can only be sold to accredited

investors in the United States.

Since about July 2017, initial coin offerings using Digital Securities have been (or should be)

limited to accredited investors.

Because we cannot qualify as an accredited investor, we do not intend to acquire coins in initial

coin offerings or from purchasers in such offerings.

Further, the Company does not intend to participate in registered or unregistered

initial coin offerings.

The Company will carefully review its purchases of Digital Securities to avoid violating the Investment

Company Act of 1940 (the “1940 Act”) and seek to reduce potential liabilities under the federal securities laws.

See “Risk Factors”

at page 14 and “Business”

at pages 3-8.

market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or

may have greater resources than us.

Asset Data Analytics Platform

are also focused on Digital Assets and blockchain technologies.

We are currently internally developing a digital asset data analytics

platform aimed at aggregating users’

information, such as tracking of multiple exchanges and wallets to aggregate portfolio

holdings into a single platform to view and analyze performance, risk metrics, and potential tax implications.

The platform utilizes

digital asset exchange APIs to read user data and does not allow for the trading of assets.

As a result of the pandemic, we have

experienced delays in the development of the platform.

Company is also seeking to acquire controlling interests in businesses in the blockchain industry as further described in this

We plan to continue to evaluate other strategic opportunities including acquiring controlling interests in business in

this rapidly evolving sector in an effort to enhance shareholder value.

though the prices of Digital Assets have been subject to substantial volatility and there remains some regulatory uncertainty,

we believe that businesses using blockchain technology and those involved with Digital Assets such as bitcoin and ether, offer

upside opportunity and are the types of opportunities that we may pursue.

current framework or criteria is to seek and evaluate acquisition targets in the blockchain and Digital Asset sector which:

align with our business model of acquiring Digital Assets, and (ii) acquiring a controlling interest in one or more blockchain

technology related business ventures.

Our acquisition activities are spearheaded by Charles Allen, our Chief Executive Officer.

also monitor blockchain networks and may consider re-entering the digital asset mining business if and when we believe a positive

return on investment is achievable.

of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, our independent auditors have indicated

in their report on our December 31, 2020 financial statements that there is substantial doubt about our ability to continue as

a going concern.

continuation of our business is dependent upon us raising additional funds.

The issuance of additional equity or convertible debt

securities by us could result in a significant dilution in the equity interests of our current stockholders.

Obtaining commercial

loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

continue to incur ongoing administrative and other expenses, including public company expenses, primarily accounting and legal

fees, in excess of corresponding (non-financing related) revenue.

While we continue to implement our business strategy,

we intend to finance our activities through:

current cash and cash equivalents on hand from the Company’s past debt and equity offerings by controlling costs, and

additional financing through sales of additional securities whether through Cavalry or other investors.

is an early entrant in the Digital Asset market and one of the first U.S.

publicly-traded companies to focus on Digital Assets

and blockchain technologies.

Through our blockchain-infrastructure operations, we secure disruptive next-generation blockchains and

operate validator nodes on various proof of stake-based blockchain networks, earning rewards of additional Digital Assets by actively

validating transactions on the networks.

While this process is similar to Bitcoin mining the consensus mechanism is different.

are building on the foundation of our pre-established infrastructure with the development of a Digital Asset Platform.

feature of the dashboard, which is an open beta, allows users to evaluate their Digital Asset portfolios from multiple exchanges

on a single platform.

We also are developing and plan to integrate into the platform a Staking-as-a-Service feature that,

once launched, will allow users to participate in asset leveraging through securing blockchain protocols.

Infrastructure

infrastructure operations can broadly be defined as earning a reward for securing a blockchain by validating transactions on that

There are currently two main consensus mechanisms used to secure blockchains:

i), proof-of-work (“PoW”), in which

nodes dedicate computational resources, and ii) proof-of-stake (“PoS”), in which nodes dedicate financial resources.

intention behind both PoW and PoS is to make it practically impossible for any single malicious actor to have enough computational

power or ownership stake to successfully attack the blockchain.

In the case of PoW, a miner does

“work” using energy-consuming computers and is rewarded for this “work” with Digital Assets.

typically through pools running nodes, validates transactions on the blockchain, essentially converting electricity and computing power

into a digital currency reward comprised of transaction fees and newly-minted Digital Assets.

Bitcoin is an example of PoW and

is by far the largest and most secure PoW blockchain.

miners, often referred to as validators in PoS systems, actively operate nodes and validate transactions.

Validators are required to

stake holdings of a digital currency to participate in the consensus algorithm and are rewarded in tokens for aligning behavior with

the rules of the algorithm.

Bad behavior can be penalized by “slashing” the validator’s holdings and/or rewards.

can also be removed from the network for breaking the rules.

Ill-intentioned behavior among validators is discouraged, allowing for the

blockchain to be properly maintained and secured.

Compared to PoW, PoS blockchains require less energy.

on the PoS blockchain protocol, native token holders have the opportunity to leverage their asset holdings by either delegating their

rights to a validator (“Delegating”), staking their token holdings in a staking pool (“Staking”), or running

their own validator (“Pooling”).

With Delegating, token holders indirectly participate by maintaining control of their private

keys and delegating their tokens to an existing validator.

Therefore, delegating is more akin to assigning voting rights of stock to

another person or entity via a power of attorney.

With Pooling, an operator and token holder combine tokens in order to improve the constituents’

collective odds of validating new blocks, and typically the operator takes custody of token holders funds i.e.

private keys.

for validation, the group is rewarded in tokens.

With both Delegating and Pooling, the validator operators earn a fee for providing the

technical capabilities of running a node 24/7 that requires regular, active maintenance and industry expertise.

BTCS uses its blockchain infrastructure

to operate validator nodes on various PoS-based blockchain networks.

In connection with the validation of transactions occurring

on those blockchain networks, BTCS will stake the Digital Assets native to those blockchains on its validator nodes in

order to earn staking rewards.

BTCS may also use its blockchain infrastructure to validate and sign transactions on behalf of customers

that delegate their validation and voting rights to BTCS-operated nodes (referred to as “Staking-as-a-Service”

StaaS provider maintains an active role in validating transactions on a given PoS network on behalf of its delegators by (1) arranging

transactions using software to stake the relevant Digital Assets;

(2) monitoring the nodes it is operating to ensure they remain

online, ready to validate transactions;

and (3) verifying transactions on the network when required to earn rewards.

Apart from Bitcoin and Ethereum,

all of the Company’s Digital Asset holdings are in tokens secured by PoS or similar consensus mechanisms that allow for

Delegating and asset leveraging.

The Company is currently actively operating validator nodes on Ethereum’s beacon chain, Cardano,

Tezos, Avalanche, Kusama and Cosmos.

The Company has also staked the following tokens Polkadot, Terra, Algorand, and Solana.

Building on that base, the Company plans to expand its PoS operations to secure other disruptive blockchain protocols that also allow

for delegating.

Company believes its blockchain infrastructure efforts will form the core growth for its Digital Asset Platform.

The Company utilizes cloud infrastructure to operate and run its validator nodes and does not maintain its own physical assets, but

may add this infrastructure in the future.

of the Company’s Digital Assets held can be found under “Item 7.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.”

Asset Platform

Company is also developing a proprietary Digital Asset Dashboard aimed at allowing users to evaluate their crypto portfolio holdings

across multiple exchanges and chains on a single platform.

The internally-developed dashboard utilizes Digital Asset exchanges’

application programming interfaces (APIs) to read user data and does not allow for the trading of assets.

In addition to portfolio

monitoring, we are also working to integrate a full suite of other features including decentralized exchanges, wallets, risk metrics

and potentially a way for users to calculate end-of year-reports for tax purposes.

We believe that increasing the number of features

we offer may create a sticky user experience across multiple, interrelated products.

Company is also currently developing and

planning to integrate into the Digital Asset Platform a proprietary Staking-as-a-Service feature aimed at allowing

users to delegate supported cryptocurrencies through a non-custodial platform to BTCS operated validator nodes.

Staking allows users

to generate an annual percentage yield (“APY”) on their staked assets whereas validator node operators charge a fee on users’

staked asset rewards earned in addition to earning an APY on staked assets.

In turn, the highly scalable nature of both staking Digital

Assets as well as allowing users to stake Digital Assets to earn token rewards is the premise behind BTCS’

Staking-as-a-Service platform.

Asset Treasury Strategy

The Company employs a Digital

Asset treasury strategy with a primary focus on disruptive protocol layer assets such as Bitcoin which are not able to be staked

non-productive).

They are distinct from Digital Assets used as the foundation for our blockchain infrastructure operations

previously discussed.

The Company’s Digital Asset treasury holding is comprised of 90 Bitcoins as set forth above.

The Company is not limiting its

assets to a single type of Digital Asset and may hold a variety of Digital Assets.

The Company will carefully review its

purchases of digital securities to avoid violating the 1940 Act and seek to reduce potential liabilities under the federal securities

market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or may have

greater resources than us.

AND MARKET OVERVIEW (DIGITAL ASSET AND BLOCKCHAIN TECHNOLOGIES)

and Digital Assets / Cryptocurrencies Generally

blockchain technologies utilize a decentralized and encrypted ledger that is designed to offer a secure, efficient, verifiable,

and permanent way of storing records and other information without the need for intermediaries.

Digital Assets, which include

and are often referred to as cryptocurrencies, serve multiple purposes.

They can serve as a medium of exchange, store of

value or unit of account, and provide non-financial and next generation uses.

Blockchain technologies are being evaluated for

a multitude of industries due to the belief in their ability to have a significant impact in many areas of business, finance,

information management, and governance.

blockchain technologies utilize a decentralized and encrypted ledger that is designed to offer a secure, efficient, verifiable, and permanent

way of storing records and other information without the need for intermediaries.

Digital Assets, which include and are often referred

to as cryptocurrencies, serve multiple purposes.

They can serve as a medium of exchange, store of value or unit of account, and provide

non-financial and next generation uses.

Blockchain technologies are being evaluated for a multitude of industries due to the belief in

their ability to have a significant impact in many areas of business, finance, information management, and governance.

Cryptocurrencies

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platform which uses peer-to-peer technology to operate with no central authority.

An online network of nodes hosts a public

transaction ledger, known as a blockchain, and each cryptocurrency is associated with a source code that comprises the basis for

the cryptographic and algorithmic protocols governing its blockchain.

In a cryptocurrency network, every peer node has

its own copy of the blockchain, which contains records of every historical transaction - effectively containing records of all

account balances.

Each account is identified solely by its unique public key (making it effectively anonymous) and is secured

with its associated private key (kept secret, like a password).

The combination of private and public cryptographic keys constitutes

a secure digital identity in the form of a digital signature, providing strong control of ownership.

An online network of nodes hosts a public transaction

ledger, known as a blockchain, and each cryptocurrency is associated with a source code that comprises the basis for the cryptographic

and algorithmic protocols governing its blockchain.

In a cryptocurrency network, every peer node has its own copy of the blockchain,

which contains records of every historical transaction - effectively containing records of all account balances.

Each account is identified

solely by its unique public key (making it effectively anonymous) and is secured with its associated private key (a

The combination of private and public cryptographic keys constitutes a secure digital identity in the form of a digital signature,

providing strong control of ownership.

single entity owns or operates a network.

The infrastructure is collectively maintained by a decentralized public user base.

a network is decentralized, it does not rely on either governmental authorities or financial institutions to create, transmit

or determine the value of the currency units.

Rather, the value is determined by market factors, supply and demand for the units,

the prices being set in transfers by mutual agreement or barter among transacting parties.

Since transfers do not require involvement

of intermediaries or third parties, there are currently limited transaction costs in direct peer-to-peer transactions.

cryptocurrency can be converted to fiat currencies, such as the U.S.

dollar, at rates determined on various exchanges, such as

Cumberland, Coinbase, Paxos, Kraken, Gemini, Bitstamp, and others.

Cryptocurrency prices are quoted on various exchanges and fluctuate

with extreme volatility.

believe cryptocurrencies and Digital Assets offer many advantages over traditional, fiat currencies, although many of these factors

also present potential disadvantages and may introduce additional risks, including:

is decentralized, it does not rely on either governmental authorities or financial institutions to create, transmit or determine the

value of the currency units.

Rather, the value is determined by market factors, supply and demand for the units, the prices being set

in transfers by mutual agreement or barter among transacting parties.

Since transfers do not require involvement of intermediaries or

third parties, there are currently limited transaction costs in direct peer-to-peer transactions.

Units of cryptocurrency can be converted

to fiat currencies, such as the U.S.

dollar, at rates determined on various exchanges, such as Cumberland, Coinbase, Paxos, Kraken, Gemini,

Bitstamp, and others.

Cryptocurrency prices are quoted on various exchanges and fluctuate with extreme volatility.

believe certain cryptocurrencies and Digital Assets offer many advantages over traditional, fiat currencies, although many of

these factors also present potential disadvantages and may introduce additional risks, including:

as a fraud deterrent, as cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by a sender;

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cryptocurrencies may not provide all of the benefits they purport to offer at all or at any time.

for example was first introduced in 2008 and was first introduced as a means of exchange in 2009.

Bitcoin is a consensus network

that enables a new payment system and a completely new form of digital money.

It is the first decentralized peer-to-peer payment

network that is powered by its users with no central authority or middlemen.

From a user perspective, we believe bitcoin can be

viewed as cash for the Internet.

The bitcoin network shares a public ledger called a “blockchain.”

This ledger contains

every transaction ever processed, allowing a user’s computer to verify the validity of each transaction.

The authenticity

of each transaction is protected by digital signatures corresponding to the sending addresses, allowing users to have full control

over sending bitcoins from their addresses.

In addition, anyone can process transactions using the computing power of specialized

hardware and earn a reward in bitcoins for this service.

This process is often called “mining”

and is a proof-of-work

consensus algorithm.

Bitcoin for example was

first introduced in 2008 and was first introduced as a means of exchange in 2009.

Bitcoin is a consensus network that enables a new

payment system and a completely new form of digital money.

It is the first decentralized peer-to-peer payment network that is

From a user perspective, we believe Bitcoin can be viewed as cash for

the Internet.

The Bitcoin network shares a public ledger called a “blockchain.” This ledger contains every transaction

ever processed, allowing a user’s computer to verify the validity of each transaction.

The authenticity of each transaction is

protected by digital signatures corresponding to the sending addresses, allowing users to have full control over sending Bitcoins

from their addresses.

In addition, anyone can process transactions using the computing power of specialized hardware and earn a

reward in Bitcoins for this service.

This process is often called “mining” and is a proof-of-work consensus

with many new and emerging technologies, there are potentially significant risks.

Businesses (including the Company) which are

seeking to develop, promote, adopt, transact or rely upon blockchain technologies and cryptocurrencies have a limited track record

and operate within an untested new environment.

These risks are not only related to the businesses the Company pursues, but the

sector and industry as a whole, as well as the entirety of the concept behind blockchain and cryptocurrency as value.

Businesses (including the Company) which are seeking

to develop, promote, adopt, transact or rely upon blockchain technologies and cryptocurrencies have a limited track record and operate

within an untested new environment.

These risks are not only related to the businesses the Company pursues, but the sector and industry

as a whole, as well as the entirety of the concept behind blockchain and cryptocurrency as value.

Digital Assets and Blockchain Technologies

are not the only type of Digital Assets founded on math-based algorithms and cryptographic security, although it is considered

the most prominent.

Other Digital Assets (commonly referred to as “altcoins”, “coins”, “tokens”,

or “protocol tokens”), have been developed since the Bitcoin Network’s inception.

The Bitcoin Network,

however, possesses the “first-to-market”

advantage and thus far has captured the majority of the industry’s

interest and market share.

Ethereum, EOS and other blockchains for example are designed for non-financial and next generation

uses (sometimes referred to as blockchain 2.0 projects).

These uses include smart contracts and distributed registers built into

or built atop their respective blockchains.

all blockchains require a consensus algorithm to secure the blockchain state which can be provided by either computational or

financial resources.

Mining mechanisms used by these algorithms are broadly divided into proof-of-work (“PoW”), in

which nodes dedicate computational resources, and proof-of-stake (“PoS”), in which nodes dedicate financial resources.

The intention behind both proof-of-work (computational resources) and proof-of-stake (financial resources) is to make it practically

infeasible for any single malicious actor to have enough computational power or ownership stake to attack the blockchain network.

With proof-of-work, a miner does some “work”

using computers that consumes electricity and is rewarded with digital

The miner is, theoretically, converting electricity and computing power into a digital currency reward comprised of

transaction fees and newly minted cryptocurrency.

Bitcoin is an example of this and is by far the largest and most secure

PoW blockchain.

With proof-of-stake, miners are staking their holdings of a digital currency to participate in the consensus algorithm

and bad behavior can be penalized by “slashing”

the rewards of the miner.

PoS requires less energy/electricity to

be consumed and can give cryptocurrency holders who participate in staking a reward on their holdings in the base cryptocurrency.

are actively evaluating other blockchain technologies that relate to Bitcoin 2.0 projects.

The Company is examining and

will continue to examine these other Digital Assets (including PoS assets) and Digital Securities and acquire them, subject to,

existing market conditions, accounting and tax implications, and regulatory compliance.

are not the only type of Digital Assets founded on math-based algorithms and cryptographic security, although it is considered the most

Other Digital Assets (commonly referred to as “altcoins”, “coins”, “tokens”, or “protocol

tokens”), have been developed since the Bitcoin Network’s inception.

The Bitcoin Network, however, possesses the “first-to-market”

advantage and thus far has captured the majority of the industry’s interest and market share.

Ethereum, Cosmos, Avalanche, Solana

and other blockchains for example are designed for non-financial and next generation uses (sometimes referred to as blockchain 2.0

These uses include smart contracts and distributed registers built into or built atop their respective blockchains.

Profile and Risks

decision to pursue blockchain and Digital Asset businesses exposes the Company to risks associated with a new and untested strategic

The prices of Digital Assets have experienced substantial volatility, which may reflect “bubble”

type volatility,

meaning that high or low prices may have little or no merit, may be subject to rapidly changing investor sentiment, and may be

influenced by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting.

example, in 2020, bitcoin’s low price was $4,971 and its high price was $29,374.

networks are a recent technological innovation and the regulatory schemes to which Digital Assets and their blockchain networks

may be subject have not been fully explored or developed.

The prices of Digital Assets have experienced substantial volatility, which may reflect “bubble” type volatility,

meaning that high or low prices may have little or no merit, may be subject to rapidly changing investor sentiment, and may be influenced

by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting.

For example, in 2021,

Bitcoin’s low price was $28,723 and its high price was $68,789.

networks are a relatively new technological innovation and the regulatory schemes to which Digital Assets and their blockchain

networks may be subject have not been fully explored or developed.

Recent actions taken by the SEC in its DAO Report that certain Digital

Assets may be securities and actions taken by the CFTC including its July 24, 2017 order approving the first derivative clearing

organization for digital currency swaps reflects that we may face increased government regulation and oversight.

this report, the SEC’s July 25, 2017 DAO Report, its Chairman’s remarks and concerns about the “Wild West”

nature of the Digital Assets market and reports that its staff is issuing subpoenas will adversely affect the Company’s

future acquisition of Digital Assets by limiting the amount of Digital Securities it may acquire and creating increased compliance

and legal costs.

In the future before we acquire Digital Assets, we may be required to examine how they were originally offered

to determine if they were offered as an investment contract or security.

Because of legal uncertainties, careful examination of

the results of our compliance review will be required by experienced securities counsel.

Because we must stay under the investment

company’s 40% provisions, we will limit the amount of Digital Securities we acquire.

If our compliance procedures and

legal reviews prove to be incorrect, we may incur the likelihood of prohibitive SEC penalties and/or private lawsuit defense costs

Assets may be securities and actions taken by the CFTC including its July 24, 2017 order approving the first derivative clearing organization

for digital currency swaps reflects that we may face increased government regulation and oversight.

As stated in this report, the SEC’s

July 25, 2017 DAO Report, its Chairman’s remarks and concerns about the “Wild West” nature of the Digital Assets market

and reports that its staff is issuing subpoenas, which would adversely affect the Company’s future acquisition of Digital

Assets by limiting the amount of Digital Securities it may acquire and creating increased compliance and legal costs.

In the future before

we acquire or transact in Digital Assets, we may be required to examine how they were originally offered to determine if they

were offered as an investment contract or other type of security.

Because of legal uncertainties, careful examination of the results

of our compliance review will be required by experienced securities counsel.

Because we must stay under the requirement under Investment

Company Act of 1940 (the “1940 Act”) that no more than 40% of our assets (excluding cash items) constitute investment securities

to avoid being deemed an investment company, we will limit the amount of Digital Securities we acquire.

If our compliance procedures

and legal reviews prove to be incorrect, we may incur the likelihood of prohibitive SEC penalties and/or private lawsuit defense costs

and adverse rulings.

the issuance of the DAO Report, promoters sought to evade it by callings coins “utility tokens”

even where the developer

the issuance of the DAO Report, promoters sought to evade it by callings coins “utility tokens” even where the developer

retained material future services that affected the profitability and future value of the coins.

The SEC quickly stopped one such

initial coin offering, which clearly was intended to send a message.

Company intends to acquire additional Digital Assets.

The Company currently own and plans to expand its digital asset holdings.

In order to avoid being an inadvertent investment company within the meaning of the 1940 Act, we actively focus on insuring that

our ownership of assets that are not securities will always exceed 60% of our total assets excluding cash.

See “Risk Factors”

beginning on page 14 and “Business”

beginning on page 3.

The ownership of Digital Assets including digital

securities may change based on the definition of a security under the Securities Act and applicable court decisions.

The key definition

is the term “investment contract”

The SEC quickly stopped one such initial

coin offering, which clearly was intended to send a message.

More recently, in August 2021 Gary Gensler, the current SEC Chairman,

voiced his concerns about and continued intention to regulate Digital Assets, referring to decentralized finance, or DeFi, platforms

that focus on Digital Assets as well as the Digital Assets themselves, and concluding by stating that the SEC would “continue to

take our authorities as far as they go.”

The Company intends to acquire

additional Digital Assets.

The Company currently owns and plans to expand its Digital Asset holdings, both through staking its existing

Digital Asset holdings on PoS blockchain networks and potentially through other means.

In order to avoid being an inadvertent investment

company within the meaning of the 1940 Act, we actively focus on ensuring that our ownership of assets that are not securities

in consultation with legal counsel and that such assets always exceed 60% of our total assets excluding cash items.

ownership of Digital Assets including digital securities may change based on the definition of a security under the Securities Act of

1933 (the “Securities Act”) and applicable court decisions.

The key definition is the term “investment contract”

and what is an investment contract.

both the regulatory landscape develops and journalistic familiarity with Digital Assets increases, mainstream media’s understanding

In addition to the securities

laws and investment company considerations, as our business model and operations continue to evolve, including our Digital Asset platform

and its functionality, we may become subject to additional laws and regulations.

For example, to the extent we collect, analyze, distribute,

or otherwise use data concerning individuals or entities and their holdings and transactions, we may become subject to the ever-growing

number of data privacy and security laws within and without the U.S.

which often have far-reaching implications for businesses.

these laws require disclosure and preventative measures designed to protect users from unauthorized access or disclosure of their personal

information, and impose fines and sanctions for failure to comply with their requirements.

Many Digital Assets have also

been subject to skepticism due to concerns about the high energy consumption used in mining on blockchain networks.

For example, in September 24,

2021, China declared all transactions in and mining of cryptocurrencies, including Bitcoin, illegal based on concerns of high energy

While our focus is currently on PoS blockchain networks which use relatively lower amounts of energy when compared to PoW,

future regulations may arise in response to these concerns that could apply to us and the Digital Asset industry as a whole.

Given the growing interest

by regulators and other stakeholders, we anticipate that legislation and regulation of cryptocurrencies and other Digital Assets is forthcoming

in the future.

In 2021 Congress introduced 35 bills related to cryptocurrencies and blockchain technologies.

At the state level in the

U.S., 33 states and Puerto Rico had pending cryptocurrency-related legislation in the 2021 legislative session, and 17 states enacted

legislation or adopted resolutions pertaining to cryptocurrencies in 2021.

Given the above

developments, both our current and planned operations, and the Digital Asset industry in general, continue to be subject to

expanding, complex and uncertain government oversight.

See “Risk Factors” beginning on page 16 and

“Business” beginning on page 3 for more information.

both the regulatory landscape develops and journalistic familiarity with Digital Assets increases, mainstream media’s understanding

of them and the regulation thereof may improve.

Regulation of Digital Assets varies from country to country as well as within

An increase in the regulation of Digital Assets may affect our proposed business by increasing compliance costs or

prohibiting certain or all of our proposed activities.

Assets Initiative

The Company’s Digital

Asset initiative will compete with other industry participants that focus on investing in and securing Digital Asset blockchains.

Market and financial conditions, and other conditions beyond the Company’s control, may make it more attractive to invest

in other entities, or to invest in Digital Assets directly.

Companies have raised substantial capital this year seeking to enter

Digital Asset businesses.

Our relative lack of capital is a competitive disadvantage.

Asset Data Analytics Platform

Company’s current and future competition for our digital asset data analytics platform is centered on the following areas:

which currently offer more robust digital asset data analytics or will choose to enhance their platforms in the future such

mobile applications, websites, niche aggregation sites, which offer similar services, such as BNCpro;

Regulation of Digital Assets varies from country to country as well as within countries.

An increase in the regulation of Digital Assets may affect our proposed business by increasing compliance costs or prohibiting certain

or all of our proposed activities.

Company’s current and future competition for our Digital Asset Platform and Staking-as-a-Service feature is centered on

the following areas:

based companies, such as Coinbase, Kraken, eToro and Binance, which provide Digital Asset

custodial solutions and staking to users with certain eligible Digital Assets

held on those exchanges.

These exchanges have more robust customer bases to attract integrated

staking services and may have more resources to enhance their platforms in the future;

Digital Asset focused companies, such as Blockdaemon, Allnodes, Everstake, Bison Trails

(acquired by Coinbase), Staked (acquired by Kraken), Figment, Foundry, and Stakefish,

that offer non-custodial Digital Asset staking and run validator nodes;

mobile applications, websites, niche aggregation sites, which offer similar analytic services,

such as BNCpro, CoinTracker, Koinly, and Rotki;

of mobile applications and websites, that offer secure storage solutions for Digital Assets;

financial service firms and data analytics firms serving traditional asset markets that choose to offer data analytic solutions

for Digital Assets;

asset focused companies that offer exchange, payment processing, and financial services for Digital Assets.

financial service firms and data analytics firms serving traditional asset markets that choose

to offer data analytic solutions for Digital Assets;

focused companies that offer exchange, payment processing, and financial services for Digital

of our current and potential competitors have greater resources, longer histories, more users, and greater brand recognition.

They may devote more resources to technology, infrastructure, marketing and may be able to more rapidly develop their solutions.

Other companies also may enter into business combinations or alliances that strengthen their competitive positions.

team and relative lack of capital is a competitive disadvantage.

Company’s sole asset (other than its cash balance and Digital Assets) is its human capital specifically Mr.

Allen and Mr.

Handerhan, who have extensive market knowledge and long-standing business relationships within the industry.

Our success depends

solely on their continued service.

See “Risk Factors”

devote more resources to technology, infrastructure, marketing and may be able to more rapidly develop their solutions.

Other companies

also may enter into business combinations or alliances that strengthen their competitive positions.

Our small team and relative lack

of capital is a competitive disadvantage.

The Company’s primary assets

consist of its Digital Assets and cash as well as its human capital and intellectual property noted below.

PROPERTY AND TRADE SECRETS

have no intellectual property assets or licenses and rely upon the experience of our two executive officers in the Digital Assets

business as it has evolved.

However, we believe this may change as we continue to develop our digital asset data analytics platform.

Assets Initiative

we continue to raise capital we plan to expand and diversify our Digital Asset holdings with a focus on disruptive protocol layer

verticals such as smart contracts, data storage and Internet of things (IoT);

provided, however that we do not intend to

acquire Digital Assets which may constitute digital securities.

We also plan to increase our holdings of bitcoin and ethereum.

Asset Data Analytics Platform Development

Company is currently internally developing a digital asset data analytics platform to aggregate user’s digital asset holding

data derived from read-only API calls to connected exchanges.

The platform solution is also being designed with a community focus

that may allow users to share their trade history with other platform users.

business depends in large part on our proprietary technology, particularly with regards to our Digital Asset platform and validator

node operations, and our brand.

We rely on, and expect to continue to rely on, a combination of trademark, domain name, and trade secret

and laws, as well as confidentiality and license agreements with our employees, contractors, consultants, and third parties with whom

we have relationships, to establish and protect our brand and intellectual property rights.

Asset Platform Development

The Company is currently internally

developing a proprietary Digital Asset Platform aimed at allowing users to evaluate their crypto portfolio holdings across multiple

exchanges and chains on a single platform.

The internally-developed dashboard utilizes Digital Asset exchange APIs to read user

data and does not allow for the trading of assets.

Our strategy has three key phases:

first develop

a robust platform and open it to public beta testing, second once the platform is open acquire users, and third monetize the platform.

Our current focus is on developing the platform.

Given our limited resources we can provide no definitive timeline as to when

the platform will be open to beta testing though we anticipated this occurring in 2021, provided however as a result of the pandemic,

we have experienced delays in the development of the platform, which may cause further delays.

currently have two employees and no part time employees.

CAPITILIZATION

following table details the Company’s capitalization as of January 22, 2021.

first develop a robust platform and open it to

public beta testing, second once the platform is open acquire users, and third monetize the platform.

Our current focus is on developing

the platform.

The first feature of the dashboard, which allows users to evaluate their Digital Asset portfolios from multiple

exchanges on a single platform, is currently in an open beta.

addition to portfolio monitoring, we are also working to integrate a full suite of other features including decentralized exchanges,

wallets, risk metrics and potentially a way for users to calculate end-of year-reports for tax purposes.

The Company is also currently

developing and plans to integrate into the Digital Asset Platform a proprietary Staking-as-a-Service feature aimed at allowing

users to delegate supported cryptocurrencies through a non-custodial platform to BTCS operated validator nodes.

allows users to generate an annual percentage yield (“APY”) on their staked assets whereas validator node operators charge

a fee on users’ staked asset rewards earned in addition to earning an APY on staked assets.

In turn, the highly scalable nature

of both staking Digital Assets as well as allowing users to stake Digital Assets to earn token rewards is the premise behind BTCS’

Staking-as-a-Service platform.

We believe that increasing the

number of features we offer may create a sticky user experience across multiple, interrelated products.

HUMAN CAPITAL RESOURCES

currently have four employees and no part time employees.

We consider our relations with our employees to be excellent.

the Risk Factor on page 16 regarding certain of our executive officers.

CAPITALIZATION

following table details the Company’s capitalization as of March 9, 2022.

Class of Security

Shares of Common

Stock as Converted

Common Stock Issued and Outstanding

Series C-1 Preferred Stock (29,414 shares at a 1:200 conversion ratio)

Warrants to purchase common stock

Restricted Stock Units Issued (Not Vested)

Options to purchase Common Stock (weighted average exercise price of $2.14)

Warrants to purchase Common Stock (weighted average exercise price of $14.85)

Total Shares Diluted

table above describes the shares of Common Stock which are outstanding and/or are issuable under outstanding securities.

above does not include:

(i) the 2020 December Promissory Note which was issued on December 16, 2020, (ii) the 2021 Promissory

Note which was issued on January 15, 2021, (iii) the Series C-2 Convertible Preferred stock which is subject to ratification by

our shareholders, and (iv) any stock options or restricted stock units that are subject to ratification by our shareholders.

2020 December Promissory Note is due on October 16, 2021 and is:

(i) convertible at a 35% discount to the closing price of the

Company’s common stock on the date before exercise with a floor price of $0.04 per share, (ii) shall bear interest at 12%

per annum (payable at maturity), and (iii) convertible at the Company’s option subject to certain limitations as set forth

in the 2020 December Promissory Note.

2021 Promissory Note is due on November 15, 2021 and is:

(i) convertible at a 35% discount to the closing price of the Company’s

common stock on the date before exercise with a floor price of $0.75 per share, (ii) shall bear interest at 12% per annum (payable

at maturity), and (iii) convertible at the Company’s option subject to certain limitations as set forth in the 2021 Promissory

above does not include any unvested restricted stock units.

Note Regarding Forward Looking Statements

contains forward-looking statements, including statements regarding our belief regarding the opportunities from businesses

using blockchain technology, our belief regarding advantages of using cryptocurrencies and Digital Assets and other

opportunities from purchasing Digital Assets, and our belief regarding our liquidity.

All statements other than statements of

historical facts contained in this report, including statements regarding our future financial position, liquidity, business

strategy and plans and objectives of management for future operations, are forward-looking statements.

“believe,”

“may,”

“estimate,”

“continue,”

“anticipate,”

“intend,”

“should,”

“plan,”

“could,”

“target,”

“potential,”

“is likely,”

“will,”

“expect”

and similar expressions, as they

relate to us, are intended to identify forward-looking statements.

We have based these forward-looking statements largely on

our current expectations and projections about future events and financial trends that we believe may affect our financial

condition, results of operations, business strategy and financial needs.

anticipated by any or all of these forward-looking statements might not occur.

Important factors, uncertainties and risks

that may cause actual results to differ materially from these forward-looking statements.

Further information on the risks

and uncertainties affecting our business is contained in the Risk Factors below.

We undertake no obligation to publicly

update or revise any forward-looking statements, whether as the result of new information, future events.

report contains forward-looking statements, including our liquidity, our belief that our blockchain infrastructure efforts will form

the core growth for our Digital Asset Platform, our plans and development of our Digital Asset Dashboard and the integration of Staking-as-a-Service,

our Digital Asset treasury strategy, our belief regarding blockchain, and future business plans.

Forward-looking statements can be

identified by words such as “anticipates,” “intends,” “may,” “potential,” “continues,”

“plans,” “seeks,” “believes,” “estimates,” “expects” and similar references

to future periods.

Forward-looking

statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions.

forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that

are difficult to predict.

Our actual results may differ materially from those contemplated by the forward-looking statements.

you therefore against relying on any of these forward-looking statements.

They are neither statements of historical fact nor guarantees

or assurances of future performance.

The results anticipated by any or all of these forward-looking statements might not occur.

factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements are contained

in the Risk Factors below.

Any forward-looking statement made by us speaks only as of the date on which it is made.

Factors or events

that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them.

undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments

or otherwise, except as may be required by law.

applicable to smaller reporting companies.

However, our principal risk factors are described under “Item 7.

Management’s

Discussion and Analysis of Financial Condition and Results of Operations.”

However, our principal risk factors are described under “Item 7.

Discussion and Analysis of Financial Condition and Results of Operations.”

of the date of this report, the Company did not have any owned or leased properties.

1 unchanged sentence

time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business.

We know of no material, active or pending legal proceedings against us.

of no material, active or pending legal proceedings against us.

MINE SAFETY DISCLOSURES.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business