What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-03-11 compared with 2021-01-26 · 31 added, 1080 removed, 2 unchanged (100% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our Common Stock is currently

quoted on the OTCQB and has been quoted under the symbol “BTCS”.

The last reported sale price of our common stock

on January 22, 2021 was $1.61.

of January 22, 2021, there were 140 stockholders of record of our common stock, one of which is Cede & Co., a nominee

for Depository Trust Company, or DTC.

Shares of common stock that are held by financial institutions as nominees for beneficial

owners are deposited into participant accounts at DTC, and are considered to be held of record by Cede & Co.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Common Stock is listed and traded on the Nasdaq Stock Market under the symbol “BTCS”.

The last reported sale price of our

Common Stock on March 9, 2022 was $3.99.

As of March 9, 2022, there

were 118 stockholders of record of our Common Stock, one of which is Cede & Co., a nominee for Depository Trust Company,

Shares of Common Stock that are held by financial institutions as nominees for beneficial owners are deposited into participant

accounts at DTC and are considered to be held of record by Cede & Co.

as one stockholder.

have not paid any cash dividends to date and do not anticipate or contemplate paying dividends in the foreseeable future.

the present intention of management to utilize all available funds for the development of our business.

AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

On January 30, 2014, the

Board of Directors approved the adoption of a 2014 Plan.

The 2014 Plan provides for the grant of incentive stock options, nonqualified

stock options, restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to our

employees, officers, directors and consultants.

Pursuant to the terms of the 2014 Plan, either the Board or a board committee

is authorized to administer the plan, including by determining which eligible participants will receive awards, the number of

shares of common stock subject to the awards and the terms and conditions of such awards.

Up to 8,613 (after giving effect to

prior reverse splits) shares of common stock are issuable pursuant to awards under the 2014 Plan.

Unless earlier terminated by

the Board, the 2014 Plan shall terminate at the close of business on January 30, 2024.

Assuming the Company’s 2021 Equity

Incentive Plan is approved by our shareholders at our 2021 Annual Meeting, we will no longer issue any securities under the 2014

of December 31, 2020, there are no incentive stock options, nonqualified stock options, restricted stock, restricted stock units,

stock appreciation rights and other types of stock-based awards issued pursuant to the 2014 Plan.

January 1, 2021, the Board of Directors approved the adoption of the 2021 Equity Incentive Plan (the “2021 Plan”).

The 2021 Plan, is subject to shareholder ratification, provides for the grant of incentive stock options, nonqualified stock options,

restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to our employees, officers,

directors and consultants.

Pursuant to the terms of the 2021 Plan, either the Board or a board committee is authorized to administer

the plan, including by determining which eligible participants will receive awards, the number of shares of common stock subject

to the awards and the terms and conditions of such awards.

Up to 20,000,000 shares of common stock are issuable pursuant to awards

under the 2021 Plan.

Unless earlier terminated by the Board, the 2021 Plan shall terminate at the close of business on January

following table gives information about our common stock that may be issued upon the exercise of options granted to employees,

directors and consultants under its 2014 Plan and outside of the 2014 Plan as of December 31, 2020.

COMPENSATION PLAN INFORMATION

Plan category

of securities

be issued upon

Weighted-average

of securities

available for

issuance under

compensation plans

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

have not paid any cash dividends through December 31, 2021.

On January 5, 2022, the board of directors of the Company declared

a non-recurring special dividend of $0.05 for each outstanding share of Common Stock of the Company.

The dividend is payable to

holders of record as of the close of business on March 17, 2022.

Shareholders are being provided the option to receive proceeds of their

dividend payable in either cash or Bitcoin.

The Bividend and cash equivalent dividend for those not electing to receive a Bividend will

be paid as soon practical after the record date.

The Company will evaluate the appropriateness of potential future dividends as the Company

continues to grow its operations.

SALES OF UNREGISTERED SECURITIES

The sales of unregistered

securities of our Company during the year ended December 31, 2020 (other than what was disclosed on a Form 10-Q or Form 8-K)

are summarized below:

of Shares Due to Conversion of 2019 Promissory Note

April 6, 2020, the Company issued a total of 735,294 shares of the Company’s common stock for the conversion of $50,000

of principal on the 2019 Promissory Note.

May 7, 2020, the Company issued a total of 632,736 shares of the Company’s common stock for the conversion of the remaining

$150,000 of principal and $2,000 of interest on the 2019 Promissory Note.

May 11, 2020, the Company issued a total of 35,824 shares of the Company’s common stock for the conversion of the remaining

accrued interest of $9,458 on the 2019 Promissory Note.

of the above sales were deemed to be exempt under Section 4(a)(2) of the Securities Act of 1933.

No advertising or general solicitation

was employed in offering the securities.

The offerings and sales were made to a limited number of accredited investors, and transfer

was restricted by us in accordance with the requirements of the Securities Act of 1933.

Each investor agreed that it was purchasing

for investment and not with a view to distribution.

SELECTED FINANCIAL DATA

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical

financial statements and the notes to those statements that appear elsewhere in this report.

Certain statements in the discussion

contain forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives,

expectations and intentions.

Actual results and the timing of events could differ materially from those anticipated in these forward-looking

statements as a result of a number of factors, including those set forth under “Risk Factors”

and elsewhere in this

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 1940 Act

and seek to reduce potential liabilities under the federal securities laws.

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.

cannot assure you we will be successful in raising sufficient capital to implement our full business plan or assuming we can,

that we will be able to develop a successful business.

For further information please see Part 1, Item 1 “Business.”

OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

For the years ended

Operating expenses:

General and administrative

Research and development

Total operating expenses

Other expense:

Interest expense

Impairment loss on digital currencies

Realized loss on digital currencies transactions

Total other expenses

$ (2,556,094 )

$ (1,640,601 )

Deemed dividend related to reduction of warrant strike price

Net loss attributable to common stockholders

$ (2,556,094 )

$ (1,736,309 )

expenses for the years ended December 31, 2020 and 2019 were approximately $2.0 million and $1.4 million.

The increase is primarily

from contingent bonuses being earned for the achievement of performance milestones.

Research and development expenses for the

years ended December 31, 2020 and 2019 were $45,450 and $0 is from the development of our digital asset data analytics platform.

expenses for the year ended December 31, 2020 and 2019 was approximately $569,800 and $208,200, respectively.

increase is primarily from interest expense on our convertible notes and impairment of our digital asset holdings.

Net loss for the years

ended December 31, 2020 and 2019 were approximately $2.6 million and $1.6 million.

The increase is primarily due to increase of

both operating expenses and other expenses as discussed above.

loss attributable to common stockholders

incurred $0 and $95,708 of deemed dividend related to reduction of warrant strike price during the year ended December 31, 2020

and 2019, respectively.

AND CAPITAL RESOURCES

of December 31, 2020, the Company had approximately $524,000 of cash and $996,000 in Digital Assets based

on the impaired value.

The fair market value of the Company’s Digital Assets, as of December 31, 2020, was approximately $3.9 million.

will require significant additional capital to sustain short-term operations and make the investments needed to execute our longer-term

business plan.

Our existing liquidity is not sufficient to fund operations and anticipated capital expenditures for the foreseeable

future, and we do not have sufficient cash resources to support our current operations for the next 12 months, and will need additional

funding, whether through our $10 million Purchase Agreement or other sources, to resume revenue generating activities.

If we attempt

to obtain additional debt or equity financing, we cannot provide assurance that such financing will be available to us on favorable

terms, if at all.

of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about

our ability to continue as a going concern.

The audited financial statements have been prepared assuming we will continue as a

going concern.

We have not made adjustments to the accompanying audited financial statements to reflect the potential effects

on the recoverability and classification of assets or liabilities should we be unable to continue as a going concern.

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.

of December 31, 2020, the Company had sold 19,363,353 shares of common stock and issued 177,054 commitment shares under the $10

million Purchase Agreement and received approximately $3.03 million in connection with the sales.

We cannot provide any assurance

that we will be able to continue selling under the $10 million Purchase Agreement or that we will be able to do so at prices that

we believe are beneficial to the Company and its shareholders.

January 6, 2021, the Company received $1,100,000 in funds from Messrs.

David Garrity a director, and Charles Allen and Michal

Handerhan, executive officers and directors of the Company pursuant to the subscription agreements entered into with them on January

1, 2021 and issued to them 1,100,000 shares of the Company’s Series C-2 Convertible Preferred Stock.

January 15, 2021, the Company issued Calvary the 2021 Promissory Note and a Series D warrant to purchase 2,000,0000 shares of

the Company’s Common Stock (the “Series D Warrant”) in consideration for $1,000,000.

The 2021 December Promissory

Note is (i) due on November 15, 2021, (ii) 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 and (iii) shall bear interest at 12% per annum (payable at maturity).

Subject to certain limitations, the Company may force conversion of the 2021 Promissory Note.

The 2,000,000 Series D Warrants

are exercisable for cash only at $2.16 per share, over a two-year period, and do not contain anti-dilution or price protection.

On January 15, 2021, the Company issued 2,000,000 shares of the Company’s Common Stock to Cavalry upon the exercise of all

their Series C warrants and payment of the exercise price of $400,000.

Cavalry and the Company entered into an agreement whereby

the Cavalry would exercise early for cash provided that the Company register the underlying shares of Common Stock within 30 days

Treatment of Digital Assets

Assets are included in current assets in the balance sheets.

Digital Assets are recorded at cost less impairment.

intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when

events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired.

Impairment exists when the carrying amount exceeds its fair value.

In testing for impairment, the Company has the option to first

perform a qualitative assessment to determine whether it is more likely than not that an impairment exists.

If it is determined

that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary.

If the Company

concludes otherwise, it is required to perform a quantitative impairment test.

To the extent an impairment loss is recognized,

the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any.

reversal of impairment losses is not permitted.

gain (loss) on sale of Digital Assets are included in other income (expense) in the statements of operations.

The Company assesses impairment

of Digital Assets quarterly if the fair value of Digital Assets was less than its cost basis on any day during the quarter.

The Company recognizes impairment losses on Digital Assets caused by decreases in fair value using the average U.S.

price of the related Digital Asset as of each impairment date.

Such impairment in the value of Digital Assets is recorded as a

component of costs and expenses in our statements of operations.

The Company recorded an impairment loss of approximately $165,000

related to Digital Assets during the year ended December 31, 2020.

audited financial statements for the year ended December 31, 2020, have been prepared on a going concern basis, which implies

that we will continue to realize our assets and discharge our liabilities and commitments in the normal course of business for

one year from the date the financial statements are issued.

We have not generated revenues during the years ended December

31, 2020 and 2019 and have never paid any dividends and are unlikely to pay dividends or generate substantial earnings in the

immediate or foreseeable future.

Our continuation as a going concern is dependent upon the continued financial support from our

shareholders, the ability of our company to obtain necessary financing to achieve our operating objectives, and the attainment

of profitable operations.

As of December 31, 2020, we have an accumulated deficit of $119.5 million since inception.

not have sufficient funds for our planned or new operations, we will need to raise additional funds for operations.

These factors,

among others, raise substantial doubt about our ability to continue as a going concern.

continuation of our business is dependent upon us raising additional financial support.

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.

See “Risk Factors”

Balance Sheet Arrangements

of December 31, 2020, there were no off-balance sheet arrangements.

ACCOUNTING POLICIES AND ESTIMATES

believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management

discussion and analysis:

Treatment of Digital Assets

Assets are included in current assets in the balance sheets.

Digital Assets are recorded at cost less impairment.

intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when

events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired.

Impairment exists when the carrying amount exceeds its fair value.

In testing for impairment, the Company has the option to first

perform a qualitative assessment to determine whether it is more likely than not that an impairment exists.

If it is determined

that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary.

If the Company

concludes otherwise, it is required to perform a quantitative impairment test.

To the extent an impairment loss is recognized,

the loss establishes the new cost basis of the asset that is amortized over the remaining useful life of that asset, if any.

reversal of impairment losses is not permitted.

gain (loss) on sale of Digital Assets are included in other income (expense) in the statements of operations.

Company assesses impairment of Digital Assets quarterly if the fair value of Digital Assets was less than its cost

basis on any day during the quarter.

The Company recognizes impairment losses on Digital Assets caused by decreases in fair

value using the average U.S.

dollar spot price of the related Digital Asset as of each impairment date.

Such impairment in

the value of Digital Assets are recorded as a component of costs and expenses in our statements of operations.

recorded impairment losses of approximately $121,000 and $165,000 related to Digital Assets during the years ended

December 31, 2019 and December 31, 2020, respectively.

Accounting Pronouncements

Note 4 to the financial statements for a discussion of recent accounting standards and pronouncements.

are numerous and varied risks, known and unknown, that may prevent us from achieving our goals.

If any of these risks actually

occur, our business, financial condition or results of operation may be materially adversely affected.

In such case, the trading

price of our common stock could decline and investors could lose all or part of their investment.

Related to Our Company

we do not raise additional debt or equity capital, we may not be able to pay all of our indebtedness or may have to sell a portion

of our Digital Assets.

May 2019, we signed a Purchase Agreement with Cavalry.

We may direct Cavalry to purchase shares of our common stock up to $10,000,000

(of which $3,034,541 has already been sold) under the Purchase Agreement over a 36-month period assuming there is an effective

registration statement covering the shares.

extent we rely on Cavalry as a source of funding will depend on a number of factors including, the prevailing market price of

our common stock and volume of trading and the extent to which we are able to secure working capital from other sources.

sufficient funding from Cavalry does not occur for any reason including Cavalry suffering liquidity issues or failure of the Company

to keep the registration statement current, we will need to secure another source of funding or sell some of or Digital Assets

in order to pay off our indebtedness.

Should the financing we require be unavailable or prohibitively expensive when we require

it, the consequences could have a material adverse effect on our business, operating results, financial condition and prospects.

auditors have issued a “going concern”

audit opinion.

independent auditors have indicated in their report on our December 31, 2020 and 2019 financial statements that there is substantial

doubt about our ability to continue as a going concern.

A “going concern”

opinion indicates that the financial statements

have been prepared assuming we will continue as a going concern for one year from the date the financial statements are issued

and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets,

or the amounts and classification of liabilities that may result if we do not continue as a going concern.

Therefore, you should

not rely on our balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors,

and potentially be available for distribution to shareholders, in the event of liquidation.

have a limited operating history and a history of operating losses, and expect to incur significant additional operating losses.

have a limited operating history.

Therefore, there is limited historical financial information upon which to base an evaluation

of our performance.

Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently

encountered by companies in their early stages of operations.

We have generated net losses of $2.6 million and $1.7 million for

the years ended December 31, 2020 and 2019, respectively.

We expect to incur additional net losses over the next several years

as we seek to expand operations.

The amount of future losses and when, if ever, we will achieve profitability are uncertain.

we are unsuccessful at executing on our business plan, our business, prospects, and results of operations may be materially adversely

have an evolving business model.

Digital Assets and blockchain technologies become more widely available, we expect the services and products associated with them

In 2017, the Securities and Exchange Commission (“SEC”) issued a DAO Report that promoters that use initial

coin offerings or token sales to raise capital may be engaged in the offer and sale of securities in violation of the Securities

Act and the Securities Exchange Act of 1934 (the “Exchange Act”).

This may cause us to potentially change our future

business in order to comply fully with the federal securities laws as well as applicable state securities laws.

As a result, to

stay current with the industry, our business model may need to evolve as well.

From time to time we may modify aspects of our

business model relating to our product mix and service offerings.

We cannot offer any assurance that these or any other modifications

will be successful or will not result in harm to the business.

We may not be able to manage growth effectively, which could damage

our reputation, limit our growth and negatively affect our operating results.

loss of our executive officers Charles Allen, our Chairman, Chief Executive Officer and Chief Financial Officer, and Michal Handerhan,

our Chief Operating Officer, could have a material adverse effect on us.

success depends solely on the continued services of our executive officers, particularly Charles Allen, our Chairman, Chief Executive

Officer and Chief Financial Officer, and Michal Handerhan, our Chief Operating Officer, who have extensive market knowledge and

long-standing industry relationships.

In particular, our reputation among and our relationships with key Digital Asset industry

leaders are the direct result of a significant investment of time and effort by these individuals to build our credibility in

a highly specialized industry.

The loss of services of either Charles Allen or Michal Handerhan, could diminish our business and

growth opportunities and our relationships with key leaders in the Digital Asset industry and could have a material adverse effect

the past as we suffered liquidity concerns, we were unable to pay these officers.

Neither exercised their right to terminate their

employment agreement.

The loss of Charles Allen, our Chairman, Chief Executive Officer and Chief Financial Officer, and Michal

Handerhan, our Chief Operating Officer, would have a material adverse effect on us.

Handerhan our Chief Operating Officer has notified the Company that in the event of the departure of Charles Allen, our Chairman,

Chief Executive Officer and Chief Financial Officer from the Company he may terminate his employment and may resign as an officer

and director of the Company, which would have a material adverse effect on us.

have no other officers and only one other director.

The simultaneous loss of Charles Allen, our Chairman, Chief Executive Officer

and Chief Financial Officer, and Michal Handerhan, our Chief Operating Officer, would have a material adverse effect on us.

Employment Agreements permit them to resign for Good Reason which includes non-payment of salaries.

In the event both of officers

terminate their Employment Agreements for Good Reason, this would result in the Company owing them approximately $611,000 and

would leave the Company without officers or employees which may have a material adverse effect upon us, your investment, and hamper

the ability of the Company to continue operations.

may need to implement additional finance and accounting systems, procedures and controls as we grow our business and organization

and to satisfy new reporting requirements .

are required to comply with a variety of reporting, accounting and other rules and regulations.

Compliance with existing requirements

is expensive.

We may need to implement additional finance and accounting systems, procedures and controls to satisfy our reporting

requirements and such further requirements may increase our costs and require additional management time and resources.

control over financial reporting is determined to be ineffective.

Such failure could cause investors to lose confidence in our

reported financial information, negatively affect the market price of our common stock, subject us to regulatory investigations

and penalties, and adversely impact our business and financial condition.

in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters

could significantly affect our financial results .

accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard

to a wide range of matters that are relevant to our business, including but not limited to revenue recognition, estimating valuation

allowances and accrued liabilities (including allowances for returns, credit card chargebacks, doubtful accounts and obsolete

and damaged inventory), internal use software and website development (acquired and developed internally), accounting for income

taxes, valuation of long-lived and intangible assets and goodwill, stock-based compensation and loss contingencies, are highly

complex and involve many subjective assumptions, estimates and judgments by our management.

Changes in these rules or their interpretation

or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected

financial performance.

there has been limited precedence set for financial accounting of Digital Assets other than Digital Securities, it is unclear

how we will be required to account for Digital Asset transactions in the future.

there has been limited precedence set for the financial accounting of Digital Assets other than Digital Securities, it is unclear

how we will be required to account for Digital Asset transactions or assets.

Furthermore, a change in regulatory or financial

accounting standards could result in the necessity to restate our financial statements.

Such a restatement could negatively impact

our business, prospects, financial condition and results of operation.

are subject to the information and reporting requirements of the Exchange Act), and other federal securities laws, including compliance

with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).

costs of preparing and filing annual and quarterly reports and other information with the SEC and furnishing audited reports to

shareholders will cause our expenses to be higher than they would have been if we were privately held.

It may be time consuming,

difficult and costly for us to develop, implement and maintain the internal controls and reporting procedures required by the

Sarbanes-Oxley Act.

We may need to hire additional financial reporting, internal controls and other finance personnel in order

to develop and implement appropriate internal controls and reporting procedures.

we lack effective internal controls and disclosure controls we erroneously accounted for Digital Assets using a fair value methodology

which was not consistent with United States generally accepted accounting principles (“U.S.

GAAP”) and required

us to restate our financial statements for the year ended December 31, 2017 and the three and six months ended March 31, 2018

and June 30, 2018, our failure to establish and maintain effective internal control over financial reporting could result in material

misstatements in our financial statements and a failure to meet our reporting and financial obligations which could have a material

adverse effect on our financial condition.

effective internal control over financial reporting is necessary for us to produce reliable financial statements.

herein, our internal controls and disclosure controls were not effective as of December 31, 2018.

Because of our ineffective controls

and material weaknesses, we did not account for our Digital Assets correctly in our financial statements and restated our audited

financial statements for the year ended December 31, 2017 and the unaudited financial statements for the quarters ended March

31, 2018 and June 30, 2018.

in April 2020, the Company received an oral comment from the Staff of the SEC regarding the classification of Digital Asset transactions

as an Investing Activity in its Cash Flow Statement within the Company’s Form 10-K for the year ended December 31, 2019

(“Form 10-K”).

As mentioned above, we previously misclassified Digital Assets in 2017 financial statements and failed

to correct this in the Form 10-K.

The Company has amended the Form 10-K to reclassify Digital Asset transactions from an Investing

Activity to an Operating Activity on the Cash Flow Statement.

material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such

that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be

prevented or detected on a timely basis.

the Company is now following U.S.

GAAP in accounting for its Digital Assets, it has not remediated its material weaknesses.

There can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will

not arise in the future.

Any failure to remediate the material weaknesses, or the development of new material weaknesses in our

internal control over financial reporting, could result in material misstatements in our financial statements and cause us to

fail to meet our reporting and financial obligations, which in turn could have a material adverse effect on our financial condition

and the trading price of our Common Stock.

company compliance may make it more difficult to attract and retain officers and directors.

Sarbanes-Oxley Act and rules implemented by the SEC have required changes in corporate governance practices of public companies.

As a public company, we expect these rules and regulations to increase our compliance costs and make certain activities more time

consuming and costly.

The impact of the SEC’s July 25, 2017 report on Digital Securities (the “DAO Report”)

as well as enforcement actions and speeches made by the SEC’s Chairman will increase our compliance and legal costs.

a public company, we also expect that these rules and regulations will make it more difficult and expensive for us to obtain director

and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially

higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and retain qualified

persons to serve on our board of directors or as executive officers, and to maintain insurance at reasonable rates, or at all.

stock price may be volatile.

market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors,

many of which are beyond our control, including the following:

in our industry including changes which adversely affect bitcoin, ethereum, and other Digital Assets;

volatility in the price of bitcoin, ethereum, and other Digital Assets;

ability to obtain working capital financing;

or departures of key personnel including our executive officers;

of our common stock;

of our warrants and the subsequent sale of the underlying common stock;

of our convertible notes and the subsequent sale of the underlying common stock;

ability to execute our business plan;

results that fall below expectations;

of any strategic relationship;

regulatory developments;

and other external factors.

addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated

to the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market

price of our common stock.

As a result, you may be unable to resell your shares at a desired price.

have not paid cash dividends in the past and do not expect to pay dividends in the future.

Any return on investment may be limited

to the value of our common stock.

have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future.

The payment of dividends

on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such

time as our board of directors may consider relevant.

If we do not pay dividends, our common stock may be less valuable because

a return on your investment will only occur if our stock price appreciates.

our common stock does not trade on a national securities exchange, the prices of our common stock may be more volatile and lower

than if we were listed.

common stock trades on the OTCQB operated by OTC Markets Group Inc.

This market is not a national securities exchange.

common stock trading has been relatively active, generally the OTCQB does not have the same level of activity as a national securities

exchange like Nasdaq.

Most institutions will not purchase a security unless it is on a national securities exchange.

they do not purchase stocks that trade below $5 per share.

We may, in the future, take certain steps, including utilizing investor

awareness campaigns, press releases, road shows and conferences to increase awareness of our business and any steps that we might

take to bring us to the awareness of investors may require we compensate consultants with cash and/or stock.

There can be no assurance

that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume.

Consequently,

investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business and

trading may be at an inflated price relative to the performance of our company due to, among other things, availability of sellers

of our shares.

common stock is deemed a “penny stock,”

which would make it more difficult for our investors to sell their shares.

common stock is subject to the “penny stock”

rules adopted under Section 15(g) of the Exchange Act.

The penny stock

rules generally apply to companies whose common stock is not listed on the Nasdaq Stock Market or other national securities exchange

or trades at less than $5.00 per share.

These rules require, among other things, that brokers who trade penny stock to persons

other than “established customers”

complete certain documentation, make suitability inquiries of investors and provide

investors with certain information concerning trading in the security, including a risk disclosure document and quote information

under certain circumstances.

Many brokers have decided not to trade penny stocks because of the requirements of the penny stock

rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited.

subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities.

Because our common stock is subject to the penny stock rules, investors will find it more difficult to dispose of our securities.

articles of incorporation allow for our board to create new series of preferred stock without further approval by our shareholders,

which could adversely affect the rights of the holders of our common stock.

board of directors has the authority to fix and determine the relative rights and preferences of preferred stock.

directors also has the authority to issue preferred stock without further shareholder approval.

As a result, our board of directors

could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon

liquidation, provide holders of the preferred anti-dilution protection, the right to receive dividend payments before dividends

are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to

the redemption of our common stock.

In addition, our board of directors could authorize the issuance of a series of preferred

stock that has greater voting power than our common stock or that is convertible into our common stock (for example, the issuance

of our outstanding Series C-2 which votes on a 2-for-1 as converted basis), which could decrease the relative voting power of

our common stock or result in dilution to our existing shareholders.

future sales of our common stock by us or by our existing shareholders could cause our stock price to fall.

equity financings (in addition to the shares issued under the Purchase Agreement) or other share issuances by us, including shares

issued in connection with strategic alliances and corporate partnering transactions, and shares issued on the conversion of outstanding

notes, could adversely affect the market price of our Common Stock.

Sales by existing shareholders of a large number of shares

of our Common Stock in the public market or the perception that additional sales could occur could cause the market price of our

Common Stock to drop.

may be accused of infringing intellectual property rights of third parties.

may be subject to legal claims of alleged infringement of the intellectual property rights of third parties.

The ready availability

of damages, royalties and the potential for injunctive relief has increased the defense litigation costs of patent infringement

claims, especially those asserted by third parties whose sole or primary business is to assert such claims.

Such claims, even

if not meritorious, may result in significant expenditure of financial and managerial resources, and the payment of damages or

settlement amounts.

Additionally, we may become subject to injunctions prohibiting us from using software or business processes

we currently use or may need to use in the future or requiring us to obtain licenses from third parties when such licenses may

not be available on financially feasible terms or terms acceptable to us or at all.

In addition, we may not be able to obtain

on favorable terms, or at all, licenses or other rights with respect to intellectual property we do not own in providing ecommerce

services to other businesses and individuals under commercial agreements.

and financial institutions may not provide banking services, or may cut off services, to businesses that engage in cryptocurrency-related

number of companies that engage in bitcoin and/or other cryptocurrency-related activities have been unable to find banks or financial

institutions that are willing to provide them with bank accounts and other services.

Similarly, a number of companies and individuals

or businesses associated with cryptocurrencies may have had and may continue to have their existing bank accounts closed or services

discontinued with financial institutions in response to government action, particularly in China, where regulatory response to

cryptocurrencies has been to exclude their use for ordinary consumer transactions within China.

We also may be unable to obtain

or maintain these services for our business.

The difficulty that many businesses that provide bitcoin and/or derivatives on other

cryptocurrency-related activities have and may continue to have in finding banks and financial institutions willing to provide

them services may be decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies,

and could decrease their usefulness and harm their public perception in the future.

usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks or

financial institutions were to close the accounts of businesses engaging in bitcoin and/or other cryptocurrency-related activities.

This could occur as a result of compliance risk, cost, government regulation or public pressure.

The risk applies to securities

firms, clearance and settlement firms, national stock and derivatives on commodities exchanges, the over-the-counter market, and

the Depository Trust Company, which, if any of such entities adopts or implements similar policies, rules or regulations, could

negatively affect our relationships with financial institutions and impede our ability to convert cryptocurrencies to fiat currencies.

Such factors could have a material adverse effect on our ability to continue as a going concern or to pursue our strategy at all,

which could have a material adverse effect on our business, prospects or operations and harm investors.

Digital Assets may be determined to be Digital Securities, we may inadvertently violate the 1940 Act and incur large losses as

a result and potentially be required to register as an investment company.

This would have a material adverse effect on an investment

plan to acquire a portfolio of Digital Assets including bitcoin, ethereum and other Digital Assets.

There is an increased regulatory

examination of Digital Assets and Digital Securities.

This has led to regulatory and enforcement activities.

As of the date of

this filing, we are not aware of any rules that have been proposed to regulate the Digital Assets we hold as securities.

be certain as to how future regulatory developments will impact the treatment of bitcoins, ethereum and other Digital Assets under

the 1940 Act, a company may be deemed an investment company under if the value of its investment securities is more than 40% of

its total assets (exclusive of government securities and cash items) on a consolidated basis.

Digital Assets we may own in the

future may be determined to be Digital Securities by the SEC or a court.

Additionally, one or more states may conclude bitcoin,

ethereum, or other Digital Assets held by us in the future are securities under state securities laws which would require registration

under state laws including merit review laws.

For example California defines the term “investment contract”

more strictly

than the SEC.

legislation and SEC rulemaking and other regulatory developments, including interpretations released by a regulatory authority,

may impact the manner in which bitcoin, ethereum, and other Digital Assets are treated for classification and clearing purposes.

The SEC’s July 25, 2017 DAO Report expressed its view that Digital Assets may be securities depending on the facts and circumstances.

a Digital Asset we hold were later determined to be a Digital Security, we could inadvertently become an investment company, as

defined by the 1940 Act, if the value of the Digital Securities we owned exceeded 40% of our assets excluding cash.

We are subject

to the following risks:

to legal advice, the SEC or a court may conclude that bitcoin, ethereum, or other Digital Assets we later acquire to be securities;

on legal advice, we may acquire other Digital Assets which we have been advised are not securities but later are held to be

may knowingly acquire Digital Assets that are securities and acquire minority investments in businesses which investments

are securities.

the event that the Digital Assets held by us exceed 40% of our total assets, exclusive of cash, we may inadvertently become an

investment company.

order to limit our acquisition of Digital Securities to stay within the 40% threshold, we will examine the manner in which a Digital

Assets was initially marketed to determine if it may be deemed a Digital Security and subject to federal and state securities

Even if we conclude that a particular Digital Asset is not a security under the 1940 Act, certain states take a stricter

view which means the Digital Asset may have violated applicable state securities laws.

the total value of securities which we hold rise to more than 40% of our assets (exclusive of cash) SEC Rule 3a-2 under the 1940

Act allows an issuer to prevent itself from being deemed an investment company if it reduces its holdings of securities to less

than 40% of its assets (exclusive of cash) and does not go above the 40% threshold more than once every three years.

if changes in the classification of Digital Assets causes us to exceed the 40% threshold, we may experience large losses when

we liquidate digital securities as a result of continued volatility.

40% requirement may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive

impact on our earnings.

In any event, we do not intend to become an investment company engaged in the business of investing and

trading securities.

the extent that Digital Assets held by us are deemed by the SEC or a state legislator to fall within the definition of a security,

we may be required to register and comply with additional regulation under the Investment Company Act, including additional periodic

reporting and disclosure standards and requirements and the registration of our Company as an investment company.

Such additional

registrations:

i) would result in extraordinary, non-recurring expenses, ii) is time consuming and restrictive, iii) would require

a restructuring of our operations, and iv) we would be very constrained in the kind of business we could do as a registered investment

company, thereby materially and adversely impacting an investment in us.

Further, if our examination of a Digital Asset is incorrect,

we may incur regulatory penalties and private investor liabilities since Section 5 of the Securities Act is a strict liability

statute much like selling spoiled milk and state securities laws generally impose liability for negligence for misrepresentations.

order to comply with the 1940 Act, we anticipate having increased management time and legal expenses in order to analyze which

Digital Assets are securities and periodically analyze our total holdings to ensure that we do not maintain more than 40% of our

total assets (exclusive of cash) as securities.

If our view that the Digital Assets we hold are not securities is challenged by

the SEC and courts uphold the challenge, we may inadvertently violate the 1940 Act and incur substantial legal fees in defending

our position.

The cost of such compliance would result in the Company incurring substantial additional expenses, and the failure

to register if required would have a materially adverse impact to conduct our operations.

current or future outbreak of a health epidemic or other adverse public health developments, such as the pneumonia caused by the

COVID-19 coronavirus, could disrupt our operations and adversely affect our business.

business could be adversely affected by the effects of health epidemics.

For example, we rely on our limited staff for our continued

operations and have no contingency plans and limited resources if anyone was to be affected by the coronavirus.

During 2020, as

a result of the COVID-19 pandemic, we experienced significant delays in the development of our digital asset data analytics platform

and may experience future delays as the pandemic continues.

Related to Digital Assets

further development and acceptance of cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies,

which represent a rapidly changing industry, are subject to a variety of factors that are difficult to evaluate.

use of Digital Assets to, among other things, buy and sell goods and services and complete transactions, is part of a new and

rapidly evolving industry that employs cryptocurrency assets based upon a computer-generated mathematical and/or cryptographic

Large-scale acceptance of cryptocurrencies as a means of payment has not, and may never, occur.

The growth of the Digital

Assets industry in general, and the use of Digital Assets in particular, is subject to a high degree of uncertainty.

affecting the further development of the Digital Assets industry, include but are not limited to:

worldwide growth in the adoption and use of Digital Assets as a medium of exchange;

and quasi-government regulation of Digital Assets and their use, or restrictions on or regulation of access to and operation

of the Digital Assets systems;

maintenance and development of the open-source software protocol of Digital Asset Networks;

in consumer demographics and public tastes and preferences;

availability and popularity of other forms or methods of buying and selling goods and services, including new means of using

fiat currencies and digital forms of fiat currencies;

economic conditions and the regulatory environment relating to Digital Assets;

impact of regulators focusing on Digital Assets and Digital Securities and the costs associated with such regulatory oversight.

decline in the popularity or acceptance of the Bitcoin Network could adversely affect an investment in us.

outcome of these factors could have negative effects on our ability to continue as a going concern or to pursue our business strategy

at all, which could have a material adverse effect on our business, prospects or operations as well as potentially negative effect

on the value of any bitcoin, ethereum or other Digital Assets we hold or acquire, which would harm investors in our securities.

there is relatively small use of bitcoins in the retail and commercial marketplace in comparison to relatively large use by speculators,

thus contributing to price volatility that could adversely affect an investment in us.

relatively new products and technologies, bitcoins and the Bitcoin Network have only recently become widely accepted as a means

of payment for goods and services by many major retail and commercial outlets, and use of bitcoins by consumers to pay such retail

and commercial outlets remains limited.

Conversely, a significant portion of bitcoin demand is generated by speculators and investors

seeking to profit from the short- or long-term holding of bitcoins.

A lack of expansion by bitcoins into retail and commercial

markets, or a contraction of such use, may result in increased volatility or a reduction in the price of bitcoin, either of which

could adversely impact an investment in us.

a malicious actor or botnet obtains control in excess of 50% of the processing power active on a Digital Asset Network, it is

possible that such actor or botnet could manipulate a blockchain in a manner that adversely affects an investment in us.

a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions

of the computers) obtains a majority of the processing power dedicated to mining a cryptocurrency, it may be able to alter blockchains

on which transactions of cryptocurrency reside and rely by constructing fraudulent blocks or preventing certain transactions from

completing in a timely manner, or at all.

The malicious actor or botnet could control, exclude or modify the ordering of transactions,

though it could not generate new units or transactions using such control.

The malicious actor could “double-spend”

its own cryptocurrency (i.e., spend the same bitcoin in more than one transaction) and prevent the confirmation of other users’

transactions for as long as it maintained control.

To the extent that such malicious actor or botnet does not yield its control

of the processing power on the network or the cryptocurrency community does not reject the fraudulent blocks as malicious, reversing

any changes made to blockchains may not be possible.

The foregoing description is not the only means by which the entirety of

blockchains or cryptocurrencies may be compromised but is only an example.

there are no known reports of malicious activity or control of blockchains achieved through controlling over 50% of the processing

power on the network, it is believed that certain mining pools may have exceeded the 50% threshold in bitcoin.

The possible crossing

of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of bitcoin transactions.

To the extent that the bitcoin ecosystem, and the administrators of mining pools, do not act to ensure greater decentralization

of bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power will increase

because the botnet or malicious actor could compromise more than 50% mining pool and thereby gain control of blockchain, whereas

if the blockchain remains decentralized it is inherently more difficult for the botnet of malicious actor to aggregate enough

processing power to gain control of the blockchain, may adversely affect an investment in our common stock.

Such lack of controls

and responses to such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue

our new strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the

value of any bitcoin, ethereum or other Digital Assets we acquire or hold, and harm investors.

has forked three times and additional forks may occur in the future which may affect the value of bitcoin held by the Company.

August 1, 2017, bitcoin’s blockchain was forked three times creating Bitcoin Cash, Bitcoin Gold and Bitcoin SV.

resulted in a new blockchain being created with a shared history, and a new path forward.

The value of the newly created Bitcoin

Cash, Bitcoin Gold and Bitcoin SV may or may not have value in the long run and may affect the price of bitcoin if interest is

shifted away from bitcoin to the newly created Digital Assets.

The value of bitcoin after the creation of a fork is subject to

many factors including the value of the fork product, market reaction to the creation of the fork product, and the occurrence

of forks in the future.

As such, the value of bitcoin could be materially reduced if existing and future forks have a negative

effect on bitcoin’s value.

decentralized nature of Digital Asset systems may lead to slow or inadequate responses to crises, which may negatively affect

our business .

decentralized nature of the governance of Digital Asset systems may lead to ineffective decision making that slows development

or prevents a network from overcoming emergent obstacles.

Governance of many Digital Asset systems is by voluntary consensus and

open competition with no clear leadership structure or authority.

To the extent lack of clarity in corporate governance of cryptocurrency

systems leads to ineffective decision making that slows development and growth of such Digital Assets, the value of our common

stock may be adversely affected.

Asset Exchanges are relatively new and therefore may be more exposed to fraud and failure than established, regulated exchanges

for other products.

To the extent that large Digital Asset Exchanges representing a substantial portion of the Digital Asset volume

are involved in fraud or experience security failures or other operational issues, such Exchanges’

failures may result in

a reduction in the price of Digital Assets and adversely affect an investment in us.

number of Digital Asset Exchanges have been closed due to fraud, failure or security breaches.

In many of these instances, the

customers of such Exchanges were not compensated or made whole for the partial or complete losses of their account balances in

such Exchanges.

While smaller Exchanges are less likely to have the infrastructure and capitalization that make larger Exchanges

more stable, larger Exchanges are more likely to be appealing targets for hackers and “malware”

(i.e., software used

or programmed by attackers to disrupt computer operation, gather sensitive information or gain access to private computer systems).

A lack of stability in an Exchange Market and the closure or temporary shutdown of larger Digital Asset Exchanges due to fraud,

business failure, hackers or malware, or government-mandated regulation may reduce confidence in Digital Assets overall and result

in greater volatility in Digital Asset values.

These potential consequences of a Exchange’s failure could adversely affect

an investment in us.

is a lack of liquid markets, and possible manipulation of blockchain/cryptocurrency-based Digital Assets.

Assets that are represented and trade on a ledger-based platform may not necessarily benefit from viable trading markets.

exchanges have listing requirements and vet issuers;

requiring them to be subjected to rigorous listing standards and rules, and

monitor investors transacting on such platform for fraud and other improprieties.

These conditions may not necessarily be replicated

on a distributed ledger platform, depending on the platform’s controls and other policies.

The laxer a distributed ledger

platform is about vetting issuers of cryptocurrency assets or users that transact on the platform, the higher the potential risk

for fraud or the manipulation of the ledger due to a control event.

These factors may decrease liquidity or volume or may otherwise

increase volatility or other assets trading on a ledger-based system, which may adversely affect us.

Such circumstances could

adversely affect an investment in us.

or economic crises may motivate large-scale sales of Digital Assets, which could result in a reduction in Digital Asset values

and adversely affect an investment in us.

Geopolitical crises may

motivate large-scale sales of Digital Assets, which could rapidly decrease the price of Digital Assets.

Alternatively,

as an emerging asset class with limited acceptance as a payment system or commodity, global crises and general economic downturn

may discourage investment in Digital Assets as investors focus their investment on less volatile asset classes as a means

of hedging their investment risk.

an alternative to fiat currencies that are backed by central governments, Digital Assets such as bitcoin and ethereum, which are

relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of

buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events.

Nevertheless,

political or economic crises may motivate large-scale acquisitions or sales of Digital Assets either globally or locally.

sales of Digital Assets would result in a reduction in Digital Asset values and could adversely affect an investment in us.

price of Digital Assets may be affected by the sale of such Digital Assets by other vehicles investing in Digital Assets or tracking

cryptocurrency markets.

global market for Digital Assets is characterized by supply constraints that differ from those present in the markets for commodities

or other assets such as gold and silver.

The mathematical protocols under which certain cryptocurrencies are mined permit the

creation of a limited, predetermined amount of currency, while others have no limit established on total supply.

To the extent

that other vehicles investing in Digital Assets or tracking Digital Asset markets form and come to represent a significant proportion

of the demand for Digital Assets, large redemptions of the securities of those vehicles and the subsequent sale of Digital Assets

by such vehicles could negatively affect Digital Asset prices and therefore affect the value of our Digital Assets.

could have a material adversely affect an investment in us.

changes or actions may alter the nature of an investment in us or restrict the use of Digital Assets in a manner that adversely

affects our business, prospects or operations.

Digital Assets have grown in both popularity and market size, governments around the world have reacted differently to Digital

certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in

some jurisdictions, such as in the U.S., subject to extensive, and in some cases overlapping, unclear and evolving regulatory

requirements.

Ongoing and future regulatory actions may impact our ability to continue to operate, and such actions could affect

our ability to continue as a going concern or to pursue our new strategy at all, which could have a material adverse effect on

our business, prospects or operations.

interpretations require the regulation of bitcoins and other Digital Assets under the CEA by the CFTC, we may be required to register

and comply with such regulations.

To the extent that we decide to continue operations, the required registrations and regulatory

compliance steps may result in extraordinary, non-recurring expenses to us.

We may also decide to cease certain operations.

disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.

and future legislation, CFTC and other regulatory developments, including interpretations released by a regulatory authority,

may impact the manner in which bitcoins and other Digital Assets are treated for classification and clearing purposes.

In particular,

derivatives on these assets are not excluded from the definition of “commodity future”

We cannot be certain

as to how future regulatory developments will impact the treatment of bitcoins and other Digital Assets under the law.

have been deemed to fall within the definition of a commodity and, we may be required to register and comply with additional regulation

under the CEA, including additional periodic report and disclosure standards and requirements.

Moreover, we may be required to

register as a commodity pool operator and to register us as a commodity pool with the CFTC through the National Futures Association.

Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting

an investment in us.

If we determine not to comply with such additional regulatory and registration requirements, we may seek

to cease certain of our operations.

Any such action may adversely affect an investment in us.

interactions with a blockchain may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate

distribute ledger technology.

Office of Financial Assets Control of the US Department of Treasury requires us to comply with its sanction program and not conduct

business with persons named on its specially designated nationals (“SDN”) list.

However, because of the pseudonymous

nature of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on

OFAC’s SDN list.

Our Company’s policy prohibits any transactions with such SDN individuals, but we may not be adequately

capable of determining the ultimate identity of the individual with whom we transact with respect to selling cryptocurrency assets.

Moreover, federal law prohibits any US person from knowingly or unknowingly possessing any visual depiction commonly known as

child pornography.

Recent media reports have suggested that persons have imbedded such depictions on one or more blockchains.

Because our business requires us to download and retain one or more blockchains to effectuate our ongoing business, it is possible

that such digital ledgers contain prohibited depictions without our knowledge or consent.

To the extent government enforcement

authorities literally enforce these and other laws and regulations that are impacted by decentralized distributed ledger technology,

we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties, all

of which could harm our reputation and affect the value of our common stock.

federal or state legislatures or agencies initiate or release tax determinations that change the classification of bitcoins, ethereum

or other Digital Assets as property for tax purposes (in the context of when such Digital Assets are held as an investment), such

determination could have a negative tax consequence on our Company or our shareholders.

IRS guidance indicates that Digital Assets such as bitcoins should be treated and taxed as property, and that transactions involving

the payment of bitcoins for goods and services should be treated as barter transactions.

While this treatment creates a potential

tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to another, usually by

means of bitcoin transactions (including off-blockchain transactions), it preserves the right to apply capital gains treatment

to those transactions which may have adversely affect an investment in our Company.

December 5, 2014, the New York State Department of Taxation and Finance issued guidance regarding the application of state tax

law to Digital Assets such as bitcoins.

The agency determined that New York State would follow IRS guidance with respect to the

treatment of Digital Assets such as bitcoins for state income tax purposes.

Furthermore, they defined Digital Assets such as bitcoin

to be a form of “intangible property,”

meaning the purchase and sale of bitcoins for fiat currency is not subject

to state income tax (although transactions of bitcoin for other goods and services maybe subject to sales tax under barter transaction

It is unclear if other states will follow the guidance of the IRS and the New York State Department of Taxation and

Finance with respect to the treatment of Digital Assets such as bitcoins for income tax and sales tax purposes.

If a state adopts

a different treatment, such treatment may have negative consequences including the imposition of greater a greater tax burden

on investors in bitcoin or imposing a greater cost on the acquisition and disposition of bitcoins, generally;

in either case potentially

having a negative effect on prices in the Bitcoin Exchange Market and may adversely affect an investment in our Company.

jurisdictions may also elect to treat Digital Assets such as bitcoins differently for tax purposes than the IRS or the New York

State Department of Taxation and Finance.

To the extent that a foreign jurisdiction with a significant share of the market of

bitcoin users imposes onerous tax burdens on bitcoin users, or imposes sales or value added tax on purchases and sales of bitcoins

for fiat currency, such actions could result in decreased demand for bitcoins in such jurisdiction, which could impact the price

of bitcoins and negatively impact an investment in our Company.

Risks Related to Our Digital Assets Holdings

Digital Assets may be subject to loss, damage, theft or restriction on access.

is a risk that part or all of our Digital Assets could be lost, stolen, destroyed or become inaccessible.

We believe that our

Digital Assets will be an appealing target to hackers or malware distributors seeking to destroy, damage or steal our Digital

To minimize the risk of loss, damage and theft, security breaches, and unauthorized access we hold our Digital Assets

at exchanges and have also relied on Bitgo Inc.’s (“Bitgo”) enterprise multi-signature storage solution.

Nevertheless,

the exchanges we utilize or Bitgo’s security system may not be impenetrable and may not be free from defect or immune to

acts of God, and any loss due to a security breach, software defect or act of God will be borne by us.

Any of these events may

adversely affect our operations and, consequently, an investment in us.

the extent that any of our Digital Assets are held by Exchanges, we may face heightened risks from cybersecurity attacks and financial

stability of the Exchanges.

Digital Assets not held in a Company’s controlled wallet such as Bitgo’s will be held at Exchanges and subject to

the risks encountered by those Exchange including DDoS Attacks, other malicious hacking, a sale of the exchange, loss of the Digital

Assets by the exchange, security breaches, and unauthorized access of our account by hackers.

The Company may not maintain a custodian

agreement with the Exchanges that it holds its Digital Assets at.

Exchanges do not provide insurance and may lack the resources

to protect against hacking and theft.

We may be materially and adversely affected if the Exchanges suffer cyberattacks or incur

financial problems.

loss or destruction of a private key required to access a Digital Assets may be irreversible.

Our loss of access to our private

keys could adversely affect an investment in our Company.

Assets such as bitcoin are controllable only by the possessor of both the unique public key and private key relating to the local

or online digital wallet in which the Digital Assets are held.

We are required by the operation of the Digital Asset Network to

publish the public key relating to a digital wallet in use by us when it first verifies a spending transaction from that digital

wallet and disseminates such information into the Network.

We safeguard and keep private the private keys relating to our Digital

Assets not held at exchanges by utilizing Bitgo’s multi-signature storage solution;

to the extent a private key is lost,

destroyed or otherwise compromised and no backup of the private key is accessible, we will be unable to access the Digital Assets

held by it and the private key will not be capable of being restored by the Network.

Any loss of private keys relating to digital

wallets used to store our Digital Assets could adversely affect an investment in us.

threats to us could result in, a loss of Company’s Digital Assets.

breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin Exchange Market since the

launch of the Bitcoin Network.

Any security breach caused by hacking, which involves efforts to gain unauthorized access to information

or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment,

and the inadvertent transmission of computer viruses, could harm our business operations or result in loss of our bitcoins and

other Digital Assets.

Any breach of our infrastructure could result in damage to our reputation which could adversely affect an

investment in us.

Furthermore, we believe that, as our assets continues to grow, it may become a more appealing target for security

threats such as hackers and malware.

security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of

an employee of ours, or otherwise, and, as a result, an unauthorized party may obtain access to our, private keys, data or bitcoins.

Additionally, outside parties may attempt to fraudulently induce employees of ours to disclose sensitive information in order

to gain access to our infrastructure.

As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage

systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until

launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.

actual or perceived breach of our security system occurs, the market perception of the effectiveness of our security system could

be harmed, which could adversely affect an investment in us.

In the event of a security breach, we may be forced to cease operations,

or suffer a reduction in assets, the occurrence of each of which could adversely affect an investment in us.

or fraudulent Digital Asset transactions may be irreversible.

Asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the

recipient of the transaction.

Once a transaction has been verified and recorded in a block that is added to a blockchain,

an incorrect transfer of Digital Assets or a theft of Digital Assets generally will not be reversible, and we may not be capable

of seeking compensation for any such transfer or theft.

It is possible that, through computer or human error, or through theft

or criminal action, our Digital Assets could be transferred from us in incorrect amounts or to unauthorized third parties.

the extent that we are unable to seek a corrective transaction with such third party or are incapable of identifying the third

party which has received our Digital Assets through error or theft, we will be unable to revert or otherwise recover incorrectly

transferred Digital Assets.

To the extent that we are unable to seek redress for such error or theft, such loss could adversely

affect an investment in us.

limited rights of legal recourse against us, and our lack of insurance protection expose us and our shareholders to the risk of

loss of our Digital Assets for which no person is liable.

Digital Assets held by us are not insured.

Therefore, a loss may be suffered with respect to our Digital Assets which is not covered

by insurance and for which no person is liable in damages which could adversely affect our operations and, consequently, an investment

Assets held by us are not subject to FDIC or SIPC protections.

do not and will not hold our bitcoins and other Digital Assets with a banking institution or a member of the Federal Deposit Insurance

Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”) and, therefore, our Digital

Assets are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions.

Related to Our Digital Asset Data Analytics Platform Development

is substantial doubt that we will be able to develop or commercialize our Digital Asset Data Analytics Platform.

are currently developing a digital asset data analytics platform with the ultimate goal of consolidating users’

so that it can be more easily accessed and reviewed by users.

We may not successfully develop this platform in a cost-efficient

manner or at all.

If we fail to develop a digital asset data analytics platform as intended, it could have a material adverse

effect on our business, especially to the extent that we allocate significant capital, labor and other resources to this endeavor

rather than focusing on other business opportunities which may prove to have been more lucrative in hindsight.

if we do successfully develop our platform and bring it to the marketplace, there is no guarantee that we will attract enough

users to generate revenue or become profitable.

Our competitors, most of whom have greater capital and human resources than we

do, may develop technologies that are superior to our platform or commercialize comparable technologies before us, in which case

our ability to attract users and generate revenue therefrom could be rendered unlikely or even impossible.

If we fail to obtain

users for our platform or find an alternative means of commercializing our platform to recoup our investment therein, it will

have a material adverse effect on our financial condition.

if we develop and commercialize our Digital Asset Data Analytics Platform, we may not be able to generate material revenues.

digital asset data analytics platform that we are currently developing will require significant time and capital.

Even if we do

develop this platform and acquire a sufficient number of users to generate revenue, we cannot guarantee the revenue would be material

or sufficient to justify the costs we anticipate incurring to develop the platform.

Our ability to capitalize on any platform

we do develop will depend on a variety of factors and uncertainties beyond our control, including the competition we face and

similar or superior services that may already exist by the time we begin marketing our platform, the volatile nature of the blockchain

industry generally and the unknown demand for the services we plan to offer through our platform as it is currently envisioned,

and the advancement of new technologies which could arise in the future and render our platform partially or completely obsolete.

If any of these or other risks come to fruition to prevent our platform from generating material revenue to justify its costs

of production, it would have a material adverse effect on our business.

development of our Digital Asset Data Analytics Platform will depend on the successful efforts of our employees.

platform development effort is completely dependent on our infrastructure.

We use internally developed systems for the platform.

Any future difficulties developing aspects of our platform may cause delays in bringing our platform to market.

If the location

where all of our computer and communications hardware is located is compromised, our platform, prospects, could be harmed.

do not currently have a disaster recovery plan which could result in a loss of the platform software.

Despite our implementation

of network security measures, our servers are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions,

the occurrence of any of which could lead to interruptions, delays, loss of critical data or the inability to launch our

The occurrence of any of the foregoing risks could harm our business.

are subject to cyber security risks and may incur delays in platform development in an effort to minimize those risks and to respond

to cyber incidents.

digital asset data analytics platform will be entirely dependent on the secure operation of our website and systems as well as

the operation of the Internet generally.

The platform involves reading user data, and storage of user data, and security breaches

could expose us to a risk of loss or misuse of this information, litigation, and potential liability.

A number of large Internet

companies have suffered security breaches, some of which have involved intentional attacks.

From time to time we and many other

Internet businesses also may be subject to a denial of service attacks wherein attackers attempt to block customers’

to our Website.

If we are unable to avert a denial of service attack for any significant period, we could sustain delays in the

development of the platform and when launched risk losing future users and have user dissatisfaction.

We may not have the resources

or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks.

Cyber attacks may target us, our

users, or exchanges we read data from in general or the communication infrastructure on which we depend.

If an actual or perceived

attack or breach of our security occurs, user perception of the effectiveness of our security measures could be harmed and we

could lose our future user.

Actual or anticipated attacks and risks may cause us to incur increasing costs, and delay development.

A person who is able to circumvent our security measures might be able to misappropriate our or our users’

proprietary information,

cause interruption in our operations, damage our computers or those of our users, or otherwise damage our reputation and platform.

Any compromise of our security could result in a violation of applicable privacy and other laws, significant legal and financial

exposure, damage to our reputation, and a loss of confidence in our security measures, which could harm our business.

may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us

from commercializing or increase the costs of commercializing the digital asset data analytics platform.

commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property

rights of third parties however, we may not always be able to determine that we are using or accessing protected information or

For example, there could be issued patents of which we are not aware that our products infringe.

There also could be

patents that we believe we do not infringe, but that we may ultimately be found to infringe.

Moreover, patent applications are

in some cases maintained in secrecy until patents are issued.

The publication of discoveries in scientific or patent literature

frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were

Because patents can take many years to issue, there may be currently pending applications of which we are unaware that

may later result in issued patents that our products infringe.

we could expend significant resources defending against patent infringement and other intellectual property right claims;

could require us to divert resources away from operations.

Any damages we are required to pay or injunctions against our continued

use of such intellectual property in resolution of such claims may cause a material adverse effect to our business and operations,

which could adversely affect the trading price of our securities and harm our investors.

Related to the Purchase Agreement with Cavalry

sale or issuance of our common stock to Cavalry may cause dilution and the sale of the shares of common stock acquired by Cavalry,

or the perception that such sales may occur, could cause the price of our common stock to fall.

May 13, 2019, we entered into the Purchase Agreement with Cavalry, pursuant to which Cavalry has committed to purchase up to $10,000,000

of our common stock.

As of the date of this filing, we have directed Cavalry to purchase 19,363,353 shares (excluding 510,388

commitment and pro-rata commitment shares) and have received $3,034,541.

The purchase shares that may be sold pursuant to the

Purchase Agreement may be sold by us to Cavalry at our discretion from time to time over a 36-month period commencing after the

SEC has declared effective the registration statement covering the respective shares.

The purchase price for the shares that we

may sell to Cavalry under the Purchase Agreement will fluctuate based on the price of our common stock.

Depending on market liquidity

at the time, sales of such shares may cause the trading price of our common stock to fall.

Additionally, the amount that we may

sell to Cavalry will be limited to the Daily Trading Dollar Volume on the day of, or day before, the Put.

If the trading volume

and/or price of our common stock is low, our ability to raise capital under the Purchase Agreement will be limited and/or take

an extensive time to raise capital.

generally have the right to control the timing and amount of any sales of our shares to Cavalry, except that, pursuant to the

terms of our agreements with Cavalry, we would be unable to sell shares to Cavalry on any day when the closing sale price of our

common stock is below $0.005 per share, subject to adjustment as set forth in the Purchase Agreement.

Cavalry may ultimately purchase

all, some or none of the shares of our common stock that may be sold pursuant to the Purchase Agreement in connection with our

rights to direct Cavalry’s purchases at our discretion and, after it has acquired shares, Cavalry may sell all, some or

none of those shares.

Therefore, sales to Cavalry by us could result in substantial dilution to the interests of other holders

of our common stock.

Additionally, the sale of a substantial number of shares of our common stock to Cavalry, or the anticipation

of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at

a price that we might otherwise wish to effect sales.

may not be able to access sufficient funds under the Purchase Agreement with Cavalry when needed.

ability to sell shares to Cavalry and obtain funds under the Purchase Agreement is limited by the terms and conditions in the

Purchase Agreement, including restrictions on when we may sell shares to Cavalry, restrictions on the amounts we may sell to Cavalry

at any one time, and a limitation on our ability to sell shares to Cavalry to the extent that it would cause Cavalry to beneficially

own more than 4.99% of our outstanding common stock.

In addition, any amounts we sell under the Purchase Agreement may not satisfy

all of our funding needs, even if we are able and choose to sell all $10,000,000 under the Purchase Agreement.

If we elect to

issue and sell more than the shares offered under any one prospectus to Cavalry, which we have the right, but not the obligation,

to do, we must first register for resale under the Securities Act any such additional shares on a subsequent prospectus.

elected to enter into the Purchase Agreement with Cavalry as we expect that amount of capital over the next 12 months will be

required for us to fully implement our business, operating and development plans.

The extent we rely on Cavalry as a source of

funding will depend on a number of factors including, the prevailing market price and trading volume of our common stock and the

extent to which we are able to secure working capital from other sources.

If obtaining sufficient funding from Cavalry were to

prove unavailable or prohibitively dilutive, we will need to secure another source of funding in order to satisfy our working

capital needs.

Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive

when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition

and prospects.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide

the information under this item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

addition to those unregistered securities previously disclosed in reports filed with the Securities and Exchange Commission (the “SEC”),

during the year ended December 31, 2021, we have issued securities without registration under the Securities Act, as described below.

or Class of Investor

of Securities

Officers and Non-Employee Director (1)

shares of restricted stock units

Directors (1)

shares of restricted stock units

under Section 4(a)(2) of the Securities Act and Regulation 506(b) thereunder.

The securities

were issued to an accredited investor and there was no general solicitation.

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 5. Market for Registrant’s Common Equity