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Item 9A. Controls and Procedures

2022-03-11 compared with 2021-01-26 · 1503 added, 923 removed, 231 unchanged (91% of the section changed)

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities

and Exchange Commission Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified

in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to

our management, as appropriate, to allow for timely decisions regarding required disclosure.

In designing and evaluating the disclosure

controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can

provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment

in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Securities and Exchange Commission

Rule 13a-15(e) and 15d-15(e), we carried out an evaluation, under the supervision and with the participation of our management,

of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered

by this report.

Based on the foregoing, management concluded that our disclosure controls and procedures were not operating effectively

as of December 31, 2020.

Our disclosure controls and procedures were not effective because of the “material weakness”

described below.

Management’s annual report on internal control over financial reporting.

rules implementing Section 404 of the Sarbanes-Oxley Act of 2002 require our 2019 Annual Report on Form 10-K to contain management’s

report regarding the effectiveness of internal control over financial reporting.

As a basis for our report, we tested and evaluated

the design, documentation, and operating effectiveness of our internal control.

is responsible for establishing and maintaining effective internal control over financial reporting, as defined in Rule 13a-15(f)

under the Exchange Act.

The Company’s internal control over financial reporting consists of policies and procedures that

are designed and operated to provide reasonable assurance about the reliability of the Company’s financial reporting and

its process for preparing financial statements in accordance with U.S.

There are inherent limitations in

the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding

Accordingly, even effective internal controls can provide only reasonable assurance with respect to financial statement

Further, because of changes in conditions, the effectiveness of internal control may vary over time.

on management’s evaluation as of December 31, 2020, our management identified the material weaknesses set forth below in

our internal control over financial reporting:

Company’s process for internally reporting material information in a systematic manner to allow for timely filing of material

information is ineffective, due to its inherent limitations from being a small company, and there exist material weaknesses in

internal control over financial reporting that contribute to the weaknesses in our disclosure controls and procedures.

These weaknesses

segregation of duties and oversight of work performed in our finance and accounting function due to limited personnel;

of controls in place to ensure that all material transactions and developments impacting the financial statements are reflected;

applying complex accounting principles.

management concluded that in light of the material weaknesses described above, the Company did not maintain effective internal

control over financial reporting as of December 31, 2020 based on the criteria set forth in Internal Control-Integrated Framework

(2013) issued by the COSO.

Subsequent to the Company’s

filing its annual report for the year ended December 31, 2019, the Board of Directors of the Company concluded that due to

ineffective controls we failed to follow U.S.

GAAP in accounting for our Digital Assets.

The Company erroneously classified

a $374,979 purchase of digital currencies as an investing activity which was re-classified to an operating activity in the statement

of cash flows on the Company’s amended annual report filed on June 22, 2020.

This failure arose from a material weakness

which required us to restate our financial statements for the year ended December 31, 2019.

IN INTERNAL CONTROL OVER FINANCIAL REPORTING

were no changes in our internal control over financial reporting during the fourth quarter of the year ended December 31, 2020

that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Controls and Procedures

management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of

the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed

by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods

specified in the rules and forms of the SEC.

Disclosure controls and procedures include, without limitation,

controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits

under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal

financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on this evaluation, management concluded

that our disclosure controls and procedures were effective as of December 31, 2021.

Annual Report on Internal Control Over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined

in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Our internal control over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes

in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent

Therefore, even those systems determined effective could provide only reasonable assurance with respect to financial statement

preparation and presentation.

management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021, based

on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway

Commission (the “2013 Internal Control-Integrated Framework”).

Based on our evaluation under the 2013 Internal Control-Integrated

Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Changes in Internal Control Over Financial

were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act that

occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal

control over financial reporting.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS

Not Applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required

by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with

the SEC within 120 days of the year ended December 31, 2020.

Our Board of Directors

has adopted a Code of Ethics applicable to all officers, directors and employees, which is available on our website (http://www.btcs.com)

under “Corporate Governance.”

We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding

amendment to, or waiver from, a provision of our Code of Ethics and by posting such information on our website at the address

information required by this item is incorporated by reference to our Proxy Statement for the 2022 Annual Meeting of Stockholders to

be filed with the SEC within 120 days of the year ended December 31, 2021.

Board of Directors has adopted a Code of Ethics applicable to all officers, directors and employees, which is available on our website

(http://www.btcs.com) under “Corporate Governance.” We intend to satisfy the disclosure requirement under Item 5.05 of Form

8-K regarding amendment to, or waiver from, a provision of our Code of Ethics and by posting such information on our website at the address

and location specified above.

EXECUTIVE COMPENSATION

The information required

by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with

the SEC within 120 days of the year ended December 31, 2020.

information required by this item is incorporated by reference to our Proxy Statement for the 2022 Annual Meeting of Stockholders to

be filed with the SEC within 120 days of the year ended December 31, 2021.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required

by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with

the SEC within 120 days of the year ended December 31, 2020.

information required by this item is incorporated by reference to our Proxy Statement for the 2022 Annual Meeting of Stockholders to

be filed with the SEC within 120 days of the year ended December 31, 2021.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required

by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with

the SEC within 120 days of the year ended December 31, 2020.

information required by this item is incorporated by reference to our Proxy Statement for the 2022 Annual Meeting of Stockholders to

be filed with the SEC within 120 days of the year ended December 31, 2021.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required

by this item is incorporated by reference to our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with

the SEC within 120 days of the year ended December 31, 2020.

(a) Documents filed as part of the

information required by this item is incorporated by reference to our Proxy Statement for the 2022 Annual Meeting of Stockholders to

be filed with the SEC within 120 days of the year ended December 31, 2021.

Documents filed as part of the report.

Financial Statements.

to Financial Statements, which appears on page F-1 hereof.

The financial statements listed in the accompanying Index to Financial

Statements are filed herewith in response to this Item.

See Index to Financial Statements, which appears on page F-1 hereof.

The financial statements listed in the accompanying

Index to Financial Statements are filed herewith in response to this Item.

Financial Statements Schedules.

All schedules are omitted because they are not applicable or because the required information is contained in the financial statements

or notes included in this report.

(3) Exhibits.

All schedules are omitted because they are not applicable or because the required information is contained

in the financial statements or notes included in this report.

See the Exhibit Index.

EXHIBIT INDEX

Incorporated by Reference

Filed/Furnished

Articles of Merger

Agreement and Plan of Merger

Articles of Incorporation

3 unchanged sentences

2 To Articles of Incorporation

Certificate of Amendment filed February 13, 2017

Amendment No.

3 To Articles of Incorporation

Certificate of Designation for Series A Preferred Stock

Certificate of Designation for Series B Convertible Preferred Stock

Certificate of Correction to Series B Convertible Preferred Stock

Certificate of Designation for Series C-1 Convertible Preferred Stock

Amended and Restated Certificate of Designation of Series C-1 Convertible Preferred Stock

Certificate of Amendment to the Series C-1 Certificate of Designation

Certificate of Designation for Series C-2 Convertible Preferred Stock

Certificate of Withdrawal of Certificate of Designation for Series B Convertible Preferred Stock

Certificate of Withdrawal of Certificate of Designation for Series A Preferred Stock

Certificate of Correction to Series C-2 Convertible Preferred Stock

Certificate of Amendment filed February 13, 2017

Certificate of Change – Reverse Split

Bylaws of TouchIT Technologies, Inc.

Articles of Merger

Agreement and Plan of Merger

Convertible Note dated as of September 18, 2019

2 unchanged sentences

Convertible Note dated as of December 16, 2020

Securities Escrow Agreement dated February 19, 2016

Securities Purchase Agreement dated June 6, 2016

20% Original Issue Discount Junior Convertible note due December 5, 2016

Security Agreement dated June 6, 2016

Pledge Agreement dated June 6, 2016

Subsidiary Guaranty dated June 6, 2016

Amendment to Subscription Agreement dated May 27, 2016

Form of Warrant Exercise Agreement dated as of June 8, 2016

Convertible Promissory Note dated December 6, 2016

Form of Note Leak-Out Agreement dated March 2, 2017

Form of January Leak-Out Agreement dated February 8, 2017

Form of April Leak-Out Agreement dated February 6, 2017

Form of January Lock-Up Agreement dated February 8, 2017

Form of April Lock-Up Agreement dated February 6, 2017

Settlement Agreement and Note dated March 22, 2017

Form of Series A Common Stock Purchase Warrant dated May 24, 2017

Form of Additional Common Stock Purchase Warrant dated May 24, 2017

Form of Bonus Common Stock Purchase Warrant dated May 24, 2017

Form of Registration Right Agreement dated as of May 24, 2017

Form of Securities Purchase Agreement dated as of May 24, 2017

Convertible Note dated as of January 15, 2021

2021 Equity Incentive Plan

Description of Securities

Employment Agreement - Charles Allen

1 unchanged sentence

Employment Agreement - Michael Handerhan

Amendment to Employment Agreement –

Michal Handerhan

Form of Series B Common Stock Purchase Warrant dated October 10, 2017

Form of Series C-1 Securities Purchase Agreement dated October 10, 2017

Form of Side Letter dated October 4, 2017

Amended Series A Common Stock Purchase Warrant dated May 24, 2017

Amended Additional Common Stock Purchase Warrant dated May 24, 2017

Amended Bonus Common Stock Purchase Warrant dated May 24, 2017

Amended Series B Common Stock Purchase Warrant dated October 10, 2017

Amended Amendment to Securities Agreement dated December 7, 2017

Form of Series C Common Stock Purchase Warrant dated October 11, 2018

Amendment to Employment Agreement – Michal Handerhan

Employment Agreement – Andrew Lee

Offer Letter – Michael Prevoznik

Equity Line Purchase Agreement dated as of May 13, 2019

4 unchanged sentences

Side Letter with Cavalry Fund I LP dated December 16, 2020

Form of Series C Common Stock Purchase Warrant dated December 16, 2020

Form of Subscription Agreement –Series C-2 Convertible Preferred Stock

Series D Warrant dated as of January 15, 2021

Form of Securities Purchase Agreement, dated March 2, 2021, by and between the Company, the Purchasers, and the Placement Agent*

Placement Agent Agreement dated March 2, 2021 by and between the company and A.G.P./Alliance Global Partners

Common Stock Purchase Warrant dated March 2, 2021, by and between the Company and the Purchasers

List of Subsidiaries

7 unchanged sentences

Taxonomy Extension Presentation Linkbase

contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.

Cover Page Interactive Data File (formatted as inline

XBRL and contained in Exhibit 101).

and/or Schedules have been omitted.

The Company hereby agrees to furnish to the SEC upon request any omitted information.

a management contract or compensatory plan.

FORM 10-K SUMMARY.

accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,

thereunto duly authorized on January 26, 2021.

Charles Allen

Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)

accordance with the Exchange Act, this report has been signed below by the following persons on behalf of BTCS Inc.

capacities and on the dates indicated.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized on March 11, 2022.

Charles Allen

Executive Officer and Chief

Executive Officer and Principal Financial and Accounting Officer) and Chairman of the Board of Directors

Executive Officer (Principal Executive Officer)

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of BTCS

and in the capacities and on the dates indicated.

/s/ Charles Allen

Chief Executive Officer

(Principal Executive Officer) and Chairman of the Board of Directors

/s/ Michael Prevoznik

Chief Financial Officer

Michael Prevoznik

(Principal Financial Officer and Principal Accounting Officer)

/s/ Michal Handerhan

Michal Handerhan

/s/ David Garrity

David Garrity

/s/ Carol Van Cleef

Carol Van Cleef

/s/ Charlie Lee

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

have audited the accompanying balance sheets of BTCS Inc.

(The “Company”) as of December 31, 2020 and 2019 and the

related statements of operations, stockholders’

(deficit) equity, and cash flows for each of the years in the two-year period

ended December 31, 2020, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and

the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity

with accounting principles generally accepted in the United States of America.

Company's Ability to Continue as a Going Concern

accompanying financial statements have been prepared assuming the Company will continue as a going concern.

As discussed in Note

3 to the accompanying financial statements, the Company has suffered recurring losses from operations, generated negative cash

flows from operating activities, and has an accumulated deficit that raises substantial doubt about the Company’s ability

to continue as a going concern.

Management's evaluation of the events and conditions and management’s plan in regard to

these matters are also described in Note 3.

The financial statements do not include any adjustments that might result from the

outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

(The “Company”) as of December 31, 2021 and 2020

and the related statements of operations, stockholders’ (deficit) equity, and cash flows for each of the years in the two-year

period ended December 31, 2021, and the related notes (collectively referred to as the financial statements).

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021

and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31,

2021, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were

communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of

critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by

communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or

disclosures to which they relate.

of the matter

discussed in Note 4 to the financial statements, the Company’s balance sheet includes digital currencies which are recorded

at cost less impairment.

Significant judgment is exercised by the Company in determining the impairment for these digital

assets because there is limited authoritative accounting guidance regarding accounting for digital assets.

we addressed the matter in our audit

principal audit procedures related to the Company’s impairment of digital assets included the following:

obtained an understanding of the Company’s accounting for digital assets.

We evaluated how management calculated the impairment

and assessed whether the methodology was consistent with industry practices.

We also tested the observable assumptions used in

the impairment calculation on a sample basis and the mathematical accuracy of the calculations.

In addition, we also evaluated

the reasonableness of the impairment.

have served as the Company’s auditor since 2016.

critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

described further in Note 9 to the financial statements, the Company has suffered recurring losses from operations and does not have

an established source of revenues sufficient to cover all of its operating costs.

The ability of the Company to ultimately continue as

a going concern is dependent on executing business plan and ultimately to attain profitable operations.

The Company’s cash position

and liquid Digital Assets are sufficient to support its daily operations over the next twelve months.

December 31, 2021, the Company had approximately $3.1 million of liquid Digital Assets (i.e.

non-staked) and $1.4 million of cash.

the year ended December 31, 2021, the Company sold a total of 466,791 shares of Common Stock under the ATM Agreement for aggregate total

net proceeds of approximately $2,882,000.

The Company’s cash position and liquid Digital Assets are sufficient to support its daily

operations over the next twelve months.

Accordingly, the Company has determined that these factors alleviate the doubt as to the Company’s

ability to continue as a going concern for a period of one year from the issuance of these financial statements.

Management may to continue

to fund its business by way of public or private offerings of the Company’s stock or through loans from private investors, in order

satisfy the Company’s business objective for at least one year from the financial statement issuance date.

However, the Company

has concluded that these plans alleviate the doubt related to its ability to continue as a going concern.

determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty

regarding the Company’s available capital and the risk of bias in management’s judgments and assumptions in their determination.

Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among

assessed whether the Company’s determination that there alleviation of doubt about

its ability to continue as a going concern was adequately disclosed.

reviewed and evaluated management's plans including cash flow projections for alleviating

the doubt about going concern.

of the Accounting for and Disclosure of Digital Assets and Cryptocurrencies Held

disclosed in Note 3 to the consolidated financial statements, the Company’s digital assets/cryptocurrencies held as of December

31, 2021, which mainly consist of Ethereum 2.0 and Bitcoin, are accounted for as indefinite-lived intangible assets, and have been included

in current assets and long-term assets on the consolidated balance sheet.

The Company’s cryptocurrencies as of December 31, 2021

were approximately $12,400,000.

identified the accounting for and disclosure of cryptocurrencies held as a critical audit matter for the following reasons.

no authoritative guidance exists for the accounting for and disclosure of cryptocurrencies held in accordance with accounting principles

generally accepted in the United States (“GAAP”).

The Company’s management has exercised significant judgment in their

determination of how existing GAAP should be applied to the accounting for cryptocurrencies held, the associated financial statement

presentation and accompanying footnote disclosures.

In addition, the accounting for cryptocurrencies involves the Company’s information

technology (“IT”) environment as such assets are held in digital wallets.

procedures we performed to address this critical audit matter included the following:

certain internal controls over the Company’s digital storage wallets with the assistance

of our IT specialist;

of management regarding controls over the Company’s digital storage wallets;

management’s rationale for the application of Accounting Standards Codification (“ASC”)

350 to account for its cryptocurrencies held, including management’s processes for

evaluating its cryptocurrencies for impairment;

management’s rationale for the inclusion of cryptocurrencies as a current asset and

long-term on the balance sheet;

supporting sale and cash receipt evidence for cryptocurrency sales, including management’s

processes for calculating any gains or losses on sales of cryptocurrencies.

of the Accounting for and Disclosure of Cryptocurrency Staking Revenue Recognized

disclosed in Note 3, the Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers.

During the year

ended December 31, 2020, the Company recognized net cryptocurrency staking revenue of approximately $1,200,000.

identified the accounting for and disclosure of cryptocurrency staking revenue recognized as a critical audit matter for the following

Currently, no authoritative guidance exists for the accounting for and disclosure of cryptocurrency staking revenue recognized

in accordance with GAAP.

The Company’s management has exercised judgment in their determination of how existing GAAP should be

applied to the accounting for and disclosure of cryptocurrency staking revenue recognized.

In addition, the Company’s cryptocurrency

staking hardware that provides computing power for the validator nodes is currently hosted at a third party facility.

primary procedures we performed to address this critical audit matter included the following:

the design of IT general controls over the Company’s IT environment.

management’s rationale for the application of ASC 606 to account for its cryptocurrency

awards earned.

management’s disclosures of its cryptocurrency activity in the financial statements;

● Independently

confirmed certain financial and performance data directly vouching to the public blockchain

the Company’s digital wallet records to publicly available blockchain records.

have served as the Company’s auditor since 2016.

York | Washington, DC | California | Nevada

2 unchanged sentences

Current assets:

Digital currencies

Digital Assets/currencies

Staked Digital Assets/currencies

Prepaid expense

2 unchanged sentences

Property and equipment, net

Staked Digital Assets/currencies - long term

Total other assets

Liabilities and Stockholders’

Equity (Deficit):

Liabilities and Stockholders’ Equity:

Accounts payable and accrued expense

1 unchanged sentence

Convertible notes payable, net

Warrant liabilities

Total current liabilities

Stockholders’

equity (deficit):

Stockholders’ equity:

Preferred stock;

20,000,000 shares authorized at $ 0.001 par value:

Series B Convertible Preferred stock:

0 shares issued and outstanding at December 31, 2020 and

Series C-1 Convertible Preferred stock:

0 and 29,414 shares issued and outstanding at December 31, 2021 and 2020, respectively;

Liquidation preference $ 0.001 per share

Series C-2 Convertible Preferred stock:

29,414 shares issued and outstanding at December 31,

2020 and 2019;

0 shares issued and outstanding at December 31, 2021 and 2020;

Liquidation preference $ 0.001 per share

Common stock, 975,000,000 shares authorized at $0.001 par value, 42,011,617 and 19,831,521 shares

issued and outstanding at December 31, 2020 and 2019, respectively

Preferred stock, value

Common Stock, 97,500,000

shares authorized at $ 0.001

par value, 10,528,212 and 4,201,035

shares issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid in capital

2 unchanged sentences

( 119,539,887 )

Total stockholders’

equity (deficit)

Total Liabilities and stockholders’

equity (deficit)

Total stockholders’ equity

Total Liabilities and stockholders’ equity

accompanying notes are an integral part of these financial statements.

1 unchanged sentence

For the years ended

Validator revenue

Total revenues

Cost of revenues

Validator expense

Operating expenses:

1 unchanged sentence

Research and development

Compensation and related expenses

Total operating expenses

Other expense:

Other (expenses) income:

Interest expense

Impairment loss on digital currencies

Realized loss on digital currencies transactions

Total other expenses

Amortization on debt discount

( 1,868,059 )

Change in fair value of warrant liabilities

Impairment loss on Digital Assets/currencies

( 3,845,899 )

Deemed dividend related to reduction of warrant strike price

Realized gains (loss) on Digital Asset/currency transactions

Total other income (expenses)

$ ( 16,049,583 )

$ ( 2,556,094 )

Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible

preferred stock

Deemed dividends related to recognition of downround adjustment to conversion

amount for Series C-2 convertible preferred stock

( 5,020,883 )

Net loss attributable to Common Stockholders

4 unchanged sentences

accompanying notes are an integral part of these financial statements.

of Stockholders’

(Deficit) Equity

of Stockholders’ (Deficit) Equity

the years ended December 31, 2021 and 2020

Series C-1 Convertible

Stockholders’

Preferred Stock

Stockholders’

Balance December 31, 2019

1 unchanged sentence

$ ( 116,983,793 )

$ ( 183,760 )

Common Stock issued including equity commitment fee, net

Issuance of common stock, net of offering cost / At-the-market offering

Issuance of common stock, net of offering cost / At-the-market offering, shares

Issuance of common stock and warrants for cash, net

Issuance of common stock and warrants for cash, net, shares

Warrant liabilities value related to Issuance of common stock

Issuance of Series C-2 convertible preferred stock

Issuance of Series C-2 convertible preferred stock, shares

Conversion of Series C-1 Convertible Preferred stock

Conversion of Series C-1 Convertible Preferred stock, shares

Conversion of Series C-2 Convertible Preferred stock

Conversion of Series C-2 Convertible Preferred stock, shares

Conversion of convertible notes and interest

Beneficial conversion features associated with convertible notes payable

Beneficial conversion feature of Series C-2 convertible preferred stock

Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock

Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock

Fractional shares adjusted for reverse split

Fractional shares adjusted for reverse split, shares

Warrant exercise

Warrant exercise, shares

Stock-based compensation

Stock-based compensation, shares

Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock

( 2,556,094 )

Balance December 31, 2020

1 unchanged sentence

$ ( 119,539,887 )

$ 120,578,944

$ ( 119,539,887 )

Common Stock issued including equity commitment fee, net

Conversion of convertible notes and interest

Issuance of Common Stock, net of offering cost / At-the-market offering

Issuance of Common Stock and warrants for cash, net

Warrant liabilities value related to Issuance of Common Stock

( 5,771,250 )

Issuance of Series C-2 convertible preferred stock

Conversion of Series C-1 Convertible Preferred stock

Conversion of Series C-2 Convertible Preferred stock

( 1,100,000 )

( 6,216,289 )

Beneficial conversion features associated with convertible notes payable

Beneficial conversion feature of Series C-2 convertible preferred stock

Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock

Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock

( 5,020,883 )

Fractional shares adjusted for reverse split

Warrant exercise

Stock-based compensation

Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock

( 16,049,583 )

Balance December 31, 2021

1 unchanged sentence

$ ( 135,589,470 )

$ 147,682,384

$ ( 135,589,470 )

accompanying notes are an integral part of these financial statements.

7 unchanged sentences

Amortization on debt discount

Purchase of digital currencies

Realized loss on digital currencies transactions

Impairment loss on digital currencies

Interest expense

Stock-based compensation

Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock

Validator revenue

( 1,213,284 )

Change in fair value of warrant liabilities

( 3,918,750 )

Purchase of non-productive Digital Assets/currencies

( 5,761,550 )

Sale of non-productive Digital Assets/currencies

Realized gain on Digital Assets/currencies transactions

( 3,054,418 )

Impairment loss on Digital Assets/currencies

Changes in operating assets and liabilities:

3 unchanged sentences

Net cash used in operating activities

( 4,861,655 )

( 2,973,003 )

Net cash used in investing activities:

Purchase of productive Digital Assets/currencies for validating

( 9,462,279 )

Purchase of property and equipment

Net cash used in investing activities

( 9,472,770 )

Net cash provided by financing activities:

Proceeds from exercise of warrants

Proceeds from short term loan

Proceeds from exercise of warrants

Proceeds from issuance of Series C-2 convertible preferred stock

Net proceeds from issuance of convertible notes

Net proceeds from issuance of Common Stock and warrants for cash

Net proceeds from issuance of Common Stock

Net proceeds from issuance Common Stock/ At-the-market offering

Payment to convertible notes principle

( 2,000,000 )

Net cash provided by financing activities

Net increase in cash

Cash, beginning of year

Cash, end of year

Cash, beginning of period

Cash, end of period

Supplemental disclosure of non-cash financing and investing activities:

Conversion of convertible note and interest to common stock

Exchange of promissory note and accrued interest into convertible note

Fractional shares adjusted for reverse split

Deemed dividend

Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock

Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock

Conversion of Series C-1 Preferred Stock

Beneficial conversion feature of Series C-2 convertible preferred stock

Beneficial conversion features associated with convertible notes payable

Conversion of convertible note to Common Stock

accompanying notes are an integral part of these financial statements.

1 unchanged sentence

1 - Organization and Description of Business and Recent Developments

(formerly Bitcoin Shop, Inc.), a Nevada corporation (the “Company”) was incorporated in 2008.

In February 2014,

the Company entered the business of hosting an online ecommerce marketplace where consumers could purchase merchandise using Digital

Assets, including bitcoin and is currently focused on blockchain and digital currency ecosystems.

In January 2015, the Company

began a rebranding campaign using its BTCS.COM domain (shorthand for Blockchain Technology Consumer Solutions) to better reflect

its broadened strategy.

The Company released its new website which included broader information on its strategy.

we shifted our focus towards our transaction verification service business, also known as bitcoin mining, though in mid-2016 we

ceased our mining operation at our North Carolina facility due to capital constraints.

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 certain

limitations regarding Digital Securities.

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.

Company is also seeking to acquire controlling interests in businesses in the blockchain industry.

Company is also internally developing a digital asset data analytics platform to provide information to users, 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.

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.

(formerly Bitcoin Shop, Inc.), a Nevada corporation (the “Company”) was incorporated in 2008.

In February 2014, the

Company entered the business of hosting an online e-commerce marketplace where consumers could purchase merchandise using Digital

Assets, including Bitcoin.

The Company is currently focused on blockchain and digital currency ecosystems.

In late 2014 we shifted

our focus towards our transaction verification service business, also known as Bitcoin mining, though in mid-2016 we ceased our mining

operation at our North Carolina facility due to capital constraints.

In January 2015, the Company began a rebranding campaign using its

BTCS.com domain to better reflect its broadened strategy.

The Company recently released its new website which included broader information

on its strategy.

In the first quarter of 2021,

the Company resumed its blockchain infrastructure operations (previously referred to as transaction verification services) with a focus

on securing proof-of-stake blockchains and anticipates this will be a core focus going forward.

Blockchain infrastructure operations

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

The Company is developing

a proprietary Staking-as-a-Service platform that would enable users to stake and delegate supported cryptocurrencies through

a non-custodial platform to BTCS operated validator nodes.

Company is also developing a proprietary Digital Asset Platform aimed at enabling users to aggregate their portfolio holdings from multiple

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

The internally

developed platform utilizes Digital Asset exchange APIs to read user data and does not allow for the trading of assets.

The Company employs a Digital

Asset treasury strategy with a primary focus on disruptive non-security protocol layer assets such as Bitcoin and Ethereum.

receives Digital Assets from its blockchain infrastructure business and acquires Digital Assets through open market purchases.

The Company is not limiting its assets to a single type of Digital Asset and may hold a variety of Digital Assets.

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.

to Articles of Incorporation

April 5, 2019, the Company filed a Certificate of Amendment to its Articles of Incorporation (the “Amendment”) with

the Nevada Secretary of State to effect a one-for 30 reverse split of the Company’s class of common stock.

The Amendment

took effect on April 9, 2019.

No fractional shares were or will be issued or distributed as a result of the Amendment.

shares resulting from the reverse split were rounded up to the nearest whole share.

Numbers of shares of the Company’s preferred

stock were not affected by the Reverse Stock Split;

however, the conversion ratios have been adjusted to reflect the Reverse Stock

The financial statements have been retroactively restated to reflect the reverse stock split.

August 12, 2021, the Company filed a Certificate of Change with the Nevada Secretary of State to affect a 1-for-10

reverse split of the Company’s class of

Common Stock (the “Reverse Split”).

The Certificate of Change became effective on August 13, 2021.

fractional shares were issued in connection with the Reverse Split and all such fractional interests were rounded up to the nearest whole

number of shares of Common Stock.

The Company now has 97,500,000

shares of Common Stock authorized.

of shares of the Company’s preferred stock were not affected by the Reverse Split;

however, the conversion ratios have been adjusted

to reflect the Reverse Split.

The financial statements and notes to the financial statements

have been retroactively restated to reflect the Reverse

2 - Basis of Presentation

Company maintains its books of account and prepares financial statements in accordance with Generally Accepted Accounting Principles

in the United States of America (“U.S.

GAAP”).

The Company’s fiscal year ends on December 31.

3 - Liquidity, Financial Condition and Management’s Plans

Company has commenced its planned operations but has limited operating activities to date.

The Company has financed its operations

since inception using proceeds received from capital contributions made by its officers and proceeds in financing transactions.

Notwithstanding,

the Company has limited revenues, limited capital resources and is subject to all of the risks and uncertainties that are typical

of an early stage enterprise.

Significant uncertainties include, among others, whether the Company will be able to raise the capital

it needs to finance its longer-term operations and whether such operations, if launched, will enable the Company to sustain operations

as a profitable enterprise.

in the United States of America (“U.S.

The Company’s fiscal year ends on December 31.

TO FINANCIAL STATEMENTS

working capital needs are influenced by our level of operations, and generally decrease with higher levels of revenue.

used $2,973,003 of cash in its operating activities for the year ended December 31, 2020.

The Company incurred $2,556,094 net

loss for the year ended December 31, 2020.

The Company had cash of $524,135 and working capital of $1,043,057 at December

The Company expects to incur losses into the foreseeable future as it undertakes its efforts to execute its business

Company will require significant additional capital to sustain its short-term operations and make the investments it needs to

execute its longer-term business plan.

The Company’s existing liquidity is not sufficient to fund its operations and anticipated

capital expenditures for the foreseeable future.

The Company is currently seeking to obtain additional equity financing, primarily

through the Equity Line Purchase Agreement with Cavalry and seeking to obtain additional equity linked debt financing, however

there are currently no other commitments of debt or equity in place for further financing nor is there any assurance that such

financing will be available to the Company on favorable terms, if at all.

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

the Company’s ability to continue as a going concern for one year from the issuance of the financial statements.

The financial

statements have been prepared assuming the Company will continue as a going concern.

The Company has not made adjustments to the

accompanying financial statements to reflect the potential effects on the recoverability and classification of assets or liabilities

should the Company be unable to continue as a going concern.

Company continues to incur ongoing administrative and other operating expenses, including public company expenses, in excess of

While the Company continues to implement its business strategy, it intends to finance its activities by:

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

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

3 - Summary of Significant Accounting Policies

summary of the significant accounting policies applied in the preparation of the accompanying financial statements is as follows:

of presentation

accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”).

Reclassifications

prior period amounts have been reclassified in order to conform with the current period presentation.

These reclassifications have no

impact on the Company’s previously reported net income (loss).

Concentration

Company maintains cash balances at two financial institutions in checking accounts and money market accounts.

The Company considers

all highly liquid investments with original maturities of six months or less when purchased to be cash and cash equivalents.

of December 31, 2020 and 2019, the Company had approximately $524,000 and $143,000 in cash.

The Company has not experienced any

losses in such accounts and believes it is not exposed to any significant credit risk on cash.

instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits.

at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.

The Company considers all

highly liquid investments with original maturities of six months or less when purchased to be cash and cash equivalents.

As of December

31, 2020 and 2019, the Company had $274,135 and $0 in excess of the FDIC insured limit, respectively.

Assets Translations and Remeasurements

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.

31, 2021 and 2020, the Company had approximately $ 1.4 million and $ 0.5 million in cash.

The Company has not experienced any losses in

such accounts and believes it is not exposed to any significant credit risk on cash.

instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits.

Accounts at each

institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 .

As of December 31, 2021 and

2020, the Company had approximately $ 0.9 million and $ 0.2 million in excess of the FDIC insured limit, respectively.

Company recognizes revenue under Accounting Standards Codification (“ASC”) 606 , Revenue from Contracts with Customers .

The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or

services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those

goods or services.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when the Company satisfies a performance obligation

is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration

the Company expects to be entitled to in exchange for those goods or services.

The Company generates revenue through staking rewards.

Company runs its own Digital Asset validator nodes and has entered into network-based smart contracts.

Through these contracts,

the Company provides cryptocurrency to stake a node for the purpose of validating transactions and adding blocks to a respective blockchain

The term of a smart contract can vary based on the rules of the respective blockchain and typically last a few weeks to months

after it is cancelled by the operator and requires that the cryptocurrency staked remain locked up during the duration of the smart contract.

In exchange for validating transactions and staking the cryptocurrency, the Company is entitled to all of the fixed cryptocurrency award

for running the Company’s own node and successfully processing, validating and/or adding a block to the blockchain.

provision of validating blockchain transactions is an output of the Company’s ordinary activities.

Each separate block creation

or validation under a smart contract with a network represents a performance obligation.

The transaction consideration the Company receives

– the fixed cryptocurrency awards – is a non-cash consideration, which the Company measures at fair value on the date received.

The fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency on the date of

The satisfaction of the performance obligation for processing and validating blockchain transactions occurs at a point in time

when confirmation is received from the network indicating that the validation is complete, and the awards are available for transfer.

At that point, revenue is recognized.

Company’s cost of revenue consists primarily of direct production costs related to the operations of validating transactions on

the network, rent and utilities for locations housing server nodes to the extent applicable, hosting costs if cloud-based servers are

utilized and fees (including stock-based fees) paid to 3rd parties to assist in the software maintenance and operations of its nodes.

Asset Transactions, Translations and Remeasurements

Company accounts for its Digital Assets as indefinite-lived intangible assets in accordance with ASC 350, Intangibles –Goodwill

An 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.

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.

Subsequent reversal of impairment losses is not permitted.

Assets held are included in the balance sheets as

either current assets or other assets if they are staked and locked up for over one year.

The Company’s Digital Assets are

initially recorded at fair value upon receipt (or “carrying value”).

The fair value of Digital Assets is determined

using the average U.S.

dollar spot price of the related Digital Asset.

On a quarterly basis, Digital Assets are measured

at carrying value, net of any impairment losses incurred since receipt.

The Company will record impairment losses as the fair value falls

below the carrying value of the Digital Assets at any time during the period, as determined using the lowest U.S.

price of the related Digital Asset subsequent to its acquisition.

The Digital Assets can only be marked down when impaired

and not marked up when their value increases.

TO FINANCIAL STATEMENTS

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 is less than its cost basis.

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 are recorded as

a component of costs and expenses in our statements of operations.

Internally Developed Software

Internally developed

software consisting of the core technology of the Company’s digital asset data analytics platform which is being designed

to allow user to aggregate and analyze data from Digital Asset exchanges.

For internally developed software, the Company uses

both its own employees as well as the services of external vendors and independent contractors.

The Company accounts for computer

software used in the business in accordance with ASC 985-20 and ASC 350.

ASC 985-20, Software-Costs

of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires that software development costs incurred in conjunction

with product development be charged to research and development expense until technological feasibility is established.

until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized

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 $ 3.8 million and $ 0.2 million related to Digital Assets during the years ended December 31,

2021 and December 31, 2020, respectively

losses cannot be recovered for any subsequent increase in fair value until the sale or disposal of the asset.

Realized gain (loss) on

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

The Company recorded realized gains (losses)

on Digital Assets of approximately $ 3.1

million and ($ 2,000 )

during the years ended December 31, 2021 and

December 31, 2020, respectively.

presentation of purchases and sales of Digital Assets on the Statement of Cash Flows is determined by the nature of the Digital Assets,

which can be characterized as productive (i.e.

purchased for purposes of staking) or non-productive.

The purchase of non-productive Digital

Assets and currencies are included as an operating activity, whereas the purchase of productive Digital Assets and currencies are included

as investing activities in accordance with ASC 230-10-20 Investing activities.

Productive Digital Assets that are staked

with a lock-up period of less than 12 months are presented on the Balance Sheet as current assets.

Staked Digital Assets with

remaining lock-up periods of greater than 12 months are presented as long-term other assets on the Balance Sheet.

Developed Software

developed software consisting of the core technology of the Company’s Digital Asset Platform which is being designed to allow user

to aggregate and analyze data from Digital Asset exchanges.

For internally developed software, the Company uses both its own employees

as well as the services of external vendors and independent contractors.

The Company accounts for computer software used in the business

in accordance with ASC 985-20 and ASC 350.

985-20, Software-Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires that software development costs

incurred in conjunction with product development be charged to research and development expense until technological feasibility is established.

Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized

cost or net realizable value of the related product.

Some companies use a “tested working model”

approach to establishing

Some companies use a “tested working model” approach to establishing

technological feasibility (i.e., beta version).

2 unchanged sentences

and has tested the version to ensure that it works as expected.

ASC 350, Intangibles-Goodwill

and Other , requires computer software costs associated with internal use software to be charged to operations as incurred

until certain capitalization criteria are met.

350, Intangibles-Goodwill and Other , requires computer software costs associated with internal use software to be charged to operations

as incurred until certain capitalization criteria are met.

Costs incurred during the preliminary project stage and the post-implementation

stages are expensed as incurred.

Certain qualifying costs incurred during the application development stage are capitalized as

property, equipment and software.

Certain qualifying costs incurred during the application development stage are capitalized as property,

equipment and software.

These costs generally consist of internal labor during configuration, coding, and testing activities.

Capitalization begins when (i) the preliminary project stage is complete, (ii) management with the relevant authority authorizes

and commits to the funding of the software project, and (iii) it is probable both that the project will be completed and that

the software will be used to perform the function intended.

Capitalization

begins when (i) the preliminary project stage is complete, (ii) management with the relevant authority authorizes and commits to the

funding of the software project, and (iii) it is probable both that the project will be completed and that the software will be used

to perform the function intended.

and Equipment

and equipment consists of leasehold improvements, computer, equipment and office furniture and fixtures, all of which are recorded

Depreciation and amortization is recorded using the straight-line method over the respective useful lives of the assets

ranging from three to five years.

Long-lived assets are reviewed for impairment whenever events or circumstances indicate that

the carrying amount of these assets may not be recoverable.

Value of Financial Instruments

instruments, including cash and cash equivalents, accounts payable and accrued liabilities are carried at cost, which management

believes approximates fair value due to the short-term nature of these instruments.

The Company measures the fair value of financial

assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit

price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants

on the measurement date.

The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when

measuring fair value.

Company uses three levels of inputs that may be used to measure fair value:

1 - quoted prices in active markets for identical assets or liabilities

2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

and equipment consists of computer, equipment and office furniture and fixtures, all of which are recorded at cost.

Depreciation and

amortization is recorded using the straight-line method over the respective useful lives of the assets ranging from three to five years.

Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may

not be recoverable.

accompanying financial statements have been prepared in conformity with U.S.

This requires management to make estimates and assumptions that affect certain reported

amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements,

and the reported amounts of revenue and expenses during the period.

The Company’s significant estimates and assumptions

include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, and the valuation

allowance related to the Company’s deferred tax assets.

Certain of the Company’s estimates, including the carrying

amount of the indefinite life intangible assets, could be affected by external conditions, including those unique to the Company

and general economic conditions.

It is reasonably possible that these external factors could have an effect on the Company’s

estimates and could cause actual results to differ from those estimates and assumptions.

This requires management to make estimates and assumptions

that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the

financial statements, and the reported amounts of revenue and expenses during the period.

The Company’s significant estimates and

assumptions include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, and the valuation

allowance related to the Company’s deferred tax assets.

Certain of the Company’s estimates, including the carrying amount

of the indefinite life intangible assets, could be affected by external conditions, including those unique to the Company and general

economic conditions.

It is reasonably possible that these external factors could have an effect on the Company’s estimates and

could cause actual results to differ from those estimates and assumptions.

Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns.

tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing

that is reflected in measuring current or deferred income tax assets and liabilities.

Tax positions are recognized only when it

is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained

upon examination by taxing authorities.

Tax positions that meet the more likely than not threshold are measured using a probability-weighted

approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.

are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for

the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.

A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely

not be realized.

Should they occur, the Company’s policy is to classify interest and penalties related to tax positions

as income tax expense.

Since the Company’s inception, no such interest or penalties have been incurred.

A tax position

is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected

in measuring current or deferred income tax assets and liabilities.

Tax positions are recognized only when it is more likely than not

(i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities.

Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of

tax benefit that is greater than 50% likely of being realized upon settlement.

Income taxes are accounted for using an asset and liability

approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that

have been recognized in the Company’s financial statements or tax returns.

A valuation allowance is established to reduce deferred

tax assets if all, or some portion, of such assets will more than likely not be realized.

Should they occur, the Company’s policy

is to classify interest and penalties related to tax positions as income tax expense.

Since the Company’s inception, no such interest

or penalties have been incurred.

TO FINANCIAL STATEMENTS

Stock-Based Compensation

Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”).

ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase

plans and stock incentive shares.

Under ASC 718 awards result in a cost that is measured at fair value on the awards’

date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.

Company accounts for the issuance of Common Stock purchase warrants issued in connection with the equity offerings in accordance

with the provisions of ASC 815, Derivatives and Hedging (“ASC 815”).

The Company classifies as equity any contracts that

(i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its

own shares (physical settlement or net-share settlement).

The Company classifies as assets or liabilities any contracts that (i) require

net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control

of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share

In addition, Under ASC 815, registered Common Stock warrants that require the issuance of registered shares upon

exercise and do not expressly preclude an implied right to cash settlement are accounted for as derivative liabilities.

The Company classifies

these derivative warrant liabilities on the balance sheet as a current liability.

Company assessed the classification of Common Stock purchase warrants as of the date of each offering and determined that such

instruments originally met the criteria for equity classification;

however, as a result of the Company no longer being in control of

whether the warrants may be cash settled, the instruments no longer qualify for equity classification.

Accordingly, the Company classified

the warrants as a liability at their fair value and adjusts the instruments to fair value at each reporting period.

This liability is

subject to re-measurement at each balance sheet date until the warrants are exercised or expired, and any change in fair value is recognized

as “change in the fair value of warrant liabilities” in the statements of operations.

The fair value of the warrants has

been estimated using a Black-Scholes valuation model (see Note 4).

Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”).

718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans

and stock incentive shares.

Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based

on the estimated number of awards that are expected to vest and will result in a charge to operations.

payment awards exchanged for services are accounted for at the fair value of the award on the estimated grant date.

Stock options issued

under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the

Company’s stock at the date of grant and expire up to ten years from the date of grant.

These options often vest over a one-year

Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating

the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application

of management’s judgment.

Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding

based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Volatility - The Company computes stock price volatility over expected terms based on its historical Common Stock trading

Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U.

Treasury zero-coupon issues

with an equivalent remaining term.

Dividend - The Company has not historically declared or paid any cash dividends on its common shares and does not plan to pay any

recurring cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

January 1, 2017, the Company elected to account for forfeited awards as they occur, as permitted by ASU 2016-09.

Ultimately, the actual

expenses recognized over the vesting period will be for those shares that vested.

Prior to making this election, the Company estimated

a forfeiture rate for awards at 0 %, as the Company did not have a significant history of forfeitures.

costs are expensed as incurred and included in marketing expenses.

Advertising expenses amounted to approximately $6,000 and $10,000

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

Advertising and marketing expenses amounted to approximately $ 0.2

million and $ 6,000 for the years ended December 31, 2021 and 2020, respectively.

Loss per Share

loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common

shares outstanding during the period.

Diluted earnings per share is computed using the weighted average number of common shares

and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the Company’s

convertible preferred stock, convertible notes and warrants.

loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares

outstanding during the period.

Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive,

potential common shares outstanding during the period.

Potential common shares consist of the Company’s convertible preferred stock,

convertible notes, restricted stock units, options and warrants.

Diluted loss per share excludes the shares issuable upon the conversion

2 unchanged sentences

their effect was anti-dilutive:

As of As of December 31,

Schedule of Earnings Per Share Anti-diluted

As of December 31,

Warrants to purchase Common Stock

1 unchanged sentence

Convertible notes

Company applies the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity”

when determining the classification

and measurement of preferred stock.

Preferred shares subject to mandatory redemption (if any) are classified as liability instruments

and are measured at fair value.

The Company classifies conditionally redeemable preferred shares (if any), which includes preferred

shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence

of uncertain events not solely within the Company’s control, as temporary equity.

At all other times, the Company classifies

its preferred shares in stockholders’

The Company’s preferred shares do not feature any redemption rights

within the holders’

control or conditional redemption features not within the Company’s control as of December 31,

2020 and 2019.

Accordingly, all issuances of preferred stock are presented as a component of stockholders’

Company has evaluated the Series C-1 Convertible Preferred Stock (“Preferred Stock”) component of the Private

Placement and determined it should be considered an “equity host”

and not a “debt host”

as defined by

ASC 815, Derivatives and Hedging.

This evaluation is necessary in order to determine if any embedded features require bifurcation

and, therefore, separate accounting as a derivative liability.

The Company’s analysis followed the “whole instrument

approach,”

which compares an individual feature against the entire preferred stock instrument which includes that feature.

The Company’s analysis was based on a consideration of the Preferred Stock’s economic characteristics and risks and

more specifically evaluated all the stated and implied substantive terms and features including (i) whether the Preferred Stock

included redemption features, (ii) whether the preferred stockholders were entitled to dividends, (iii) the voting rights of the

Preferred Stock and (iv) the existence and nature of any conversion rights.

As a result of the Company’s determination that

the Preferred Stock is an “equity host,”

the embedded conversion feature is not considered a derivative liability.

Non-vested restricted stock awards units

Preferred Stock

Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement

of its preferred stock.

Preferred stock subject to mandatory redemption are classified as liability instruments and are measured at fair

Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the

control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)

are classified as temporary equity.

At all other times, preferred shares are classified as stockholders’ equity.

The Company evaluated

the classification of its convertible preferred stock and determined that such instruments meet the criteria for equity classification.

Company has also evaluated its convertible preferred stock in accordance with the provisions of ASC 815, Derivatives and Hedging ,

including consideration of embedded derivatives requiring bifurcation.

The issuance of the convertible preferred stock could generate

a beneficial conversion feature, which arises when a debt or equity security is issued with an embedded conversion option that is beneficial

to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market

price of the underlying stock at the commitment date.

TO FINANCIAL STATEMENTS

Conversion Feature of Convertible Notes Payable

Company accounts for convertible notes payable in accordance with the guidelines established by the FASB Accounting Standards

Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options.

The beneficial conversion feature of a

convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate

of conversion that is below market value or in-the-money when issued.

The Company records a beneficial conversion feature related

to the issuance of a convertible note when issued.

Company accounts for convertible notes payable in accordance with the guidelines established by the FASB Accounting Standards Codification

(“ASC”) Topic 470-20, Debt with Conversion and Other Options.

The beneficial conversion feature of a convertible note is

normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below

market value or in-the-money when issued.

The Company records a beneficial conversion feature related to the issuance of a convertible

note when issued.

discounted face value is then used to measure the effective conversion price of the note.

The effective conversion price and the

market price of the Company’s common stock are used to calculate the intrinsic value of the conversion feature.

The intrinsic

value is recorded in the financial statements as a debt discount from the face amount of the note and such discount is amortized

over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

The effective conversion price and the market

price of the Company’s Common Stock are used to calculate the intrinsic value of the conversion feature.

The intrinsic value

is recorded in the financial statements as a debt discount from the face amount of the note and such discount is amortized over the expected

term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

Accounting Pronouncements

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU

2019-12”), which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain

exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020,

with early adoption permitted.

The Company is currently evaluating the impact of this standard on its financial statements and

related disclosures.

In August 2020,

the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and

Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts

in an Entity’s Own Equity , which simplifies accounting for convertible instruments by removing major separation

models required under current U.S.

The ASU removes certain settlement conditions that are required for equity contracts

to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December

15, 2021, with early adoption permitted.

The Company is currently evaluating the impact of this standard on its financial

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU

2019-12”), which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions

to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance

is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption

The Company adopted ASU No.

2019-12 effective January 1, 2021, and the adoption did not have a material impact on its financial

statements and related disclosures.

August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity , which simplifies accounting for convertible instruments by removing major separation models required under

The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative

scope exception and it also simplifies the diluted earnings per share calculation in certain areas.

This guidance is effective for fiscal

years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted.

The Company adopted

2020-06 effective January 1, 2022, and the adoption did not have a material impact on its financial statements and related disclosures.

recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public

Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s

present or future financial statements.

4 - Fair Value of Financial Assets and Liabilities

instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried

at cost, which management believes approximates fair value due to the short-term nature of these instruments.

The Company measures the

fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a

liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market

participants on the measurement date.

The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs

when measuring fair value.

Company uses three levels of inputs that may be used to measure fair value:

1 - quoted prices in active markets for identical assets or liabilities

2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

NOTES TO FINANCIAL STATEMENTS

following table presents the Company’s assets and liabilities that are measured at fair value at December 31, 2021 and 2020:

Schedule of Fair Value of Assets and Liabilities Valued on Recurring Basis

Fair value measured at December 31, 2021

Total at December 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Warrant Liabilities

Fair value measured at December 31, 2020

Total at December 31,

Quoted prices in active markets

Significant unobservable inputs

Warrant Liabilities

3 Valuation Techniques

3 financial liabilities consist of the warrant liabilities for which there is no current market for these securities such that the determination

of fair value requires significant judgment or estimation.

Changes in fair value measurements categorized within Level 3 of the fair

value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a

significantly lower fair value measurement.

Changes in the values of the warrant liabilities are recorded in “change in fair value

of warrant liabilities” in the Company’s statements of operations.

March 2, 2021, the Company entered into a securities purchase agreement (the “Offering”) with certain purchasers pursuant

to which the Company agreed to sell an aggregate of (i) 950,000

shares of Common Stock, and (ii) Common

Stock warrants (the “Warrants”) to purchase up to 712,500

shares of Common Stock for gross proceeds

million in a private placement.

The closing of

the Offering occurred on March 4, 2021.

Warrants require, at the option of the holder, a net-cash settlement following certain fundamental transactions (as defined in the Warrants)

at the Company.

At the time of issuance, the Company maintained control of certain fundamental transactions and as such the Warrants

were initially classified in equity.

As of December 31, 2021, the Company no longer maintained control of certain fundamental transactions

as they did not control a majority of shareholder votes.

As such, the Company may be required to cash settle the Warrants if a fundamental

transaction occurs which is outside the Company’s control.

Accordingly, the Warrants are classified as liabilities.

have been recorded at their fair value using the Black-Scholes valuation model, and will be recorded at their respective fair value at

each subsequent balance sheet date.

This model incorporates transaction details such as the Company’s stock price, contractual

terms, maturity, risk free rates, as well as volatility.

Warrants require the issuance of registered shares upon exercise, do not expressly preclude an implied right to cash settlement and are

therefore accounted for as derivative liabilities.

The Company classifies these derivative warrant liabilities on the balance sheet as

a current liability.

summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company’s

warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of December 31, 2021,

is as follows:

NOTES TO FINANCIAL STATEMENTS

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

September 14, 2021

December 31, 2021

Risk-free rate of interest

Expected volatility

Expected life (in years)

Expected dividend yield

risk-free interest rate was based on rates established by the Federal Reserve Bank.

For the Warrants, the Company estimates expected

volatility giving primary consideration to the historical volatility of its Common Stock.

The general expected volatility is based

on the standard deviation of the Company’s underlying stock price’s daily logarithmic returns.

The expected life of the warrants

was determined by the expiration date of the warrants.

The expected dividend yield was based on the fact that the Company has not historically

paid dividends on its Common Stock and does not expect to pay recurring dividends on its Common Stock in the future.

following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities for the years

ended December 31, 2021 and 2020, that are measured at fair value on a recurring basis:

Schedule of Changes in Fair Value and Other Adjustments of Warrants

Fair Value of Level 3 financial liabilities

Beginning balance

Warrant liabilities classification

Fair value adjustment of warrant liabilities

( 3,918,750 )

Ending balance

5 - Note Payable

Promissory Note

November 7, 2019, the Company issued Cavalry Fund I LP (“Cavalry”) a $200,000 promissory note (the “2019 Promissory

Note”).

The 2019 Promissory Note is due on August 7, 2020 and is:

(i) convertible at a 20% discount to the closing price

of the Company’s common stock on the date before exercise with a floor price of $0.02 per share, (ii) shall bear interest

at 12% per annum (payable at maturity) and in the event of default bears interest at a rate of 20%, (iii) convertible at the Company’s

option subject to certain limitations as set forth in the 2019 Promissory Note, and (iv) may be prepaid by the Company.

the Convertible Note does not contain any embedded features that require bifurcation pursuant to ASC 815-15.

At the issuance date,

the Convertible Note was convertible into 2,173,913 shares of common stock at $0.09 per share, but the Company’s fair value

of underlying common stock was $0.12 per share.

As such, the Company recognized a beneficial conversion feature, resulting in

a discount to the Notes of approximately $50,000 with a corresponding credit to additional paid-in capital.

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

Promissory Note (Retired)

November 7, 2019, the Company issued Cavalry Fund I LP (“Cavalry”) a $ 200,000

promissory note (the “2019 Promissory Note”).

The 2019 Promissory Note is due on August

7, 2020 and is:

(i) convertible at a 20 %

discount to the closing price of the Company’s Common Stock on the date before exercise with a floor price of $ 0.20

per share, (ii) shall bear interest at 12 %

per annum (payable at maturity) and in the event of default bears interest at a rate of 20 %,

(iii) convertible at the Company’s option subject to certain limitations as set forth in the 2019 Promissory Note, and (iv) may

be prepaid by the Company.

In addition, the Convertible Note does not contain any embedded features that require bifurcation pursuant

to ASC 815-15.

At the issuance date, the Convertible Note was convertible into 217,392

shares of Common Stock at $ 0.90

per share, but the Company’s fair value

of underlying Common Stock was $ 1.20

As such, the Company recognized

a beneficial conversion feature, resulting in a discount to the Notes of approximately $ 50,000

with a corresponding credit to additional paid-in

April 6, 2020, the Company issued a total of 73,530

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.

the year ended December 31, 2020, the Company recorded approximately $40,000 in interest expense related to amortization on debt

discount related to the 2019 Promissory Note.

May 7, 2020, the Company issued a total of 63,274

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 3,583

shares of the Company’s Common Stock

for the conversion of the remaining accrued interest of $ 9,458

on the 2019 Promissory Note.

the year ended December 31, 2020, the Company recorded approximately $ 40,000 in interest expense related to amortization on debt discount

related to the 2019 Promissory Note.

the year ended December 31, 2020, the Company recorded interest expense of approximately $ 8,000 .

As of December 31, 2020, the

principal balance of the 2019 Promissory Note was $0.

As of December 31, 2020, the principal

balance of the 2019 Promissory Note was $ 0 .

TO FINANCIAL STATEMENTS

April Promissory Note

April 17, 2020, the Company issued Cavalry a $500,000 promissory note (the “2020 April Promissory Note”) in consideration

for $500,000.

The 2020 April Promissory Note is (i) due on February 17, 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 $0.01 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 2020

April Promissory Note.

April Promissory Note (Retired)

April 17, 2020, the Company issued Cavalry a $ 500,000

promissory note (the “2020 April Promissory

Note”) in consideration for $ 500,000 .

The 2020 April Promissory Note is (i) due on February

17, 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 $ 0.20

per share and (iii) shall bear interest at

per annum (payable at maturity).

Subject to certain limitations, the Company may force conversion of the 2020 April Promissory Note.

In addition, this note does not contain any embedded features that require bifurcation pursuant to ASC 815-15.

At the issuance date, the Convertible Note was convertible into 7,770,008 shares of common stock at $0.064 per share,

but the Company’s fair value of underlying common stock was $0.099 per share.

As such, the Company recognized a beneficial

conversion feature, resulting in a discount to this note of approximately $269,000 with a corresponding credit to additional paid-in

November 2 to December 3, 2020, the Company issued a total of 5,200,906 shares of the Company’s common stock for the conversion

of the $500,000 of principal of 2020 April Promissory Note.

December 16, 2020, the Company issued a total of 343,703 shares of the Company’s common stock for the conversion of accrued

interest of $35,298 on the 2020 April Promissory Note.

the year ended December 31, 2020, the Company recorded approximately $269,000 in interest expense related to amortization on debt

discount related to the 2020 April Promissory Note.

the year ended December 31, 2020, the Company recorded interest expense of approximately $35,000.

As of December 31, 2020, the

principal balance of the 2020 Promissory Note was $0.

December Promissory Note

December 16, 2020, the Company issued Cavalry a $1,000,000 promissory note (the “2020 December Promissory Note”) and

a Series C warrant to purchase 2,000,0000 shares of the Company’s Common Stock (the “Warrant”) in consideration

for $1,000,000.

The 2020 December Promissory Note is (i) due on October 16, 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 $0.04 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 2020

December Promissory Note.

2,000,000 Warrants are exercisable for cash only at $0.20 per share, over a two-year period, and does not contain anti-dilution

or price protection.

the year ended December 31, 2020, the Company recorded approximately $45,000 in interest expense related to amortization on debt

discount related to the 2020 December Promissory Note.

As of December 31, 2020, the remaining unamortized debt discount related

to the 2020 December Promissory Note was approximately $868,000.

At the issuance date,

the Convertible Note was convertible into 777,001

shares of Common Stock at $ 0.64

per share, but the Company’s fair value

of underlying Common Stock was $ 0.99

As such, the Company recognized a

beneficial conversion feature, resulting in a discount to this note of approximately $ 269,000

with a corresponding credit to additional paid-in

November 2 to December 3, 2020, the Company issued a total of 520,091

shares of the Company’s Common Stock

for the conversion of the $ 500,000

of principal of 2020 April Promissory Note.

December 16, 2020, the Company issued a total of 34,371

shares of the Company’s Common Stock

for the conversion of accrued interest of $ 35,298

on the 2020 April Promissory Note.

the year ended December 31, 2020, the Company recorded approximately $ 269,000 in interest expense related to amortization on debt discount

related to the 2020 April Promissory Note.

the year ended December 31, 2020, the Company recorded interest expense of approximately $ 35,000 .

As of December 31, 2020, the

principal balance of the 2020 December Promissory Note was $1,000,000.

the year ended December 31, 2020, the Company recorded compensation payable, to Charles Allen, its CEO, and Michal Handerhan,

its COO, of approximately $349,000 this relates to the achievement of performance milestones set forth in the 2019

Contingent Bonuses.

6 - Stockholders’

Equity (Deficit)

to Articles of Incorporation

April 5, 2019, the Company filed a Certificate of Amendment to its Articles of Incorporation (the “Amendment”) with

the Nevada Secretary of State to effect a one-for 30 reverse split of the Company’s class of common stock.

The Amendment

took effect on April 9, 2019.

No fractional shares were or will be issued or distributed as a result of the Amendment.

shares resulting from the reverse split were rounded up to the nearest whole share.

Numbers of shares of the Company’s preferred

stock were not affected by the Reverse Stock Split;

however, the conversion ratios have been adjusted to reflect the Reverse Stock

The financial statements have been retroactively restated to reflect the reverse stock split.

are authorized to issue 20,000,000 shares of $0.001 par value preferred stock in one or more series with such designations, voting

powers, if any, preferences and relative, participating, optional or other special rights, and such qualifications, limitations

and restrictions, as are determined by resolution of our board of directors.

The issuance of preferred stock may have the effect

of delaying, deferring or preventing a change in control of our company without further action by shareholders and could adversely

affect the rights and powers, including voting rights, of the holders of common stock.

In certain circumstances, the issuance

of preferred stock could depress the market price of the common stock.

As of December 31, 2020, the principal

balance of the 2020 Promissory Note was $ 0 .

December Promissory Note (Retired)

December 16, 2020, the Company issued Cavalry a $ 1,000,000

promissory note (the “2020 December Promissory

Note”) in consideration for $ 1,000,000 .

The 2020 December Promissory Note is (i) due on October 16, 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 $ 0.40

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 2020 December Promissory Note.

In connection with issuance of the 2020 December Promissory Note, the Company issued a Series C warrant to purchase 200,000

shares of the Company’s Common Stock

at an exercise price of $ 2.00 ,

the Series C warrants were exercised for cash on January 15, 2021, resulting in proceeds of $ 400,000

to the Company.

the year ended December 31, 2021, the Company recorded approximately $ 868,000 amortization of debt discount related to the 2020 December

Promissory Note.

the year ended December 31, 2021, the Company recorded interest expense of approximately $ 88,000 for the 2020 December Promissory Note.

September 24, 2021, the Company paid off in full the 2020 December Promissory Note.

Repayment to Cavalry consisted of $ 1,000,000 in principal

and $ 92,712 in accrued interest, for a total of $ 1,092,712 .

Cavalry confirmed the 2020 December Promissory Note had been fully paid and

the Company has no further obligations with respect to the note.

NOTES TO FINANCIAL STATEMENTS

January Promissory Note (Retired)

January 15, 2021, the Company issued Calvary a $ 1,000,000

promissory note (the “2021 Promissory Note”)

in consideration for $ 1,000,000 .

The 2021 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 $ 7.50

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.

connection with issuance of the 2021 Promissory Note, the Company issued a Series D warrant to purchase 200,000

shares of the Company’s Common Stock

at an exercise price of $ 21.60

per share (the “Series D Warrant”).

Detachable warrants issued in a bundled transaction with debt and equity offerings are accounted for on a separate basis.

The allocation

of the issuance proceeds to the base instrument and to the warrants depends on the accounting classification of the separate warrant

as equity or liability.

If the warrants are classified as equity, then the allocation is made based upon the relative fair values of

the base instrument and the warrants following the guidance in ASC 470-20-25-2.

In this case, the Series D Warrant is equity-classified,

with the fair value at issuance was approximately $ 3,580,000 .

As such, the Company recognized a beneficial conversion feature, resulting in a discount to the 2021 Promissory Note of approximately

with a corresponding credit to additional paid-in

addition, the 2021 Promissory Note does not contain any embedded features that require bifurcation pursuant to ASC 815-15.

At the issuance

date, the 2021 Promissory Note was convertible into 70,572

shares of Common Stock at $ 14.10

per share, but the Company’s fair value

of underlying Common Stock was $ 21.8

As such, the Company recognized a

beneficial conversion feature, resulting in an additional discount to the 2021 Promissory Note of approximately $ 218,000

with a corresponding credit to additional paid-in

the year ended December 31, 2021, the Company recorded approximately $ 1,000,000 amortization of debt discount related to the 2021 December

Promissory Note.

the year ended December 31, 2021, the Company recorded interest expense of approximately $ 99,000 for the 2021 December Promissory Note.

November 12, 2021, the Company paid off in full the 2021 December Promissory Note.

Repayment to Cavalry consisted of $ 1,000,000 in principal

and $ 98,958 in accrued interest, for a total of $ 1,098,958 .

Cavalry confirmed the 2021 December Promissory Note had been fully paid and

the Company has no further obligations with respect to the note.

6 - Stockholders’ Equity (Deficit)

C-2 Preferred Stock

have 29,414 shares of outstanding Series C-1 Convertible Preferred Stock (the “Series C-1”) which converts into 196,093

company is authorized to issue 20,000,000

shares of $ 0.001

par value preferred stock.

This preferred stock

may be issued in one or more series, and shall have such designations, preferences and relative, participating, optional or other special

rights and qualifications, limitations or restrictions thereof as shall be determined at the time of issuance by the Company’s

board of directors without further action by the Company’s shareholders.

The issuance of preferred stock may have the effect of

delaying, deferring or preventing a change in control of our company without further action by shareholders and could adversely affect

the rights and powers, including voting rights, of the holders of Common Stock.

In certain circumstances, the issuance of preferred

stock could depress the market price of the Common Stock.

January 1, 2021, members of the Company’s management subscribed for 110,000 shares of the Company’s Series C-2 Convertible

Preferred Stock (the “Series C-2”), for a total of $ 1,100,000 at $ 10.00 per Share of Series C-2.

The Company obtained an

independent valuation of the Series C-2 and $ 179,277 of compensation expense was recognized, representing the difference between the

fair value and the proceeds received.

NOTES TO FINANCIAL STATEMENTS

Series C-2 is not mandatorily redeemable and is not unconditionally redeemable.

The Series C-2 is callable by the Company.

The Certificate

of Designation required that the Company, within 180 days of the Initial Issuance Date, call a special meeting of stockholders seeking

shareholder ratification of the issuance of the Series C-2.

If the ratification of the issuance was not approved prior to the twelve-month

anniversary of the Initial Issuance Date (the “Vote Deadline”), the Series C-2 would be redeemed at a price equal to 107 %

of (i) the Stated Value per share plus (ii) all unpaid dividends thereon.

further, if the Company had filed a proxy with the

SEC prior to the Vote Deadline but was unable to conduct a vote prior to the Vote Deadline then the Vote Deadline would have been extended

until such time as the vote was conducted.

The Series C-2 holders were not entitled to vote on the ratification.

The call provision would

have been automatically triggered if the ratification of the issuance was not approved in a special meeting of stockholders prior to

the twelve-month anniversary of the Initial Issuance Date.

The Company held the meeting within the required period and the Series C-2

is no longer redeemable.

on the guidance in ASC 480-10-S99 (“ASR 268”), a redeemable equity instrument is not to be included in permanent equity.

Rather, it should be reported between long-term debt and stockholders’ equity, without a subtotal that might imply it is a part

of stockholders’ equity (i.e., “temporary equity” or “mezzanine capital”).

ASR 268 specifies that redeemable

stock is any type of equity security, including common or preferred stock, when it has any condition for redemption which is not solely

within the control of the issuer without regard to probability.

Series C-2 Certificate of Designation required the Company to redeem the Series C-2 if stockholder approval was not received by the Vote

Stockholder approval was not considered to be “solely within the Company’s control.” Stockholder approval

occurred on March 31, 2021, at which time the Series C-2 was no longer callable by the Company.

As such, the Series C-2 was initially

classified in temporary equity under ASR 268 and was reclassified to permanent equity upon stockholder approval on March 31, 2021.

holders of Series C-2 shall be entitled to receive dividends or distributions on each share of Series C-2 on an “as-converted basis”

into Common Stock when and if dividends are declared on the Common Stock by the Board of Directors.

Dividends shall be

paid in cash or property, as determined by the Board of Directors.

any time or times on or after the two-year anniversary of the Initial Issuance Date, each Holder shall be entitled to convert any portion

of the outstanding Series C-2 held by such Holder into validly issued, fully-paid and non-assessable shares of Common at the Conversion

The Conversion Amount is subject to adjustment for certain capitalization and Anti-Dilution Events.

The Series C-2 will automatically

be converted at the earlier of:

(i) the four-year anniversary of the Initial Issuance Date, and (ii) simultaneously with the Company’s

Common Stock being listed on a national securities exchange.

The Conversion Rate is based upon the Conversion Price of $ 1.70

which resulted in a beneficial conversion feature

at the time of issuance.

As such, the Company recognized a beneficial conversion amount of $ 129,412

as a reduction to the carrying amount of the

convertible instrument.

This discount will be amortized as a dividend over two years, the earliest conversion date.

Upon the conversion

of Series C-2 into Common Stock on September 14, 2021, the total amortization of the beneficial conversion feature is $ 45,541

and the remaining discount is netted against

additional paid in capital.

Conversion Amount may be adjusted due to certain Anti-Dilution Events.

at any time after the Initial Issuance Date, the Company raises capital equal to or in excess of $5 million by issuing Common Stock

or Common Stock Equivalents then the Anti-Dilution Amount per share of Series C-2 shall be the product of:

(i) 0.0000004, and (ii)

the aggregate amount of all capital raised by the Company after the Initial Issuance Date (the “Capital Raised”).

further, for the determination of the Anti-Dilution Amount, the amount of Capital Raised shall be limited to $13 million, regardless

of how much capital the Company raises.

In the event capital is raised simultaneous with a listing on a national securities exchange

and the automatic conversion of the Series C-2 then such funds shall be included in the Capital Raised for the purpose of determining

the Anti-Dilution Amount.

As of September 30, 2021, over $13 million of capital was raised and the adjustment to the Conversion Amount

was fully triggered.

The Company recognized the effect of the down-round protection when capital raises occur as the difference between:

(1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price, and (2) the financial

instrument’s fair value (without the down round feature) using the reduced exercise price.

The value of the effect of the down

round feature of $5,020,883 was treated as a dividend and a reduction to income available to common shareholders in the basic EPS calculation.

On September 14, 2021, the Series C-2 was converted

into 4,011,766

shares of Common Stock.

Each share of Series C-1 converts into approximately 6.667 shares of common stock.

The Certificate of

Designation contains what is commonly referred to as a blocker which limits the number of shares of common stock which the holder

may “beneficially own”

to 4.99% of the common stock issued and outstanding.

Under Rule 13d-3 of the Exchange Act,

in determining beneficial ownership the holder must consider shares of common stock that may be issued upon conversion or exercise

of other securities within 60-days of the date of calculation and which are not subject to any limitation on conversion or exercise.

The Series C-1 also contains a provision requiring the Company to treat all holders equally.

TO FINANCIAL STATEMENTS

April 18, 2019, the Company issued 16,860 shares of Common Stock in connection with the one-for 30 reverse split resulting from

the rounding up of fractional shares of Common Stock to the whole shares of Common Stock.

2019, the Company issued 4,642,108 shares of Common Stock (including 333,334 commitment shares and 68,532 pro-rata

commitment shares) under the Purchase Agreement with Cavalry resulting in aggregate proceeds of approximately $1.16 million.

2019, the Company issued 725,564 shares of Common Stock for the cash exercise of Series A Warrants, Additional Warrants, and Bonus

Warrants resulting in aggregate proceeds of $228,000 to the Company.

2019, the Company issued a total of 1,931,788 shares of the Company’s Common Stock for the conversion of approximately $200,000

of principal and $18,000 of interest on the Convertible Note.

Line Purchase Agreement

May 13, 2019, the Company entered into an equity line purchase agreement with Cavalry (the “Purchase Agreement”) pursuant

to which Cavalry agreed to purchase from the Company, at Company’s sole discretion, up to $10,000,000 of common stock (subject

to certain limitations) from time to time over a 36-month period.

In consideration for entering into the $10 million Purchase

Agreement, the Company issued to Cavalry 333,334 shares of common stock as a commitment fee and will issue up to 583,334 shares

of common stock pro rata as Cavalry purchases additional shares.

with the execution of the Purchase Agreement on May 13, 2019, the Company and Cavalry also entered into a registration rights

agreement (the “Registration Rights Agreement”), pursuant to which the Company agreed, among other things, to file

a registration statement (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”),

no later than May 23, 2019 to register for resale by Cavalry under the Securities Act of 1933 (the “Act”), the shares

of common stock that the Company may elect to issue and sell to Cavalry from time to time under the Purchase Agreement.

The Registration

Rights Agreement provides that in the event the Company is unable to register sufficient shares under the Registration Statement,

the Company will be required to file additional registration statements such that sufficient registered shares are available for

issuance and sale to Cavalry under the Purchase Agreement.

Company filed a Registration Statement on Form S-1 seeking to register 4,374,741 shares.

The Registration Statement was declared

effective by the SEC on May 28, 2019.

Provided the Registration Statement remains current and effective and the conditions set

forth in the Purchase Agreement are satisfied, the Company may, from time to time and at its sole discretion, direct Cavalry to

purchase shares of the Company’s common stock during trading hours (“Intraday Puts”) and after trading hours

New York time (“Aftermarket Puts”) (either an Intraday Put or an Aftermarket Put may be referred to as

a “Put”).

The Company may make multiple Puts each day subject to delivery of the shares associated with prior Puts.

number of shares that may be sold under an Intraday Put shall be equal to the total daily trading dollar volume (“Daily

Trading Dollar Volume”) for the trading day prior to the applicable Put date, divided by the Intraday Purchase Price (such

shares being the “Intraday Put Share Limit”).

The “Intraday Purchase Price”

means the lower of:

of the lowest sale price on the trading day prior to the applicable Put date, and (ii) 94% of the arithmetic average of the three

lowest closing prices for the Company’s common stock during the 12 consecutive trading days ending on the Trading Day immediately

preceding such Put date.

number of shares that may be sold under an Aftermarket Put shall be equal to the Daily Trading Dollar Volume, divided by the Aftermarket

Put Price (such shares being the “Aftermarket Put Share Limit”).

The “Aftermarket Put Price”

(i) the lowest Sale Price on the applicable Put date, and (ii) the arithmetic average of the three lowest closing prices

for the Company’s common stock during the 12 consecutive trading days ending on the trading day immediately preceding such

TO FINANCIAL STATEMENTS

mutual agreement of Cavalry and the Company and subject to written confirmation by Cavalry that such agreement will not result

in violation of the 4.99% beneficial ownership limitation, the Company may increase the Intraday Put Share Limit or the Aftermarket

Put Share Limit, as applicable, for any Put to include an amount equal to $2,000,000 in Put shares at the applicable Purchase

Price, in each case in addition to the applicable Intraday Put Share Limit or Aftermarket Put Share Limit.

In all instances, the

Company may not sell shares of its common stock to Cavalry under the Purchase Agreement if it would result in Cavalry beneficially

owning more than 4.99% of the Company’s common stock or if the closing price the trading day immediately preceding the Put

date is below $0.005.

of December 31, 2019, the Company sold all 4,374,741 shares available for sale under the Registration Statement for total proceeds

of $1,146,014, net of cost of $12,625.

The Company also issued 333,334 commitment shares and 68,532 pro-rata commitment

shares which were registered under the Registration Statement.

September 5, 2019, the Company filed a second Registration Statement on Form S-1 seeking to register 6,454,000 shares.

Registration Statement was declared effective by the SEC on December 20, 2019.

As of December 31, 2019, the Company sold 267,367

shares available for sale under the second Registration Statement for total proceeds of $15,986.

the year ended December 31, 2020, the Company issued 6,186,633 shares of common stock (including 24,219 pro-rata commitment shares)

under the second Registration Statement pursuant to the Purchase Agreement with Cavalry resulting in aggregate proceeds of approximately

June 22, 2020, the Company filed a third Registration Statement on Form S-1 seeking to register 9,045,000 shares.

The third Registration

Statement was declared effective by the SEC on June 26, 2020.

the year ended December 31, 2020, Company issued 9,045,000 shares of common stock (including 84,303 pro-rata commitment shares)

under the third Registration Statement pursuant to the Purchase Agreement with Cavalry resulting in aggregate proceeds of approximately

$1,445,000 million.

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

NOTES TO FINANCIAL STATEMENTS

August 25, 2021, the Company issued approximately 14,500

shares of Common Stock in connection with

the 1-for-10 Reverse Split

resulting from the rounding up of fractional shares of Common

Stock to the whole shares of Common Stock.

The financial statements have been retroactively restated to reflect the reverse

of Shares Pursuant to Equity Line of Credit Purchase Agreement

the year ended December 31, 2020, the Company issued 618,658

shares of Common Stock (including 2,421

pro-rata commitment shares) under the second

Registration Statement pursuant to the Purchase Agreement with Cavalry resulting in aggregate proceeds of approximately $ 415,000 .

June 22, 2020, the Company filed a third Registration Statement on Form S-1 seeking to register 904,500

The third Registration Statement

was declared effective by the SEC on June 26, 2020.

the year ended December 31, 2020, Company issued 904,500

shares of Common Stock (including

pro-rata commitment shares) under the third Registration

Statement pursuant to the Purchase Agreement with Cavalry resulting in aggregate proceeds of approximately $ 1,445,000

January 28, 2021, the Company filed a fourth Registration Statement on Form S-1 seeking to register 400,000 shares.

The fourth Registration

Statement was declared effective by the SEC on February 1, 2021.

the year ended December 31, 2021, the Company sold 321,738 shares (inclusive of approximately 17,590 pro-rata commitment shares) available

for sale under the fourth Registration Statement for total proceeds of approximately $ 3,015,000 .

of Shares Pursuant to Registered Direct Offering

March 4, 2021, the Company entered into a securities purchase agreement (the “RD Purchase Agreement”) with institutional

investors, pursuant to which the Company sold and issued, in a registered direct offering, 950,000

shares of the Company’s Common Stock,

at a purchase price per share of $ 10.00

and immediately exercisable five-year warrants

to purchase 712,500

shares of Common Stock at an exercise

price of $ 11.50

Gross proceeds from the Offering were

Net proceeds were $ 8.9

million after deducting placement agent fees

and other offering expenses paid for by the Company.

RD Purchase Agreement contains representations, warranties, indemnifications and other provisions customary for transactions of this

Pursuant to the RD Purchase Agreement, subject to limited exceptions, each of the Company and its officers and directors agreed

not to, and not to publicly disclose the intention to, sell or otherwise dispose of, any shares of Common Stock or any securities

convertible into, or exchangeable or exercisable for, Common Stock, for a period ending 60 days after the date of the prospectus

supplement for this offering.

Company also entered into a placement agent agreement with A.G.P./Alliance Global Partners (“AGP”), pursuant to which AGP

agreed to serve as the exclusive placement agent for the Company in connection with that offering.

The Company paid AGP a cash placement

fee equal to 7.0 % of the aggregate gross proceeds raised in the offering (reduced to 3.5 % for certain investors) and reimbursed the placement

agent for its legal fees and other accountable expenses in the amount of $ 40,000 .

The Market Offering Agreement

September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C.

& Co., LLC, as agent (“H.C.

Wainwright”), pursuant to which the Company may offer and sell, from time-to-time through

Wainwright, shares of the Company’s Common Stock having an aggregate offering price of up to $ 98,767,500

million (the “Shares”).

will pay H.C.

Wainwright a commission rate equal to 3.0 %

of the aggregate gross proceeds from each sale of Shares.

NOTES TO FINANCIAL STATEMENTS

the year ended December 31, 2021, the Company sold a total of 466,791

shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $ 2,979,000

at an average selling price of $ 6.38

per share, resulting in net proceeds of approximately

after deducting commissions and other transaction

of Shares Pursuant to Cash Exercise of Series C Warrants

January 15, 2021, the Company issued 200,000

shares of the Company’s Common Stock

to Cavalry upon the exercise of all their Series C warrants and payment of the exercise amount of $ 400,000 .

Cavalry and the Company entered into an agreement whereby Cavalry would exercise early for cash provided that the Company register the

underlying shares of Common Stock within 30 days of exercise.

of Shares Due to Conversion of Series C-1 Preferred Stock

March 30, 2021, the Company issued 19,609

shares of Common Stock upon the conversion

shares of Series C-1 Convertible Preferred stock.

After this conversion, there were no Series C-1 shares outstanding, so the Company filed a Certificate of Withdrawal with the Secretary

of State of the State of Nevada.

The Certificate of Withdrawal eliminated from the Articles of Incorporation of the Company all matters

set forth in the Series C-1.

of Shares Due to Conversion of Series C-2 Preferred Stock

September 14, 2021, the Series C-2 was converted into 4,011,766

shares of Common Stock.

Please refer to

the discussion below.

of Restricted Stock to Service Providers

the year ended December 31, 2021, the Company issued to four service providers a total of approximately 52,800

shares of restricted Common Stock, representing

a total fair value of $ 0.6

of Shares Due to Conversion of Notes

April 6, 2020, the Company issued a total of 73,529

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.

November 2 to December 3, 2020, the Company issued a total of 5,200,906 shares of the Company’s common stock for the conversion

of the $500,000 of principal of 2020 April Promissory Note.

December 16, 2020, the Company issued a total of 343,703 shares of the Company’s common stock for the conversion of accrued

interest of $35,298 on the 2020 April Promissory Note.

May 7, 2020, the Company issued a total of 63,273

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 3,582

shares of the Company’s Common Stock

for the conversion of the remaining accrued interest of $ 9,458

on the 2019 Promissory Note.

November 2 to December 3, 2020, the Company issued a total of 520,088

shares of the Company’s Common Stock

for the conversion of the $ 500,000

of principal of 2020 April Promissory Note.

December 16, 2020, the Company issued a total of 34,370

shares of the Company’s Common Stock

for the conversion of accrued interest of $ 35,298

on the 2020 April Promissory Note.

Equity Incentive Plan

Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was effective on January 1, 2021 and approved by shareholders

on March 31, 2021.

The Company has reserved 2,000,000

shares of Common Stock for issuance pursuant

to the 2021 Plan.

NOTES TO FINANCIAL STATEMENTS

January 1, 2021, the Board of Directors of the Company approved the grant of 1.2 million stock options with an exercise price of $ 1.90

under the Company’s 2021 Plan to Messrs.

David Garrity a director, and Charles Allen and Michal Handerhan, executive officers and

directors of the Company.

Effective as of January 1, 2021, the Company and each optionee executed Stock Option Agreements evidencing

the option grants.

While stockholder approval (or ratification) of the grants was not required (under either the Stock Option Agreements

or by the resolutions of the Board of Directors approving such grants), the Board of Directors voluntarily caused the Company to seek

shareholder ratification of the grants to limit any potential exposure to breach of fiduciary duty claims.

As a result, based on the

guidance in ASC 718, the date the stockholders ratified the grants (March 31, 2021) is the deemed grant date solely with respect to GAAP

for those stock options.

Of the stock options:

(i) 480,000 options will vest on January 1, 2022 and (ii) the remaining options vested

(prior to March 31, 2021) based upon the Company’s stock price meeting certain milestones.

April 1, 2021, the Company granted 35,000 stock options with an exercise price of $ 10.30 to Charles B.

Lee and Carol Van Cleef, directors

of the Company.

Of the stock options:

(i) 14,000 options will vest on April 1, 2022 and (ii) the remaining 21,000 options vest based

upon the Company’s stock price meeting certain milestones.

Company records compensation expense for the 14,000 options granted on April 1, 2021 based on the estimated fair value of the options

on the deemed grant date using the Black-Scholes formula, utilizing assumptions laid out in the table below.

The Company uses historical

data to determine exercise behavior, volatility and forfeiture rate of the options.

For the 21,000 options granted on April 1, 2021 that

vest based upon the Company’s stock price meeting certain milestones, the Company records compensation expense based on the estimated

fair value of the options using a Monte-Carlo simulation.

following weighted-average assumptions were used to estimate the fair value of options granted during the year ended December 31, 2021

and 2020 for both the Black-Scholes formula and the Monte-Carlo simulation:

Summary of Weighted-average Assumptions Used to Estimate Fair Value

For the year ended

Exercise price

Expected stock price volatility

Risk-free rate of interest

The Company uses historical volatility as it provides a reasonable estimate of the expected volatility.

Historical volatility

is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the option.

Interest Rate :

The risk-free interest rate is based on the U.S.

treasury zero-coupon yield curve in effect at the time of grant for

the expected term of the option.

The Company’s expected term represents the weighted-average period that the Company’s stock options are expected

to be outstanding.

The expected term is based on the expected time to post-vesting exercise of options by employees.

The Company uses

historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise

awards vesting upon the achievement of a service condition, compensation cost measured on the grant date will be recognized on a straight-line

basis over the vesting period.

For awards vesting upon the achievement of the market conditions which were met at the date of grant,

compensation cost measured on the date of grant was immediately recognized.

For awards vesting upon the achievement of the market conditions

which were not met at the date of grant, compensation cost measured on the grant date will be recognized on a straight-line basis over

the vesting period based on estimation using a Monte-Carlo simulation.

NOTES TO FINANCIAL STATEMENTS

summary of options activity under the Company’s stock option plan for the year ended December 31, 2021 is presented below:

Summary of Option Activity

Number of Shares

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual

Outstanding as of December 31, 2020

Employee options granted

Outstanding as of December 31, 2021

Options vested and exercisable

January 1, 2021, the Board of Directors of the Company approved 275,000

restricted stock unit grants under the Company’s

2021 Equity Incentive Plan to Messrs.

David Garrity a director, and Charles Allen and Michal Handerhan, executive officers and directors

of the Company.

Effective as of January 1, 2021, the Company and each recipient executed a Restricted Stock Agreement evidencing the

stock grants.

While stockholder approval (or ratification) of the grants was not required (under either the Restricted Stock Agreements

or by the resolutions of the Board of Directors approving such grants), the Board of Directors voluntarily caused the Company to seek

shareholder ratification of the grants to limit any potential exposure to breach of fiduciary duty claims.

As a result, based on the

guidance in ASC 718, the date the stockholders ratified the grants (March 31, 2021) is the deemed grant date solely with respect to GAAP

for those restricted stock grants.

The restricted stock units vest when the Company lists its Common Stock on a national securities

As of December 31, 2021, all 275,000

restricted stock units vested with a total fair

value of approximately $ 2.8

The cost of stock-based compensation

for restricted stock units is measured based on the closing fair market value of the Company’s Common Stock at the deemed

grant date and was recorded on the September 14, 2021 vesting date when the listing occurred.

April 1, 2021, the Company granted a total of 15,000

restricted stock units to two non-employee directors

of the Company.

The restricted stock units vest when the Company lists its Common Stock on a national securities exchange.

of December 31, 2021, all 15,000

restricted stock units vested with a total fair

value of approximately $ 0.2

The cost of stock-based compensation

for restricted stock units is measured based on the closing fair market value of the Company’s Common Stock at the deemed

grant date and was recorded on the September

14, 2021 vesting date when the listing occurred.

June 28, 2021, the Company granted 50,781 restricted stock units to the Company’s then Chief Financial Officer.

The restricted

stock units were to vest over a five-year period as follows:

20 % of the 50,781 restricted stock units were to vest on the one-year anniversary

of the grant date, and the remaining 80% were to vest monthly over the following four years with vesting occurring on the last day of

each respective month.

On November 30, 2021, this Chief Financial Officer resigned.

The 50,781 restricted stock units granted to this

Chief Financial Officer were forfeited accordingly.

December 1, 2021, the Company granted 29,363 restricted stock units to the Company’s current Chief Financial Officer.

The restricted

stock units are to vest over a five-year period as follows:

20 % of the 29,363 restricted stock units are to vest on the one-year anniversary

of the grant date, and the remaining 80% are to vest monthly over the following four years with vesting occurring on the last day of

each respective month.

The grant date fair value of restricted stock units was approximately $ 0.2 million.

NOTES TO FINANCIAL STATEMENTS

summary of the Company’s restricted stock units granted under the 2021 Plan during the year ended December 31, 2021 are as follows:

Summary of Restricted Stock

Number of Restricted Stock Units

Weighted Average Grant Day Fair Value

Nonvested at December 31, 2020

Nonvested at December 31, 2021

compensation expense for the year ended December 31, 2021 was approximately $ 15.4

million, comprised of approximately $ 0.3

million restricted Common Stock issued

to service providers not pursuant to the 2021 Plan and approximately $ 11.9

million in connection with options issued pursuant

to the 2021 Plan.

Unrecognized compensation expense for the Company was $ 0.3

million on December 31, 2021.

Stock-based compensation

expense is recorded as a part of selling, general and administrative expenses, compensation expenses and cost of revenues.

compensation expense for the years ended December 31, 2021 and 2020 was as follows:

Schedule of Stock-based Compensation Expense

Employee stock option awards

Employee restricted stock units awards

Non-employee restricted stock awards

Series C-2 allocation

TO FINANCIAL STATEMENTS

Purchase Warrants

following is a summary of warrant activity for the year ended December 31, 2020 and 2019:

following is a summary of warrant activity for the years ended December 31, 2021 and 2020:

Summary of Warrant Activity

Number of Warrants

Outstanding as of December 31, 2019

Warrants exercise for cash

Issuance of Series C Warrants

Expiration of warrant

1 unchanged sentence

Issuance of Series C Warrants

Expiration of warrant

Warrants exercise for cash

Issuance of Warrants pursuant to Registered Direct Offering

Fractional shares adjusted for reverse split

Outstanding as of December 31, 2021

7 - Employment Agreements

June 22, 2017, we entered into an employment agreement with Charles Allen (the “Allen Employment Agreement”), whereby

Allen agreed to serve as our Chief Executive Officer and Chief Financial Officer for a period of two (2) years, subject to

renewal, in consideration for an annual salary of $245,000.

June 22, 2017, we entered into an employment agreement with Charles Allen (the “Allen Employment Agreement”), whereby Mr.

Allen agreed to serve as our Chief Executive Officer and Chief Financial Officer for a period of two ( 2 ) years, subject to renewal, in

consideration for an annual salary of $ 245,000 .

Additionally, under the terms of the Allen Employment Agreement, Mr.

Allen shall be eligible for an annual bonus if we meet certain criteria, as established by the Board of Directors.

be entitled to participate in all benefits plans we provide to our senior executive.

Allen shall be eligible

for an annual bonus if we meet certain criteria, as established by the Board of Directors.

Allen shall be entitled to participate

in all benefits plans we provide to our senior executive.

We shall reimburse Mr.

Allen for all reasonable

expenses incurred in the course of his employment.

The Company shall pay the Executive $500 per month to cover telephone and internet

If the Company does not provide office space to the Executive the Company will pay the Executive an additional $500

per month to cover expenses in connection with their office space needs.

February 6, 2019 we amended the Allen Employment Agreement whereby the annual salary was increased to $345,000 per year effective

January 1, 2019, all other terms of the Allen Employment Agreement remained unchanged including the Annual Increase.

the year ended December 31, 2020, Mr.

Allen’s annual salary was $360,525.

June 22, 2017, we entered into an employment agreement with Michal Handerhan (the “Handerhan Employment Agreement”),

Handerhan agreed to serve as our Chief Operating Officer and Secretary for a period of two (2) years, subject to renewal,

in consideration for an annual salary of $190,000.

Allen for all reasonable expenses incurred in the course

of his employment.

The Company shall pay the Executive $ 500 per month to cover telephone and internet expenses.

If the Company does not

provide office space to the Executive the Company will pay the Executive an additional $ 500 per month to cover expenses in connection

with their office space needs.

February 6, 2019 we amended the Allen Employment Agreement whereby the annual salary was increased to $ 345,000 per year effective January

1, 2019, subject to a 4.5% annual increase each subsequent year to adjust for inflation.

All other terms of the Allen Employment Agreement

remained unchanged including the Annual Increase.

For the year ended December 31, 2021, Mr.

Allen’s annual salary was $ 376,749 .

June 22, 2017, we entered into an employment agreement with Michal Handerhan (the “Handerhan Employment Agreement”), whereby

Handerhan agreed to serve as our Chief Operating Officer and Secretary for a period of two ( 2 ) years, subject to renewal, in consideration

for an annual salary of $ 190,000 .

Additionally, under the terms of the Handerhan Employment Agreement, Mr.

shall be eligible for an annual bonus if we meet certain criteria, as established by the Board of Directors.

Handerhan shall

be entitled to participate in all benefits plans we provide to our senior executive.

Handerhan shall be eligible

for an annual bonus if we meet certain criteria, as established by the Board of Directors.

Handerhan shall be entitled to participate

in all benefits plans we provide to our senior executive.

We shall reimburse Mr.

Handerhan for all

reasonable expenses incurred in the course of his employment.

The Company shall pay the Executive $500 per month to cover telephone

and internet expenses.

If the Company does not provide office space to the Executive the Company will pay the Executive an additional

$500 per month to cover expenses in connection with their office space needs.

Handerhan for all reasonable expenses incurred in the

course of his employment.

The Company shall pay the Executive $ 500 per month to cover telephone and internet expenses.

If the Company

does not provide office space to the Executive the Company will pay the Executive an additional $ 500 per month to cover expenses in connection

with their office space needs.

February 6, 2019 we amended the Handerhan Employment Agreement whereby the annual salary was increased to $ 215,000 per year effective

on January 1, 2019, all other terms of the Handerhan Employment Agreement remained unchanged including the Annual Increase.

the year ended December 31, 2020 Mr.

Handerhan’s annual salary was $224,675.

March 31, 2020, Charles Allen, the Company’s Chief Executive Officer and Chief Financial Officer, and Michal Handerhan,

the Company’s Chief Operating Officer, agreed to defer 35% of their cash compensation during the second quarter 2020 (the

“Period”) and refrain from making any payments during the Period on accrued and unpaid compensation owed prior to

The Company subsequently paid the deferred compensation for the Period.

on January 1, 2019, subject to a 4.5 % annual increase each subsequent year to adjust for inflation.

All other terms of the Handerhan

Employment Agreement remained unchanged including the Annual Increase.

For the year ended December 31, 2021 Mr.

Handerhan’s annual

salary was $ 234,785 .

March 31, 2020, Charles Allen, the Company’s Chief Executive Officer, and Michal Handerhan, the Company’s Chief Operating

Officer, agreed to defer 35 % of their cash compensation during the second quarter 2020 (the “Period”) and refrain from making

any payments during the Period on accrued and unpaid compensation owed prior to the Period.

The Company subsequently paid the deferred

compensation for the Period.

June 28, 2021 we entered into an employment agreement with Andrew Lee (the “Lee Employment Agreement”), whereby Mr.

to serve as our Chief Financial Officer in consideration for an annual salary of $ 250,000 .

Additionally, under the terms of the Lee Employment

Agreement, Mr.

Lee shall be eligible for an annual bonus if we meet certain criteria, as established by the Board of Directors.

shall be entitled to participate in all benefits plans we provide to our senior executive.

We shall reimburse Mr.

Lee for all reasonable

expenses incurred in the course of his employment.

The Company shall pay the Executive $ 500 per month to cover telephone and internet

If the Company does not provide office space to the Executive the Company will pay the Executive an additional $ 500 per month

to cover expenses in connection with their office space needs.

November 4, 2021, Mr.

Andrew Lee resigned as the Company’s Chief Financial Officer.

In connection with the resignation, the Board

of Directors appointed Mr.

Charles Allen, the Company’s current Chairman of the Board and Chief Executive Officer as the Company’s

interim Chief Financial Officer.

Allen did not receive any additional compensation for his interim role as Chief Financial Officer.

December 1, 2021 we entered into an employment agreement with Michael Prevoznik (the “Prevoznik Employment Agreement”), whereby

Prevoznik agreed to serve as our Chief Financial Officer in consideration for an annual salary of $ 175,000 .

Additionally, under the

terms of the Prevoznik Employment Agreement, Mr.

Prevoznik shall be eligible for an annual bonus if we meet certain criteria, as established

by the Board of Directors.

Prevoznik shall be entitled to participate in all benefits plans we provide to our senior executive.

shall reimburse Mr.

Prevoznik for all reasonable expenses incurred in the course of his employment.

The Company shall pay the Executive

$ 500 per month to cover telephone and internet expenses.

If the Company does not provide office space to the Executive the Company will

pay the Executive an additional $ 500 per month to cover expenses in connection with their office space needs.

TO FINANCIAL STATEMENTS

Termination/Severance

terms of the Allen Employment Agreement and Handerhan Employment Agreement (collectively the “Employment Agreements”)

provide each of Messrs.

Allen and Handerhan (the “Executives”) certain, severance and change of control benefits if

the Executive resigns from the Company for good reason or the Company terminates him other than for cause.

In such circumstances,

the Executive would be entitled to a lump sum payment equal to (i) the Executive’s then-current base salary, and (ii) payment

on a pro-rated basis of any bonus or other payments earned in connection with any bonus plan to which the Executive was a participant.

In addition, the severance benefit for the Executives the employment agreements include the Company continuing to pay for medical

and life insurance coverage for up to one year following termination.

If, within eighteen months following a change of control

(as defined below), the Executive’s employment is terminated by the Company without cause or he resigns from the Company

for good reason, the Executive will receive certain severance compensation.

In such circumstances, the cash benefit to the Executive

will be a lump sum payment equal to two times (i) his then-current base salary and (ii) his prior year cash bonus and incentive

compensation.

Upon the occurrence of a change of control, irrespective of whether his employment with the Company terminates,

each Executive’s stock options and equity-based awards will immediately vest.

“change of control”

for purposes of the Employment Agreements means any of the following:

(i) the sale or partial

sale of the Company to an un-affiliated person or entity or group of un-affiliated persons or entities pursuant to which such

party or parties acquire shares of capital stock of the Company representing at least twenty five (25%) of the fully diluted capital

stock (including warrants, convertible notes, and preferred stock on an as converted basis) of the Company;

(ii) the sale of the

Company to an un-affiliated person or entity or group of such persons or entities pursuant to which such party or parties acquire

all or substantially all of the Company’s assets determined on a consolidated basis, or (iii) Incumbent Directors (Mr.

Handerhan) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or

similar transaction, to constitute at least a majority of the board of directors of the Company.

terms of the Allen Employment Agreement and Handerhan Employment Agreement (collectively the “Employment Agreements”) provide

each of Messrs.

Allen and Handerhan (the “Executives”) certain, severance and change of control benefits if the Executive

resigns from the Company for good reason or the Company terminates him other than for cause.

In such circumstances, the Executive would

be entitled to a lump sum payment equal to (i) the Executive’s then-current base salary, and (ii) payment on a pro-rated basis

of any bonus or other payments earned in connection with any bonus plan to which the Executive was a participant.

In addition, the severance

benefit for the Executives the employment agreements include the Company continuing to pay for medical and life insurance coverage for

up to one year following termination.

If, within eighteen months following a change of control (as defined below), the Executive’s

employment is terminated by the Company without cause or he resigns from the Company for good reason, the Executive will receive certain

severance compensation.

In such circumstances, the cash benefit to the Executive will be a lump sum payment equal to two times (i) his

then-current base salary and (ii) his prior year cash bonus and incentive compensation.

Upon the occurrence of a change of control, irrespective

of whether his employment with the Company terminates, each Executive’s stock options and equity-based awards will immediately

“change of control” for purposes of the Employment Agreements means any of the following:

(i) the sale or partial sale of

the Company to an un-affiliated person or entity or group of un-affiliated persons or entities pursuant to which such party or parties

acquire shares of capital stock of the Company representing at least twenty five ( 25 %) of the fully diluted capital stock (including

warrants, convertible notes, and preferred stock on an as converted basis) of the Company;

(ii) the sale of the Company to an un-affiliated

person or entity or group of such persons or entities pursuant to which such party or parties acquire all or substantially all of the

Company’s assets determined on a consolidated basis, or (iii) Incumbent Directors (Mr.

Allen and Mr.

Handerhan) cease for any reason,

including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a

majority of the board of directors of the Company.

Additionally,

4 unchanged sentences

Allen and Mr.

Handerhan contingent cash bonuses of $175,000

and $75,000 respectively (the “2017 Contingent Bonuses”) which will be deemed earned on the earlier of i) the closing

of a merger approved by the Board, ii) the closing of one or many financings in 2018 totaling over $1.25 million in gross proceeds,

or iii) the Company having cash and the fair market value of Digital Assets valued at over $1.5 million.

Provided further that

the 2017 Contingent Bonuses if deemed earned will only be payable if the Company has at least $1.25 million in cash and the fair

market value of Digital Assets prior to paying the bonuses.

The 2017 Contingent Bonuses are not conditioned upon the continued

service of either Mr.

Handerhan and do not expire.

The conditions to earn the 2017 Contingent Bonuses have been achieved

and the 2017 Contingent Bonuses have been paid.

Handerhan contingent cash bonuses of $ 175,000 and $ 75,000

respectively (the “2017 Contingent Bonuses”) which will be deemed earned on the earlier of i) the closing of a merger approved

by the Board, ii) the closing of one or many financings in 2018 totaling over $ 1.25 million in gross proceeds, or iii) the Company having

cash and the fair market value of Digital Assets valued at over $ 1.5 million.

Provided further that the 2017 Contingent Bonuses if deemed

earned will only be payable if the Company has at least $ 1.25 million in cash and the fair market value of Digital Assets prior to paying

The 2017 Contingent Bonuses are not conditioned upon the continued service of either Mr.

Handerhan and do not

The conditions to earn the 2017 Contingent Bonuses have been achieved and the 2017 Contingent Bonuses have been paid in 2020.

February 6, 2019, the Company agreed to pay Charles Allen, its CEO, and Michal Handerhan, its COO, contingent cash bonuses of $ 256,025

$256,025 and $150,000, respectively for 2018 (the “2018 Contingent Bonuses”) which will be deemed earned and payable

upon the repayment and / or settlement of the $200,000 Promissory Note issued on December 18, 2018.

On September 18, 2019, the

Company exchanged the $200,000 Promissory Note and accrued interest of $17,973 for a $217,973 Convertible Promissory Note due

on December 18, 2019 (the “New Note”).

and $ 150,000 ,

respectively for 2018 (the “2018 Contingent Bonuses”) which will be deemed earned and payable upon the repayment and / or

settlement of the $ 200,000

Promissory Note issued on December 18, 2018.

On September 18, 2019, the Company exchanged the $ 200,000

Promissory Note and accrued interest of $ 17,973

for a $ 217,973

Convertible Promissory Note due on December 18,

2019 (the “New Note”).

From September 18, 2019 through October 16, 2019 the Company issued 193,179

shares of the Company’s Common Stock for the conversion of all $217,973 principal on the New Note.

shares of the Company’s Common Stock

for the conversion of all $ 217,973

principal on the New Note.

The Company subsequently

paid all the accrued interest expense of $905 on the New Note as such the conditions to earn the 2018 Contingent Bonuses have

been achieved and the 2018 Contingent Bonuses have been paid.

paid all the accrued interest expense of $ 905

on the New Note as such the conditions to earn

the 2018 Contingent Bonuses have been achieved and the 2018 Contingent Bonuses have been paid in 2020.

TO FINANCIAL STATEMENTS

3 unchanged sentences

Allen and Mr.

Handerhan contingent cash bonuses of $462,000

and $235,750 (collectively the “2019 Contingent Bonuses”).

The Contingent Cash Bonuses will be earned and payable

upon the achievement or satisfaction of any one of the following performance goals or criteria:

Handerhan contingent cash bonuses of $ 462,000 and $ 235,750 (collectively

the “2019 Contingent Bonuses”).

The Contingent Cash Bonuses will be earned and payable upon the achievement or satisfaction

of any one of the following performance goals or criteria:

1) The Company either:

i) consummates

a merger with another company which would constitute a change of control, or ii) signs a letter of intent (an “LOI”),

approved by the board, to merge with another company which would constitute a change of control, 2) the combined value of the

Company’s cash and fair market value of Digital Assets (collectively the “Assets”) at any point in time

i) greater than or equal to $1.25 million, then 25% of the Contingent Cash Bonuses will be deemed earned and payable, ii)

greater than or equal to $1.75 million (excluding any portion of Contingent Cash Bonuses previously earned whether paid or accrued),

then 25% of the Contingent Cash Bonuses will be deemed earned and payable, iii) greater than or equal to $2 million (excluding

any portion of Contingent Cash Bonuses previously earned whether paid or accrued), then the remaining 50% of the Contingent Cash

Bonuses will be deemed earned and payable, and 3) provided further if the Company and Mr.

Handerhan agree to exchange

their respective Contingent Cash Bonus or a portion thereof for equity securities (not debt) then the above performance criteria

do not need to be achieved with respect to the portion of Contingent Cash Bonuses exchanged for equity.

The Contingent Cash Bonuses

are not conditioned upon the continued service of Mr.

i) consummates a merger with another company which

would constitute a change of control, or ii) signs a letter of intent (an “LOI”), approved by the board, to merge with another

company which would constitute a change of control, 2) the combined value of the Company’s cash and fair market value of Digital

Assets (collectively the “Assets”) at any point in time are:

i) greater than or equal to $ 1.25 million, then 25 % of the Contingent

Cash Bonuses will be deemed earned and payable, ii) greater than or equal to $ 1.75 million (excluding any portion of Contingent Cash

Bonuses previously earned whether paid or accrued), then 25% of the Contingent Cash Bonuses will be deemed earned and payable, iii) greater

than or equal to $ 2 million (excluding any portion of Contingent Cash Bonuses previously earned whether paid or accrued), then the remaining

50% of the Contingent Cash Bonuses will be deemed earned and payable, and 3) provided further if the Company and Mr.

agree to exchange their respective Contingent Cash Bonus or a portion thereof for equity securities (not debt) then the above performance

criteria do not need to be achieved with respect to the portion of Contingent Cash Bonuses exchanged for equity.

The Contingent Cash

Bonuses are not conditioned upon the continued service of Mr.

Handerhan and do not expire.

The conditions to earn the 2019

Contingent Bonuses have been achieved and the 2019 Contingent Bonuses have been paid.

amendments to the Employment Agreements, the 2017 Contingent Bonuses, the 2018 Contingent Bonuses, and the 2019 Contingent Bonuses

were approved unanimously by the Board.

Contingent Bonuses have been achieved and the 2019 Contingent Bonuses have been paid in 2020.

amendments to the Employment Agreements, the 2017 Contingent Bonuses, the 2018 Contingent Bonuses, and the 2019 Contingent Bonuses were

approved unanimously by the Board.

of December 31, 2021 and 2020, the Company had approximately $ 7,000 and $ 350,000 of accrued compensation.

8 – Employee Benefit Plans

Company maintains defined contribution benefit plans under Section 401(k) of the Internal Revenue Code covering substantially all qualified

employees of the Company (the “401(k) Plan”).

Under the 401(k) Plan, the Company may make discretionary contributions of

up to 100 % of employee contributions.

For the year ended December 31, 2021 and 2020, the Company made contributions to the 401(k) Plan

of $ 39,000 and $ 0 , respectively.

9 – Going Concern - Liquidity

Company follows “ Presentation of Financial Statements—Going Concern (Subtopic 205-40):

Disclosure of Uncertainties about

an Entity’s Ability to Continue as a Going Concern ”.

The Company’s financial statements have been prepared assuming

that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities

in the normal course of business.

reflected in the financial statements, the Company has historically incurred a net loss and has an accumulated deficit at December 31,

2021, a net loss and net cash used in operating activities for the reporting period then ended.

The Company is implementing its business

plan and generating revenue;

however, the Company’s cash position and liquid Digital Assets are sufficient to support its daily

operations over the next twelve months.

Company has sustained recurring losses and negative cash flows from operations.

Over the past year, the Company’s growth has been

funded through a combination of sale of equity (common and preferred stock), promissory notes, and lease financing.

As of December 31,

2021, the Company had approximately $ 1.4 million of unrestricted cash and liquid Digital Assets with a carrying value of $ 3.7 million.

However, historically the Company has experienced and may continue to experience negative operating margins and negative cash flows from

operations, as well as an ongoing requirement for additional capital investment.

The Company expects that it will need to raise additional

capital to accomplish its business plan over the next several years.

The Company expects to seek to obtain additional funding through

debt or equity financing.

There can be no assurance as to the availability or terms upon which such financing and capital might be available.

10 - Income Taxes

Company had no income tax expense due to operating loss incurred for the years ended December 31, 2021 and 2020.

tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred

tax assets and liabilities at December 31, 2020 and 2019 are comprised of the following:

tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets

and liabilities at December 31, 2021 and 2020 are comprised of the following:

Schedule of Deferred Tax Assets and Liabilities

As of December 31,

Deferred tax assets:

Net-operating loss carryforward (federal &

Net-operating loss carryforward (federal & state)

Other (Non-Qualified Stock Options)

Total Deferred Tax Assets

Valuation allowance

( 2,497,577 )

( 1,937,770 )

Deferred Tax Asset, Net of Allowance

At December 31, 2020,

the Company had net operating loss (“NOL”) carry forwards for federal and state tax purposes of approximately

$9.23 million and $3.61 million respectively which begins to expire in 2034.

The NOLs carryforward amounts identified

in the table above are comprised of both the federal NOLs and state NOLs.

The tax effected federal NOL is $1.94 million and the

state NOL carryforward available is $0.228 million.

The state NOL carryforward available to the Company is taken from the actual

state tax returns filed in previous years.

The only state whereby NOL carryforwards are available is Maryland as that is the only

state that has losses apportioned to it based on state income tax rules.

The other state in which the Company has filed and continues

to file corporate income tax returns is Pennsylvania.

Because Pennsylvania uses the single receipts factor to apportion taxable

income (loss), since there are no receipts earned by the Company, the Pennsylvania state apportionment factor is zero and there

are no Pennsylvania NOLs available to be carried forward.

20-year carryforward period has been replaced with an indefinite carryforward period for these NOLs generated in tax years beginning

after December 31, 2017 and future years.

Prior to the February 5, 2014 merger, the Company had generated net operating losses,

which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to Internal Revenue

Code Section 382.

The Company has not completed its IRC Section 382 Valuation, as required and the NOL’s because of potential

change of ownerships might be completely worthless.

Therefore, management of the Company has recorded a Full

Valuation Reserve, since it is more likely than not that no benefit will be realized for the Deferred Tax Assets.

assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or

all of the deferred tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation

of future taxable income during the period in which those temporary differences become deductible.

Management considers the scheduled

reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment.

the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount

of the deferred tax assets at December 31, 2020 and 2019.

The valuation allowance increased by approximately $0.607 million

as of December 31, 2020.

December 31, 2021, the Company had net operating loss carry forwards for federal and state tax purposes of approximately $ 10.89 million

which begins to expire in 2034 .

The 20-year carryforward period has been replaced with an indefinite carryforward period for these NOLs

generated in tax years beginning after December 31, 2017 and future years.

Accordingly, the amount of

NOLs that were generated in the tax year December 31, 2014 in the amount of $ 1,290,156 will expire after December 31, 2034 .

of NOLs that were generated in the tax year December 31, 2015 in the amount of $ 1,545,343 will expire after December 31, 2035 .

of NOLs that were generated in the tax year December 31, 2016 in the amount of $ 794,762 will expire after December 31, 2036 .

of NOLs that were generated in the tax year December 31, 2017 in the amount of $ 1,084,564 will expire after December 31, 2037 .

generated in the tax years December 31, 2018 in the amounts of $ 6,179,367 and onwards will have an indefinite life per current U.S.

income tax legislation.

Prior to the February 5, 2014 merger, the Company had generated

net operating losses, which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to

Internal Revenue Code Section 382.

The Company has not completed its IRC Section 382 Valuation, as required and the NOL’s because

of potential Change of Ownerships might be completely worthless.

Management of the Company has recorded a Full Valuation Reserve, since it is more likely than not that no benefit will be realized for

the Deferred Tax Assets.

assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of

the deferred tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future

taxable income during the period in which those temporary differences become deductible.

Management considers the scheduled reversal

of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment.

In case the deferred tax

assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax

assets at December 31, 2021 and 2020.

The valuation allowance increased by approximately $ 0.559 million as of December 31, 2021.

TO FINANCIAL STATEMENTS

1 unchanged sentence

federal statutory rate is reconciled with actual tax expense (benefit) as follows:

years ended December 31,

Schedule of Income Tax Rate

For the years ended December 31,

Statutory Federal Income Tax Rate

6 unchanged sentences

Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued.

upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required

adjustment or disclosure in the financial statements other than disclosed.

January 1, 2021, Messrs.

David Garrity a director, and Charles Allen and Michal Handerhan, executive officers and directors of

the Company subscribed for 1,100,000 shares of the Company’s to be designated Series C-2 Convertible Preferred Stock (the

“Series C-2”), for a total of $1,100,000 at $1.00 per Share of Series C-2.

Subsequently the Company received all funds

and filed the Series C-2 Certificate of Designation with the State of Nevada.

The material terms of the Series C-2 (as corrected)

are summarized as follows:

and Stockholder Approval :

Under the terms of the Series C-2, the Company shall call a special meeting of stockholders within

180 days of the initial issuance date seeking stockholder ratification of the issuance of the Series C-2.

If the ratification

of the issuance is not approved prior to the twelve-month anniversary of the initial issuance date (the “Vote Deadline”),

the Series C-2 will be redeemed at a price equal to 107% of (i) the stated value per share, or $1.07 per share, plus (ii) all

unpaid dividends thereon.

If the Company has filed a proxy with the Securities and Exchange Commission prior to the Vote Deadline

and is unable to conduct a vote prior to the Vote Deadline then the Vote Deadline will be extended until such time as the vote

is conducted.

The Series C-2 will not be entitled to vote on the ratification.

Each share of Series C-2 is convertible into shares of the Company’s common stock, par value $0.001 per share, beginning

on the two-year anniversary of the initial issuance date at a per-share conversion rate determined by dividing the stated value

by $0.17, subject to anti-dilution adjustment provisions described below, if applicable.

Further, the Series C-2 automatically

converts into shares of common stock upon the earlier of:

(i) the four-year anniversary of the initial issuance date, and (ii)

the Company’s common stock being listed on a national securities exchange.

The Series C-2 ranks senior to the Company’s common stock, and to all other classes and series of equity securities of the

Company which by their terms do not rank pari passu or senior to the Series C-2.

The Series C-2 is subordinate to and ranks junior

to all indebtedness of the Company.

The holders of the Series C-2 are entitled to receive dividends or distributions on each share

of Series C-2 on an as converted basis.

If the issuance of the Series C-2 is ratified by the stockholders of the Company, each share of Series C-2 shall vote

on an as converted basis with the common stock or other equity securities of the Company on a two vote per one share of common

The common stock into which the Series C-2 is convertible shall, when issued, have all the same voting rights as

other issued and outstanding common stock of the Company.

Anti-Dilution

If at any time after the initial issuance date, the Company raises capital equal to or in excess of $5 million

by issuing common stock or common stock equivalents, then the following amount will be added to the numerator of the per-share

conversion formula:

the product of:

(i) 0.0000004, and (ii) the aggregate amount of all capital raised by the Company after the

initial issuance date, subject to a $13 million cap.

January 1, 2021, the Board of Directors of the Company approved grants of the following performance-based awards (“Awards”)

under the Company’s 2021 Equity Incentive Plan:

(i) 12 million stock options with an exercise price of $0.19 (the closing

stock price on the last trade date immediately prior to the grant) and (ii) 2.75 million restricted stock units, to Messrs.

and Handerhan, directors and executive officers of the Company and Messrs Garrity a director of the Company.

Of the Awards, Mr.

Allen, was granted 7,500,000 stock options and 2,000,000 restricted stock units, Mr.

Handerhan was granted 3,500,000 stock options

and 500,000 restricted stock units, Mr.

Garrity was granted 1,000,000 stock options and 250,000 restricted stock units.

and exercisability of these Awards, which are subject to stockholder approval, are summarized as follows:

million options will vest on January 1, 2022 and the remaining options and the restricted stock units will vest based upon the

following milestones:

options when the trailing 20-day average trading price is greater than or equal to $0.228

options when the trailing 20-day average trading price is greater than or equal to $0.274

options when the trailing 20-day average trading price is greater than or equal to $0.328

options when the trailing 20-day average trading price is greater than or equal to $0.394

restricted stock units when the Company lists its Common Stock on the Nasdaq or NYSE

trading price shall be defined as the closing price on each such day.

Company intends to seek stockholder approval for the vesting and exercisability of the foregoing equity incentive plan award s

at the same special meeting to be held for the ratification of the Series C-2 issuance.

TO FINANCIAL STATEMENTS

January 11, 2021, the Company issued RedChip Companies Inc.

400,000 shares of common stock in connection with an 18 month investor

relations engagement.

January 15, 2021, the Company issued Cavalry a $1,000,000 promissory note (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 Promissory

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.

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

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

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.

On January 21, 2021,

the Company filed a Certificate of Withdrawal with the Secretary of State of the State of Nevada.

The Certificate of Withdrawal,

which was effective upon filing, eliminated from the Articles of Incorporation of the Company all matters set forth in the Company’s

Certificate of Designation with respect to the Company’s Series A Preferred Stock that had been previously filed with the

Secretary of State of the State of Nevada on December 9, 2016.

No shares of the Series A Preferred Stock were issued or outstanding

at the time of the filing of the Certificate of Withdrawal, and none will be issued.

On January 21, 2021,

the Company filed a Certificate of Withdrawal with the Secretary of State of the State of Nevada.

The Certificate of Withdrawal,

which was effective upon filing, eliminated from the Articles of Incorporation of the Company all matters set forth in the Company’s

Certificate of Designation with respect to the Company’s Series B Convertible Preferred Stock that had been previously filed

with the Secretary of State of the State of Nevada on March 15, 2017.

No shares of the Series B Convertible Preferred Stock were

issued or outstanding at the time of the filing of the Certificate of Withdrawal, and none will be issued.

On January 6, 2021,

the Company issued Series C-2 Preferred Stock to Messrs.

David Garrity, a director, and Charles Allen and Michal Handerhan, executive

officers and directors of the Company.

After further review, the Company determined that there was a scrivener’s error in

Section 6 (Ant-Dilution Adjustment) of the Certificate of Designation.

The formula was meant to be the product of (i) 0.0000004

(as opposed to the filed 0.000002), and (ii) the aggregate amount of all capital raised by the Company after the initial issuance

date, subject to a $13 million cap.

On January 21, 2021 the Company filed a Certificate of Correction in the state of Nevada to

fix this error.

Based upon the

evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure

in the financial statements other than disclosed.

the period from December 31, 2021 to March 9, 2022, the Company sold a total of 1,723,666 shares of Common Stock under

the ATM Agreement for aggregate total gross proceeds of approximately $ 10,578,000 at an average selling price of $ 6.14

per share, resulting in net proceeds of approximately $ 10,252,000 after deducting commissions and other transaction costs.

January 5, 2022, the Board of Directors of the Company declared a special one-time dividend of $ 0.05

for each outstanding share of Common Stock of

The dividend is payable to holders of record as of the close of business on March 17, 2022 (the “Record Date”).

Shareholders are being provided the option to receive proceeds of their dividend payable in either cash (a “Cash Dividend”)

or Bitcoin (“Bitcoin Dividend” or “Bividend”).

January 19, 2022, the Board of Directors of the Company approved a base salary increase for the Company’s Chief Operating Officer

Michal Handerhan as an amendment to the Handerhan Employment Agreement whereby the annual salary was increased to $ 275,000 per year effective

on January 1, 2021, subject to a 4.5 % annual increase each subsequent year to adjust for inflation, pursuant to the 2021 compensation

On January 21, 2022, the

Board of Directors of the Company approved the formation of a Digital Asset Regulatory Committee comprised of two members:

Cleef, Chair, and Charles Allen.

January 2, 2022, the Board of Directors of the Company ratified the following arrangements approved by its

Compensation Committee:

Allen, the Company’s Chief Executive Officer, was awarded 173,611

fully-vested shares of Common Stock and

Michal Handerhan, the Company’s Chief Operating Officer, was awarded 111,111

fully-vested shares of Common Stock granted

under the 2021 Equity Incentive Plan (the “Plan”).

Allen, the Company’s Chief Executive Officer, was granted the following restricted stock units (“RSUs”) with vesting

terms set forth below:

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 100,000,000 ;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 150,000,000 ;

RSUs priced when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 200,000,000 ;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 400,000,000 .

Handerhan, the Company’s Chief Operating Officer, was granted the following RSUs with vesting terms set forth below:

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 100,000,000 ;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 150,000,000 ;

RSUs priced when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 200,000,000 ;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 400,000,000 .

NOTES TO FINANCIAL STATEMENTS

Prevoznik, the Company’s Chief Financial Officer, was granted the following RSUs with vesting terms set forth below:

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 100,000,000 ,

and the time-based criteria set forth below are met;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 150,000,000 ,

and the time-based criteria set forth below are met;

RSUs priced when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 200,000,000 , and the time-based criteria set forth below are met;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 400,000,000 ,

and the time-based criteria set forth below are met.

the extent any market capitalization targets set forth above for Mr.

Prevoznik are achieved the RSUs will also be subject to the following

five-year vesting schedule:

20 % of the RSUs which have met a market capitalization criteria will vest on the one-year anniversary of

the grant date, and the remaining 80 % of the RSUs which have met a market capitalization criteria will vest monthly over the four years

following the one year anniversary of the grant date.

addition to the vesting criteria set forth above, while the Company is listed on the Nasdaq, the restricted stock units issued to Mr.

Handerhan, and Mr.

Prevoznik are subject to the receipt of shareholder approval approving an increase in the Plan or the creation

of a new plan as required under Nasdaq rules.

Board of Directors of the Company ratified grants of RSUs to each independent director.

David Garrity, Carol Van Cleef and Charles Lee

were each granted 31,848 restricted stock units (the “Board Grants”).

The Board Grants vest in four equal installments at

the end of each calendar quarter.

The Board also approved the following annual committee chair fees:

$ 15,000 for the Audit Committee

Chair, $ 8,000 for the Compensation Committee Chair, and $ 8,000 for the Governance and Nominating Committee (collectively, the “Committee

Chair Fees”).

The Committee Chair Fees are payable quarterly in four equal installments.

February 22, 2022, the Company appointed Manish Paranjape as Chief Technology Officer of the Company.

January 2019, Mr.

Paranjape has been the Vice President of Technology and Research at Corra, a global digital agency.

Prior to that,

beginning in July 2013, Mr.

Paranjape was the Director of Technology (U.S.) at Corra.

Additionally, since March 2021, Mr.

Paranjape has

been the principal of Kilwar LLC (“Kilwar”), a software development consulting company.

Paranjape will receive a salary of $ 225,000 per year and will be eligible for a performance bonus in an amount and with milestones to

be determined by the Board of Directors and the Compensation Committee with the target bonus being one half to two times his then base

Additionally, the Company has granted Mr.

Paranjape 45,767 restricted stock units (“RSUs”).

The RSUs shall vest as

(i) one fifth on February 22, 2023, and (ii) the remaining in 48 equal (monthly) increments, with each vesting tranche being

subject to continued employment on such applicable vesting date.

Paranjape, the Company’s Chief Technology Officer, was also granted the following long-term incentive restricted stock units (the

“LTI RSUs”) with vesting terms set forth below:

LTI RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 100,000,000 , and the time-based criteria set forth below are met;

LTI RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 150,000,000 , and the time-based criteria set forth below are met;

LTI RSUs priced when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days

above $ 200,000,000 , and the time-based criteria set forth below are met;

LTI RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 400,000,000 , and the time-based criteria set forth below are met.

the extent any market capitalization targets set forth above for Mr.

Paranjape are achieved the RSUs will also be subject to the following

five-year vesting schedule:

20 % of the LTI RSUs which have met a market capitalization criteria will vest on the one-year anniversary

of the grant date, and the remaining 80 % of the LTI RSUs which have met a market capitalization criteria will vest monthly over the four

years following the one year anniversary of the grant date.

addition to the vesting criteria set forth above, while the Company is listed on the Nasdaq, the vesting and delivery of the shares of

Common Stock underlying the LTI RSUs are subject to the receipt of shareholder approval approving an increase in the Plan or the

creation of a new plan as required under Nasdaq rules.

Paranjape was not appointed pursuant to any arrangement or understanding with any person, and Mr.

Paranjape does not have any family

relationships with any directors or executive officers of the Company.

From April 1, 2021 to February 15, 2022, the Company paid approximately

$ 205,000 to Kilwar for its consulting services.

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 9A. Controls and Procedures