BTCS Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ . Commission file number: 001-40792 BTCS Inc. (Exact name of registrant as specified in its charter) Nevada 90-1096644 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 9466 Georgia Avenue #124 , Silver Spring , MD 20910 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code ( 202 ) 430-6576 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 BTCS The Nasdaq Stock Market (The Nasdaq Capital Market) Securities registered under Section 12(g) of the Exchange Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of May 9, 2022, there were 12,651,271 shares of common stock, par value $0.001, issued and outstanding. The aggregate market value of voting stock held by non-affiliates of the registrant was approximately $11,756,692, based on the closing sales price of Common Stock of $2.54 on May 9, 2022. BTCS INC. TABLE OF CONTENTS Page PART I - FINANCIAL INFORMATION ITEM 1 Financial Statements 4 Condensed Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021 4 Condensed Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (unaudited) 5 Condensed Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021 (unaudited) 6 Condensed Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (unaudited) 7 Notes to the Unaudited Condensed Financial Statements 8-18 ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 19 ITEM 3 Quantitative and Qualitative Disclosures About Market Risk 27 ITEM 4 Controls and Procedures 27 PART II - OTHER INFORMATION ITEM 1 Legal Proceedings 28 ITEM 1A Risk Factors 28 ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds 28 ITEM 3 Defaults Upon Senior Securities 28 ITEM 4 Mine Safety Disclosures 28 ITEM 5 Other Information 28 ITEM 6 Exhibits 28 Signature 29 2 BTCS INC. As used in this Quarterly Report on Form 10-Q (this “Quarterly Report”), the terms “we,” “us,” “our,” the “Company,” the “Registrant,” and “BTCS Inc.,” mean BTCS Inc. and its consolidated subsidiaries, unless otherwise indicated. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements, including our liquidity, our belief that our revenues will increase, our blockchain infrastructure efforts will form the core growth for our Digital Asset Platform, our plans and development of our Digital Asset Dashboard and the integration of Staking-as-a-Service, our Digital Asset treasury strategy, our belief regarding blockchain, plans to expand the PoS operations and other future business plans. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “may,” “potential,” “continues,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The results anticipated by any or all of these forward-looking statements might not occur. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the rewards and costs associated with staking or validating transactions on blockchains, continued drop in crypto prices, significant decrease in value of our digital assets and rewards while locked up, loss or theft of the private withdrawal keys resulting in the complete loss of digital assets and reward, and others which are contained in our filings with the SEC, including our Form 10-K for the year ended December 31, 2021. Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 3 PART I - FINANCIAL INFORMATION ITEM 1 Financial Statements BTCS Inc. Balance Sheets March 31, December 31, 2022 2021 (Unaudited) Assets: Current assets: Cash $ 2,245,062 $ 1,400,867 Digital assets/currencies 2,617,730 3,117,360 Staked digital assets/currencies 6,601,777 623,754 Prepaid expense 315,169 324,551 Total current assets 11,779,738 5,466,532 Other assets: Property and equipment, net 11,544 9,783 Staked digital assets/currencies - long term 8,684,238 8,625,678 Total other assets 8,695,782 8,635,461 Total Assets $ 20,475,520 $ 14,101,993 Liabilities and Stockholders’ Equity: Accounts payable and accrued expense $ 106,144 $ 138,716 Accrued compensation 3,209 7,334 Capital shares payable 75,002 - Dividends payable 266,231 - Warrant liabilities 2,493,750 1,852,500 Total current liabilities 2,944,336 1,998,550 Stockholders’ equity: Common stock, 97,500,000 shares authorized at $ 0.001 par value, 12,616,010 and 10,528,212 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively 12,617 10,529 Additional paid in capital 158,848,780 147,682,384 Accumulated deficit ( 141,330,213 ) ( 135,589,470 ) Total stockholders’ equity 17,531,184 12,103,443 Total Liabilities and Stockholders’ Equity $ 20,475,520 $ 14,101,993 The accompanying notes are an integral part of these unaudited condensed financial statements. 4 BTCS Inc. Statements of Operations (Unaudited) For the Three Months Ended March 31, 2022 2021 Revenues Validator revenue $ 563,015 $ 72,524 Total revenues 563,015 72,524 Cost of revenues Validator expense 137,869 14,996 Gross profit 425,146 57,528 Operating expenses: General and administrative $ 650,289 $ 553,981 Research and development 136,718 82,933 Compensation and related expenses 1,423,896 7,337,679 Marketing 41,793 1,421 Total operating expenses 2,252,696 7,976,014 Other income (expenses): Interest expense - ( 54,247 ) Amortization on debt discount - ( 562,096 ) Change in fair value of warrant liabilities ( 641,250 ) - Distributions to warrant holders ( 35,625 ) - Impairment loss on digital assets/currencies ( 3,307,428 ) ( 1,301,764 ) Realized gains (loss) on digital asset/currency transactions 71,110 3,054,418 Total other income (expenses) ( 3,913,193 ) 1,136,311 Net loss $ ( 5,740,743 ) $ ( 6,782,175 ) Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock - ( 16,176 ) Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock - ( 4,822,220 ) Net loss attributable to common stockholders $ ( 5,740,743 ) $ ( 11,620,571 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 0.47 ) $ ( 2.43 ) Weighted average number of common shares outstanding, basic and diluted 12,245,278 4,777,894 The accompanying notes are an integral part of these unaudited condensed financial statements. 5 BTCS Inc. Statements of Changes in Stockholders’ Equity (Unaudited) For the Three Months Ended March 31, 2022 Additional Total Common Stock Paid-in Accumulated Stockholders’ Shares Amount Capital Deficit Equity Balance December 31, 2021 - - 10,528,212 $ 10,529 $ 147,682,384 $ ( 135,589,470 ) $ 12,103,443 Issuance of common stock, net of offering cost / At-the-market offering 1,790,576 1,791 10,511,976 - 10,513,767 Stock-based compensation 297,222 297 1,288,977 - 1,289,274 Dividend distributions - - ( 634,557 ) - ( 634,557 ) Net loss - - - - - ( 5,740,743 ) ( 5,740,743 ) Balance March 31, 2022 - - 12,616,010 $ 12,617 $ 158,848,780 $ ( 141,330,213 ) $ 17,531,184 For the Three Months Ended March 31, 2021 Series C-1 Convertible Series C-2 Convertible Additional Total Preferred Stock Preferred Stock Common Stock Paid-in Accumulated Stockholders’ Shares Amount Shares Amount Shares Amount Capital Deficit Equity Balance December 31, 2020 29,414 $ 29 - $ - 4,201,035 $ 4,201 $ 120,578,944 $ ( 119,539,887 ) $ 1,043,287 Common stock issued including equity commitment fee, net - - - - 171,814 172 $ 2,012,541 - 2,012,713 Issuance of common stock and warrants for cash, net - - - - 950,000 950 $ 8,855,500 - 8,856,450 Issuance of Series C-2 convertible preferred stock - - 1,100,000 1,100,000 - - $ - - 1,100,000 Conversion of Series C-1 Convertible Preferred stock ( 29,414 ) ( 29 ) - - 19,609 20 $ ( 167 ) - ( 176 ) Beneficial conversion features associated with convertible notes payable - - - - - - $ 1,000,000 - 1,000,000 Beneficial conversion feature of Series C-2 convertible preferred stock - - - ( 129,412 ) - - $ 129,412 - - Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock - - 16,176 - - $ ( 16,176 ) - - Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock - - 4,822,220 - - $ ( 4,822,220 ) - - Warrant exercise - - - - 200,000 200 $ 398,000 - 398,200 Stock-based compensation - - - - 46,579 47 $ 7,539,094 - 7,539,141 Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock - - - 179,277 - - - - 179,277 Net loss - - - - - - - ( 6,782,175 ) ( 6,782,175 ) Balance March 31, 2021 - $          - 1,100,000 $ 5,988,261 5,589,037 $ 5,590 $ 135,674,928 $ ( 126,322,062 ) $ 15,346,717 The accompanying notes are an integral part of these unaudited condensed financial statements. 6 BTCS Inc. Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2022 2021 Net Cash flows used from operating activities: Net loss $ ( 5,740,743 ) $ ( 6,782,175 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 797 212 Amortization on debt discount - 562,096 Stock-based compensation 1,289,274 7,539,560 Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock - 179,277 Validator revenue ( 563,015 ) ( 72,524 ) Blockchain network fees (non-cash) 1,321 Change in fair value of warrant liabilities 641,250 - Purchase of non-productive digital assets/currencies - ( 5,761,549 ) Sale of non-productive digital assets/currencies - 4,274,491 Realized gain on digital assets/currencies transactions ( 71,110 ) ( 3,054,418 ) Impairment loss on digital assets/currencies 3,307,428 1,301,764 Changes in operating assets and liabilities: Prepaid expenses and other current assets 9,382 ( 421,384 ) Accounts payable and accrued expenses ( 36,329 ) 42,267 Accrued compensation ( 4,125 ) ( 348,875 ) Capital shares payable 75,002 - Dividends payable - distributions to warrant holders 35,625 - Net cash used in operating activities ( 1,055,243 ) ( 2,541,258 ) Net cash used in investing activities: Purchase of productive digital assets/currencies for validating ( 8,521,726 ) ( 7,994,887 ) Sale of productive digital assets/currencies 310,149 - Purchase of property and equipment ( 2,558 ) - Net cash used in investing activities ( 8,214,135 ) ( 7,994,887 ) Net cash provided by financing activities: Dividend distributions ( 400,194 ) - Proceeds from exercise of warrants - 400,000 Proceeds from issuance of Series C-2 convertible preferred stock - 1,100,000 Net proceeds from issuance of convertible notes - 1,000,000 Net proceeds from issuance of common stock and warrants for cash - 8,865,000 Net proceeds from issuance of common stock - 2,014,259 Net proceeds from issuance common stock/ At-the-market offering 10,513,767 - Payment to convertible notes principle - - Net cash provided by financing activities 10,113,573 13,379,259 Net increase in cash 844,195 2,843,114 Cash, beginning of period 1,400,867 524,135 Cash, end of period $ 2,245,062 $ 3,367,249 Supplemental disclosure of non-cash financing and investing activities: Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock $ - $ 16,176 Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock $ - $ 4,822,220 Conversion of Series C-1 Preferred Stock $ - $ 196 Beneficial conversion feature of Series C-2 convertible preferred stock $ - $ 129,412 Beneficial conversion features associated with convertible notes payable $ - $ 1,000,000 Dividends payable $ 230,606 $ - The accompanying notes are an integral part of these unaudited condensed financial statements. 7 BTCS Inc. Notes to Unaudited Condensed Financial Statements Note 1 - Business Organization and Nature of Operations BTCS Inc. (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. The Company’s blockchain infrastructure operations with a focuses on securing next-generation blockchains and operating validator nodes on various proof of stake-based blockchain networks, earning rewards of additional Digital Assets by actively validating transactions on the networks. The Company is developing a Digital Asset Platform that would enable users to aggregate their Digital Asset 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. We also are developing and plan to integrate into the Digital Asset Platform a proprietary Staking-as-a-Service feature that would enable users participate in asset leveraging through securing blockchain protocols and to stake and delegate supported cryptocurrencies through a non-custodial platform to BTCS operated validator nodes. The 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. Amendment to Articles of Incorporation On 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. No 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. Numbers 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 Split. Note 2 - Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements do not include all of the information and notes required by GAAP for annual financial statements, but in the opinion of the Company’s management, reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results for the three months ended March 31, 2022 are not necessarily indicative of results for the full year ended December 31, 2022. The unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2021. 8 Note 3 - Summary of Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2021 Annual Report. Basis of presentation The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Reclassifications Certain 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 of Cash The 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. As of March 31, 2022 and December 31, 2021, the Company had approximately $ 2.2 million and $ 1.4 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. Financial 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 March 31, 2022 and December 31, 2021, the Company had approximately $ 1.7 million and $ 0.9 million in excess of the FDIC insured limit, respectively. Revenue Recognition The 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: ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligation Revenue 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. The Company has entered into network-based smart contracts by running its own Digital Asset validating nodes as well as by staking Digital Assets with staking pools on nodes run by third-party operators (either directly or through exchanges). Through these contracts, the Company provides cryptocurrency to stake on a node for the purpose of validating transactions and adding blocks to a respective blockchain network. 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 canceled by the operator and requires that the cryptocurrency staked remain locked up during the duration of the smart contract. In exchange for staking the cryptocurrency and validating transactions on blockchain networks, the Company is entitled to all of the fixed cryptocurrency award for running the Company’s own node and is entitled to a fractional share of the fixed cryptocurrency award a third-party staking pool operator receives (less digital asset transaction fees payable to the pool operator or exchanges, which are immaterial and are recorded as a deduction from revenue), for successfully adding a block to the blockchain. The Company’s fractional share of awards received by a third-party staking pool is based on the proportion of cryptocurrency the Company staked to the staking pool node to the total cryptocurrency staked by all pool participants validating blockchain transactions. 9 The 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 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 at the time of receipt. The satisfaction of the performance obligation for transaction verification services 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. Cost of revenue The 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 software maintenance and operations of its nodes. Digital Assets Translations and Remeasurements The Company accounts for its Digital Assets as indefinite-lived intangible assets in accordance with ASC 350, Intangibles –Goodwill and Other . 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. Subsequent reversal of impairment losses is not permitted. Digital 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. dollar spot 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. Such impairment in the value of Digital Assets are recorded as a component of costs and expenses in our statements of operations. The Company recorded impairment losses of approximately $ 3.3 million and $ 1.3 million related to Digital Assets during the three months ended March 31, 2022 and 2021, respectively Impairment 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 $ 70,000 and $ 3 million during the three months ended March 31, 2022 and 2021, respectively. The 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. 10 Internally Developed Software Internally 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. 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. 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 technological feasibility (i.e., beta version). Under this approach, software under development will pass the technological feasibility milestone when the Company has completed a version that contains essentially all the functionality and features of the final version 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. 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. 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. Property and Equipment Property 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. Use of Estimates The accompanying financial statements have been prepared in conformity with U.S. GAAP. 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. Income Taxes The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. 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. Accounting for Warrants The 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 settlement). 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. The 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). 11 Stock-based compensation The 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’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. Share-based payment awards exchanged for services are accounted for at the fair value of the award on the estimated grant date. Options 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 period. The 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. Restricted Stock Units (RSUs) For 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. Stock-based compensation expense for the market-based restricted stock units with explicit service conditions is recognized on a straight-line basis over the longer of the derived service period or the explicit service period, regardless of whether the market condition is satisfied. However, in the event that the explicit service period is not met, previously recognized compensation cost would be reversed. Market-based restricted stock units subject to market-based performance targets require achievement of the performance target as well as a service condition in order for these RSUs to vest. The Company estimates the fair value of market-based RSUs as of the grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the period from the grant date through the end of the derived service period. Dividends On January 5, 2022, the board of directors of the Company declared a non-recurring special dividend of $ 0.05 for each outstanding share of Common Stock of the Company, payable to holders of record as of the close of business on March 17, 2022. The dividend distributions are considered a return of capital as the distributions are in excess of the Company’s current and accumulated earnings and profits. The return of capital distribution reduces the Company’s additional paid in capital balance. The Company will evaluate the appropriateness of potential future dividends as the Company continues to grow its operations. Dividend distributions amounted to $ 635,000 and $ 0 during the three months ended March 31, 2022 and 2021, respectively. Advertising Expense Advertisement costs are expensed as incurred and included in marketing expenses. Advertising and marketing expenses amounted to approximately $ 42,000 and $ 1,000 for the three months ended March 31, 2022 and 2021, respectively. Net Loss per Share Basic 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 of preferred stock, notes and warrants from the calculation of net loss per share if their effect would be anti-dilutive. The following financial instruments were not included in the diluted loss per share calculation as of March 31, 2022 and 2021 because their effect was anti-dilutive: Schedule of Earnings Per Share Anti-diluted As of March 31, 2022 2021 Warrants to purchase common stock 962,794 962,794 Series C-1 Convertible Preferred stock - 3,989,767 Convertible notes - 149,366 Options 1,235,000 - Non-vested restricted stock awards units 1,668,084 - Total 3,865,878 5,101,927 12 Recent Accounting Pronouncements In 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 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. 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 GAAP. 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 ASU No. 2019-12 effective January 1, 2021, and the adoption did not have a material impact on its financial statements and related disclosures. Other 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. Note 4 - Fair Value of Financial Assets and Liabilities Financial 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. The Company uses three levels of inputs that may be used to measure fair value: Level 1 - quoted prices in active markets for identical assets or liabilities Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The following table presents the Company’s assets and liabilities that are measured at fair value at March 31, 2022 and December 31, 2021: Schedule of Fair Value of Assets and Liabilities Valued on Recurring Basis Fair value measured at March 31, 2022 Total at March 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2022 (Level 1) (Level 2) (Level 3) Liabilities Warrant Liabilities $ 2,493,750 $   - $   - $ 2,493,750 Fair value measured at December 31, 2021 Total at December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs 2021 (Level 1) (Level 2) (Level 3) Liabilities Warrant Liabilities $ 1,852,500 $    - $    - $   1,852,500 13 Level 3 Valuation Techniques Level 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. A 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. On 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 of $ 9.5 million in a private placement. The closing of the Offering occurred on March 4, 2021. The 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. The Warrants 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. The 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. A 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 March 31, 2022 and December 31, 2021, is as follows: Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities March 31, 2022 December 31, 2021 Risk-free rate of interest 2.42 % 1.26 % Expected volatility 160.1 % 162.5 % Expected life (in years) 3.93 4.18 Expected dividend yield - - The 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. The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities for the three months ended March 31, 2022 and 2021, 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 March 31, March 31, 2022 2021 Beginning balance $ 1,852,500 $ - Warrant liabilities classification -              - Fair value adjustment of warrant liabilities 641,250 - Ending balance $ 2,493,750 $ - 14 Note 5 - Stockholders’ Equity Common Stock Reverse Stock Split On 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 stock split. At The Market Offering Agreement On September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”), pursuant to which the Company may offer and sell, from time-to-time through H.C. Wainwright, shares of the Company’s Common Stock having an aggregate offering price of up to $ 98,767,500 million (the “Shares”). The Company will pay H.C. Wainwright a commission rate equal to 3.0 % of the aggregate gross proceeds from each sale of Shares. During the three months ended March 31, 2022, the Company sold a total of 1,790,576 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $ 10,849,000 at an average selling price of $ 6.06 per share, resulting in net proceeds of approximately $ 10,514,000 after deducting commissions and other transaction costs. 2021 Equity Incentive Plan The 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. The Company is currently seeking shareholder approval to increase the reserved amount under the 2021 Plan to 7,000,000 shares. Options On 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 vested 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. A summary of option activity under the Company’s stock option plan for three months ended March 31, 2022 is presented below: Summary of Option Activity Number of Shares Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2021 1,235,000 $ 2.14 $ 1,488,000 4.3 Employee options granted - - - - Outstanding as of March 31, 2022 1,235,000 $ 2.14 $ 2,736,000 4.0 Options vested and exercisable as of March 31, 2022 1,205,250 $ 1.94 $ 2,736,000 4.0 15 RSUs Effective January 2, 2022, the Board of Directors of the Company ratified the following arrangements approved by its Compensation Committee: The 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 in 2022. As of March 31, 2022, 23,886 RSUs vested and are reflected as capital shares payable on the Balance Sheet amounting to approximately $ 75,000 . The Company’s executive officers were granted RSUs as part of a long-term incentive plan (“LTI”), with vesting terms set for when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above four defined market capitalization thresholds of $ 100 million, $ 150 million, $ 200 million and $ 400 million. Effective February 22, 2022, upon appointment of Manish Paranjape as Chief Technology Officer of the Company, Mr. Paranjape was also granted RSUs as part of the LTI plan, with consistent vesting terms set for when the Company’s market capitalization above the same four defined market capitalization thresholds. The RSUs granted to each executive employee are as follows: Schedule of Restricted Stock Units Market Cap Vesting Thresholds Total Officer Name Title Grant Date RSUs Granted $ 100 million $ 150 million $ 200 million $ 400 million Charles Allen Chief Executive Officer 1/2/2022 694,444 173,611 173,611 173,611 173,611 Michal Handerhan Chief Operations Officer 1/2/2022 444,444 111,111 111,111 111,111 111,111 Michael Prevoznik Chief Financial Officer 1/2/2022 222,224 55,556 55,556 55,556 55,556 Manish Paranjape Chief Technology Officer 2/22/2022 160,184 40,046 40,046 40,046 40,046 1,521,296 380,324 380,324 380,324 380,324 To the extent any market capitalization targets set forth above for Mr. Prevoznik and 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. In 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. For 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. Stock-based compensation expense for the market-based restricted stock units with explicit service conditions is recognized on a straight-line basis over the longer of the derived service period or the explicit service period, regardless of whether the market condition is satisfied. However, in the event that the explicit service period is not met, previously recognized compensation cost would be reversed. Market-based restricted stock units subject to market-based performance targets require achievement of the performance target as well as a service condition in order for these RSUs to vest. The Company estimates the fair value of market-based RSUs as of the grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the period from the grant date through the end of the derived service period. 16 The following weighted-average assumptions were used to estimate the fair value of options granted during the three months ended March 31, 2022 and 2021 for the Monte-Carlo simulation: Schedule of Weighted-average Assumptions Used to estimate Fair Value Three Months Ended March 31, 2022 2021 Vesting Hurdle Price $ 19.39 - Term (years) 5 .00 - Expected stock price volatility 103.7 % - Risk-free rate of interest 1.32 % - Expected Volatility : 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 RSUs. Risk-Free 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 RSUs. Expected Term : The Company’s expected term represents the weighted-average period that the Company’s RSUs are expected to be outstanding. The expected term is based on the stipulated 5 year period from the grant date until the market based criteria are achieved. If the market based criteria are not achieved within the five year period from the grant date, the RSUs will not vest and shall expire. Vesting Hurdle Price: : The vesting hurdle prices are determined by taking the vesting Market Cap criteria divided by the shares outstanding as of the valuation dates. A summary of the Company’s restricted stock units granted under the 2021 Plan during the three months ended March 31, 2022 are as follows: Summary of Restricted Stock Number of Restricted Stock Units Weighted Average Grant Day Fair Value Nonvested at December 31, 2021 29,363 $ 5.96 Granted 1,662,607 3.29 Vested ( 23,886 ) 3.14 Forfeited - - Nonvested at March 31, 2022 1,668,084 $ 3.34 Stock Based Compensation Stock-based compensation expense for the three months ended March 31, 2022 was approximately $ 1.3 million. Stock-based compensation expense is recorded as a part of selling, general and administrative expenses, compensation expenses and cost of revenues. Stock-based compensation expense for the three months ended March 31, 2022 and 2021 was as follows: Schedule of Stock-based Compensation Expense For the Three Months Ended March 31, 2022 2021 Employee bonus stock awards $ 894,027 $ - Employee stock option awards 69,634 7,039,560 Employee restricted stock unit awards 341,990 - Non-employee restricted stock awards 82,081 62,640 Series C-2 Allocation - 179,277 Stock-based compensation $ 1,387,732 $ 7,281,477 17 Note 6 – Accrued Expenses Accrued expenses consist of the following: Schedule of Accrued Expenses March 31, 2022 December 31, 2021 Compensation and related expenses $ 3,209 $ 7,334 Accounts Payable 102,387 138,716 Other 3,757 - Accrued Expenses $ 109,352 $ 146,050 Note 7 - Employee Benefit Plans The 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 three months ended March 31, 2022, the Company made contributions to the 401(k) Plan of $ 45,000 . Note 8 - Subsequent Events The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. 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. During the period from March 31, 2022 to May 9, 2022, the Company sold a total of 11,375 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $ 46,000 at an average selling price of $ 4.02 per share, resulting in net proceeds of approximately $ 44,000 after deducting commissions and other transaction costs. On May 12, 2022, the Compensation Committee of the Board of Directors of the Company approved a performance based Annual Cash Incentive Plan for the Company’s executives for fiscal year 2022. If an executive meets their performance milestones, the executive will receive a cash bonus in amount up to 48 % to 107 % of the applicable executive’s base salary, as detailed below: ● Charles Allen, the Company’s Chief Executive Officer is eligible to receive up to 107 % of his base salary. Mr. Allen’s current base salary is $ 393,702 ; ● Michal Handerhan, the Company’s Chief Operating Officer is eligible to receive up to 60 % of his base salary. Mr. Handerhan’s base salary is $ 275,000 ; ● Michael Prevoznik, the Company’s Chief Financial Officer is eligible to receive up to 50 % of his base salary. Mr. Prevoznik’s base salary is $ 175,000 ; ● Manish Paranjape, the Company’s Chief Technology Officer is eligible to receive up to 48 % of his base salary. Mr. Paranjape’s base salary is $ 225,000 . 18 ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical financial statements and the notes to those statements that appear elsewhere in this report. Certain statements in the discussion contain forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those discussed in the Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2021. When we refer to the “2022 Quarter” and the “2021 Quarter” we are referring to the three months ended March 31, 2022 and March 31, 2021 quarters, respectively. Additionally, the twelve months ending December 31, 2022 is referred to as “Fiscal 2022.” Overview BTCS is an early entrant in the Digital Asset market and one of the first U.S. publicly-traded companies to focus on Digital Assets and blockchain technologies. Through our blockchain-infrastructure operations, we secure disruptive next-generation blockchains and operate validator nodes on various proof of stake-based blockchain networks, earning rewards of additional Digital Assets by actively validating transactions on the networks. While this process is similar to Bitcoin mining the consensus mechanism is different. Now we are building on the foundation of our pre-established infrastructure with the development of a Digital Asset Platform. The first feature of the dashboard, which is an open beta, allows users to evaluate their Digital Asset portfolios from multiple exchanges on a single platform. We also are developing and plan to integrate into the platform a Staking-as-a-Service feature that, once launched, will allow users to participate in asset leveraging through securing blockchain protocols. Blockchain Infrastructure Blockchain infrastructure operations can broadly be defined as earning a reward for securing a blockchain by validating transactions on that blockchain. There are currently two main consensus mechanisms used to secure blockchains: i) proof-of-work (“PoW”), in which nodes dedicate computational resources, and ii) proof-of-stake (“PoS”), in which nodes dedicate financial resources. The intention behind both PoW and PoS is to make it practically impossible for any single malicious actor to have enough computational power or ownership stake to successfully attack the blockchain. In the case of PoW, a miner does “work” using energy-consuming computers and is rewarded for this “work” with Digital Assets. The miner, typically through pools running nodes, validates transactions on the blockchain, essentially converting electricity and computing power into a digital currency reward comprised of transaction fees and newly-minted Digital Assets. Bitcoin is an example of PoW and is by far the largest and most secure PoW blockchain. PoS miners, often referred to as validators in PoS systems, actively operate nodes and validate transactions. Validators are required to stake holdings of a digital currency to participate in the consensus algorithm and are rewarded in tokens for aligning behavior with the rules of the algorithm. Bad behavior can be penalized by “slashing” the validator’s holdings and/or rewards. Validators can also be removed from the network for breaking the rules. Ill-intentioned behavior among validators is discouraged, allowing for the blockchain to be properly maintained and secured. Compared to PoW, PoS blockchains require less energy. Depending on the PoS blockchain protocol, native token holders have the opportunity to leverage their asset holdings by either delegating their rights to a validator (“Delegating”), staking their token holdings in a staking pool (“Staking”), or running their own validator (“Pooling”). With Delegating, token holders indirectly participate by maintaining control of their private keys and delegating their tokens to an existing validator. Therefore, delegating is more akin to assigning voting rights of stock to another person or entity via a power of attorney. With Pooling, an operator and token holder combine tokens in order to improve the constituents’ collective odds of validating new blocks, and typically the operator takes custody of token holders funds i.e. private keys. If chosen for validation, the group is rewarded in tokens. With both Delegating and Pooling, the validator operators earn a fee for providing the technical capabilities of running a node 24/7 that requires regular, active maintenance and industry expertise. BTCS uses its blockchain infrastructure to operate validator nodes on various proof of stake-based blockchain networks. In connection with the validation of transactions occurring on those blockchain networks, BTCS will stake the Digital Assets native to those blockchains on the validator nodes it operates in order to earn staking rewards. BTCS may also use its blockchain infrastructure to validate and sign transactions on behalf of customers that delegate their validation and voting rights to BTCS-operated validator nodes (referred to as “Staking-as-a-Service” or “StaaS”). A StaaS provider maintains an active role in validating transactions on a given PoS network on behalf of its delegators by (1) arranging transactions using software to stake the relevant Digital Assets; (2) monitoring the nodes it is operating to ensure they remain online, ready to validate transactions; and (3) verifying transactions on the network when required to earn rewards. 19 Apart from Bitcoin and Ethereum, all of the Company’s Digital Asset holdings are in tokens secured by PoS or similar consensus mechanisms that allow for Delegating and asset leveraging. The Company is currently actively operating validator nodes on Ethereum’s beacon chain, Cardano, Tezos, Avalanche, Kusama, and Cosmos. The Company has also staked the following tokens Polkadot, Terra, Algorand, and Solana. Building on that base, the Company plans to expand its PoS operations to secure other disruptive blockchain protocols that also allow for delegating. The Company believes its blockchain infrastructure efforts will form the core growth for its Digital Asset Platform. The Company utilizes cloud infrastructure to operate and run its validator nodes and does not maintain its own physical assets, but may add this infrastructure in the future. The Company currently holds the following Digital Assets which are core to its blockchain infrastructure efforts. The table also includes Bitcoin which is not core to our infrastructure operations. Digital Assets Held at Period End Asset 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 Bitcoin (BTC) 90 90 90 90 90 Ethereum (ETH) 7,733 7,879 7,992 8,098 8,196 Cardano (ADA) 257,757 257,757 257,757 257,757 Kusama (KSM) 123 374 374 5,278 Tezos (XTZ) 14,966 24,172 24,504 70,453 Solana (SOL) 4,788 4,779 7,043 Polkadot (DOT) 8,032 8,032 38,816 Terra (LUNA) 3,584 3,584 3,621 Cosmos (ATOM) 3,072 3,072 80,474 Polygon (MATIC) 67,114 67,114 454,486 Avalanche (AVAX) 2,025 2,073 14,273 Algorand (ALGO) 50,584 51,103 51,197 Axie Infinity (AXS) 22,322 Kava (KAVA) 183,966 20 Fair Market Value of Digital Assets at Period End Asset 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 Bitcoin (BTC) $ 5,302,695 $ 3,153,675 $ 3,941,180 $ 4,167,579 $ 4,098,481 Ethereum (ETH)* $ 14,833,709 $ 17,920,148 $ 23,990,541 $ 29,820,477 $ 26,894,723 Cardano (ADA) $ 356,600 $ 545,028 $ 337,716 $ 294,320 Kusama (KSM) $ 26,501 $ 123,957 $ 103,866 $ 992,851 Tezos (XTZ) $ 45,495 $ 146,914 $ 106,679 $ 262,023 Solana (SOL) $ 675,373 $ 813,791 $ 863,854 Polkadot (DOT) $ 229,558 $ 214,616 $ 826,875 Terra (LUNA) $ 138,351 $ 306,353 $ 373,005 Cosmos (ATOM) $ 111,252 $ 99,761 $ 2,325,374 Polygon (MATIC) $ 75,644 $ 169,604 $ 735,034 Avalanche (AVAX) $ 135,191 $ 226,499 $ 1,383,403 Algorand (ALGO) $ 82,381 $ 84,830 $ 47,492 Axie Infinity (AXS) $ 1,416,264 Kava (KAVA) $ 828,742 Total $ 20,136,404 $ 21,502,420 $ 30,195,370 $ 36,451,772 $ 41,342,441 QoQ Change 411 % 7 % 40 % 21 % 13 % YoY Change 7516 % 2013 % 1780 % 825 % 105 % * Approximately 9 ETH is not staked on Ethereum 2.0’s Beacon Chain. 21 Prices of Digital Assets at Period End Asset 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 Bitcoin (BTC) $ 58,919 $ 35,041 $ 43,791 $ 46,306 $ 45,539 Ethereum (ETH) $ 1,918 $ 2,275 $ 3,002 $ 3,683 $ 3,282 Cardano (ADA) $ 1.38 $ 2.11 $ 1.31 $ 1.14 Kusama (KSM) $ 215 $ 331 $ 278 $ 188 Tezos (XTZ) $ 3.04 $ 6.08 $ 4.35 $ 3.72 Solana (SOL) $ 141 $ 170 $ 123 Polkadot (DOT) $ 28.58 $ 26.72 $ 21.30 Terra (LUNA) $ 38.60 $ 85.47 $ 103 Cosmos (ATOM) $ 36.21 $ 32.47 $ 28.90 Polygon (MATIC) $ 1.13 $ 2.53 $ 1.62 Avalanche (AVAX) $ 66.77 $ 109 $ 96.92 Algorand (ALGO) $ 1.63 $ 1.66 $ 0.93 Axie Infinity (AXS) $ 63.45 Kava (KAVA) $ 4.50 * The prices have been rounded to the nearest whole dollar for prices above $100 Digital Asset Platform The Company is also developing a proprietary Digital Asset Platform aimed at allowing users to evaluate their crypto portfolio holdings across multiple exchanges and chains on a single platform. The internally-developed dashboard utilizes Digital Asset exchange APIs to read user data and does not allow for the trading of assets. In addition to portfolio monitoring, we are also working to integrate a full suite of other features including decentralized exchanges, wallets, risk metrics and potentially a way for users to calculate end-of year-reports for tax purposes. We believe that increasing the number of features we offer may create a sticky user experience across multiple, interrelated products. The Company is also currently developing and plans to integrate into the Digital Asset Platform a proprietary Staking-as-a-Service feature aimed at allowing users to delegate supported cryptocurrencies through a non-custodial platform to BTCS operated validator nodes. Staking allows users to generate an annual percentage yield (“APY”) on their staked assets whereas validator node operators charge a fee on users’ staked asset rewards earned in addition to earning an APY on staked assets. In turn, the highly scalable nature of both staking Digital Assets as well as allowing users to stake Digital Assets to earn token rewards is the premise behind BTCS’ Staking-as-a-Service platform. Digital Asset Treasury Strategy The Company employs a Digital Asset treasury strategy with a primary focus on disruptive protocol layer assets such as Bitcoin which are not able to be staked (i.e. non-productive). They are distinct from Digital Assets used as the foundation for our blockchain infrastructure operations previously discussed. The Company’s Digital Asset treasury holding is comprised of 90 Bitcoins as set forth above. The Company is not limiting its assets to a single type of Digital Asset and may hold a variety of Digital Assets. The Company will carefully review its purchases of digital securities to avoid violating the Investment Company Act of 1940 and seek to reduce potential liabilities under the federal securities laws. The 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. 22 Non-GAAP financial measure In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA, a non-GAAP measure, is useful in evaluating our operating performance. We believe that Adjusted EBITDA may be helpful to investors because it provides consistency and comparability with past financial performance and the economic realities of our business. However, Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Among other non-cash and non-recurring items, Adjusted EBITDA excludes stock-based compensation expense (including stock-based compensation issued to service providers), which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business. We calculate Adjusted EBITDA as net income (loss), adjusted to exclude, depreciation and amortization, interest expense, change in fair value of warrant liabilities, and stock-based compensation expense (including stock-based compensation issued to service providers). Adjusted EBITDA presented does not include adjustments for impairment of intangible Digital Assets. The following table provides a reconciliation of net income (loss) to Adjusted EBITDA: Three Months Ended March 31, 2022 2021 Net income (loss) $ (5,740,743 ) $ (6,782,175 ) Adjusted to exclude the following: Depreciation and amortization 797 562,096 Interest expense - 54,247 Change in fair value of warrant liabilities 641,250 - Stock-based compensation 1,364,276 7,281,477 Adjusted EBITDA (3,734,420 ) 1,115,645 23 Results of Operations for the Three Months Ended March 31, 2022 and 2021 The following table reflects our operating results for the three months ended March 31, 2022 and 2021: For the Three Months Ended March 31, $ Change % Change 2022 2021 2022 2022 Revenues Validator revenue $ 563,015 $ 72,524 $ 490,491 676 % Total revenues 563,015 72,524 490,491 676 Cost of revenues Validator expense 137,869 14,996 122,873 819 Gross profit 425,146 57,528 367,618 639 Operating expenses: General and administrative $ 650,289 $ 553,981 $ 96,308 17 % Research and development 136,718 82,933 53,784 65 Compensation and related expenses 1,423,896 7,337,679 (5,913,784 ) (81 ) Marketing 41,793 1,421 40,372 2,841 Total operating expenses 2,252,696 7,976,014 (5,723,318 ) (72 ) Other income (expenses): Interest expense - (54,247 ) 54,247 (100 ) Amortization on debt discount - (562,096 ) 562,096 (100 ) Change in fair value of warrant liabilities (641,250 ) - (641,250 ) N/A Distributions to warrant holders (35,625 ) - (35,625 ) N/A Impairment loss on digital assets/currencies (3,307,428 ) (1,301,764 ) (2,005,664 ) 154 Realized gains (loss) on digital asset/currency transactions 71,110 3,054,418 (2,983,308 ) 98 Total other income (expenses) (3,913,193 ) 1,136,311 (5,049,505 ) 444 Net loss $ (5,740,743 ) $ (6,782,175 ) 1,041,342 (15 ) Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock - (16,176 ) 16,176 (100 ) Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock - (4,822,220 ) 4,822,220 (100 ) Net loss attributable to common stockholders $ (5,740,743 ) $ (11,620,571 ) 5,879,828 (51 ) 24 Validator Revenue Revenue for the three months ended March 31, 2022 and 2021 were approximately $563,000 and $73,000, respectively. The increase is from our blockchain infrastructure validating revenue. We believe revenues will increase as the Company continues to expand its blockchain infrastructure efforts. Cost of Revenues Cost of revenues for the three months ended March 31, 2022 and 2021 were approximately $138,000 and $15,000, respectively. The increase is from our blockchain infrastructure validating operating costs, including, web service hosting fees, and cash and stock-based compensation related to services provided by vendors. We believe our cost of revenues will increase as we continue to ramp up our business. However, we believe gross margin will improve as we add scale to our blockchain infrastructure operations, leading to improved gross profits. Operating Expenses Operating expenses for the three months ended March 31, 2022 and 2021 were approximately $2.2 million and $8.0 million. The decrease is primarily due to $7.3 million non-cash contingent bonuses granted to employees and our non-employee director during 2021 for the achievement of performance milestones. The equity compensation was not valued based on the Company’s stock price of $0.19, the last closing date prior to the date of issuance of January 1, 2021 but instead, in accordance with GAAP, valued as of March 31, 2021 (the date the Company received stockholder ratification). On that date, the Company’s stock price was $1.03 which caused the significant corresponding stock compensation expense. We believe operating expenses will remain consistent as the Company continues to utilize equity-based bonus incentives as a core part of its compensation strategy. Other Income (Expenses) Other income (expenses) for the three months ended March 31, 2022 and 2021 was approximately $(3.9) million and $1.1 million, respectively. The increase in other income is primarily from $3.3 million impairment loss on digital assets/currencies and $0.6 million change in fair value of warrant liabilities. Net loss Net loss for the three months ended March 31, 2022 and 2021 was approximately $5.7 million and $6.8 million, respectively. The decrease is primarily due to the decrease of operating expenses and increase in other income (expense) as discussed above. Net loss attributable to common stockholders We incurred approximately $0 and $16,000 related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock, and $0 and $4.8 million of deemed dividends related to recognition of anti-dilution adjustment to the conversion amount for Series C-2 convertible preferred stock for the three months ended March 31, 2022 and 2021, respectively. Liquidity and Capital Resources Recent Financing On September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”), pursuant to which the Company may offer and sell, from time-to-time through H.C. Wainwright, shares of the Company’s Common Stock having an aggregate offering price of up to $98,767,500. From the period September 14, 2021 through May 9, 2022, the Company sold a total of 2,268,742 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $13,874,000 at an average selling price of $6.12 per share, resulting in net proceeds of approximately $13,440,000 after deducting commissions and other transaction costs. Liquidit y 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. 25 Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At March 31, 2022, the Company had approximately $2.6 million of liquid Digital Assets (i.e. non-staked) and $2.2 million of cash. As of March 31, 2022, we held approximately 90 bitcoins that composed a majority of our non-staked liquid Digital Asset balance. We do not believe we will need to sell any of our bitcoins within the next twelve months to meet our working capital requirements, although we may from time to time sell bitcoins as part of treasury management operations, including to increase our cash balances. The Bitcoin market historically has been characterized by significant volatility in its price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, susceptibility to market abuse and manipulation, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of instability in the Bitcoin market, we may not be able to sell our bitcoins at reasonable prices or at all. As a result, our bitcoins are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. In addition, upon sale of our bitcoin, we may incur additional taxes related to any realized gains or we may incur capital losses as to which the tax deduction may be limited. We view our crypto asset investments as long-term holdings and we do not plan to engage in regular trading of crypto assets. During times of instability in the market of crypto assets, we may not be able to sell our crypto assets at reasonable prices or at all. As a result, our crypto assets are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. As of May 9, 2022, the Company had approximately $1.9 million of cash and the fair market value of the Company’s liquid Digital Assets was approximately $8.7 million, which excludes $18.7 million of staked Ethereum. The Company had no notes payable or any other long-term debt outstanding. As of May 9, 2022, the Company also has approximately $18.2 million available under the At the Market Offering Agreement over the next twelve months under the Form S-3 baby shelf rules, although, the amount that we may raise under the Form S-3 may increase or decrease based upon our then stock price. The Company believes that the existing cash and liquid Digital Assets held by us, in addition to the funds available to the Company from the issuance of additional stock through the ATM Agreement, provide sufficient liquidity to meet working capital requirements, anticipated capital expenditures and contractual obligations for at least the next twelve months. Cash Flows Cash used in operating activities was $1.1 million during the three months ended March 31, 2022 compared to $2.5 million for the three months ended March 31, 2021. Cash used in investing activities was $8.2 million during the three months ended March 31, 2022 compared to $8.0 million for the three months ended March 31, 2021. Net cash outflow for investing activities was used primarily for the purchase of Digital Assets for blockchain infrastructure operations. Cash provided by financing activities was $10.1 million during the three months ended March 31, 2022 compared to $13.4 million for the three months ended March 31, 2021. The cash inflows from financing activities were primarily from proceeds from the Common Stock sold pursuant to the ATM Agreement ($10.5 million). This was partially offset by a one time return of capital distribution of $635,000 made to record holders as of March 17, 2022. The Company has plans to continue to raise proceeds from the sale of Common Stock and issuance of debt to fund operations as needed. Off Balance Sheet Transactions As of March 31, 2022, there were no off-balance sheet arrangement and we were not a party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations. 26 RECENT ACCOUNTING PRONOUNCEMENTS For information on recent accounting pronouncements, see Note 3 to the Unaudited Condensed Financial Statements. ITEM 3 Quantitative and Qualitative Disclosures About Market Risk Not applicable. ITEM 4 Controls and Procedures Evaluation of Disclosure Controls and Procedures Our 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 March 31, 2022. 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 March 31, 2022. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 27 PART II - OTHER INFORMATION ITEM 1 Legal Proceedings None. ITEM 1A Risk Factors Not applicable to smaller reporting companies. ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds In addition to those unregistered securities previously disclosed in reports filed with the Securities and Exchange Commission, during the quarter ended March 31, 2022, we have issued securities without registration under the Securities Act, as described below. Name or Class of Investor Date of Sale No. of Securities Reason for Issuance Non-Employee Directors (1) January 2, 2022 95,544 shares of restricted stock units Performance awards (1) Exempt under Section 4(a)(2) of the Securities Act and Regulation 506(b) thereunder. The securities were issued to accredited investors and there was no general solicitation. ITEM 3 Defaults Upon Senior Securities None. ITEM 4 Mine Safety Disclosures Not applicable. ITEM 5 Other Information On May 12, 2022, the Compensation Committee of the Board of Directors of the Company approved a performance based Annual Cash Incentive Plan for the Company’s executives for fiscal year 2022. If an executive meets their performance milestones, the executive will receive a cash bonus in amount up to 48% to 107% of the applicable executive’s base salary, as detailed below: ● Charles Allen, the Company’s Chief Executive Officer is eligible to receive up to 107% of his base salary. Mr. Allen’s current base salary is $393,702; ● Michal Handerhan, the Company’s Chief Operating Officer is eligible to receive up to 60% of his base salary. Mr. Handerhan’s base salary is $275,000; ● Michael Prevoznik, the Company’s Chief Financial Officer is eligible to receive up to 50% of his base salary. Mr. Prevoznik’s base salary is $175,000; ● Manish Paranjape, the Company’s Chief Technology Officer is eligible to receive up to 48% of his base salary. Mr. Paranjape’s base salary is $225,000. ITEM 6 Exhibits The exhibits listed in the accompanying “Exhibit Index” are filed or incorporated by reference as part of this Form 10-Q. 28 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BTCS Inc. May 13, 2022 By: /s/ Charles Allen Charles W. Allen Chief Executive Officer (Principal Executive Officer) 29 EXHIBIT INDEX Incorporated by Reference Filed or Furnished Exhibit # Exhibit Description Form Date Number Herewith 2.1 Articles of Merger 8-K/A 7/31/15 3.1 2.2 Agreement and Plan of Merger 8-K/A 7/31/15 3.2 3.1 Amended and Restated Articles of Incorporation, as of May 2010 10-K 3/31/11 3.1 3.1(a) Certificate of Amendment to Articles of Incorporation - Increase Authorized Capital 8-K 3/25/13 3.1 3.1(b) Certificate of Amendment to Articles of Incorporation - Increase Authorized Capital 8-K 2/5/14 3.1 3.1(c) Certificate of Amendment to Articles of Incorporation - Reverse Stock Split 8-K 2/16/17 3.1 3.1(d) Certificate of Amendment to Articles of Incorporation - Reverse Stock Split 8-K 4/9/19 3.1 3.1(e) Certificate of Change – Reverse Split 8-K 8/17/21 3.1 3.2 Bylaws S-1 5/29/08 3.2 3.2(a) Amendment No. 1 to the Bylaws 8-K 4/12/22 3.1 4.1 2021 Equity Incentive Plan DEF 14A 4/26/22 Annex A 10.1 Form of Subscription Agreement – Series C-2 Convertible Preferred Stock 8-K 1/4/21 10.1 10.2 Series D Warrant dated January 15, 2021 8-K 1/22/21 10.1 10.3 Form of Securities Purchase Agreement, dated March 2, 2021, by and between the Company, the Purchasers and the Placement Agent+ 8-K 3/4/21 10.1 10.4 Placement Agent Agreement dated March 2, 2021 by and between the Company and A.G.P./Alliance Global Partners 8-K 3/4/21 10.2 10.5 Common Stock Purchase Warrant dated March 2, 2021, by and between the Company and the Purchasers 8-K 3/4/21 10.3 10.6 Offer Letter – Michael Prevoznik 10-K 3/11/22 10.4 31.1 Certification of Principal Executive and Financial Officer (302) Filed 31.2 Certification of Principal Financial Officer (302) Filed 32 Certification of Principal Executive and Principal Financial Officer (906) Furnished** 101.INS Inline XBRL Instance Document Filed 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). Filed ** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. + Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission staff upon request. Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to BTCS Inc., 9466 Georgia Avenue #124, Silver Spring, MD 20910, Attention: Corporate Secretary. 30