What changed in this filing

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Item 1. Financial Statements

2022-05-13 compared with 2021-11-09 · 365 added, 559 removed, 330 unchanged (74% of the section changed)

1 Financial Statements

Balance Sheets

ITEM 1 Financial Statements

assets/currencies

digital assets/currencies

current assets

and equipment, net

digital assets/currencies

digital assets/currencies - long term

and Stockholders’ Equity:

payable and accrued expense

notes payable, net

shares payable

current liabilities

Stockholders’

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

C-1 Convertible Preferred stock:

0 and 29,414 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively;

Liquidation preference $ 0.001 per share

C-2 Convertible Preferred stock:

0 shares issued and outstanding at September 30, 2021 and December 31, 2020;

Liquidation preference

$ 0.001 per share

stock, 97,500,000 shares authorized at $ 0.001 par value, 10,102,711 and 4,201,035 shares issued and outstanding at September 30,

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

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accompanying notes are an integral part of these unaudited condensed financial statements.

Statements of Operations

September 30,

of Operations

the Three Months Ended

and administrative

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operating expenses

(expenses) income:

income (expenses):

on debt discount

( 1,716,744 )

in fair value of warrant liabilities

Distributions

to warrant holders

loss on digital assets/currencies

( 3,307,428 )

( 1,301,764 )

gains (loss) on digital asset/currency transactions

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$ ( 6,782,175 )

$ ( 1,795,897 )

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

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$ ( 11,620,571 )

$ ( 20,533,009 )

$ ( 1,795,897 )

loss per share attributable to common stockholders, basic and diluted

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accompanying notes are an integral part of these unaudited condensed financial statements.

of Changes in Stockholders’ (Deficit) Equity

the Three Months Ended September 30, 2021

C-1 Convertible

C-2 Convertible

of Changes in Stockholders’ Equity

the Three Months Ended March 31, 2022

Stockholders’

June 30, 2021

December 31, 2021

$ 147,682,384

$ ( 135,589,470 )

stock issued including equity commitment fee, net

of convertible notes

of convertible notes, shares

Beneficial conversion features associated with convertible notes payable

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

of common stock and warrants for cash, net

of common stock and warrants for cash, net , shares

liabilities value related to Issuance of common stock

( 5,771,250 )

of Series C-2 convertible preferred stock

of Series C-2 convertible preferred stock , shares

of Series C-2 Convertible Preferred stock

( 1,100,000 )

( 6,216,289 )

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

of Series C-1 Convertible Preferred stock

of Series C-1 Convertible Preferred stock, shares

conversion features associated with convertible notes payable

conversion feature of Series C-2 convertible preferred stock

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

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

shares adjusted for reverse split

exercise , shares

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

( 3,842,337 )

September 30, 2021

$ 143,472,733

$ ( 135,006,472 )

the Three Months Ended September 30, 2020

C-1 Convertible

Stockholders’

June 30, 2020

$ 117,834,086

$ ( 117,774,366 )

stock issued including equity commitment fee, net

( 1,005,324 )

distributions

( 5,740,743 )

September 30, 2020

( 5,740,743 )

March 31, 2022

$ 158,848,780

$ ( 141,330,213 )

the Nine Months Ended September 30, 2021

the Three Months Ended March 31, 2021

C-1 Convertible

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stock issued including equity commitment fee, net

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

of common stock and warrants for cash, net

liabilities value related to Issuance of common stock

( 5,771,250 )

of Series C-2 convertible preferred stock

of Series C-1 Convertible Preferred stock

of Series C-2 Convertible Preferred stock

( 1,100,000 )

( 6,216,289 )

conversion features associated with convertible notes payable

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$ ( 4,822,220 )

shares adjusted for reverse split

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

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( 6,782,175 )

September 30, 2021

$ 143,472,733

$ ( 135,006,472 )

the Nine Months Ended September 30, 2020

C-1 Convertible

Stockholders’

December 31, 2019

$ 116,798,021

$ ( 116,983,793 )

$ ( 183,760 )

$ 116,798,021

$ ( 116,983,793 )

$ ( 183,760 )

stock issued including equity commitment fee, net

of convertible notes

conversion features associated with convertible notes payable

( 1,795,897 )

September 30, 2020

$ 118,662,882

$ ( 118,779,690 )

$ ( 113,475 )

$ 118,662,882

March 31, 2021

$ 135,674,928

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accompanying notes are an integral part of these unaudited condensed financial statements.

Statements of Cash Flows

the Nine Months Ended

of Cash Flows

the Three Months Ended

Cash flows used from operating activities:

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

network fees (non-cash)

in fair value of warrant liabilities

( 2,066,250 )

of non-productive digital assets/currencies

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payable and accrued expenses

shares payable

payable - distributions to warrant holders

cash used in operating activities

4 unchanged sentences

( 8,521,726 )

( 7,994,887 )

of productive digital assets/currencies

of property and equipment

1 unchanged sentence

( 8,214,135 )

( 7,994,887 )

cash provided by financing activities:

from short term loan

distributions

from exercise of warrants

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proceeds from issuance common stock/ At-the-market offering

to convertible notes principle and accrued interest

( 1,092,712 )

to convertible notes principle

cash provided by financing activities

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of Series C-1 Preferred Stock

conversion feature of Series C-2 convertible preferred stock

conversion features associated with convertible notes payable

of convertible note to common stock

accompanying notes are an integral part of these unaudited condensed financial statements.

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its strategy.

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.

is developing a proprietary staking-as-a-service platform that would enable clients to stake and delegate supported cryptocurrencies

through a non-custodial platform.

Company is also developing a proprietary digital asset data analytics 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.

Company employs a digital asset treasury strategy with a primary focus on disruptive non-security protocol layer assets such as Bitcoin

and Ethereum.

The Company 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.

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’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

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.

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

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however, the conversion ratios have been adjusted to reflect the Reverse Split.

The financial statements have been retroactively restated to reflect the Reverse Split.

The financial statements and notes to the financial statements have been retroactively restated to reflect the Reverse Split.

2 - Basis of Presentation

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results of operations and cash flows for the interim periods presented.

Interim results are not necessarily indicative of results for

The unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes

for the year ended December 31, 2020.

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 investments from third-party investors as well as from officers and directors of the Company.

The Company has plans to continue to raise proceeds from sale of common stock and issuance of debt to fund operations as needed

for the next twelve months.

the nine months ended September 30, 2021, the Company received net proceeds of approximately $ 14.6

million from the issuance of:

Series C-2 convertible

preferred stock, a convertible note, common stock and warrants issued pursuant to the Purchase agreement, common stock issued pursuant

to the Equity Line Purchase Agreement, the cash exercise of warrants, and the proceeds from the common stock sold pursuant to the ATM

On September 30, 2021, the fair market value of the Company’s liquid digital assets was approximately $ 6.2

million and the Company had approximately

$ 0.66 million of cash.

As such, the Company has adequate cash to fund operations for at least the next twelve months.

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.

3 - Summary of Significant Accounting Policies

have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2021 Annual

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 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 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.

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.

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.

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.

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 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.

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.

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

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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.

- 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.

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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.

Assets Translations and Impairments

assets are included in the balance sheets as either current assets or other assets if they are staked and locked up for over one year.

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.

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

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

Assets 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.

Subsequent reversal of impairment losses is not permitted.

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

We assign costs to transactions

on a first-in, first-out basis.

Company assesses impairment of digital assets quarterly if the fair value of digital assets is less than its cost basis.

recognizes impairment losses on digital assets caused by decreases in fair value using the lowest U.S.

dollar spot price of the related

digital asset as of each impairment date.

Such impairment in the value of digital assets are recorded as a component of costs and expenses

in our statements of operations.

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

The Company’s Digital Assets are initially recorded at fair value upon receipt (or “carrying value”).

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

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.

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 $ 3.3 million and $ 1.3 million related to Digital Assets during the three months ended March

31, 2022 and 2021, 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 $ 70,000 and $ 3 million during the three months ended March 31, 2022 and 2021, 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 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.

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

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to perform the function intended.

accompanying unaudited condensed financial statements have been prepared in conformity with 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 intangible assets, stock-based compensation, the valuation of

derivative liabilities, the valuation of convertible preferred stock and the valuation allowance related to the Company’s deferred

Certain of the Company’s estimates, including the carrying amount of the intangible assets, if any, 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.

and Equipment

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.

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.

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

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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 6).

Company accounts for share-based payment awards exchanged for services at the estimated grant date fair value of the award.

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 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.

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.

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

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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 prices.

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 never declared or paid any cash dividends on its common shares and does not plan to pay 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.

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.

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.

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.

Stock Units (RSUs)

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.

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.

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.

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.

Loss per Share

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

convertible notes 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.

following financial instruments were not included in the diluted loss per share calculation as of September 30, 2021 and 2020 because

their effect was anti-dilutive:

of Earnings Per Share Anti-diluted

of September 30,

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.

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

to purchase common stock

C-1 Convertible Preferred stock

restricted stock awards units

Accounting Pronouncements

7 unchanged sentences

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

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

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.

6 unchanged sentences

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 is currently

evaluating the impact of this standard on its financial statements and related disclosures.

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

2019-12 effective January 1, 2021, 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

1 unchanged sentence

present or future financial statements.

5 - Note Payable

December Promissory Note (Retired)

December 16, 2020, the Company issued Cavalry Fund I LP (“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 nine months ended September 30, 2021, the Company recorded approximately $ 868,000 amortization of debt discount related to the 2020

December Promissory Note.

the nine months ended September 30, 2021, the Company recorded interest expense of approximately $ 88,000 for the 2020 December Promissory

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.

January Promissory Note

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

$ 782,000 with a corresponding credit to additional paid-in capital.

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 per share.

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 capital.

the nine months ended September 30, 2021, the Company recorded approximately $ 848,000 amortization of debt discount related to the 2021

Promissory Note.

the nine months ended September 30, 2021, the Company recorded interest expense of approximately $ 85,000 for the 2021 Promissory Note.

As of September 30, 2021, the principal balance of the 2021 Promissory Note was $ 1 million and accrued interest on the note payable amounted

to approximately $ 85,000 .

4 - Fair Value of Financial Assets and Liabilities

11 unchanged sentences

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

following table presents the Company’s assets and liabilities that are measured at fair value at September 30, 2021 and December

following table presents the Company’s assets and liabilities that are measured at fair value at March 31, 2022 and December 31,

of Fair Value of Assets and Liabilities Valued on Recurring Basis

value measured at September 30, 2021

at September 30,

value measured at March 31, 2022

prices in active markets

1 unchanged sentence

unobservable inputs

Fair value measured at December 31, 2020

Total at December 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Warrant Liabilities

value measured at December 31, 2021

at December 31,

prices in active markets

other observable inputs

unobservable inputs

3 Valuation Techniques

16 unchanged sentences

were initially classified in equity.

As of September 30, 2021, the Company no longer maintained control of certain fundamental transactions

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.

8 unchanged sentences

therefore accounted for as derivative liabilities.

The Company classifies these derivative warrant liabilities on the balance

sheet as a current liability.

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 September 30,

2021, is as follows:

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:

of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

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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 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 nine

months ended September 30, 2021 and 2020, that are measured at fair value on a recurring basis:

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 three

months ended March 31, 2022 and 2021, that are measured at fair value on a recurring basis:

of Changes in Fair Value and Other Adjustments of Warrants

2 unchanged sentences

value adjustment of warrant liabilities

( 2,066,250 )

5 - Stockholders’ Equity

Company is authorized to issue up to 2,000,000 shares of 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.

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.

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.

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 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.

August 25, 2021, the Company issued 14,477 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.

of Shares Pursuant to Equity Line of Credit Purchase Agreement

January 28, 2021, the Company filed a registration statement on Form S-1 seeking to register 400,000 shares (the “Registration

Statement”) pursuant to the equity line of credit purchase agreement with Cavalry (the “Equity Line Purchase Agreement”).

The Registration Statement was declared effective by the SEC on February 1, 2021.

the nine months ended September 30, 2021, the Company issued approximately 321,740 shares of common stock (inclusive of approximately

17,590 pro-rata commitment shares) under the Registration Statement resulting in aggregate net proceeds of $ 3,014,005 (net of

$ 1,000 in transfer agent fees) and $ 3,015,005 in gross proceeds at a per share price of approximately $ 9.37 (inclusive

of the pro-rata commitment shares).

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

Gross proceeds from the Offering was

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

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 .

At The Market Offering Agreement

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.

The Market Offering Agreement

September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C.

4 unchanged sentences

Wainwright a commission rate equal to 3.0 % of the aggregate gross proceeds from each sale of Shares.

the nine months ended September 30, 2021, the Company sold a total of 41,290 shares of common stock under the ATM Agreement for aggregate

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.

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 of 29,414 shares of Series C-1 Convertible Preferred

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 above.

of Restricted Stock to Service Providers

the nine months ended September 30, 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 million.

Equity Incentive Plan

2 unchanged sentences

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.

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

11 unchanged sentences

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 nine months ended 2021 and

2020 for both the Black-Scholes formula and the Monte-Carlo simulation:

(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.

summary of option activity under the Company’s stock option plan for three months ended March 31, 2022 is presented below:

of Option Activity

Intrinsic Value

Average Remaining Contractual Life (in years)

as of December 31, 2021

options granted

as of March 31, 2022

vested and exercisable as of March 31, 2022

January 2, 2022, the Board of Directors of the Company ratified the following arrangements approved by its Compensation Committee:

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 .

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.

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.

RSUs granted to each executive employee are as follows:

of Restricted Stock Units

Cap Vesting Thresholds

Executive Officer

Operations Officer

Financial Officer

Technology Officer

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.

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.

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.

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.

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:

of Weighted-average Assumptions Used to estimate Fair Value

the nine months ended

stock price volatility

rate of interest

Three Months Ended

Vesting Hurdle 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.

is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the RSUs.

Interest Rate :

1 unchanged sentence

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.

summary of options activity under the Company’s stock option plan for nine months ended September 30, 2021 is presented below:

of Option Activity

Average Exercise Price

Intrinsic Value

Average Remaining Contractual Life (in years)

as of December 31, 2020

options granted

as of September 30, 2021

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.

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 exchange.

As of September

30, 2021, all 275,000 restricted stock units vested with a total fair value of approximately $ 2.8 million.

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.

As of September 30, 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.

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.

grant date fair value of restricted stock units was approximately $ 0.3

summary of the Company’s restricted stock units granted under the 2021 Plan during the nine months ended September 30, 2021 are

of Restricted Stock

the expected term of the RSUs.

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.

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.

summary of the Company’s restricted stock units granted under the 2021 Plan during the three months ended March 31, 2022 are as

Summary of Restricted Stock

Number of Restricted Stock Units

1 unchanged sentence

Nonvested at December 31, 2021

Nonvested at September 30, 2021

compensation expense for the nine months ended September 30, 2021 was approximately $ 13.8 million, comprised of $ 203,000 restricted common

stock issued to service providers not pursuant to the 2021 Plan and approximately $ 10.3 million in connection with options issued pursuant

to the 2021 Plan.

Unrecognized compensation expense for the Company was $ 2.0 million on September 30, 2021.

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 and nine months ended September 30, 2021 and 2020 was as follows:

Schedule of Stock-based Compensation Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Nonvested at March 31, 2022

Based Compensation

compensation expense for the three months ended March 31, 2022 was approximately $ 1.3

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 three months ended March 31, 2022 and 2021 was as follows:

of Stock-based Compensation Expense

the Three Months Ended

Employee bonus stock awards

Employee stock option awards

Employee restricted stock units awards

Employee restricted stock unit awards

Non-employee restricted stock awards

Series C-2 Allocation

Stock-based compensation

6 – Accrued Expenses

expenses consist of the following:

of Accrued Expenses

March 31, 2022

December 31, 2021

Compensation and related expenses

Accounts Payable

Accrued Expenses

7 - Employee Benefit Plans

3 unchanged sentences

up to 100 % of employee contributions.

During the nine months ended September 30, 2021, the Company made contributions to the 401(k) Plan

of $ 39,000 .

For the three months ended March 31, 2022, the Company made contributions to the 401(k) Plan of

8 - Subsequent Events

October 1, 2021 to November 4, 2021, the Company sold a total of 172,547 shares of common stock under the ATM Agreement for aggregate

total gross proceeds of $ 1,185,474 at an average selling price of $ $ 6.87 per share, resulting in net proceeds of approximately $ 1,147,886

after deducting commissions and other transaction costs.

October 25, 2021, the Company received a filing acknowledgment with respect to a Certificate of Withdrawal with the Secretary of State

of the State of Nevada.

The Certificate of Withdrawal, was effective on October 25, 2021, and 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 C-2

Preferred Stock that had been previously filed with the Secretary of State of the State of Nevada on January 5, 2021.

No shares of the

Series C-2 Preferred Stock were issued and outstanding at the time of the filing of the Certificate of Withdrawal, and none will be issued.

November 4, 2021, Mr.

Andrew Lee resigned as the Company’s Chief Financial Officer.

In connection with the resignation, Mr.

Allen was appointed interim Chief Financial Officer.

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.

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

after deducting commissions and other transaction

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:

Allen, the Company’s Chief Executive Officer is eligible to receive up to 107 % of his base salary.

Allen’s current

base salary is $ 393,702 ;

Handerhan, the Company’s Chief Operating Officer is eligible to receive up to 60 % of his base salary.

base salary is $ 275,000 ;

Prevoznik, the Company’s Chief Financial Officer is eligible to receive up to 50 % of his base salary.

base salary is $ 175,000 ;

Paranjape, the Company’s Chief Technology Officer is eligible to receive up to 48 % of his base salary.

base salary is $ 225,000 .

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-Q

Item 1. Financial Statements