What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-31 compared with 2022-03-11 · 642 added, 941 removed, 793 unchanged (67% of the section changed)

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specified in the rules and forms of the SEC.

Disclosure controls and procedures include, without limitation,

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

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

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

Based on this evaluation, management concluded

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

Disclosure controls and procedures include, without limitation, controls and procedures

designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange

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

as appropriate to allow timely decisions regarding required disclosure.

Based on this evaluation, management concluded that our disclosure

controls and procedures were effective as of December 31, 2022.

Annual Report on Internal Control Over Financial Reporting

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Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2022.

Changes in Internal Control Over Financial

in Internal Control Over Financial Reporting

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

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OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS

Not Applicable.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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be filed with the SEC within 120 days of the year ended December 31, 2022.

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

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

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

and location specified above.

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

under “Corporate Governance.” We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment

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

EXECUTIVE COMPENSATION

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Certificate of Change – Reverse Split

Certificate of Designation – Series V

Bylaws of TouchIT Technologies, Inc.

Amendment No.

1 to the Bylaws

Convertible Note dated as of September 18, 2019

4 unchanged sentences

2021 Equity Incentive Plan

Amendment No.

1 to the BTCS Inc.

2021 Equity Incentive Plan

Description of Securities

3 unchanged sentences

Amendment to Employment Agreement – Michal Handerhan

Employment Agreement – Andrew Lee

Offer Letter – Michael Prevoznik

Offer Letter – Manish Paranjape

Equity Line Purchase Agreement dated as of May 13, 2019

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List of Subsidiaries

Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Consent of RBSM LLP

Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Instance Document

Taxonomy Extension Schema

Taxonomy Extension Calculation Linkbase

Taxonomy Extension Definition Linkbase

Taxonomy Extension Label Linkbase

Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (formatted as inline

XBRL and contained in Exhibit 101).

and/or Schedules have been omitted.

XBRL Instance Document

XBRL Taxonomy Extension Schema

XBRL Taxonomy Extension Calculation Linkbase

XBRL Taxonomy Extension Definition Linkbase

XBRL Taxonomy Extension Label Linkbase

XBRL Taxonomy Extension Presentation Linkbase

Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

Exhibits and/or Schedules

have been omitted.

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

a management contract or compensatory plan.

Indicates a management

contract or compensatory plan.

Furnished herein

FORM 10-K SUMMARY.

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and in the capacities and on the dates indicated.

/s/ Charles Allen

Chief Executive Officer

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

/s/ Michael Prevoznik

Chief Financial Officer

Charles Allen

Executive Officer

Executive Officer) and Chairman of the Board of Directors

Michael Prevoznik

(Principal Financial Officer and Principal Accounting Officer)

/s/ Michal Handerhan

Financial Officer

Financial Officer and Principal Accounting Officer)

Michal Handerhan

/s/ David Garrity

David Garrity

/s/ Carol Van Cleef

Carol Van Cleef

/s/ Charlie Lee

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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have audited the accompanying balance sheets of BTCS Inc.

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

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

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

In our opinion,

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

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

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

(The “Company”) as of December 31, 2022 and 2021 and the related

statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December

31, 2022, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations

and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally

accepted in the United States of America.

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

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

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

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

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

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The Company’s cash position

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

and liquid Digital Assets are sufficient to support its daily operations over the next twelve months based on the cash flow forecasts

provided by management.

The cash used in operations in 2022 was approximately $800,000.

December 31, 2022, the Company had approximately $1.8 million of liquid Digital Assets (i.e.

non-staked) and $2.1 million of cash.

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

net proceeds of approximately $2,882,000.

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

operations over the next twelve months.

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

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

Management may to continue

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

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

However, the Company

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

the year ended December 31, 2022, the Company sold a total of 2,172,336 shares of Common Stock under the ATM Agreement for aggregate

total net proceeds of approximately $11,126,331.

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

its daily operations over the next twelve months.

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

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

Management may to continue to fund its business by way of public or private offerings of the Company’s stock or through loans from

private investors, in order satisfy the Company’s business objective for at least one year from the financial statement issuance

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

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

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

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

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

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

the doubt about going concern.

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

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

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

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

The Company’s cryptocurrencies as of December 31, 2021

were approximately $12,400,000.

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

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

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

The Company’s management has exercised significant judgment in their

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

presentation and accompanying footnote disclosures.

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

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

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

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

of our IT specialist;

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

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

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

evaluating its cryptocurrencies for impairment;

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

long-term on the balance sheet;

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

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

of the Accounting for and Disclosure of Cryptocurrency Staking Revenue Recognized

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

During the year

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

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

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

in accordance with GAAP.

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

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

In addition, the Company’s cryptocurrency

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

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

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

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

awards earned.

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

● Independently

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

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

We assessed whether the

Company’s determination that their alleviation of doubt about its ability to continue as a going concern was adequately disclosed.

We reviewed and evaluated

management’s plans including cash flow projections for alleviating the doubt about going concern.

have served as the Company’s auditor since 2016.

Vegas, Nevada

York | Washington, DC | California | Nevada

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of ANTEA International with offices worldwide

December 31, 2022

December 31, 2021

Current assets:

Digital Assets/currencies

Staked Digital Assets/currencies

Crypto assets

Investments, at value (Cost $ 100,000 )

Staked crypto assets

Prepaid expense

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Property and equipment, net

Staked Digital Assets/currencies - long term

Staked crypto assets

Total other assets

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Accrued compensation

Convertible notes payable, net

Warrant liabilities

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Stockholders’ equity:

Preferred stock;

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

Series C-1 Convertible Preferred stock:

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

Liquidation preference $ 0.001 per share

Series C-2 Convertible Preferred stock:

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

Liquidation preference $ 0.001 per share

Preferred stock, value

Common Stock, 97,500,000

shares authorized at $ 0.001

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

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

Common stock, 97,500,000 shares authorized at $ 0.001 par value, 13,107,149 and 10,528,212 shares issued and outstanding at December 31, 2022 and 2021, respectively

Additional paid in capital

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of Operations

For the years ended

Validator revenue

For the Year Ended

Validator revenue (net of fees)

Total revenues

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Compensation and related expenses

Impairment loss on crypto assets

Realized gains on crypto asset transactions

( 3,054,418 )

Total operating expenses

Other (expenses) income:

Other income (expenses):

Interest expense

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Change in fair value of warrant liabilities

Impairment loss on Digital Assets/currencies

( 3,845,899 )

Realized gains (loss) on Digital Asset/currency transactions

Distributions to warrant holders

Total other income (expenses)

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$ ( 16,049,583 )

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

preferred stock

Deemed dividends related to recognition of downround adjustment to conversion

amount for Series C-2 convertible preferred stock

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

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

( 5,020,883 )

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accompanying notes are an integral part of these financial statements.

of Stockholders’ (Deficit) Equity

of Stockholders’ Equity

the Years Ended December 31, 2022 and 2021

Stockholders’

Series C-1 Convertible

Series C-2 Convertible

Total Stockholders’

Preferred Stock

Balance December 31, 2020

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$ ( 119,539,887 )

$ ( 183,760 )

Common stock issued including equity commitment fee, net

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

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

Issuance of common stock and warrants for cash, net

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

Warrant liabilities value related to Issuance of common stock

( 5,771,250 )

Issuance of Series C-2 convertible preferred stock

Issuance of Series C-2 convertible preferred stock, shares

Conversion of Series C-1 Convertible Preferred stock

Conversion of Series C-1 Convertible Preferred stock, shares

Conversion of Series C-2 Convertible Preferred stock

Conversion of Series C-2 Convertible Preferred stock, shares

Conversion of convertible notes and interest

( 1,100,000 )

( 6,216,289 )

Beneficial conversion features associated with convertible notes payable

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

( 5,020,883 )

Fractional shares adjusted for reverse split

Fractional shares adjusted for reverse split, shares

Warrant exercise

Warrant exercise, shares

Stock-based compensation

Stock-based compensation, shares

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

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$ ( 135,589,470 )

$ 120,578,944

$ ( 119,539,887 )

Common Stock issued including equity commitment fee, net

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

Issuance of Common Stock and warrants for cash, net

Warrant liabilities value related to Issuance of Common Stock

( 5,771,250 )

Stockholders’

Balance December 31, 2021

$ 147,682,384

Issuance of Series C-2 convertible preferred stock

Conversion of Series C-1 Convertible Preferred stock

Conversion of Series C-2 Convertible Preferred stock

$ ( 135,589,470 )

$ 147,682,384

Beneficial conversion features associated with convertible notes payable

Beneficial conversion feature of Series C-2 convertible preferred stock

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

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

$ ( 135,589,470 )

Fractional shares adjusted for reverse split

Warrant exercise

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

Stock-based compensation

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

Dividend distributions

( 15,892,738 )

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of Cash Flows

For the years ended

For the Year Ended

Net Cash flows used from operating activities:

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( 1,692,454 )

( 1,213,284 )

Blockchain network fees (non-cash)

Change in fair value of warrant liabilities

( 1,638,750 )

Purchase of non-productive Digital Assets/currencies

( 3,918,750 )

Sale of non-productive Digital Assets/currencies

Realized gain on Digital Assets/currencies transactions

Purchase of non-productive crypto assets

( 5,761,550 )

Impairment loss on Digital Assets/currencies

Sale of non-productive crypto assets

Realized gain on crypto asset transactions

( 3,054,418 )

Impairment loss on crypto assets

Changes in operating assets and liabilities:

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( 4,861,655 )

( 2,973,003 )

Net cash used in investing activities:

Purchase of productive Digital Assets/currencies for validating

Purchase of productive crypto assets for validating

( 9,453,024 )

( 9,462,279 )

Sale of productive crypto assets

Purchase of investments

Purchase of property and equipment

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( 8,972,837 )

( 9,472,770 )

Net cash provided by financing activities:

Proceeds from short term loan

Dividend distributions

Proceeds from exercise of warrants

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Beneficial conversion features associated with convertible notes payable

Conversion of convertible note to Common Stock

Dividends payable

accompanying notes are an integral part of these financial statements.

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1 - Organization and Description of Business and Recent Developments

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

In February 2014, the

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

Assets, including Bitcoin.

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

In late 2014 we shifted

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

operation at our North Carolina facility due to capital constraints.

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

BTCS.com domain to better reflect its broadened strategy.

The Company recently released its new website which included broader information

on its strategy.

In the first quarter of 2021,

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

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

Blockchain infrastructure operations

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

The Company is developing

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

a non-custodial platform to BTCS operated validator nodes.

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

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

The internally

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

The Company employs a Digital

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

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

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

will carefully review its purchases of digital securities to avoid violating the 1940 Act and seek to reduce potential liabilities under

the federal securities laws.

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

greater resources than us.

(formerly Bitcoin Shop, Inc.), a Nevada corporation (the “Company”) was incorporated in 2008 and is an early entrant

in the crypto asset market with a primary focus on blockchain infrastructure and staking.

The Company operates validator nodes on various

DPoS and PoS-based blockchain networks and stakes the native crypto assets on those blockchains to earn rewards.

The Company’s

recently launched StakeSeeker, a comprehensive crypto dashboard and education center designed to empower users to better understand

and grow their crypto holdings with innovative portfolio analytics and a non-custodial process to earn staking rewards through the direct

participation in blockchain consensus algorithms.

Staking-as-a-Service (“StaaS”) is a central component of BTCS’s strategy, allowing crypto asset holders

to earn rewards by participating in network consensus mechanisms through staking and delegating their crypto assets to Company-operated

validator nodes.

The Company believes that StaaS provides a more accessible and cost-effective way for crypto asset holders to participate

in blockchain networks’ consensus mechanisms, thereby promoting the growth and adoption of blockchain technology.

Company’s business is subject to various risks and uncertainties, including risks associated with the evolving regulatory landscape

for crypto assets, risks associated with the volatility of crypto asset prices, and risks associated with the development and adoption

of blockchain technology.

The Company’s future success is dependent on various factors, including the growth of the crypto asset

market, the adoption of blockchain technology, and the Company’s ability to effectively operate and grow its blockchain infrastructure

operations and StaaS business.

of the date of the financial statements, the Company had recently launched its StakeSeeker platform, which is currently in beta.

Company plans to expand its PoS operations to secure other disruptive blockchain protocols that also allow for delegating and asset leveraging.

The growth of both StakeSeeker’s user base as well as the number and size of staked cryptocurrencies by delegators to Company-run

validator nodes are critical to the Company’s strategy and success.

to Articles of Incorporation

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”).

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.

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number of shares of Common Stock.

The Company now has 97,500,000

shares of Common Stock authorized.

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

however, the conversion ratios have been adjusted

to reflect the Reverse Split.

The financial statements and notes to the financial statements

have been retroactively restated to reflect the Reverse

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.

2 - Basis of Presentation

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Concentration

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

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

The Company considers all

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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

Identify the contract

with the customer

Identify the performance

obligations in the contract

Determine the transaction

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

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The Company generates revenue through staking rewards.

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

Company has entered into network-based smart contracts by running its own crypto asset validator nodes (or “nodes”) as well

as by staking crypto assets on nodes run by third-party operators (either directly or through crypto exchanges).

Through these contracts,

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

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

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

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

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

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

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 node operator receives (less crypto asset transaction fees payable to the node operator or exchanges, which are immaterial

and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain.

The Company’s fractional

share of awards received from delegating to a third-party validator node is based on the proportion of cryptocurrency the Company staked

to the node to the total cryptocurrency staked by delegators to the node.

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 award - 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 receipt.

The satisfaction

of the performance obligation for processing and validating blockchain transactions occurs at a point in time when confirmation is received from the

network indicating that the validation is complete, and the awards are available for transfer.

At that point, revenue is recognized.

TO FINANCIAL STATEMENTS

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

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

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

Asset Transactions, Translations and Remeasurements

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

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 crypto 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,

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Subsequent reversal of impairment losses is not permitted.

Assets held are included in the balance sheets as

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

The Company’s Digital Assets are

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

The fair value of Digital Assets is determined

using the average U.S.

dollar spot price of the related Digital Asset.

On a quarterly basis, Digital Assets are measured

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

The Company will record impairment losses as the fair value falls

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

price of the related Digital Asset subsequent to its acquisition.

The Digital Assets can only be marked down when impaired

and not marked up when their value increases.

TO FINANCIAL STATEMENTS

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

recorded impairment losses of approximately $ 3.8 million and $ 0.2 million related to Digital Assets during the years ended December 31,

2021 and December 31, 2020, respectively

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

value of crypto assets is determined using the U.S.

dollar spot price of the related crypto asset.

On a quarterly basis, crypto 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 crypto assets at any time during the period, as determined using the lowest U.S.

spot price of the related crypto asset subsequent to its acquisition.

The crypto assets can only be marked down when impaired and not

marked up when their value increases.

impairment in the value of crypto assets is recorded as a component of costs and expenses in our Statements of Operations.

recorded impairment losses of approximately $ 13.3 million and $ 3.8 million related to crypto assets during the years ended December 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.

sale of crypto assets are included in other income (expense) in the statements of operations.

The Company recorded realized gains (losses)

on Digital Assets of approximately $ 3.1

million and ($ 2,000 )

during the years ended December 31, 2021 and

December 31, 2020, respectively.

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

on crypto assets of approximately $ 0.5 million and $ 3.1 million during the years ended December 31, 2022 and 2021, respectively.

presentation of purchases and sales of crypto assets on the Statement of Cash Flows is determined by the nature of the crypto 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

The purchase of non-productive crypto

assets and currencies are included as an operating activity, whereas the purchase of productive crypto 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.

Productive crypto assets that are staked with a

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

Staked crypto assets with remaining lock-up

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

TO FINANCIAL STATEMENTS

Developed Software

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

to aggregate and analyze data from Digital Asset exchanges.

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

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

The Company accounts for computer software used in the business

in accordance with ASC 985-20 and ASC 350.

developed software consists of the core technology of the Company’s Digital Asset Platform, which is being designed to allow users

to track, monitor and analyze their aggregate cryptocurrency portfolio holdings by connecting their crypto exchanges and digital wallets

as well as providing a non-custodial delegation process to earn staking rewards on crypto asset holdings.

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 FINANCIAL STATEMENTS

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

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

The Company classifies as equity any contracts that

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

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

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

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

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

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

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

The Company classifies

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

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

instruments originally met the criteria for equity classification;

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

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

Accordingly, the Company classified

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

This liability is

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

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

The fair value of the warrants has

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

Company accounts for 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.

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

originally met the criteria for equity classification;

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

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

Accordingly, the Company classified the warrants

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

This liability is subject to re-measurement

at each balance sheet date until the warrants are exercised or expired, and any change in fair value is recognized as “change in

the fair value of warrant liabilities” in the statements of operations.

The fair value of the warrants has been estimated using

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

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

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

718 addresses all forms of share-based payment awards including shares issued under employee stock purchase plans

and stock incentive shares.

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

Stock options issued

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

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

These options often vest over a one-year

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

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

Treasury zero-coupon issues

with an equivalent remaining term.

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

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

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

Ultimately, the actual

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

Prior to making this election, the Company estimated

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

TO FINANCIAL STATEMENTS

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 (the “Board”) 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.

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.

will evaluate the appropriateness of potential future dividends as the Company continues to grow its operations.

Dividend distributions

amounted to $ 631,000 and $ 0 during the years ended December 31, 2022 and 2021, respectively.

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Advertising and marketing expenses amounted to approximately $ 78,000

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

and $ 180,000 for the year ended December 31, 2022 and 2021, respectively.

Loss per Share

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Schedule of Earnings Per Share Anti-diluted

As of December 31,

Warrants to purchase Common Stock

Series C-1 Convertible Preferred stock

Convertible notes

Non-vested restricted stock awards units

Preferred Stock

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

of its preferred stock.

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

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

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

are classified as temporary equity.

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

The Company evaluated

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

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

including consideration of embedded derivatives requiring bifurcation.

The issuance of the convertible preferred stock could generate

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

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

price of the underlying stock at the commitment date.

of December 31,

to purchase common stock

restricted stock awards units

TO FINANCIAL STATEMENTS

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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

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.

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present or future financial statements.

TO FINANCIAL STATEMENTS

4 - Fair Value of Financial Assets and Liabilities

Company measures certain assets and liabilities at fair value.

The Company defines fair value as the price that would be received

from selling an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly

transaction between market participants at the measurement date.

Fair value is estimated by applying the following hierarchy, which

prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the

lowest level of input that is available and significant to the fair value measurement:

1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or

similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data

for substantially the full term of the assets or liabilities.

3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants

would use in pricing the asset or liability.

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

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

The Company measures the

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

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

participants on the measurement date.

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

when measuring fair value.

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

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

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

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

NOTES TO FINANCIAL STATEMENTS

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

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

Fair value measured at December 31, 2021

Total at December 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Warrant Liabilities

Fair value measured at December 31, 2020

Total at December 31,

Quoted prices in active markets

Significant unobservable inputs

Warrant Liabilities

following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and the Company’s

estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2022 and 2021:

Schedule of Fair Value of Assets and

Liabilities Valued on Recurring Basis

value measured at December 31, 2022

active markets

observable inputs

value measured at December 31, 2021

active markets

observable inputs

Company did not make any transfers between the levels of the fair value hierarchy during the years ended December 31, 2022 and 2021.

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

for the years ended December 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

value of Level 3 financial assets

Beginning balance

appreciation (depreciation)

Ending balance

value of Level 3 financial liabilities

Beginning balance

liabilities classification

value adjustment of warrant liabilities

( 1,638,750 )

( 3,918,750 )

Ending balance

TO FINANCIAL STATEMENTS

3 Valuation Techniques

3 financial assets consist of private equity investments for which there is no current public market for these securities such that the

determination of fair value requires significant judgment or estimation.

As of December 31, 2022, the Company’s Level 3 investments

were carried at original cost of the investments, with a value of $ 100,000 .

The Company has elected to apply the measurement alternative under ASC 321, Investments—Equity Securities , for these investments.

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.

in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates

or assumptions and recorded as appropriate.

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

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

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

shares of Common Stock, and (ii) Common

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

shares of Common Stock for gross proceeds

million in a private placement.

The closing of

the Offering occurred on March 4, 2021.

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.

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

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

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

is as follows:

NOTES TO FINANCIAL STATEMENTS

warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of December 31, 2022 and 2021, is as follows:

TO FINANCIAL STATEMENTS

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

September 14, 2021

December 31, 2021

Risk-free rate of interest

Expected volatility

Expected life (in years)

Expected dividend yield

rate of interest

life (in years)

dividend yield

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

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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 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

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

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

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

Schedule of Changes in Fair Value and Other Adjustments of Warrants

Fair Value of Level 3 financial liabilities

Beginning balance

Warrant liabilities classification

Fair value adjustment of warrant liabilities

( 3,918,750 )

Ending balance

5 - Note Payable

Promissory Note (Retired)

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

promissory note (the “2019 Promissory Note”).

The 2019 Promissory Note is due on August

7, 2020 and is:

(i) convertible at a 20 %

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

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

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

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

be prepaid by the Company.

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

to ASC 815-15.

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

shares of Common Stock at $ 0.90

per share, but the Company’s fair value

of underlying Common Stock was $ 1.20

As such, the Company recognized

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

with a corresponding credit to additional paid-in

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

shares of the Company’s Common Stock

for the conversion of $ 50,000

of principal on the 2019 Promissory Note.

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

shares of the Company’s Common Stock

for the conversion of the remaining $ 150,000

of principal and $ 2,000

of interest on the 2019 Promissory Note.

May 11, 2020, the Company issued a total of 3,583

shares of the Company’s Common Stock

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

on the 2019 Promissory Note.

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

related to the 2019 Promissory Note.

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

As of December 31, 2020, the principal

balance of the 2019 Promissory Note was $ 0 .

TO FINANCIAL STATEMENTS

April Promissory Note (Retired)

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

promissory note (the “2020 April Promissory

Note”) in consideration for $ 500,000 .

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

17, 2021 , (ii) convertible at a 35 %

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

per share and (iii) shall bear interest at

per annum (payable at maturity).

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

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

At the issuance date,

the Convertible Note was convertible into 777,001

shares of Common Stock at $ 0.64

per share, but the Company’s fair value

of underlying Common Stock was $ 0.99

As such, the Company recognized a

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

with a corresponding credit to additional paid-in

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

shares of the Company’s Common Stock

for the conversion of the $ 500,000

of principal of 2020 April Promissory Note.

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

shares of the Company’s Common Stock

for the conversion of accrued interest of $ 35,298

on the 2020 April Promissory Note.

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

related to the 2020 April Promissory Note.

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

As of December 31, 2020, the principal

balance of the 2020 Promissory Note was $ 0 .

December Promissory Note (Retired)

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

promissory note (the “2020 December Promissory

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

The 2020 December Promissory Note is (i) due on October 16, 2021, (ii) convertible at a 35 %

discount to the closing price of the Company’s Common Stock on the date before exercise with a floor price of $ 0.40

per share and (iii) shall bear interest at 12 %

per annum (payable at maturity).

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

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

shares of the Company’s Common Stock

at an exercise price of $ 2.00 ,

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

to the Company.

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

Promissory Note.

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

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

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

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

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

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

NOTES TO FINANCIAL STATEMENTS

January Promissory Note (Retired)

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

promissory note (the “2021 Promissory Note”)

in consideration for $ 1,000,000 .

The 2021 Promissory Note is (i) due on November 15, 2021, (ii) convertible at a 35 %

discount to the closing price of the Company’s Common Stock on the date before exercise with a floor price of $ 7.50

per share and (iii) shall bear interest at 12 %

per annum (payable at maturity).

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

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

shares of the Company’s Common Stock

at an exercise price of $ 21.60

per share (the “Series D Warrant”).

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

The allocation

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

as equity or liability.

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

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

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

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

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

with a corresponding credit to additional paid-in

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

At the issuance

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

shares of Common Stock at $ 14.10

per share, but the Company’s fair value

of underlying Common Stock was $ 21.8

As such, the Company recognized a

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

with a corresponding credit to additional paid-in

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

Promissory Note.

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

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

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

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

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

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

5 - Stockholders’ Equity (Deficit)

C-2 Preferred Stock

company is authorized to issue 20,000,000

shares of $ 0.001

par value preferred stock.

This preferred stock

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

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

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

The issuance of preferred stock may have the effect of

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

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

In certain circumstances, the issuance of preferred

stock could depress the market price of the Common Stock.

company is authorized to issue 20,000,000 shares of $ 0.001 par value preferred stock.

This preferred stock may be issued in one or more

series, and shall have such designations, preferences and relative, participating, optional or other special rights and qualifications,

limitations or restrictions thereof as shall be determined at the time of issuance by the Company’s Board of Directors without

further action by the Company’s shareholders.

The issuance of preferred stock may have the effect of delaying, deferring or preventing

a change in control of our company without further action by shareholders and could adversely affect the rights and powers, including

voting rights, of the holders of Common Stock.

In certain circumstances, the issuance of preferred stock could depress the market price

of the Common Stock.

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

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fair value and the proceeds received.

NOTES TO FINANCIAL STATEMENTS

TO FINANCIAL STATEMENTS

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

28 unchanged sentences

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.

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

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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.

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.

as a reduction to the carrying amount of the convertible instrument.

This discount will be amortized as a dividend over two years, the

earliest conversion date.

Upon the conversion of Series C-2 into Common Stock on September 14, 2021, the total amortization of the beneficial

conversion feature is $ 45,541 and the remaining discount is netted against additional paid in capital.

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

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

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

(i) 0.0000004, and (ii)

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

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

of how much capital the Company raises.

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

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

the Anti-Dilution Amount.

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

was fully triggered.

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

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

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

The value of the effect of the down

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

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

into 4,011,766

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.

NOTES TO FINANCIAL STATEMENTS

August 25, 2021, the Company issued approximately 14,500

shares of Common Stock in connection with

the 1-for-10 Reverse Split

resulting from the rounding up of fractional shares of Common

Stock to the whole shares of Common Stock.

The financial statements have been retroactively restated to reflect the reverse

TO FINANCIAL STATEMENTS

August 25, 2021, the Company issued approximately 14,500 shares of Common Stock in connection with the 1-for-10 Reverse Split resulting

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

The financial statements have been retroactively

restated to reflect the reverse stock split.

of Shares Pursuant to Equity Line of Credit Purchase Agreement

the year ended December 31, 2020, the Company issued 618,658

shares of Common Stock (including 2,421

pro-rata commitment shares) under the second

Registration Statement pursuant to the Purchase Agreement with Cavalry resulting in aggregate proceeds of approximately $ 415,000 .

June 22, 2020, the Company filed a third Registration Statement on Form S-1 seeking to register 904,500

The third Registration Statement

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

the year ended December 31, 2020, Company issued 904,500

shares of Common Stock (including

pro-rata commitment shares) under the third Registration

Statement pursuant to the Purchase Agreement with Cavalry resulting in aggregate proceeds of approximately $ 1,445,000

January 28, 2021, the Company filed a fourth Registration Statement on Form S-1 seeking to register 400,000 shares.

5 unchanged sentences

March 4, 2021, the Company entered into a securities purchase agreement (the “RD Purchase Agreement”) with institutional

investors, pursuant to which the Company sold and issued, in a registered direct offering, 950,000

shares of the Company’s Common Stock,

at a purchase price per share of $ 10.00

and immediately exercisable five-year warrants

to purchase 712,500

shares of Common Stock at an exercise

price of $ 11.50

Gross proceeds from the Offering were

Net proceeds were $ 8.9

million after deducting placement agent fees

and other offering expenses paid for by the Company.

investors, pursuant to which the Company sold and issued, in a registered direct offering, 950,000 shares of the Company’s Common

Stock, at a purchase price per share of $ 10.00 and immediately exercisable five-year warrants to purchase 712,500 shares of Common Stock

at an exercise price of $ 11.50 per share.

Gross proceeds from the Offering were $ 9.5 million.

Net proceeds were $ 8.9 million after deducting

placement agent fees and other offering expenses paid for by the Company.

RD Purchase Agreement contains representations, warranties, indemnifications and other provisions customary for transactions of this

Pursuant to the RD Purchase Agreement, subject to limited exceptions, each of the Company and its officers and directors agreed

not to, and not to publicly disclose the intention to, sell or otherwise dispose of, any shares of Common Stock or any securities

convertible into, or exchangeable or exercisable for, Common Stock, for a period ending 60 days after the date of the prospectus

supplement for this offering.

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

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Wainwright, shares of the Company’s Common Stock having an aggregate offering price of up to $ 98,767,500

million (the “Shares”).

will pay H.C.

(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.

NOTES TO FINANCIAL STATEMENTS

the year ended December 31, 2021, the Company sold a total of 466,791

shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $ 2,979,000

at an average selling price of $ 6.38

per share, resulting in net proceeds of approximately

after deducting commissions and other transaction

TO FINANCIAL STATEMENTS

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

gross proceeds of approximately $ 2,979,000 at an average selling price of $ 6.38 per share, resulting in net proceeds of approximately

$ 2,832,000 after deducting commissions and other transaction costs.

the year ended December 31, 2022, the Company sold a total of 2,172,336 shares of Common Stock under the ATM Agreement for aggregate

total gross proceeds of approximately $ 11,487,000 at an average selling price of $ 5.29 per share, resulting in net proceeds of approximately

$ 11,126,000 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.

January 15, 2021, the Company issued 200,000 shares of the Company’s Common Stock to Cavalry upon the exercise of all their Series

C warrants and payment of the exercise amount of $ 400,000 .

Cavalry and the Company entered into an agreement whereby Cavalry would exercise

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

of Shares Due to Conversion of Series C-1 Preferred Stock

March 30, 2021, the Company issued 19,609

shares of Common Stock upon the conversion

shares of Series C-1 Convertible Preferred stock.

After this conversion, there were no Series C-1 shares outstanding, so the Company filed a Certificate of Withdrawal with the Secretary

of State of the State of Nevada.

The Certificate of Withdrawal eliminated from the Articles of Incorporation of the Company all matters

set forth in the Series C-1.

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 below.

September 14, 2021, the Series C-2 was converted into 4,011,766 shares of Common Stock.

Please refer to the discussion below.

of Restricted Stock to Service Providers

the year ended December 31, 2021, the Company issued to four service providers a total of approximately 52,800

shares of restricted Common Stock, representing

a total fair value of $ 0.6

of Shares Due to Conversion of Notes

April 6, 2020, the Company issued a total of 73,529

shares of the Company’s Common Stock

for the conversion of $ 50,000

of principal on the 2019 Promissory Note.

May 7, 2020, the Company issued a total of 63,273

shares of the Company’s Common Stock

for the conversion of the remaining $ 150,000

of principal and $ 2,000

of interest on the 2019 Promissory Note.

May 11, 2020, the Company issued a total of 3,582

shares of the Company’s Common Stock

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

on the 2019 Promissory Note.

November 2 to December 3, 2020, the Company issued a total of 520,088

shares of the Company’s Common Stock

for the conversion of the $ 500,000

of principal of 2020 April Promissory Note.

December 16, 2020, the Company issued a total of 34,370

shares of the Company’s Common Stock

for the conversion of accrued interest of $ 35,298

on the 2020 April Promissory Note.

the year ended December 31, 2021, the Company issued to four service providers a total of approximately 52,800 shares of restricted Common

Stock, representing a total fair value of $ 0.6 million.

the year ended December 31, 2022, the Company issued to one service provider a total of approximately 12,500 shares of restricted Common

Stock, representing a total fair value of $ 59,000 .

Equity Incentive Plan

Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was effective on January 1, 2021 and approved by shareholders

on March 31, 2021.

The Company has reserved 2,000,000

shares of Common Stock for issuance pursuant

to the 2021 Plan.

NOTES TO FINANCIAL STATEMENTS

on March 31, 2021 and amended on June 13, 2022.

The Company has reserved 7,000,000 shares of Common Stock for issuance pursuant to the

TO FINANCIAL STATEMENTS

January 1, 2021, the Board of Directors of the Company approved the grant of 1.2 million stock options with an exercise price of $ 1.90

19 unchanged sentences

upon the Company’s stock price meeting certain milestones.

Company records compensation expense for the 14,000 options granted on April 1, 2021 based on the estimated fair value of the options

on the deemed grant date using the Black-Scholes formula, utilizing assumptions laid out in the table below.

The Company uses historical

data to determine exercise behavior, volatility and forfeiture rate of the options.

For the 21,000 options granted on April 1, 2021 that

vest based upon the Company’s stock price meeting certain milestones, the Company records compensation expense based on the estimated

fair value of the options using a Monte-Carlo simulation.

following weighted-average assumptions were used to estimate the fair value of options granted during the year ended December 31, 2021

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

Summary of Weighted-average Assumptions Used to Estimate Fair Value

For the year ended

the year ended December 31, 2022, the Company granted 50,000 stock options with a weighted average exercise price of $ 1.51 to non-executive

following weighted-average assumptions were used to estimate the fair value of options granted on the deemed grant date during the year

ended December 31, 2022 and 2021 for both the Black-Scholes formula and the Monte-Carlo simulation, applicable to 2021 options granted:

of Weighted-average Assumptions Used to Estimate Fair Value

Exercise price

13 unchanged sentences

historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise

awards vesting upon the achievement of a service condition, compensation cost measured on the grant date will be recognized on a straight-line

basis over the vesting period.

For awards vesting upon the achievement of the market conditions which were met at the date of grant,

compensation cost measured on the date of grant was immediately recognized.

For awards vesting upon the achievement of the market conditions

which were not met at the date of grant, compensation cost measured on the grant date will be recognized on a straight-line basis over

the vesting period based on estimation using a Monte-Carlo simulation.

NOTES TO FINANCIAL STATEMENTS

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.

TO FINANCIAL STATEMENTS

summary of options activity under the Company’s stock option plan for the year ended December 31, 2022 is presented below:

Summary of Option Activity

Number of Shares

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual

Outstanding as of December 31, 2020

Employee options granted

Outstanding as of December 31, 2021

Options vested and exercisable

January 1, 2021, the Board of Directors of the Company approved 275,000

restricted stock unit grants under the Company’s

2021 Equity Incentive Plan to Messrs.

David Garrity a director, and Charles Allen and Michal Handerhan, executive officers and directors

Average Exercise Price

Intrinsic Value

Average Remaining Contractual Life (in years)

Outstanding as

of December 31, 2021

options granted

options expired

options forfeited

as of December 31, 2022

vested and exercisable as of December 31, 2022

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 former director, and Charles Allen and Michal Handerhan, executive officers and directors

of the Company.

7 unchanged sentences

for those restricted stock grants.

The restricted stock units vest when the Company lists its Common Stock on a national securities

As of December 31, 2021, all 275,000

restricted stock units vested with a total fair

value of approximately $ 2.8

The cost of stock-based compensation

for restricted stock units is measured based on the closing fair market value of the Company’s Common Stock at the deemed

grant date and was recorded on the September 14, 2021 vesting date when the listing occurred.

April 1, 2021, the Company granted a total of 15,000

restricted stock units to two non-employee directors

of the Company.

The restricted stock units vest when the Company lists its Common Stock on a national securities exchange.

of December 31, 2021, all 15,000

restricted stock units vested with a total fair

value of approximately $ 0.2

The cost of stock-based compensation

for restricted stock units is measured based on the closing fair market value of the Company’s Common Stock at the deemed

grant date and was recorded on the September

14, 2021 vesting date when the listing occurred.

As of December 31, 2021, all 275,000 restricted stock units vested with a total fair value of approximately $ 2.8 million.

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 December 31, 2021, all 15,000 restricted

stock units vested with a total fair value of approximately $ 0.2 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.

June 28, 2021, the Company granted 50,781 restricted stock units to the Company’s then Chief Financial Officer.

11 unchanged sentences

20 % of the 29,363 restricted stock units are to vest on the one-year anniversary

of the grant date, and the remaining 80% are to vest monthly over the following four years with vesting occurring on the last day of

each respective month.

of the grant date, and the remaining 80% are to vest annually over the following four years with vesting occurring on December 31 st

of each respective year.

The grant date fair value of restricted stock units was approximately $ 0.2 million.

NOTES TO FINANCIAL STATEMENTS

As of December 31,

2022, 5,873 of the restricted stock units vested with a total fair value of approximately $ 35,000 .

February 22, 2022, the Company granted 45,767 restricted stock units to the Company’s Chief Technology Officer.

The restricted

stock units are to vest over a five-year period as follows:

20 % of the 45,767 restricted stock units are to vest on January 1, 2023,

and the remaining 80% are to vest annually over the following four years with vesting occurring on December 31 st of each respective

The grant date fair value of restricted stock units was approximately $ 0.2 million.

TO FINANCIAL STATEMENTS

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 95,544 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 December 31, 2022, all 95,544 of the restricted stock units vested with a total fair

value of approximately $ 0.3 million.

Company’s executive officers were granted RSUs as part of a long-term incentive (“LTI”) plan, 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.

On December 9, 2022, upon recommendation

of the Compensation Committee of the Board of Directors approved an amendment to the LTI plan, whereby the market capitalization threshold

targets were lowered to $ 50 million, $ 100 million, $ 150 million, and $ 300 million, effective January 1, 2023.

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:

Schedule 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 annually on each subsequent calendar year-end date over the four years following the one year anniversary of the grant date.

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.

TO FINANCIAL STATEMENTS

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 year ended December 31, 2022

and 2021 for the Monte-Carlo simulation:

Weighted-Average Assumptions Used to Estimate Fair Value

stock price volatility

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 RSUs.

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.

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.

September 30, 2022, Mr.

David Garrity resigned as a director of BTCS, Inc.

The Board of Directors of the Company agreed to fully vest

Garrity’s remaining unvested restricted stock units ( 7,962 shares) and pay Mr.

Garrity approximately $ 5,600 , which represents

the remaining 2022 director fees.

October 1, 2022, the Company granted a total of 7,962 restricted stock units to Melanie Pump, a non-employee director of the Company,

which vested on December 31, 2022 with a total fair value of approximately $ 12,000 .

summary of the Company’s restricted stock units granted under the 2021 Plan during the year ended December 31, 2022 are as follows:

Summary of Restricted Stock

Number of Restricted Stock Units

Weighted Average Grant Day Fair Value

Average Grant

Day Fair Value

Nonvested at December 31, 2021

Nonvested at December

compensation expense for the year ended December 31, 2021 was approximately $ 15.4

million, comprised of approximately $ 0.3

million restricted Common Stock issued

to service providers not pursuant to the 2021 Plan and approximately $ 11.9

million in connection with options issued pursuant

to the 2021 Plan.

Unrecognized compensation expense for the Company was $ 0.3

million on December 31, 2021.

Stock-based compensation

expense is recorded as a part of selling, general and administrative expenses, compensation expenses and cost of revenues.

compensation expense for the years ended December 31, 2021 and 2020 was as follows:

TO FINANCIAL STATEMENTS

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 years ended December 31, 2022 and 2021 was as follows:

Schedule of Stock-based Compensation Expense

the Year Ended December 31,

Employee bonus

Employee stock option awards

Employee restricted stock units awards

Non-employee restricted stock awards

Series C-2 allocation

TO FINANCIAL STATEMENTS

Employee restricted stock

Non-employee restricted stock

C-2 Allocation

Purchase Warrants

1 unchanged sentence

Summary of Warrant Activity

Number of Warrants

Outstanding as of December 31, 2019

Issuance of Series C Warrants

Expiration of warrant

Outstanding as of December 31, 2020

Outstanding as

of December 31, 2020

Issuance of Series C Warrants

Warrants exercise for cash

Issuance of Warrants pursuant to Registered Direct Offering

Fractional shares adjusted for reverse split

Issuance of Warrants pursuant

to Registered Direct Offering

shares adjusted for reverse split

Outstanding as of December

7 - Employment Agreements

Expiration of warrants

Outstanding as of December

TO FINANCIAL STATEMENTS

6 – Executive Compensation

Allen – Chief Executive Officer and Director

June 22, 2017, we entered into an employment agreement with Charles Allen (the “Allen Employment Agreement”), whereby Mr.

5 unchanged sentences

Allen shall be entitled to participate

in all benefits plans we provide to our senior executive.

in all benefits plans we provide to our senior executives.

We shall reimburse Mr.

10 unchanged sentences

For the year ended December 31, 2022, Mr.

Allen’s annual salary was $ 376,749 .

Allen’s annual base salary was $ 393,702 .

June 24, 2022, as a part of its cost-cutting measures, Charles Allen agreed to forfeit $ 25,000 of his annual base salary for 2022.

forfeiture in 2022 does not alter or amend current employment agreements, or any calculations based on those agreements.

Handerhan – Chief Operating Officer and Director

June 22, 2017, we entered into an employment agreement with Michal Handerhan (the “Handerhan Employment Agreement”), whereby

5 unchanged sentences

Handerhan shall be entitled to participate

in all benefits plans we provide to our senior executive.

in all benefits plans we provide to our senior executives.

We shall reimburse Mr.

9 unchanged sentences

Employment Agreement remained unchanged including the Annual Increase.

For the year ended December 31, 2021 Mr.

Handerhan’s annual

salary was $ 234,785 .

March 31, 2020, Charles Allen, the Company’s Chief Executive Officer, and Michal Handerhan, the Company’s Chief Operating

Officer, agreed to defer 35 % of their cash compensation during the second quarter 2020 (the “Period”) and refrain from making

any payments during the Period on accrued and unpaid compensation owed prior to the Period.

The Company subsequently paid the deferred

compensation for the Period.

June 28, 2021 we entered into an employment agreement with Andrew Lee (the “Lee Employment Agreement”), whereby Mr.

to serve as our Chief Financial Officer in consideration for an annual salary of $ 250,000 .

Additionally, under the terms of the Lee Employment

Agreement, Mr.

Lee shall be eligible for an annual bonus if we meet certain criteria, as established by the Board of Directors.

shall be entitled to participate in all benefits plans we provide to our senior executive.

We shall reimburse Mr.

Lee for all reasonable

expenses incurred in the course of his employment.

The Company shall pay the Executive $ 500 per month to cover telephone and internet

If the Company does not provide office space to the Executive the Company will pay the Executive an additional $ 500 per month

to cover expenses in connection with their office space needs.

November 4, 2021, Mr.

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

In connection with the resignation, the Board

of Directors appointed Mr.

Charles Allen, the Company’s current Chairman of the Board and Chief Executive Officer as the Company’s

interim Chief Financial Officer.

Allen did not receive any additional compensation for his interim role as Chief Financial Officer.

January 19, 2022, the Board of Directors approved a salary increase for Michael Handerhan effective January 1, 2022.

For the year ended

December 31, 2022 Mr.

Handerhan’s annual base salary was $ 275,000 .

June 24, 2022, as a part of its cost-cutting measures, Michal Handerhan agreed to each forfeit $ 25,000 of his annual base salary for

The forfeiture in 2022 does not alter or amend current employment agreements, or any calculations based on those agreements.

Prevoznik – Chief Financial Officer

December 1, 2021 we entered into an employment agreement with Michael Prevoznik (the “Prevoznik Employment Agreement”), whereby

4 unchanged sentences

by the Board of Directors.

Prevoznik shall be entitled to participate in all benefits plans we provide to our senior executive.

Prevoznik shall be entitled to participate in all benefits plans we provide to our senior executives.

shall reimburse Mr.

4 unchanged sentences

pay the Executive an additional $ 500 per month to cover expenses in connection with their office space needs.

June 1, 2022, the Board of Directors approved a salary increase for Michael Prevoznik effective June 1, 2022.

For the year ended December

Prevoznik’s annual base salary was $ 225,000 .

December 9, 2022, upon recommendation of the Compensation Committee of the Board of Directors approved a 4.5 % inflationary increase in

Prevoznik’s annual base salary, effective January 1, 2023.

Paranjape – Chief Technology Officer

February 22, 2022 we entered into an employment agreement with Manish Paranjape (the “Paranjape Employment Agreement”), whereby

Paranjape agreed to serve as our Chief Technology Officer in consideration for an annual salary of $ 225,000 .

Additionally, under

the terms of the Paranjape Employment Agreement, Mr.

Paranjape shall be eligible for an annual bonus if we meet certain criteria, as

established by the Board of Directors.

Paranjape shall be entitled to participate in all benefits plans we provide to our senior

We shall reimburse Mr.

Paranjape for all reasonable expenses incurred in the course of his employment.

The Company shall pay

the Executive $ 500 per month to cover telephone and internet expenses.

If the Company does not provide office space to the Executive

the Company will pay the Executive an additional $ 500 per month to cover expenses in connection with their office space needs.

December 9, 2022, upon recommendation of the Compensation Committee of the Board of Directors approved a 4.5 % inflationary increase in

Paranjape’s annual base salary, effective January 1, 2023.

TO FINANCIAL STATEMENTS

31 unchanged sentences

pursuant to the terms of the Employment Agreements, we have entered into an indemnification agreement with each executive officer.

December 14, 2017, the Company agreed to pay Charles Allen, its CEO, and Michal Handerhan, its COO, cash bonuses of $ 75,000 and $ 35,000 ,

respectively for 2017.

The Company further agreed to pay Mr.

Allen and Mr.

Handerhan contingent cash bonuses of $ 175,000 and $ 75,000

respectively (the “2017 Contingent Bonuses”) which will be deemed earned on the earlier of i) the closing of a merger approved

by the Board, ii) the closing of one or many financings in 2018 totaling over $ 1.25 million in gross proceeds, or iii) the Company having

cash and the fair market value of Digital Assets valued at over $ 1.5 million.

Provided further that the 2017 Contingent Bonuses if deemed

earned will only be payable if the Company has at least $ 1.25 million in cash and the fair market value of Digital Assets prior to paying

The 2017 Contingent Bonuses are not conditioned upon the continued service of either Mr.

Handerhan and do not

The conditions to earn the 2017 Contingent Bonuses have been achieved and the 2017 Contingent Bonuses have been paid in 2020.

February 6, 2019, the Company agreed to pay Charles Allen, its CEO, and Michal Handerhan, its COO, contingent cash bonuses of $ 256,025

and $ 150,000 ,

respectively for 2018 (the “2018 Contingent Bonuses”) which will be deemed earned and payable upon the repayment and / or

settlement of the $ 200,000

Promissory Note issued on December 18, 2018.

On September 18, 2019, the Company exchanged the $ 200,000

Promissory Note and accrued interest of $ 17,973

for a $ 217,973

Convertible Promissory Note due on December 18,

2019 (the “New Note”).

From September 18, 2019 through October 16, 2019 the Company issued 193,179

shares of the Company’s Common Stock

for the conversion of all $ 217,973

principal on the New Note.

The Company subsequently

paid all the accrued interest expense of $ 905

on the New Note as such the conditions to earn

the 2018 Contingent Bonuses have been achieved and the 2018 Contingent Bonuses have been paid in 2020.

January 2, 2022, Charles Allen, the Company’s Chief Executive Officer, was awarded 173,611 fully-vested shares of Common Stock

and Michal Handerhan, the Company’s Chief Operating Officer, was awarded 111,111 fully-vested shares of Common Stock granted under

the 2021 Equity Incentive Plan (the “Plan”) as equity bonuses.

May 12, 2022, the Compensation Committee of the Board of Directors of the Company approved a performance based Annual Cash Incentive

Plan (“ACIP”) for the Company’s executives for fiscal year 2022 whereby if an executive meets their performance milestones,

the executive will receive a bonus in amount up to 48 % to 107 % of the applicable executive’s base salary.

December 9, 2022, upon recommendation of the Compensation Committee, the Board of Directors approved an annual performance payout in

the aggregate amount of $ 278,498 , to be paid in stock and cash in the closing price of the Company’s common stock on January 1,

2023 as follows:

of Annual Performance Layout

the Year Ended

Handerhan - COO

Prevoznik - CFO

Paranjape - CTO

Performance Bonuses Earned

TO FINANCIAL STATEMENTS

January 19, 2020, the Company agreed to pay Charles Allen, its CEO, and Michal Handerhan, its COO, cash bonuses of $ 15,000 and $ 10,000 ,

respectively for 2019.

The Company also agreed to pay Mr.

Allen and Mr.

Handerhan contingent cash bonuses of $ 462,000 and $ 235,750 (collectively

the “2019 Contingent Bonuses”).

The Contingent Cash Bonuses will be earned and payable upon the achievement or satisfaction

of any one of the following performance goals or criteria:

1) The Company either:

i) consummates a merger with another company which

would constitute a change of control, or ii) signs a letter of intent (an “LOI”), approved by the board, to merge with another

company which would constitute a change of control, 2) the combined value of the Company’s cash and fair market value of Digital

Assets (collectively the “Assets”) at any point in time are:

i) greater than or equal to $ 1.25 million, then 25 % of the Contingent

Cash Bonuses will be deemed earned and payable, ii) greater than or equal to $ 1.75 million (excluding any portion of Contingent Cash

Bonuses previously earned whether paid or accrued), then 25% of the Contingent Cash Bonuses will be deemed earned and payable, iii) greater

than or equal to $ 2 million (excluding any portion of Contingent Cash Bonuses previously earned whether paid or accrued), then the remaining

50% of the Contingent Cash Bonuses will be deemed earned and payable, and 3) provided further if the Company and Mr.

agree to exchange their respective Contingent Cash Bonus or a portion thereof for equity securities (not debt) then the above performance

criteria do not need to be achieved with respect to the portion of Contingent Cash Bonuses exchanged for equity.

The Contingent Cash

Bonuses are not conditioned upon the continued service of Mr.

Handerhan and do not expire.

The conditions to earn the 2019

Contingent Bonuses have been achieved and the 2019 Contingent Bonuses have been paid in 2020.

amendments to the Employment Agreements, the 2017 Contingent Bonuses, the 2018 Contingent Bonuses, and the 2019 Contingent Bonuses were

approved unanimously by the Board.

of December 31, 2021 and 2020, the Company had approximately $ 7,000 and $ 350,000 of accrued compensation.

7 – Accrued Compensation

of December 31, 2022 and 2021, the Company had accrued expenses consisting of the following:

of Accrued Compensation

Compensation and

related expenses

Accounts Payable

compensation and related expenses include approximately $ 284,000 and related to performance bonus accruals as of December 31, 2022 and

2021, respectively.

8 – Employee Benefit Plans

3 unchanged sentences

up to 100 % of employee contributions.

For the year ended December 31, 2021 and 2020, the Company made contributions to the 401(k) Plan

For the years ended December 31, 2022 and 2021, the Company made contributions to the 401(k) Plan

of $ 45,000 and $ 39,000 , respectively.

9 – Going Concern - Liquidity

9 – Liquidity

Company follows “ Presentation of Financial Statements—Going Concern (Subtopic 205-40):

8 unchanged sentences

plan and generating revenue;

however, the Company’s cash position and liquid Digital Assets are sufficient to support its daily

however, the Company’s cash position and liquid crypto assets are sufficient to support its daily

operations over the next twelve months.

1 unchanged sentence

Over the past year, the Company’s growth has been

funded through a combination of sale of equity (common and preferred stock), promissory notes, and lease financing.

As of December 31,

2021, the Company had approximately $ 1.4 million of unrestricted cash and liquid Digital Assets with a carrying value of $ 3.7 million.

funded through the sale of common stock equity.

As of December 31, 2022, the Company had approximately $ 2.1 million of unrestricted cash.

However, historically the Company has experienced and may continue to experience negative operating margins and negative cash flows from

5 unchanged sentences

There can be no assurance as to the availability or terms upon which such financing and capital might be available.

TO FINANCIAL STATEMENTS

10 - Income Taxes

2 unchanged sentences

and liabilities at December 31, 2022 and 2021 are comprised of the following:

Schedule of Deferred Tax Assets and Liabilities

of Deferred Tax Assets and Liabilities

As of December 31,

Deferred tax assets:

Net-operating loss carryforward (federal & state)

Federal Net-operating loss carryforward

State Net-operating loss carryforward

Other (Non-Qualified Stock Options)

8 unchanged sentences

generated in tax years beginning after December 31, 2017 and future years .

Accordingly, the amount of

NOLs that were generated in the tax year December 31, 2014 in the amount of $ 1,290,156 will expire after December 31, 2034 .

of NOLs that were generated in the tax year December 31, 2015 in the amount of $ 1,545,343 will expire after December 31, 2035 .

of NOLs that were generated in the tax year December 31, 2016 in the amount of $ 794,762 will expire after December 31, 2036 .

of NOLs that were generated in the tax year December 31, 2017 in the amount of $ 1,084,564 will expire after December 31, 2037 .

generated in the tax years December 31, 2018 in the amounts of $ 6,179,367 and onwards will have an indefinite life per current U.S.

income tax legislation.

Prior to the February 5, 2014 merger, the Company had generated

net operating losses, which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to

Internal Revenue Code Section 382.

The Company has not completed its IRC Section 382 Valuation, as required and the NOL’s because

of potential Change of Ownerships might be completely worthless.

the amount of NOLs that were generated in the tax year December 31, 2014 in the amount of $ 1,290,156 will expire after December 31, 2034 .

The amount of NOLs that were generated in the tax year December 31, 2015 in the amount of $ 1,545,343 will expire after December 31, 2035 .

The amount of NOLs that were generated in the tax year December 31, 2016 in the amount of $ 794,762 will expire after December 31, 2036 .

The amount of NOLs that were generated in the tax year December 31, 2017 in the amount of $ 1,084,564 will expire after December 31, 2037 .

The NOLs generated in the tax years December 31, 2018 and onwards in the amounts of $ 8,508,712 will have an indefinite life per current

federal income tax legislation.

to the February 5, 2014 merger, the Company had generated net operating losses, which the Company’s preliminary analysis indicates

would be subject to significant limitations pursuant to Internal Revenue Code Section 382.

The Company has not completed its IRC Section

382 Valuation, as required, and the NOL’s because of potential Change of Ownerships might be completely worthless.

Management of the Company has recorded a Full Valuation Reserve, since it is more likely than not that no benefit will be realized for

10 unchanged sentences

The valuation allowance increased by approximately $ 0.9 million as of December 31, 2022.

TO FINANCIAL STATEMENTS

expected tax expense (benefit) based on the U.S.

federal statutory rate is reconciled with actual tax expense (benefit) as follows:

Schedule of Income Tax Rate

of Income Tax Rate

For the years ended December 31,

5 unchanged sentences

Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2022 and 2021.

TO FINANCIAL STATEMENTS

11 - Subsequent Events

3 unchanged sentences

in the financial statements other than disclosed.

the period from December 31, 2021 to March 9, 2022, the Company sold a total of 1,723,666 shares of Common Stock under

the ATM Agreement for aggregate total gross proceeds of approximately $ 10,578,000 at an average selling price of $ 6.14

per share, resulting in net proceeds of approximately $ 10,252,000 after deducting commissions and other transaction costs.

January 5, 2022, the Board of Directors of the Company declared a special one-time dividend of $ 0.05

for each outstanding share of Common Stock of

The dividend is payable to holders of record as of the close of business on March 17, 2022 (the “Record Date”).

Shareholders are being provided the option to receive proceeds of their dividend payable in either cash (a “Cash Dividend”)

or Bitcoin (“Bitcoin Dividend” or “Bividend”).

January 19, 2022, the Board of Directors of the Company approved a base salary increase for the Company’s Chief Operating Officer

Michal Handerhan as an amendment to the Handerhan Employment Agreement whereby the annual salary was increased to $ 275,000 per year effective

on January 1, 2021, subject to a 4.5 % annual increase each subsequent year to adjust for inflation, pursuant to the 2021 compensation

On January 21, 2022, the

Board of Directors of the Company approved the formation of a Digital Asset Regulatory Committee comprised of two members:

Cleef, Chair, and Charles Allen.

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

Compensation Committee:

Allen, the Company’s Chief Executive Officer, was awarded 173,611

fully-vested shares of Common Stock and

Michal Handerhan, the Company’s Chief Operating Officer, was awarded 111,111

fully-vested shares of Common Stock granted

under the 2021 Equity Incentive Plan (the “Plan”).

Allen, the Company’s Chief Executive Officer, was granted the following restricted stock units (“RSUs”) with vesting

terms set forth below:

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 100,000,000 ;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 150,000,000 ;

RSUs priced when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 200,000,000 ;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 400,000,000 .

Handerhan, the Company’s Chief Operating Officer, was granted the following RSUs with vesting terms set forth below:

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 100,000,000 ;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 150,000,000 ;

RSUs priced when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 200,000,000 ;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 400,000,000 .

NOTES TO FINANCIAL STATEMENTS

Prevoznik, the Company’s Chief Financial Officer, was granted the following RSUs with vesting terms set forth below:

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 100,000,000 ,

and the time-based criteria set forth below are met;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 150,000,000 ,

and the time-based criteria set forth below are met;

RSUs priced when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 200,000,000 , and the time-based criteria set forth below are met;

RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 400,000,000 ,

and the time-based criteria set forth below are met.

the extent any market capitalization targets set forth above for Mr.

Prevoznik are achieved the RSUs will also be subject to the following

five-year vesting schedule:

20 % of the RSUs which have met a market capitalization criteria will vest on the one-year anniversary of

the grant date, and the remaining 80 % of the RSUs which have met a market capitalization criteria will vest monthly over the four years

following the one year anniversary of the grant date.

addition to the vesting criteria set forth above, while the Company is listed on the Nasdaq, the restricted stock units issued to Mr.

Handerhan, and Mr.

Prevoznik are subject to the receipt of shareholder approval approving an increase in the Plan or the creation

of a new plan as required under Nasdaq rules.

Board of Directors of the Company ratified grants of RSUs to each independent director.

David Garrity, Carol Van Cleef and Charles Lee

were each granted 31,848 restricted stock units (the “Board Grants”).

The Board Grants vest in four equal installments at

the end of each calendar quarter.

The Board also approved the following annual committee chair fees:

$ 15,000 for the Audit Committee

Chair, $ 8,000 for the Compensation Committee Chair, and $ 8,000 for the Governance and Nominating Committee (collectively, the “Committee

Chair Fees”).

The Committee Chair Fees are payable quarterly in four equal installments.

February 22, 2022, the Company appointed Manish Paranjape as Chief Technology Officer of the Company.

January 2019, Mr.

Paranjape has been the Vice President of Technology and Research at Corra, a global digital agency.

Prior to that,

beginning in July 2013, Mr.

Paranjape was the Director of Technology (U.S.) at Corra.

Additionally, since March 2021, Mr.

Paranjape has

been the principal of Kilwar LLC (“Kilwar”), a software development consulting company.

Paranjape will receive a salary of $ 225,000 per year and will be eligible for a performance bonus in an amount and with milestones to

be determined by the Board of Directors and the Compensation Committee with the target bonus being one half to two times his then base

Additionally, the Company has granted Mr.

Paranjape 45,767 restricted stock units (“RSUs”).

The RSUs shall vest as

(i) one fifth on February 22, 2023, and (ii) the remaining in 48 equal (monthly) increments, with each vesting tranche being

subject to continued employment on such applicable vesting date.

Paranjape, the Company’s Chief Technology Officer, was also granted the following long-term incentive restricted stock units (the

“LTI RSUs”) with vesting terms set forth below:

LTI RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 100,000,000 , and the time-based criteria set forth below are met;

LTI RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 150,000,000 , and the time-based criteria set forth below are met;

LTI RSUs priced when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days

above $ 200,000,000 , and the time-based criteria set forth below are met;

LTI RSUs when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above

$ 400,000,000 , and the time-based criteria set forth below are met.

the extent any market capitalization targets set forth above for Mr.

Paranjape are achieved the RSUs will also be subject to the following

five-year vesting schedule:

20 % of the LTI RSUs which have met a market capitalization criteria will vest on the one-year anniversary

of the grant date, and the remaining 80 % of the LTI RSUs which have met a market capitalization criteria will vest monthly over the four

years following the one year anniversary of the grant date.

addition to the vesting criteria set forth above, while the Company is listed on the Nasdaq, the vesting and delivery of the shares of

Common Stock underlying the LTI RSUs are subject to the receipt of shareholder approval approving an increase in the Plan or the

creation of a new plan as required under Nasdaq rules.

Paranjape was not appointed pursuant to any arrangement or understanding with any person, and Mr.

Paranjape does not have any family

relationships with any directors or executive officers of the Company.

From April 1, 2021 to February 15, 2022, the Company paid approximately

$ 205,000 to Kilwar for its consulting services.

the period from December 31, 2022 to March 28, 2023, the Company sold a total of 295,306 shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $ 520,000 at an average selling price of $ 1.76 per share, resulting in net

proceeds of approximately $ 501,000 after deducting commissions and other transaction costs.

December 9, 2022, upon recommendation of the Compensation Committee, the Board of Directors of BTCS Inc.

approved, effective January

1, 2023, the amendment of unvested RSUs which are subject to monthly time-based vesting such that the time-based vesting conditions will

be replaced with calendar year annual vesting, including any pro-rata adjustment which may be required to move from an annual basis to

a calendar year annual basis.

In addition, the Board of Directors approved the grant of 25,000 RSUs to Mr.

Prevoznik and Mr.

each, which vest annually over a five-year period with the first vesting date being on the one-year anniversary of the execution date

of the effective grant date, subject to continued employment on each applicable vesting date.

January 19, 2023, The Board of Directors of the Company approved the issuance of $ 50,000 of common stock to each independent director.

The shares will be issued in four equal installments ($ 12,500 ) at the end of each calendar quarter beginning March 31st, subject to continued

service on each applicable issuance date.

The number of shares issuable will be based on the closing price of the Company’s common

stock on the last trading day prior to the end of the applicable calendar quarter.

Board also approved the following annual committee chair fees:

$ 5,000 for the Audit Committee Chair, 5,000 for the Compensation Committee

Chair, and $ 5,000 for the Governance and Nominating Committee (collectively, the “Committee Chair Fees”).

The Committee Chair

Fees are payable quarterly in four equal installments at the end of each calendar quarter.

The annual Board fees remain unchanged at

$ 25,000 per independent director, payable quarterly in four equal installments at the end of each calendar quarter.

On February 2, 2023,

the Company announced that it had created a new Series V Convertible Preferred Stock with plans to distribute the Series V to each shareholder

of record as of March 27, 2023 with a payment date of April 14, 2023.

On March 23, 2023, the Company announced the delay of the key dates

including record and payment dates of the Series V distribution, due to anticipated changes to the structure.

The Company is actively

working with relevant parties to ensure a smooth process of the distribution moving forward.

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

What changed 10-K

Item 9A. Controls and Procedures