What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-12 compared with 2022-11-10 · 240 added, 309 removed, 509 unchanged (52% of the section changed)

1 Financial Statements

September 30,

Current assets:

Digital assets/currencies

Staked digital assets/currencies

Crypto assets/currencies

Investments, at value (Cost $ 100,000 )

Staked crypto assets/currencies

Prepaid expense

2 unchanged sentences

Property and equipment, net

Staked digital assets/currencies - long term

Staked crypto assets/currencies - long term

Total other assets

5 unchanged sentences

Stockholders’ equity:

Common stock, 97,500,000 shares authorized at $ 0.001 par value, 13,053,712 and 10,528,212 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Common stock, 97,500,000 shares authorized at $ 0.001 par value, 13,799,745 and 13,107,149 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid in capital

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For the Three Months Ended

For the Nine Months Ended

September 30,

Validator revenue (net of fees)

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Compensation and related expenses

Impairment loss on digital assets/currencies

Realized gains on digital asset/currency transactions

( 3,054,418 )

Impairment loss on crypto assets/currencies

Realized gains on crypto asset/currency transactions

Total operating expenses

Other income (expenses):

Interest expense

Amortization on debt discount

( 1,716,744 )

Change in fair value of warrant liabilities

3 unchanged sentences

$ ( 5,740,743 )

$ ( 14,495,664 )

$ ( 15,466,585 )

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

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

( 5,020,883 )

Net loss attributable to common stockholders

$ ( 1,030,248 )

$ ( 3,855,525 )

$ ( 14,495,664 )

$ ( 20,533,009 )

Net loss per share attributable to common stockholders, basic and diluted

2 unchanged sentences

of Changes in Stockholders’ Equity

the Nine Months Ended September 30, 2022

the Three months Ended March 31, 2023

Stockholders’

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( 1,413,369 )

Balance September 30, 2022

Balance March 31, 2023

$ 161,839,971

$ ( 152,895,577 )

the Nine Months Ended September 30, 2021

Series C-1 Convertible

Series C-2 Convertible

Total Stockholders’

the Three months Ended March 31, 2022

Stockholders’

Balance December 31, 2021

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$ ( 135,589,470 )

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

$ 147,682,384

$ ( 135,589,470 )

Issuance of Series C-2 convertible preferred stock

Conversion of Series C-1 Convertible Preferred stock

Conversion of Series C-2 Convertible Preferred stock

( 1,100,000 )

( 6,216,289 )

Beneficial conversion features associated with convertible notes payable

Beneficial conversion feature of Series C-2 convertible preferred stock

Deemed dividends related to amortization of beneficial conversion feature

of Series C-2 convertible preferred stock

Deemed dividends related to recognition of downround adjustment to conversion

amount for Series C-2 convertible preferred stock

( 5,020,883 )

Fractional shares adjusted for reverse split

Warrant exercise

Stock-based compensation

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

preferred stock

( 15,466,585 )

Balance September 30, 2021

$ 143,472,733

$ ( 135,006,472 )

the Three Months Ended September 30, 2022

Stockholders’

Balance June 30, 2022

$ 159,432,894

$ ( 149,054,886 )

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

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( 5,740,743 )

Balance September 30, 2022

$ 160,374,041

$ ( 150,085,134 )

the Three Months Ended September 30, 2021

Series C-1 Convertible

Series C-2 Convertible

Stockholders’

Balance June 30, 2021

$ 137,959,473

$ ( 131,164,135 )

Common stock issued including equity commitment fee, net

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

Warrant liabilities value related to Issuance of common stock

( 5,771,250 )

Conversion of Series C-2 Convertible Preferred stock

( 1,100,000 )

( 6,216,289 )

Deemed dividends related to amortization of beneficial conversion feature

of Series C-2 convertible preferred stock

Fractional shares adjusted for reverse split

Stock-based compensation

Balance March 31, 2022

$ 158,848,780

$ ( 141,330,213 )

Balance September 30, 2021

$ 158,848,780

3 unchanged sentences

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

For the Nine Months Ended

September 30,

For the Three Months Ended

Net Cash flows used from operating activities:

3 unchanged sentences

Depreciation expense

Amortization on debt discount

Stock-based compensation

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

Validator revenue

( 1,421,560 )

Blockchain network fees (non-cash)

Change in fair value of warrant liabilities

( 1,140,000 )

( 2,066,250 )

Purchase of non-productive digital assets/currencies

( 5,761,550 )

Sale of non-productive digital assets/currencies

Realized gain on digital assets/currencies transactions

( 3,054,418 )

Impairment loss on digital assets/currencies

Realized gain on crypto assets/currencies transactions

Impairment loss on crypto assets/currencies

Changes in operating assets and liabilities:

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Accrued compensation

Capital shares payable

Dividends payable - distributions to warrant holders

Net cash used in operating activities

( 1,126,032 )

Net cash used in investing activities:

Purchase of productive digital assets/currencies for validating

( 1,055,243 )

Net cash used in investing activities:

Purchase of productive crypto assets/currencies for validating

( 8,521,726 )

Sale of productive digital assets/currencies

Sale of productive crypto assets/currencies

Purchase of investments

Purchase of property and equipment

1 unchanged sentence

( 8,214,135 )

( 9,466,822 )

Net cash provided by financing activities:

Dividend distributions

Proceeds from exercise of warrants

Proceeds from issuance of Series C-2 convertible preferred stock

Net proceeds from issuance of convertible notes

Net proceeds from issuance of common stock and warrants for cash

Net proceeds from issuance of common stock

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

Payment to convertible notes principle

( 1,092,712 )

Net cash provided by financing activities

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Supplemental disclosure of non-cash financing and investing activities:

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

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

Conversion of Series C-1 Preferred Stock

Conversion of Series C-2 Preferred Stock

Beneficial conversion feature of Series C-2 convertible preferred stock

Beneficial conversion features associated with convertible notes payable

Dividends payable

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

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1 - Business Organization and Nature of Operations

(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 released a new website which included broader information on its strategy.

Company’s blockchain infrastructure operations focuses on securing next-generation blockchains and operating validator nodes on

various proof of stake-based blockchain networks, earning rewards of additional Digital Assets by authenticating and validating transactions

on the networks.

The Company is in the late stages of developing a Digital Asset Platform that would enable users to aggregate their

Digital Asset portfolio holdings from multiple exchanges and wallets into a single platform to view and analyze performance, risk metrics,

and potential tax implications.

The internally developed platform utilizes Digital Asset exchange APIs to read user data and does not

allow for the trading of assets.

We also are developing an integrated proprietary Staking-as-a-Service feature on the Digital Asset Platform

that would enable users to participate in asset leveraging through securing blockchain protocols and to stake and delegating supported

cryptocurrencies to BTCS operated validator nodes through a non-custodial platform.

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 (“BTCS” or the “Company”) was incorporated in 2008 and

is an early entrant in the crypto asset (also referred to “cryptocurrencies”, “crypto”, or “tokens”)

market with a primary focus on blockchain infrastructure and staking.

The Company operates validator nodes on various proof-of-stake

(“PoS”) and delegated proof-of-stake (“DPoS”) based blockchain networks and stakes the native crypto assets on

those blockchains to earn rewards.

The Company’s Staking-as-a-Service (“StaaS”) business allows crypto asset holders

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

validator nodes (or “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

The Company’s recently launched StakeSeeker platform (the “Digital Asset Platform”), currently in beta,

is 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 direct participation in blockchain consensus

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.

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

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

Interim results for the three and nine months ended September

30, 2022 are not necessarily indicative of results for the full year ended December 31, 2022.

The unaudited condensed financial statements

and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2021.

Interim results for the three months ended March 31, 2023 are

not necessarily indicative of results for the full year ended December 31, 2023.

The unaudited condensed financial statements and notes

should be read in conjunction with the financial statements and notes for the year ended December 31, 2022.

3 - Summary of Significant Accounting Policies

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Concentration

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

The Company considers all

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

As of September

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

The Company considers

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

31, 2023 and December 31, 2022, the Company had approximately $ 1.4 million and $ 2.1 million in cash.

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

As of September 30, 2022 and

December 31, 2021, the Company had approximately $ 2.5 million and $ 0.9 million in excess of the FDIC insured limit, respectively.

As of March 31, 2023 and December

31, 2022, the Company had approximately $ 0.7 million and $ 1.7 million in excess of the FDIC insured limit, respectively.

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

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Identify the contract with the customer

Identify the performance obligations in the

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

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 has entered into network-based smart contracts by running its own Digital Asset validating nodes as well as by staking Digital

Assets with staking pools on nodes run by third-party operators (either directly or through exchanges).

Through these contracts, the

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

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

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

In exchange for staking the cryptocurrency and validating transactions on blockchain networks, the Company is entitled to all of the

fixed cryptocurrency award for running the Company’s own node and is entitled to a fractional share of the fixed cryptocurrency

award a third-party staking pool operator receives (less digital asset transaction fees payable to the pool operator or exchanges, which

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

The Company’s

fractional share of awards received by a third-party staking pool is based on the proportion of cryptocurrency the Company staked to

the staking pool node to the total cryptocurrency staked by all pool participants validating blockchain transactions.

Company has entered into network-based smart contracts by running its own crypto asset validator 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 on a node for the purpose of validating transactions and adding blocks to a respective blockchain network.

The term of a smart

contract can vary based on the rules of the respective blockchain and typically last a few weeks to months after it is canceled by the

operator and requires that the cryptocurrency staked remain locked up during the duration of the smart contract.

In exchange for staking

the cryptocurrency and validating transactions on blockchain networks, the Company is entitled to all of the fixed cryptocurrency award

for running the Company’s own node and is entitled to a fractional share of the fixed cryptocurrency award a third-party 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 cryptocurrency awards - is a non-cash consideration, which the Company measures at fair value on the date received.

- 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 at the time of receipt.

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 transaction verification services occurs at a point in time when confirmation is received from the

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

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.

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Assets Translations and Remeasurements

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

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

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

value of Digital Assets is determined using the average U.S.

dollar spot price of the related Digital Asset.

On a quarterly basis, Digital

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

The Company will record impairment losses

as the fair value falls below the carrying value of the Digital Assets at any time during the period, as determined using the lowest

dollar spot price of the related Digital Asset subsequent to its acquisition.

The Digital Assets can only be marked down when impaired

and not marked up when their value increases.

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

recorded impairment losses related to Digital Assets of approximately $ 12.3 million and $ 3.8 million during the nine months ended September

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 related to crypto assets of approximately $ 95,000 and $ 3.3 million during the three months ended March 31,

2023, and 2022, respectively.

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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 $ 490,000 and $ 3.1 million during the nine months ended September 30, 2022 and 2021, respectively.

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

on crypto assets of approximately $ 17,000 and $ 71,000 during the three months ended March 31, 2023 and 2022, 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

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.

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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 Digital Asset exchanges and digital

wallets as well as providing a non-custodial delegation process to earn staking rewards on Digital Asset holdings.

For internally developed

software, the Company uses both its own employees as well as the services of external vendors and independent contractors.

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

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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Depreciation and

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

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

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

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

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

and stock incentive shares.

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

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

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

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

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

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

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incorporates pricing inputs covering the period from the grant date through the end of the derived service period.

January 5, 2022, the board of directors of the Company declared a non-recurring special dividend of $0.05 for each outstanding share

of Common Stock of the Company, payable to holders of record as of the close of business on March 17, 2022.

The dividend distributions

are considered a return of capital as the distributions are in excess of the Company’s current and accumulated earnings and profits.

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.

The Company will evaluate the appropriateness

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

Dividend distributions amounted to $ 635,000 and $ 0 during

the nine months ended September 30, 2022 and 2021, respectively.

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

Dividend distributions

amounted to $ 0 and $ 635,000 during the three months ended March 31, 2023 and 2022, respectively.

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Advertising and marketing expenses amounted to approximately $ 6,000

and $ 10,000 for the nine months ended September 30, 2022 and 2021, respectively.

and $ 42,000 for the three months ended March 31, 2023 and 2022, respectively.

Loss per Share

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of preferred stock, notes and warrants from the calculation of net loss per share if their effect would be anti-dilutive.

following financial instruments were not included in the diluted loss per share calculation as of September 30, 2022 and 2021 because

their effect was anti-dilutive:

following financial instruments were not included in the diluted loss per share calculation as of March 31, 2023 and 2022 because their

effect was anti-dilutive:

Schedule of Earnings Per Share Anti-diluted

As of September 30,

As of March 31,

Warrants to purchase common stock

Convertible notes

Non-vested restricted stock awards units

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

current GAAP.

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

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

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

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

This guidance is effective for fiscal

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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

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)

following table presents the Company’s assets and liabilities that are measured at fair value at September 30, 2022 and December

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 March 31, 2023 and December 31, 2022:

Schedule of Fair Value of Assets and

Liabilities Valued on Recurring Basis

Fair value measured at September 30, 2022

September 30,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Fair Value Measured at March 31, 2023

Quoted prices in

active markets

Significant other

observable inputs

Warrant Liabilities

Fair Value Measured at December 31, 2022

Total at December 31,

Quoted prices in active markets

Quoted prices in

active markets

Significant other

observable inputs

Significant unobservable inputs

Warrant Liabilities

Company did not make any transfers between the levels of the fair value hierarchy during the three months ended March 31, 2023 and 2022.

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 March 31,2023 and 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

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

warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of September 30,

warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of March 31, 2023

and December 31, 2022, is as follows:

Summary of Valuation

Methodology and Significant Unobservable Inputs Warrant Liabilities

September 30,

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

Risk-free rate of interest

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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 nine

months ended September 30, 2022 and 2021, that are measured at fair value on a recurring basis:

Schedule of Changes in Fair Value and Other

Adjustments of Warrants

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 three months ended March 31, 2023 and 2022, that are measured at fair value on a recurring basis:

of Changes in Fair Value and Other Adjustments of Warrants

Fair Value of Level 3 Financial Assets

Beginning balance

Unrealized appreciation (depreciation)

Ending balance

Fair Value of Level 3 Financial Liabilities

September 30,

Beginning balance

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Fair value adjustment of warrant liabilities

( 1,140,000 )

Ending balance

5 – Stockholders’ Equity

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

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

The financial statements have been retroactively

restated to reflect the reverse stock split.

The Market Offering Agreement

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

the nine months ended September 30, 2022, the Company sold a total of 2,148,658 shares of Common Stock under the ATM Agreement for aggregate

the three months ended March 31, 2023, the Company sold a total of 301,154 shares of Common Stock under the ATM Agreement for aggregate

total gross proceeds of approximately $ 529,000 at an average selling price of $ 1.76 per share, resulting in net proceeds of approximately

$ 509,000 after deducting commissions and other transaction costs.

Based Payments

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 31 st , 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.

For the three months ended March 31, 2023,

27,576 shares of common stock were issued to independent directors.

Preferred Stock

Effective January 27, 2023, the Company’s Board

of Directors approved the issuance of a newly designated Series V Preferred Stock (“Series V”) on a one-for-one basis to the

Company’s shareholders (including restricted stock unit holders).

The record date has been set for May 12, 2023 and the payment

date is June 2, 2023.

The Series V:

(i) is non-convertible, (ii) has a 20% liquidation preference over the shares of common stock, (iii)

is non-voting and (iv) has certain rights to dividends and distributions (at the discretion of the Board of Directors) .

Equity Incentive Plan

2 unchanged sentences

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

the three months ended September 30, 2022, the Company granted 50,000 stock options with a weighted average exercise price of $ 1.51 to

non-executive employees.

The following weighted-average assumptions were used to estimate the fair value of options granted on the deemed

grant date during the nine months ended September 30, 2022 and 2021 for both the Black-Scholes formula and the Monte-Carlo simulation

formula, applicable to 2021 options granted:

the three months ended March 31, 2023, the Company granted 20,000 stock options with a weighted average exercise price of $ 0.63 to non-executive

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

months ended March 31, 2023 and 2022 for both the Black-Scholes formula:

Weighted-Average Assumptions Used to Estimate Fair Value

the nine months ended September 30,

For the Three Months

Ended March 31,

Exercise price

18 unchanged sentences

using a Monte-Carlo simulation.

summary of option activity under the Company’s stock option plan for nine months ended September 30, 2022 is presented below:

summary of option activity under the Company’s stock option plan for three months ended March 31, 2023 is presented below:

Summary of Option Activity

6 unchanged sentences

Employee options granted

Outstanding as of September 30, 2022

Options vested and exercisable as of September 30, 2022

Outstanding as of March 31, 2023

Options vested and exercisable as of March 31, 2023

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

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

David Garrity, Carol Van Cleef and Charles Lee

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

The Board Grants vest in four equal installments at

the end of each calendar quarter in 2022.

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

5 unchanged sentences

market capitalization thresholds.

Effective January 1, 2023 (the “LTI RSU Amendment Date”), 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.

RSUs granted to each executive employee are as follows:

4 unchanged sentences

$ 300 million

$ 400 million

Charles Allen

12 unchanged sentences

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.

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

9 unchanged sentences

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 nine months ended September

As of the LTI RSU

Amendment Date, the Company determined the pre-modification and post-modification estimated fair value of the LTI RSUs accounting for

the amended market cap criteria.

The increase in fair value of the LTI RSUs attributable to the modification was added to the related

unrecognized compensation expense in accordance with ASC 718 – Share-Based Compensation , whereby any previously recognized

compensation cost that has not vested as of the modification date should be adjusted to reflect the new fair value of the equity awards

on the date of the modification.

following weighted-average assumptions were used to estimate the fair value of options granted during the three months ended March 31,

2023 and 2022 for the Monte-Carlo simulation:

Weighted-Average Assumptions Used to Estimate Fair Value

Nine Months Ended

September 30,

Three Months Ended

(Post-Modification)

(Original Grants)

Vesting Hurdle Price

$ 3.81 - $30.52

$ 8.07 - $36.99

Expected stock price volatility

8 unchanged sentences

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.

The expected term is based on the stipulated five -year period from the grant date until the market-based criteria are achieved.

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

The vesting hurdle price is determined as the average of 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.

summary of the Company’s restricted stock units granted under the 2021 Plan during the nine months ended September 30, 2022 are

December 9, 2022, upon recommendation of the Compensation Committee, the Board of Directors approved the grant of 25,000 RSUs to Mr.

Prevoznik and Mr.

Paranjape each, effective January 1, 2023, 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.

summary of the Company’s restricted stock units granted under the 2021 Plan during the three months ended March 31, 2023 are as

Summary of Restricted Stock

2 unchanged sentences

Nonvested at December 31, 2022

Nonvested at September 30, 2022

Nonvested at March 31, 2023

Based Compensation

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

Stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 was as follows:

Stock-based compensation expense for the three months ended March 31, 2023 and 2022 was as follows:

Schedule of Stock-based Compensation Expense

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Employee bonus stock awards

2 unchanged sentences

Non-employee restricted stock awards

Series C-2 Allocation

Stock-based compensation

1 unchanged sentence

expenses consist of the following:

Schedule of Accrued Expenses

September 30, 2022

of Accrued Expenses

March 31, 2023

December 31, 2022

Compensation and related expenses

1 unchanged sentence

Accrued Expenses

compensation and related expenses include approximately $ 209,000 related to performance bonus accruals as of September 30, 2022.

compensation and related expenses include approximately $ 0 and $ 284,000 related to performance bonus accruals as of March 31, 2023 and

December 31, 2022, respectively.

7 – Employee Benefit Plans

3 unchanged sentences

up to 100 % of employee contributions.

For the nine months ended September 30, 2022, the Company made contributions to the 401(k) Plan

of $ 45,000 .

For the three months ended March 31, 2023 and 2022, the Company made contributions to the 401(k)

Plan of $ 95,000 and $ 45,000 , respectively.

8 – Liquidity

5 unchanged sentences

in the normal course of business.

reflected in the financial statements, the Company has historically incurred a net loss and has an accumulated deficit at September 30,

reflected in the financial statements, the Company has historically incurred a net loss and has an accumulated deficit at March 31, 2023,

a net loss and net cash used in operating activities for the reporting period then ended.

The Company is implementing its business

plan and generating revenue;

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

operations over the next twelve months.

The Company is implementing its business plan

and generating revenue;

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

over the next twelve months.

9 – Subsequent Events

3 unchanged sentences

in the financial statements other than disclosed.

the period from October 1, 2022 to November 8, 2022, the Company sold a total of 23,678 shares of Common Stock under the ATM Agreement

the period from April 1, 2023 to May 9, 2023, the Company sold a total of 30,558 shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $ 46,000 at an average selling price of $ 1.52 per share, resulting in net proceeds

of approximately $ 44,000 after deducting commissions and other transaction costs.

October 1, 2022, the Board of Directors of BTCS Inc.

appointed Melanie Pump as a new independent director of the Board.

also appointed as the Chairperson of the Audit and Compensation Committees.

As compensation for her service as a director and Chairperson

of the Committees, Ms.

Pump will receive:

(i) annual cash compensation of $ 25,000 and $ 5,000 for each Committee ($ 10,000 in total), and

(ii) 7,962 restricted stock units which will vest on December 31, 2022.

May 11, 2023, the Compensation Committee of the Board of Directors of the Company approved a performance based Annual Cash Incentive

Plan for the Company’s executives for fiscal year 2023.

If an executive meets their performance milestones, the executive will

receive a bonus, payable in cash and/or equity at the discretion of the Compensation Committee, in an amount up to 54 % to 104 % of the

applicable executive’s base salary, as detailed below:

Allen, the Company’s Chief Executive Officer is eligible to receive up to 104 % of his base salary.

Allen’s current

base salary is $ 411,419 ;

Handerhan, the Company’s Chief Operating Officer is eligible to receive up to 68 % of his base salary.

base salary is $ 287,375 ;

Prevoznik, the Company’s Chief Financial Officer is eligible to receive up to 54 % of his base salary.

base salary is $ 235,125 ;

Paranjape, the Company’s Chief Technology Officer is eligible to receive up to 54 % of his base salary.

base salary is $ 235,125 .

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

What changed 10-Q

Item 1. Financial Statements