What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-09 compared with 2023-08-11 · 300 added, 238 removed, 495 unchanged (52% of the section changed)

1 Financial Statements

assets/currencies

at value (Cost $100,000)

crypto assets/currencies

September 30, 2023

December 31, 2022

Current assets:

and equipment, net

crypto assets/currencies - long term

and Stockholders’ Equity:

payable and accrued expense

current liabilities

Stockholders’

Cash and cash equivalents

Crypto assets

Staked crypto assets

Investments, at value (Cost $ 100,000 )

Prepaid expense

Total current assets

Other assets:

Property and equipment, net

Staked crypto assets - long term

Total other assets

Liabilities and Stockholders’ Equity:

Accounts payable and accrued expense

Accrued compensation

Warrant liabilities

Total current liabilities

Stockholders’ equity:

Preferred stock:

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

V Preferred stock:

shares issued and outstanding at June 30, 2023 and December 31,

2022, respectively

stock, 97,500,000 shares authorized at $ 0.001 par value, 14,181,410 and 13,107,149 shares issued and outstanding at June 30, 2023

and December 31, 2022, respectively

paid in capital

Series V Preferred stock:

14,542,803 and 0 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Preferred stock value

Common stock, 97,500,000 shares authorized at $ 0.001 par value, 14,373,186 and 13,107,149 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid in capital

Accumulated deficit

( 154,554,101 )

( 151,482,208 )

stockholders’ equity

Liabilities and Stockholders’ Equity

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

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

of Operations

the Three Months Ended

the Six Months Ended

revenue (net of fees)

For the Three Months Ended

For the Nine Months Ended

September 30,

Validator revenue (net of fees)

Total revenues

Cost of revenues

and administrative

and development

and related expenses

loss on crypto assets/currencies

gains on crypto asset/currency transactions

Validator expenses

Operating expenses:

income (expenses):

in fair value of warrant liabilities

Distributions

to warrant holders

General and administrative

Research and development

Compensation and related expenses

Impairment loss on crypto assets

Realized gains on crypto asset transactions

Total operating expenses

Other income (expenses):

Change in fair value of warrant liabilities

Distributions to warrant holders

Total other income (expenses)

$ ( 640,071 )

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$ ( 14,495,664 )

loss per share attributable to common stockholders, basic and diluted

loss per share attributable to common stockholders, basic

average number of common shares outstanding, basic and diluted

average number of common shares outstanding, basic

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

Weighted average number of common shares outstanding, basic and diluted

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

of Changes in Stockholders’ Equity

the Six Months Ended June 30, 2023

the Nine Months Ended September 30, 2023

Series V Preferred Stock

Stockholders’

December 31, 2022

Balance December 31, 2022

$ 160,800,263

$ ( 151,482,208 )

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

of Series V preferred stock

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

Issuance of Series V preferred stock

( 2,559,533 )

Stock-based compensation

( 3,071,893 )

June 30, 2023

Balance September 30, 2023

$ 160,410,794

$ ( 154,554,101 )

the Six Months Ended June 30, 2022

Stockholders’

December 31, 2021

the Nine Months Ended September 30, 2022

Balance December 31, 2021

$ 147,682,384

$ ( 135,589,470 )

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

distributions

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

Stock-based compensation

Dividend distributions

( 14,495,664 )

June 30, 2022

Balance September 30, 2022

$ 160,374,041

$ ( 150,085,134 )

the Three Months Ended June 30, 2023

the Three Months Ended September 30, 2023

Series V Preferred Stock

Stockholders’

March 31, 2023

Balance June 30, 2023

$ 159,955,610

$ ( 153,914,030 )

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

of Series V preferred stock

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

Stock-based compensation

Balance September 30, 2023

$ 160,410,794

$ ( 154,554,101 )

the Three Months Ended September 30, 2022

Stockholders’

Balance June 30, 2022

$ 159,432,894

June 30, 2023

$ ( 149,054,886 )

$ 159,432,894

the Three Months Ended June 30, 2022

Stockholders’

March 31, 2022

$ ( 149,054,886 )

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

Stock-based compensation

Dividend distributions

( 1,030,248 )

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

distributions

( 1,030,248 )

Balance September 30, 2022

$ 160,374,041

June 30, 2022

$ ( 150,085,134 )

$ 160,374,041

$ ( 150,085,134 )

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

of Cash Flows

the Six Months Ended June

Cash flows used from operating activities:

For the Nine Months Ended

September 30,

Net Cash flows used from operating activities:

$ ( 3,071,893 )

$ ( 14,495,664 )

to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

Stock-based compensation

Validator revenue

( 1,013,503 )

network fees (non-cash)

in fair value of warrant liabilities

( 1,421,560 )

of non-productive crypto assets/currencies

gain on crypto assets/currencies transactions

loss on crypto assets/currencies

in operating assets and liabilities:

expenses and other current assets

payable and accrued expenses

cash used in operating activities

Blockchain network fees (non-cash)

Change in fair value of warrant liabilities

( 1,140,000 )

cash used in investing activities:

of productive crypto assets/currencies for validating

Sale of non-productive crypto assets

Realized gain on crypto assets transactions

Impairment loss on crypto assets

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Accrued compensation

Net cash used in operating activities

( 2,693,405 )

Cash flows from investing activities:

Purchase of productive crypto assets for validating

( 1,804,482 )

of productive crypto assets/currencies

of investments

of property and equipment

cash used in investing activities

( 9,274,055 )

cash provided by financing activities:

distributions

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

cash provided by financing activities

increase in cash

Sale of productive crypto assets

Purchase of property and equipment

Sale of property and equipment

Net cash provided by (used in) investing activities

( 8,846,747 )

beginning of period

end of period

disclosure of non-cash financing and investing activities:

V Preferred Stock Distribution

Cash flows from financing activities:

Dividend distributions

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

Net cash provided by financing activities

Net (decrease)/increase in cash

( 1,393,550 )

Cash, beginning of period

Cash, end of period

Supplemental disclosure of non-cash financing and investing activities:

Series V Preferred Stock Distribution

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

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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 proprietary digital asset platform StakeSeeker (“StakeSeeker”) is currently in beta.

StakeSeeker is a personal

finance software and education center with a comprehensive crypto dashboard for crypto asset holders to connect, monitor, track, and

analyze their crypto portfolios across exchanges and wallets in a single analytics platform.

The internally-developed dashboard reads

user data from digital wallets and utilizes application programming interfaces (APIs) to read data from crypto exchanges and does not

allow for the trading or custody of crypto assets.

StakeSeeker’s Stake hub is an education center for users to learn how to earn

crypto rewards by delegating to our non-custodial validator nodes.

Crypto asset holders are able to delegate to our validator nodes without

signing up for the StakeSeeker platform;

conversely, crypto asset holders can delegate to validator nodes not operated by the Company

and sign up for StakeSeeker to utilize our software.

The Company is not a broker-dealer or an investment advisor and does not provide

any such related services.

Company has addressed the majority of outstanding matters pertaining to its StakeSeeker platform and anticipates its transition from

the beta phase on or before the conclusion of the first quarter of 2024.

The current functionality allows for crypto asset holders to

connect, monitor, track, and analyze their crypto portfolios across exchanges and wallets in a single analytics platform.

In the future,

the Company may expand support for additional blockchains and introduce additional analytic tools, with associated costs expected to

align with historical research and development expenses.

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

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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

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

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

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

Interim results for the three and six months ended June 30, 2023

Interim results for the three and nine months ended September

30, 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.

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

Concentration

Company maintains cash balances at three 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.

30, 2023 and December 31, 2022, the Company had approximately $ 0.9 million and $ 2.1 million in cash.

The Company has not experienced

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

and cash equivalents

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

The Company maintains cash and cash equivalent balances at financial institutions that are insured by the FDIC.

As of September 30, 2023

and December 31, 2022, the Company had approximately $ 753,000 and $ 2,147,000 in cash.

The Company has not experienced any losses

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

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

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

As of June 30, 2023 and December

31, 2022, the Company had approximately $ 0.3 million and $ 1.7 million in excess of the FDIC insured limit, respectively.

As of September 30, 2023 and

December 31, 2022, the Company had approximately $ 102,000 and $ 1,682,000 in excess of the FDIC insured limit, respectively.

Company holds stablecoins, such as USDT (Tether) and USDC (USD Coin), which are crypto assets that are pegged to the value of one U.S.

dollar and can be redeemed on demand for one U.S.

Our stablecoins are typically held in secure digital wallets or on crypto asset

The Company acquires and holds stablecoins primarily to facilitate crypto asset transactions, including, but not limited to,

payments to third-party vendors.

While not accounted for as cash or cash equivalents, these stablecoins are considered a liquidity resource.

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

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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 cancelled 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.

Through these contracts, the Company provides crypto

assets to stake on a node for the purpose of validating transactions and adding blocks to a respective blockchain network.

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 crypto assets staked remain locked up during the duration of the smart contract.

In exchange for

staking the crypto assets and validating transactions on blockchain networks, the Company is entitled to all of the fixed crypto asset

award for running the Company’s own node and is entitled to a fractional share of the fixed crypto asset 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 crypto assets the Company staked to the

node to the total crypto assets 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 award - is a non-cash consideration, which the Company measures at fair value on the date received.

- the crypto asset 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.

of the crypto asset award received is determined using the quoted price of the related crypto assets on the date of receipt.

The satisfaction

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At that point, revenue is recognized.

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

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

utilized and fees (including equity compensation stock-based fees) paid to 3rd parties to assist in software maintenance and operations

of its nodes.

Company’s cost of revenue primarily includes direct production costs associated with transaction validation on the network, cloud-based

server hosting expenses related to our validator nodes, and allocated employee salaries dedicated to node maintenance and support.

Additionally,

the cost of revenue encompasses fees, including equity compensation stock-based fees, paid to third parties for their assistance in software

maintenance and node operations.

Assets Translations and Remeasurements

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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.

fair value falls below the carrying value of the crypto assets at any time during the period, as determined using the lowest intraday

dollar 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 $ 0.9 million and $ 12.2 million during the six months ended June

30, 2023, and 2022, respectively.

Company recorded impairment losses related to crypto assets of approximately $ 1,252,000

and $ 12,347,000 during the nine months ended September 30, 2023, and 2022, respectively.

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

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The Company recorded realized gains (losses)

on crypto assets of approximately $ 0.7 million and $ 0.5 million during the six months ended June 30, 2023 and 2022, respectively.

on crypto assets of approximately $ 806,000 and $ 490,000 during the nine months ended September 30, 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,

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Developed Software

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

developed software consists of the core technology of the Company’s StakeSeeker platform, which is being designed to allow users

to track, monitor and analyze their aggregate crypto asset 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.

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June 2, 2023 to shareholders as of the record date of May 12, 2023.

(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) .

A total of 14,542,803

shares of Series V Preferred Stock were distributed

to shareholders on 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).

A total of 14,542,803 shares of Series V Preferred Stock were distributed to shareholders on June 2, 2023.

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

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

The dividend distributions are considered a return of capital

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

The dividend distributions were considered a return of capital

as the distributions were 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.

Dividend distributions amounted to $ 0 and $ 635,000 during the six months

ended June 30, 2023 and 2022, respectively.

Dividend distributions amounted to $ 0 and $ 635,000 during the nine months

ended September 30, 2023 and 2022, respectively.

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

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Advertising and marketing expenses amounted to approximately $ 11,000

and $ 65,000 for the six months ended June 30, 2023 and 2022, respectively.

and $ 74,000 for the nine months ended September 30, 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 June 30, 2023 and 2022 because their

effect was anti-dilutive:

following financial instruments were not included in the diluted loss per share calculation as of September 30, 2023 and 2022 because

their effect was anti-dilutive:

of Earnings Per Share Anti-diluted

As of June 30,

to purchase common stock

restricted stock awards units

As of September 30,

Warrants to purchase common stock

Non-vested restricted stock awards units

Anti-dilutive securities

Accounting Pronouncements

December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU

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

ASU 2019-12 removes certain exceptions

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

This guidance

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

The Company adopted ASU No.

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

statements and related disclosures.

August 2020, the FASB issued ASU No.

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

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

Accounting for Convertible Instruments and Contracts in an

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

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

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

This guidance is effective for fiscal

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

The Company adopted

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

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

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

present or future financial statements.

have evaluated all recently issued accounting pronouncements and believe such pronouncements do not have a material effect on our financial

4 – Fair Value of Financial Assets and Liabilities

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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 June 30, 2023 and December 31, 2022:

estimated level within the fair value hierarchy of those assets and liabilities as of September 30, 2023 and December 31, 2022:

of Fair Value of Assets and Liabilities Valued on Recurring Basis

Value Measured at June 30, 2023

Value Measured at December 31, 2022

Company did not make any transfers between the levels of the fair value hierarchy during the six months ended June 30, 2023 and 2022.

Fair Value Measured at September 30, 2023

September 30,

Quoted prices in active markets (Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Warrant Liabilities

Fair Value Measured at December 31, 2022

Quoted prices in active markets (Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Warrant Liabilities

Company did not make any transfers between the levels of the fair value hierarchy during the nine months ended September 30, 2023 and

3 Valuation Techniques

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determination of fair value requires significant judgment or estimation.

As of June 30, 2023 and December 31, 2022, the Company’s

As of September 30, 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 .

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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 June 30, 2023

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

2023 and December 31, 2022, is as follows:

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

rate of interest

life (in years)

dividend yield

September 30, 2023

December 31, 2022

Risk-free rate of interest

Expected volatility

Expected life (in years)

Expected dividend yield

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

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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 six months ended June 30, 2023 and 2022, that are measured at fair value on a recurring basis:

for the nine months ended September 30, 2023 and 2022, that are measured at fair value on a recurring basis:

of Changes in Fair Value and Other Adjustments of Warrants

Value of Level 3 Financial Assets

appreciation (depreciation)

Value of Level 3 Financial Liabilities

liabilities classification

value adjustment of warrant liabilities

Fair Value of Level 3 Financial Assets

September 30, 2023

September 30, 2022

Beginning balance

Unrealized appreciation (depreciation)

Ending balance

Fair Value of Level 3 Financial Liabilities

September 30, 2023

September 30, 2022

Beginning balance

Warrant liabilities classification

Fair value adjustment of warrant liabilities

( 1,140,000 )

Ending balance

5 – Stockholders’ Equity

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of Incorporation to effectuate the increase of our authorized shares of common stock to 975,000,000 .

The Market Offering Agreement

At-The-Market Offering Agreement

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

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Wainwright”), pursuant to which the Company may offer and sell, from time-to-time through

Wainwright, shares of the Company’s Common Stock having an aggregate offering price of up to $ 98,767,500 million (the “Shares”).

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

the six months ended June 30, 2023, the Company sold a total of 651,172 shares of Common Stock under the ATM Agreement for aggregate

the nine months ended September 30, 2023, the Company sold a total of 803,054 shares of Common Stock under the ATM Agreement for aggregate

total gross proceeds of approximately $ 1,161,000 at an average selling price of $ 1.45 per share, resulting in net proceeds of approximately

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

For the six months ended June 30, 2023, 59,223

For the nine months ended September 30, 2023,

99,117 shares of common stock were issued to independent directors.

For the nine months ended September 30, 2023, 410,317 shares of common stock were issued to officers related to payment

of 2022 accrued bonus compensation.

January 27, 2023, the Board approved the issuance of a newly designated Series V Preferred Stock (“Series V”) on a one-for-one

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to shareholders on June 2, 2023.

The Series V is listed to trade on the Upstream, the trading app for digital securities and NFTs powered by Horizon

Fintex and MERJ Exchange Limited, under the ticker symbol BTCSP.

The fair value of the Preferred stock as of the record date, May 12, 2023,

amounted to $ 2.6 million.

The Series V is listed to trade on Upstream, the trading app for digital securities and NFTs powered

by Horizon Fintex and MERJ Exchange Limited, under the ticker symbol BTCSP.

fair value of the Preferred stock as of the record date, May 12, 2023, amounted to approximately $ 2,560,000 .

The Company used a probability valuation model to determine the fair value of the preferred stock.

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amount under the 2021 Plan from 7,000,000 shares to 12,000,000 shares.

the six months ended June 30, 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 six

months ended June 30, 2023 and 2022 for both the Black-Scholes formula:

the nine months ended September 30, 2023, the Company granted 35,000 stock options with a weighted average exercise price of $ 0.81 to

non-executive employees.

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, 2023 and 2022 for both the Black-Scholes formula:

Weighted-Average Assumptions Used to Estimate Fair Value

Months Ended March 31,

stock price volatility

rate of interest

Nine Months Ended

September 30,

Exercise price

Expected stock price volatility

Risk-free rate of interest

The Company uses historical volatility as it provides a reasonable estimate of the expected volatility.

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using a Monte-Carlo simulation.

summary of option activity under the Company’s stock option plan for six months ended June 30, 2023 is presented below:

summary of option activity under the Company’s stock option plan for nine months ended September 30, 2023 is presented below:

Summary of Option Activity

as of December 31, 2022

options granted

options forfeited

as of June 30, 2023

vested and exercisable as of June 30, 2023

Number of Shares

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2022

Employee options granted

Employee options forfeited

Outstanding as of September 30, 2023

Options vested and exercisable as of September 30, 2023

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

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Schedule of Restricted Stock Units

Cap Vesting Thresholds

Executive Officer

Operations Officer

Financial Officer

Technology Officer

Market Cap Vesting Thresholds

Charles Allen

Chief Executive Officer

Michal Handerhan

Chief Operations Officer

Michael Prevoznik

Chief Financial Officer

Manish Paranjape

Chief Technology Officer

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

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on the date of the modification.

following weighted-average assumptions were used to estimate the fair value of options granted during the six months ended June 30, 2023

following weighted-average assumptions were used to estimate the fair value of options granted during the nine months ended September

30, 2023 and 2022 for the Monte-Carlo simulation:

Weighted-Average Assumptions Used to Estimate Fair Value

Valuation Dates

January 1, 2023

(Modification)

January 2, 2022

(Original Issuance)

Vesting Hurdle Price

stock price volatility

rate of interest

$ 3.81 - $ 30.52

$ 8.07 - $ 36.99

Expected stock price volatility

Risk-free rate of interest

The Company uses historical volatility as it provides a reasonable estimate of the expected volatility.

16 unchanged sentences

vesting date.

summary of the Company’s restricted stock units granted under the 2021 Plan during the six months ended June 30, 2023 are as follows:

summary of the Company’s restricted stock units granted under the 2021 Plan during the nine months ended September 30, 2023 are

Summary of Restricted Stock

at December 31, 2022

at June 30, 2023

Weighted Average

Nonvested at December 31, 2022

Nonvested at September 30, 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 six months ended June 30, 2023 and 2022 was as follows:

Stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 was as follows:

Schedule of Stock-based Compensation Expense

the Three Months Ended June 30,

the Six Months Ended June 30,

bonus stock awards

stock option awards

restricted stock unit awards

restricted stock awards

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Employee bonus stock awards

Employee stock option awards

Employee restricted stock unit awards

Non-employee restricted stock awards

Stock-based compensation

6 – Accrued Expenses

1 unchanged sentence

of Accrued Expenses

and related expenses

compensation and related expenses include approximately $ 254,000 and $ 284,000 related to performance bonus accruals as of June 30, 2023

September 30, 2023

December 31, 2022

Accrued compensation

Accounts payable and accrued expenses

Accrued Expenses

compensation includes approximately $ 321,000 and $ 284,000 related to performance bonus accruals as of September 30,

2023 and December 31, 2022, respectively.

4 unchanged sentences

up to 100 % of employee contributions.

For the six months ended June 30, 2023 and 2022, the Company made contributions to the 401(k) Plan

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

For the nine months ended September 30, 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 June 30, 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 crypto assets are sufficient to support its daily operations

over the next twelve months.

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

approximately $ 154,554,000 at September 30, 2023, a net loss for the nine months ended September 30, 2023 of approximately

$ 3,072,000 and net cash used in operating activities of approximately $ 2,693,000 for the reporting period then ended.

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 July 1, 2023 to August 9, 2023, the Company sold a total of 151,882

shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $ 195,000

at an average selling price of $ 1.28

per share, resulting in net proceeds of approximately $ 187,000

after deducting commissions and other transaction costs.

On July 11, 2023, the Company filed

an Amendment to the Articles of Incorporation with the Nevada Secretary of State increasing the authorized shares of common stock to 975

million shares.

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