What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-21 compared with 2023-03-31 · 723 added, 733 removed, 702 unchanged (67% of the section changed)

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OTHER INFORMATION

November 14, 2023 , our Chief Executive Officer , adopted a Rule 10b5-1 trading plan, which is intended to satisfy the

affirmative defense in Rule 10b5-1(c).

The trading plan provides for the potential

sale of up to an aggregate of 1.25 million shares of our common stock.

The duration of the plan is through October 15,

December 5, 2023 , our Chief Operating Officer , adopted a Rule 10b5-1 trading plan, which is intended to satisfy the affirmative

defense in Rule 10b5-1(c).

The trading plan provides for the potential

sale of up to an aggregate of 750,000 shares of our common stock.

The duration of the plan is through October 15, 2024 .

other officers, as defined in Rule 16a-1(f), or directors adopted or terminated a “Rule 10b5-1 trading arrangement”

or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the last fiscal quarter.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

information required by this item is incorporated by reference to our Proxy Statement for the 2023 Annual Meeting of Stockholders to

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

information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders

to be filed with the SEC within 120 days of the year ended December 31, 2023.

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

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See the Exhibit Index.

Incorporated by Reference

Filed/Furnished

Articles of Merger

Agreement and Plan of Merger

Articles of Incorporation

Amendment No.

At-The-Market Offering Agreement, dated September 14, 2021, 2020, by and between BTCS Inc.

Wainwright & Co., LLC

and Plan of Merger

of Incorporation

1 To Articles of Incorporation

Amendment No.

2 To Articles of Incorporation

Certificate of Amendment filed February 13, 2017

Amendment No.

of Amendment filed February 13, 2017

3 To Articles of Incorporation

Certificate of Change – Reverse Split

Certificate of Designation – Series V

Bylaws of TouchIT Technologies, Inc.

of Change – Reverse Split

of Designation – Series V

Certificate of Amendment to the Series V Certificate of Designation

Amendment No.

4 to Articles of Incorporation – Increase Authorized Capital

of TouchIT Technologies, Inc.

1 to the Bylaws

Convertible Note dated as of September 18, 2019

Convertible Note dated as of November 7, 2019

Convertible Note dated as of April 17, 2020

Convertible Note dated as of December 16, 2020

Convertible Note dated as of January 15, 2021

2021 Equity Incentive Plan

Amendment No.

1 to the BTCS Inc.

2021 Equity Incentive Plan

2021 Equity Incentive Plan, as amended

Description of Securities

5 unchanged sentences

Offer Letter – Manish Paranjape

Equity Line Purchase Agreement dated as of May 13, 2019

Registration Rights Agreement dated as of May 13, 2019

Note Exchange Agreement dated as of September 18, 2019

Side Letter dated as of November 7, 2019

Side Letter with Cavalry Fund I LP dated April 17, 2020

Side Letter with Cavalry Fund I LP dated December 16, 2020

Form of Subscription Agreement –Series C-2 Convertible Preferred Stock

Series D Warrant dated as of January 15, 2021

Form of Securities Purchase Agreement, dated March 2, 2021, by and between the Company, the Purchasers, and the Placement Agent*

Placement Agent Agreement dated March 2, 2021 by and between the company and A.G.P./Alliance Global Partners

Common Stock Purchase Warrant dated March 2, 2021, by and between the Company and the Purchasers

Insider Trading Policy

List of Subsidiaries

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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.

Clawback Policy

XBRL Instance Document

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

Exhibits and/or Schedules

have been omitted.

and/or Schedules have been omitted.

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

Indicates a management

contract or compensatory plan.

Furnished herein

a management contract or compensatory plan.

FORM 10-K SUMMARY.

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Michal Handerhan

Carol Van Cleef

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 3 to the financial statements, the Company has changed

its method of accounting for digital assets (crypto currencies) to fair value, with changes in fair value recognized in net income, effective

as of January 1, 2023 due to the adoption of Accounting Standards Update (“ASU”) No.

2023-08, Intangibles-Goodwill and Other-Crypto

Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”).

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

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matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

described further in Note 9 to the financial statements, the Company has suffered recurring losses from operations and does not have

an established source of revenues sufficient to cover all of its operating costs.

The ability of the Company to ultimately continue as

a going concern is dependent on executing business plan and ultimately to attain profitable operations.

The Company’s cash position

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, 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

regarding the Company’s available capital and the risk of bias in management’s judgments and assumptions in their determination.

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

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.

Evaluation of audit evidence

pertaining to the existence and control of the digital assets

As discussed in Notes 3 to the

consolidated financial statements, the Company accounts for its digital assets as indefinite-lived intangible assets measured at fair

value pursuant to ASU No.

The digital assets are recorded at fair value.

As of December 31, 2023, the fair value of the Company’s

digital assets was $25.2 million.

We identified the evaluation

of audit evidence pertaining to the existence of the digital assets and whether the Company controls the digital assets as a critical

audit matter.

Especially subjective auditor judgment was involved in determining the nature and extent of evidence required to assess

the existence of the digital assets and whether the Company controls the digital assets, as control over the digital assets is provided

through stored private cryptographic keys.

In addition, information technology (IT) professional with specialized skills and knowledge

in IT controls was needed to assist in the evaluation of the sufficiency of certain controls over digital assets.

The following are the primary

procedures we performed to address this critical audit matter.

We evaluated the design of certain internal controls over the digital assets

process, including a control over the comparison of the Company’s records of digital assets held to the information on the representative

blockchain via blockchain explorers.

This included assessing the controls to prevent unauthorized users from access to the private keys

and to prevent the misuse or misappropriation of crypto assets.

We involved IT professional with specialized skills and knowledge in IT

controls, who assisted in evaluating certain internal controls over the digital assets process, related specifically to the control of

the private cryptographic keys, the storing of these keys, and the reconciliation of digital assets per the Company’s ledgers to

the public blockchain.

We also compared on test basis of the Company’s record of digital asset transactions to the records on the

public blockchain using at least two different blockchain explorers.

We performed procedures to establish that the Company has controls

over the crypto assets.

We evaluated the reasonableness of the prices utilized by the Company to value digital assets by obtaining independent

digital asset prices and comparing those to the prices selected by the Company.

We applied auditor judgment in determining the nature and extent of audit

evidence required, especially related to assessing the existence of the digital assets and whether the Company controls the digital assets.

We evaluated the sufficiency and appropriateness of audit evidence obtained by assessing the results of procedures performed over the

digital assets.

have served as the Company’s auditor since 2016.

Vegas, Nevada

York | Washington, DC | California | Nevada

| India | Greece

of ANTEA International with offices worldwide

December 31, 2022

December 31, 2021

Current assets:

Cash and cash equivalents

Crypto assets

Investments, at value (Cost $ 100,000 )

Staked crypto assets

Prepaid expense

Prepaid expenses

Receivable for capital shares sold

Total current assets

Other assets:

Investments, at value (Cost $ 100,000 )

Property and equipment, net

Staked crypto assets

Staked crypto assets - long term

Total other assets

Liabilities and Stockholders’ Equity:

Accounts payable and accrued expense

Accounts payable and accrued expenses

Accrued compensation

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Stockholders’ equity:

Preferred stock:

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

Series V preferred stock:

14,567,829 and 0 shares issued and outstanding at December 31, 2023 and 2022, respectively

Preferred stock value

Common stock, 975,000,000 shares authorized at $ 0.001 par value, 15,320,281 and 13,107,149 shares issued and outstanding at December 31, 2023 and 2022, respectively

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Cost of revenues

Validator expense

Validator expenses

Operating expenses:

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Impairment loss on crypto assets

Realized gains on crypto asset transactions

( 3,054,418 )

Realized (gains) losses on crypto asset transactions

Total operating expenses

Other income (expenses):

Interest expense

Amortization on debt discount

( 1,868,059 )

Change in unrealized appreciation (depreciation) on crypto assets

Change in fair value of warrant liabilities

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Total other income (expenses)

$ ( 15,892,738 )

$ ( 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

( 5,020,883 )

Net loss attributable to common stockholders

$ ( 15,892,738 )

Net income (loss)

$ ( 15,892,738 )

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

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

Weighted average number of common shares outstanding, basic and diluted

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the Years Ended December 31, 2023 and 2022

Series C-1 Convertible

Series C-2 Convertible

Total Stockholders’

Preferred Stock

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

( 5,771,250 )

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

Dividend distributions

( 15,892,738 )

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$ ( 151,482,208 )

Preferred Stock

Stockholders’

Balance December 31, 2021

Balance December 31, 2022, as adjusted

$ 160,800,263

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$ 160,800,263

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

Stock-based compensation

Dividend distributions

$ ( 146,495,831 ) (1)

$ 14,317,540 (1)

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

Issuance of Series V preferred stock

( 2,559,533 )

Stock-based compensation

Net income (loss)

Balance December 31, 2023

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$ ( 138,677,103 )

an adjustment to the opening balance of $ 4,986,377

resulting from a change in accounting principle.

See Note 3 for further details.

accompanying notes are an integral part of these financial statements.

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Net Cash flows used from operating activities:

$ ( 15,892,738 )

Net income (loss)

$ ( 15,892,738 )

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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

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( 1,638,750 )

( 3,918,750 )

Purchase of non-productive crypto assets

( 5,761,550 )

Sale of non-productive crypto assets

Realized gain on crypto asset transactions

Realized gain on crypto assets transactions

Change in unrealized (appreciation) depreciation on crypto assets

( 12,135,648 )

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Prepaid expenses and other current assets

Receivable for capital shares sold

Accounts payable and accrued expenses

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( 3,562,247 )

Net cash used in investing activities:

Cash flows from investing activities:

Purchase of productive crypto assets for validating

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Purchase of property and equipment

Net cash used in investing activities

( 8,972,837 )

Sale of property and equipment

Net cash provided by (used in) investing activities

( 8,972,837 )

Net cash provided by financing activities:

Cash flow from 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

( 2,000,000 )

Net cash provided by financing activities

Net increase in cash

Net (decrease)/increase in cash

Cash, beginning of period

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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

Series V Preferred Stock Distribution

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 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.

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

is a Nasdaq listed company operating in the blockchain technology sector since 2014 with a primary focus on blockchain infrastructure.

Our core focus is on driving scalable growth through a diverse range of business streams leveraging and built on top of our core and

proven blockchain infrastructure operations.

The Company secures and operates validator nodes (as a “Validator”) on various

proof-of-stake (“PoS”) and delegated proof-of-stake (“dPoS”) based blockchain networks earning native token rewards

by staking our proof-of-stake crypto assets (also referred to “cryptocurrencies”, “crypto”, “crypto assets”,

“digital assets”, or “tokens”), with an emphasis on Ethereum.

Company’s non-custodial Staking-as-a-Service (“StaaS”) business allows crypto asset holders to earn staking rewards

by participating in network consensus mechanisms through staking (or “delegating”) their crypto assets to BTCS-operated validator

nodes (or “nodes”).

As a non-custodial Validator and StaaS provider, BTCS may charge a validator node fee, typically determined

as a percent of the crypto asset rewards earned on crypto assets delegated to its node, creating the opportunity for potential scalable

revenue and business growth with limited additional costs.

The Company believes that StaaS provides a more accessible and cost-effective

way for crypto asset holders to participate in blockchain network consensus, thereby promoting the growth and adoption of blockchain

Company’s internally-developed “StakeSeeker” platform 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 StakeSeeker 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

functions as an educational center, offering users guidance on the delegation of their crypto assets to our non-custodial validator nodes,

along with the ability to monitor such delegation activities through data analysis.

StakeSeeker does not provide or facilitate direct,

asset delegation or transaction execution on our platform.

Stake Hub’s primary purpose is to offer instructional support and tracking

capabilities.

There is no active process for asset delegation through the Stake Hub dashboard;

it is primarily a monitoring tool.

StakeSeeker platform is currently free-to-use for registered users so is not currently generating revenue.

The Company is not a broker-dealer

or an investment advisor and does not provide any such related services.

StakeSeeker provides a valuable analytical platform to crypto

enthusiasts and strategically seeks to entice users with its cutting-edge features.

The underlying strategic objective of the platform

is to drive the expansion of Delegators to our validator nodes.

Company anticipates taking the StaaS Platform out of beta prior to the end 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 we may add support for additional blockchains and provide other analytic tools.

We are also exploring the feasibility of

adding Ethereum non-custodial staking to StakeSeeker in 2024.

We anticipate the costs associated with doing so would be in line with

our historical research and development costs.

Company has introduced “Builder+”, a newly developed Ethereum block builder (“Builder”) that utilizes advanced

algorithms to maximize validator earnings by constructing optimized blocks for on-chain validation.

Builders actively monitor the Ethereum

transaction queue, known as the “mempool”, for pending transactions and strategically reorder them to create ‘optimized

blocks’ containing transactions with the highest fees.

Builders pay a fee to increase the chances of their blocks being selected

by a validator and, in return, earn the associated crypto transaction fees.

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

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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”).

The Certificate of Change became effective on August 13, 2021.

fractional shares were issued in connection with the Reverse Split and all such fractional interests were rounded up to the nearest whole

number of shares of Common Stock.

The Company now has 97,500,000 shares of Common Stock authorized.

Numbers of shares of the Company’s

preferred stock were not affected by the Reverse Split;

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

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

2 - Basis of Presentation

Company maintains its books of account and prepares financial statements in accordance with Generally Accepted Accounting Principles

in the United States of America (“U.S.

The Company’s fiscal year ends on December 31.

TO FINANCIAL STATEMENTS

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

Concentration

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.

As of December

31, 2022 and 2021, the Company had approximately $ 2.1 million and $ 1.4 million in cash.

The Company has not experienced any losses in

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

and Cash Equivalents

Company considers all highly liquid investments with original maturities of six 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 December 31, 2023

and 2022, the Company had approximately $ 1,458,000 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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As of December 31, 2023 and

2021, the Company had approximately $ 1.7 million and $ 0.9 million in excess of the FDIC insured limit, respectively.

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

2022, the Company had approximately $ 933,000 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.

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

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

Value Measurement

Company’s fair value measurement for its crypto assets is guided by Financial Accounting Standards Board (“FASB”) Accounting

Standards Codification (“ASC”) 820, Fair Value Measurement .

According to ASC 820, fair value is defined as the price

that would be received for an asset in a current sale, assuming an orderly transaction between market participants on the measurement

It requires the Company to assume that its crypto assets are sold in their principal market or, in the absence of a principal market,

the most advantageous market.

In this context, market participants are considered to be independent, knowledgeable, and willing and able

has been identified as the principal market for the Company’s crypto assets, serving as the Company’s primary cryptocurrency

exchange for both purchases and sales.

This determination is based on a comprehensive evaluation process that considers various factors,

including regulatory compliance, trading activity, and price stability.

The Company places significant trust in Kraken’s well-established

reliability and robust capabilities.

determine the fair value of its crypto assets, the Company relies primarily on coinmarketcap.com (“CoinMarketCap”) as the

principal pricing source.

The selection of CoinMarketCap is the result of thorough due diligence, which identified it as the most reliable

source for consistently obtaining timely and accurate crypto asset price data, covering all the crypto assets held by the Company.

real-time pricing from CoinMarketCap is notably aligned with the bid/ask quotes observed on the Company’s primary exchange and

principal market, Kraken.

Kraken is designated as the primary exchange, the Company maintains the flexibility to engage in cryptocurrency transactions on other

exchanges where it maintains accounts.

This flexibility allows the Company to adapt to changing market conditions and explore alternative

platforms when necessary to ensure cost-effective execution and fair value measurement using the most advantageous market.

determination of Kraken as the principal market reflects the Company’s commitment to making informed decisions based on regulatory

compliance, trading activity, and price stability and achieving the most accurate representation of fair value for its crypto assets.

The Company regularly reviews and assesses its choice of principal market to ensure it aligns with its objectives and the evolving landscape

of the cryptocurrency market.

NOTES TO FINANCIAL STATEMENTS

for Crypto Assets

cost basis of the Company’s crypto assets is initially recorded at their fair value using the U.S.

dollar spot price of the related

crypto asset at 4:00 p.m., New York time, on the date of receipt (or “carrying value”).

assets are measured at their fair respective fair market values at each reporting period end on the balance sheets and classified as

either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish their nature within the respective balances.

Staked crypto assets are presented as current assets if their lock-up periods are less than 12 months, and as long-term other assets

if the lock-up extends beyond one year.

The majority of our crypto assets are staked, typically with lock-up periods of less than 21

days, and are considered current assets in accordance with ASC 210-10-20, Balance Sheet ,

due to the Company’s ability to sell them in a liquid marketplace, as we have a reasonable expectation that they will be

realized in cash or sold or consumed during the normal operating cycle of our business to support operations when needed .

classification of purchases and sales in the statements of cash flows is determined based on the nature of the crypto assets, which can

be categorized as ‘productive’ (i.e.

acquired for purposes of staking) or ‘non-productive’ (e.g.

of non-productive crypto assets are treated as operating activities, while acquisitions of productive crypto assets are classified as

investing activities in accordance with ASC 230-10-20, Investing activities .

Productive crypto assets staked with lock-up periods

of less than 12 months are listed as current assets in the ‘Staked Crypto Assets’ line item on the balance sheet.

crypto assets with lock-up periods exceeding 12 months are categorized as long-term other assets.

Non-productive crypto assets are included

in the ‘Crypto Assets’ line item on the balance sheet.

January 1, 2023, the Company has elected to early adopt ASU No.

2023-08 , resulting in a material change in accounting principle

related to the Company’s accounting treatment of crypto assets.

The impacts of the change in accounting principle are discussed

further in Note 3.

to the Company’s adoption of ASU No.

2023-08, the Company accounted for its crypto assets as indefinite-lived intangible

assets in accordance with ASC 350, Intangibles –Goodwill and Other .

An intangible asset with an indefinite useful life

is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating

that it is more likely than not that the indefinite-lived asset is impaired.

Impairment exists when the carrying amount exceeds its

In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it

is more likely than not that an impairment exists.

If it is determined that it is not more likely than not that an impairment

exists, a quantitative impairment test is not necessary.

If the Company concludes otherwise, it is required to perform a

quantitative impairment test.

To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset.

Subsequent reversal of impairment losses is not permitted.

to the Company’s adoption of ASU No.

2023-08, on a quarterly basis, crypto assets were measured at carrying value, net of any

impairment losses incurred since receipt.

The Company recorded impairment losses as the fair value fell below the carrying value of

the crypto assets at any time during the period, as determined using the lowest intraday U.S.

dollar spot price of the related

crypto asset subsequent to its acquisition.

The crypto assets could only be marked down when impaired and not marked up when their

value increases.

Impairment losses could not be recovered for any subsequent increase in fair value until the sale or disposal of

Such impairment in the value of crypto assets was recorded as a component of costs and expenses in our statements of

The Company recorded impairment losses of approximately $ 0

and $ 13,349,000

related to crypto assets during the years ended December 31, 2023 and 2022, respectively.

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

The Company recorded realized

gains (losses) on crypto assets of approximately ($ 604,000 ) and $ 507,000 during the years ended December 31, 2023 and 2022, respectively.

NOTES TO FINANCIAL STATEMENTS

Company recognizes revenue under ASC 606 , Revenue from Contracts with Customers .

The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or

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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

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 price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when the Company satisfies a performance obligation

is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration

1 unchanged sentence

The Company generates revenue through staking rewards

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 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 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.

generated from its blockchain infrastructure operations.

transaction consideration the Company receives - the crypto asset awards and gas fees - are a non-cash consideration, which the Company

measures at fair value on the date received.

The fair value of the crypto asset award received is determined using the U.S.

price of the related crypto asset at 4:00 p.m., New York time, on the date of receipt.

Infrastructure

Company engages in network-based smart contracts by running its own crypto asset validator nodes as well as by staking (or “delegating”)

crypto assets directly to both its own validator nodes and nodes run by third-party operators.

Through these contracts, the Company provides

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

term of a smart contract can vary based on the rules of the respective blockchain and typically last from a few days to several weeks

after it is cancelled (or “un-staked”) by the delegator and requires that the crypto assets staked remain locked up during

the duration of the smart contract.

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

crypto asset award earned from the network when delegating to 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, 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 proportionate to the crypto assets staked by the

Company compared to the total crypto assets staked by all Delegators to that node at that time.

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

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or validation under a smart contract with a network represents a performance obligation.

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 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.

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 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,

when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired.

Impairment exists when the carrying amount exceeds its fair value.

In testing for impairment, the Company has the option to first perform

a qualitative assessment to determine whether it is more likely than not that an impairment exists.

If it is determined that it is not

more likely than not that an impairment exists, a quantitative impairment test is not necessary.

If the Company concludes otherwise,

it is required to perform a quantitative impairment test.

To the extent an impairment loss is recognized, the loss establishes the new

cost basis of the asset.

Subsequent reversal of impairment losses is not permitted.

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

The Company recorded realized gains (losses)

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 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 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.

following table details the native token rewards and their respective fair market value recognized as revenue during the years ended

December 31, 2023.

The tables distinguish between token rewards earned from staking to BTCS run Validator nodes as well as delegating

to validator nodes operated by unaffiliated third-parties.

Crypto assets earned from staking to BTCS validator nodes

Schedule Of Crypto Assets Earned From

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

Ethereum (ETH)

Cosmos (Atom)

Evmos (EVMOS)

Avalanche (Avax)

NEAR Protocol (NEAR)

Oasis Network (ROSE)

Algorand (Algo)

Total earned from staking to BTCS validator nodes

Crypto assets earned from staking to third-party validator nodes

Schedule of Crypto Assets Earned From Third

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

Axie Infinity (AXS)

Polygon (Matic)

Polkadot (DOT)

Cardano (ADA)

Total earned from staking to third-party validator nodes

Company’s cost of revenue related to its blockchain infrastructure operations 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.

These costs directly related to production of revenues are collectively summarized as “Validator expenses” in the

statements of operations.

TO FINANCIAL STATEMENTS

Developed Software

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

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 cryptocurrency portfolio holdings by connecting their crypto exchanges and digital wallets

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and Equipment

and equipment consists of computer, equipment and office furniture and fixtures, all of which are recorded at cost.

and equipment consist of computer, equipment and office furniture and fixtures, all of which are recorded at cost.

Depreciation and

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

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

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

The Company classifies as equity any contracts that (i) require

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

(physical settlement or net-share settlement).

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

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

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

In addition, Under ASC 815, registered Common Stock warrants that require the issuance of registered shares upon exercise and do not

expressly preclude an implied right to cash settlement are accounted for as derivative liabilities.

The Company classifies these derivative

warrant liabilities on the balance sheet as a current liability.

the provisions of ASC 815, Derivatives and Hedging .

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 sheets 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

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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 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.

Company accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation .

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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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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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.

January 27, 2023, the Company’s Board of Directors (the “Board”) 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 and warrant holders who were entitled to such distribution).

The distribution of Series V shares was approved and completed on

June 2, 2023 to shareholders as of the record date of May 12, 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 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 $ 631,000 during the years

ended December 31, 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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and $ 78,000 for the year ended December 31, 2023 and 2022, respectively.

Loss per Share

loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares

outstanding during the period.

Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive,

potential common shares outstanding during the period.

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

convertible notes, restricted stock units, options and warrants.

Diluted loss per share excludes the shares issuable upon the conversion

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

Income (Loss) per Share

income (loss) per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of

common shares outstanding during the period.

Diluted earnings per share is computed using the weighted average number of common shares

and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the Company’s restricted stock units, options and warrants.

Diluted loss per share excludes the shares issuable

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

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

their effect was anti-dilutive:

Schedule of Earnings Per Share Anti-diluted

of December 31,

to purchase common stock

restricted stock awards units

of Earnings Per Share Anti-diluted

As of December 31,

Warrants to purchase common stock

Non-vested restricted stock awards units

Anti-dilutive securities

TO FINANCIAL STATEMENTS

Conversion Feature of Convertible Notes Payable

Company accounts for convertible notes payable in accordance with the guidelines established by the FASB Accounting Standards Codification

(“ASC”) Topic 470-20, Debt with Conversion and Other Options.

The beneficial conversion feature of a convertible note is

normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below

market value or in-the-money when issued.

The Company records a beneficial conversion feature related to the issuance of a convertible

note when issued.

discounted face value is then used to measure the effective conversion price of the note.

The effective conversion price and the market

price of the Company’s Common Stock are used to calculate the intrinsic value of the conversion feature.

The intrinsic value is

recorded in the financial statements as a debt discount from the face amount of the note and such discount is amortized over the expected

term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

Accounting Pronouncements

December 2023, 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

2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60) , which

is intended to improve the accounting for and disclosure of crypto assets.

The ASU requires entities to subsequently measure crypto assets

that meet specific criteria at fair value, with changes recognized in net income each reporting period.

The ASU also the requires specific

presentation of cash receipts arising from crypto assets that are received as noncash consideration in the ordinary course of business

and are converted nearly immediately into cash.

The amendments in this update are effective for all entities for fiscal years beginning

after December 15, 2024, with early adoption permitted.

The Company adopted ASU No.

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

statements and related disclosures.

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.

2023-08 effective January 1, 2023, which had a material

impact to its financial statement and related disclosures, which are further discussed in Note 3.

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

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present or future financial statements.

3 - Changes in Accounting Principle

January 1, 2023, the Company has elected to early adopt ASU No.

2023-08, resulting in a material change in accounting principle related

to the Company’s accounting treatment of crypto assets.

As a result of the adoption

2023-08, crypto assets are recorded at their fair market value on its balance sheet and changes in the fair market value of

its crypto assets during reporting periods are recorded within its statements of operations as unrealized appreciation (depreciation).

Prior to adopting ASU No.

2023-08, crypto assets were accounted for as intangible assets with an indefinite life in accordance with ASC

350, Intangibles –Goodwill and Other , carrying them at their impaired value and recognizing impairment losses during reporting

Adoption of the fair market value guidance contained within ASU No.

2023-08 eliminates the need to calculate impairment losses

on crypto assets for the year of adoption and moving forward.

Company elected to early adopt the guidance contained with ASU No.

2023-08 as we believe that the specified changes in financial reporting

better reflect the economic realities of the Company’s business model and the value of the crypto assets held, enhancing the transparency

and accuracy of the financial statements.

adoption of ASU No.

2023-08 required an adjustment to the Company’s opening Retained Earnings balance as of January 1, 2023, to

recognize the cumulative effect of initially applying the change in accounting principle to previous periods.

The adjustment accounts

for the difference between the December 31, 2022 ending book value of crypto assets and their respective fair market value, which amounted

to approximately $ 4,986,000 .

TO FINANCIAL STATEMENTS

4 – Crypto Assets

following table presents the Company’s crypto assets held as of December 31, 2023:

of Crypto Assets Held

Fair Market Value

Ethereum (ETH)

Cosmos (Atom)

Avalanche (Avax)

Axie Infinity (AXS)

Polygon (Matic)

Oasis Network (ROSE)

NEAR Protocol (NEAR)

Cardano (ADA)

Polkadot (DOT)

Evmos (EVMOS)

Band Protocol (BAND)

following table presents a rollforward of the Company’s crypto asset activities for the years ended December 31, 2023 and

of Crypto Asset Activities

31, 2021 - Book Value

of crypto assets

earned from staking

of crypto assets

( 3,132,920 )

gains on sale of crypto assets

( 13,348,874 )

31, 2022 - Book Value

adjustment for change in accounting principle

of crypto assets

earned from staking

of crypto assets

( 1,994,851 )

gains on sale of crypto assets

losses on sale of crypto assets

in unrealized appreciation (depreciation) of crypto assets

31, 2023 - Fair Market Value

TO FINANCIAL STATEMENTS

5 - 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.

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

selling an asset or paid to transfer a liability (i.e., an ‘exit price’) in the principal or most advantageous market in

an orderly transaction between market participants at the measurement date.

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 – Valuations based on unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that are accessible

at the measurement date.

Since valuations are based on quoted prices that are readily and regularly available in an active market, these

valuations do not entail a significant degree of judgment.

2 – Valuations based on 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 – Valuations based on 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

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

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

of Fair Value of Assets and Liabilities Valued on Recurring Basis

Fair Value Measured at December 31, 2023

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Crypto Assets

Warrant Liabilities

Fair Value Measured at December 31, 2022

Total at December 31,

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 years ended December 31, 2023 and 2022.

NOTES TO FINANCIAL STATEMENTS

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

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Beginning balance

liabilities classification

Warrant liabilities classification

value adjustment of warrant liabilities

( 1,638,750 )

( 3,918,750 )

Ending balance

5 unchanged sentences

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.

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

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therefore accounted for as derivative liabilities.

The Company classifies these derivative warrant liabilities on the balance sheet as

a current liability.

The Company classifies these derivative warrant liabilities on the balance sheets

as a current liability.

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

warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of December 31, 2023 and 2022, is as follows:

TO FINANCIAL STATEMENTS

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

rate of interest

life (in years)

dividend yield

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

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.

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

Preferred Stock (the “Series C-2”), for a total of $ 1,100,000 at $ 10.00 per Share of Series C-2.

The Company obtained an

independent valuation of the Series C-2 and $ 179,277 of compensation expense was recognized, representing the difference between the

fair value and the proceeds received.

TO FINANCIAL STATEMENTS

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

The Series C-2 is callable by the Company.

The Certificate

of Designation required that the Company, within 180 days of the Initial Issuance Date, call a special meeting of stockholders seeking

shareholder ratification of the issuance of the Series C-2.

If the ratification of the issuance was not approved prior to the twelve-month

anniversary of the Initial Issuance Date (the “Vote Deadline”), the Series C-2 would be redeemed at a price equal to 107 %

of (i) the Stated Value per share plus (ii) all unpaid dividends thereon.

further, if the Company had filed a proxy with the

SEC prior to the Vote Deadline but was unable to conduct a vote prior to the Vote Deadline then the Vote Deadline would have been extended

until such time as the vote was conducted.

The Series C-2 holders were not entitled to vote on the ratification.

The call provision would

have been automatically triggered if the ratification of the issuance was not approved in a special meeting of stockholders prior to

the twelve-month anniversary of the Initial Issuance Date.

The Company held the meeting within the required period and the Series C-2

is no longer redeemable.

on the guidance in ASC 480-10-S99 (“ASR 268”), a redeemable equity instrument is not to be included in permanent equity.

Rather, it should be reported between long-term debt and stockholders’ equity, without a subtotal that might imply it is a part

of stockholders’ equity (i.e., “temporary equity” or “mezzanine capital”).

ASR 268 specifies that redeemable

stock is any type of equity security, including common or preferred stock, when it has any condition for redemption which is not solely

within the control of the issuer without regard to probability.

Series C-2 Certificate of Designation required the Company to redeem the Series C-2 if stockholder approval was not received by the Vote

Stockholder approval was not considered to be “solely within the Company’s control.” Stockholder approval

occurred on March 31, 2021, at which time the Series C-2 was no longer callable by the Company.

As such, the Series C-2 was initially

classified in temporary equity under ASR 268 and was reclassified to permanent equity upon stockholder approval on March 31, 2021.

holders of Series C-2 shall be entitled to receive dividends or distributions on each share of Series C-2 on an “as-converted basis”

into Common Stock when and if dividends are declared on the Common Stock by the Board of Directors.

Dividends shall be paid in cash or

property, as determined by the Board of Directors.

any time or times on or after the two-year anniversary of the Initial Issuance Date, each Holder shall be entitled to convert any portion

of the outstanding Series C-2 held by such Holder into validly issued, fully-paid and non-assessable shares of Common at the Conversion

The Conversion Amount is subject to adjustment for certain capitalization and Anti-Dilution Events.

The Series C-2 will automatically

be converted at the earlier of:

(i) the four-year anniversary of the Initial Issuance Date, and (ii) simultaneously with the Company’s

Common Stock being listed on a national securities exchange.

The Conversion Rate is based upon the Conversion Price of $ 1.70 which resulted

in a beneficial conversion feature at the time of issuance.

As such, the Company recognized a beneficial conversion amount of $ 129,412

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

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

earliest conversion date.

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

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

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

If at any time after the Initial Issuance Date, the Company raises

capital equal to or in excess of $5 million by issuing Common Stock or Common Stock Equivalents then the Anti-Dilution Amount per share

of Series C-2 shall be the product of:

(i) 0.0000004, and (ii) the aggregate amount of all capital raised by the Company after the Initial

Issuance Date (the “Capital Raised”).

further, for the determination of the Anti-Dilution Amount, the amount of

Capital Raised shall be limited to $13 million, regardless of how much capital the Company raises.

In the event capital is raised simultaneous

with a listing on a national securities exchange and the automatic conversion of the Series C-2 then such funds shall be included in

the Capital Raised for the purpose of determining the Anti-Dilution Amount.

As of September 30, 2021, over $13 million of capital was

raised and the adjustment to the Conversion Amount was fully triggered.

The Company recognized the effect of the down-round protection

when capital raises occur as the difference between:

(1) the financial instrument’s fair value (without the down round feature)

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

reduced exercise price.

The value of the effect of the down round feature of $5,020,883 was treated as a dividend and a reduction to

income available to common shareholders in the basic EPS calculation.

On September 14, 2021, the Series C-2 was converted into 4,011,766

shares of Common Stock.

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

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

The fourth Registration

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

the year ended December 31, 2021, the Company sold 321,738 shares (inclusive of approximately 17,590 pro-rata commitment shares) available

for sale under the fourth Registration Statement for total proceeds of approximately $ 3,015,000 .

of Shares Pursuant to Registered Direct Offering

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

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

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

at an exercise price of $ 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

Company also entered into a placement agent agreement with A.G.P./Alliance Global Partners (“AGP”), pursuant to which AGP

agreed to serve as the exclusive placement agent for the Company in connection with that offering.

The Company paid AGP a cash placement

fee equal to 7.0 % of the aggregate gross proceeds raised in the offering (reduced to 3.5 % for certain investors) and reimbursed the placement

agent for its legal fees and other accountable expenses in the amount of $ 40,000 .

6 - Stockholders’ Equity (Deficit)

Company received shareholder approval on July 11, 2023 to amend our Articles of Incorporation to increase the number of authorized shares

of common stock from 97,500,000 shares to 975,000,000 .

On July 12, 2023, the Company filed a Certificate of Amendment to the Articles

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

The Market Offering Agreement

2 unchanged sentences

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

(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.

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

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

the year ended December 31, 2023, the Company sold a total of 1,707,621 shares of Common Stock under the ATM Agreement for aggregate

total gross proceeds of approximately $ 2,790,000 at an average selling price of $ 1.63 per share, resulting in net proceeds of approximately

$ 2,688,000 after deducting commissions and other transaction costs.

2 unchanged sentences

$ 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.

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

March 30, 2021, the Company issued 19,609 shares of Common Stock upon the conversion of 29,414 shares of Series C-1 Convertible Preferred

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

Secretary of State of the State of Nevada.

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

all matters set forth in the Series C-1.

of Shares Due to Conversion of Series C-2 Preferred Stock

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

Please refer to the discussion below.

Based Payments

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

The shares will be issued

in four equal installments ($ 12,500 each) 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 year ended December 31, 2023, 122,124 shares of

common stock were issued to independent directors.

the years ended December 31, 2023 and 2022, 354,713 and 284,722 shares of common stock were issued to officers related to payment of

accrued bonus compensation, respectively.

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 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 .

TO FINANCIAL STATEMENTS

January 27, 2023, the Board 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 and warrant holders).

The distribution of Series V

shares was approved and completed on June 2, 2023 to shareholders as of the record date of May 12, 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.

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.

Equity Incentive Plan

1 unchanged sentence

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

under the Company’s 2021 Plan to Messrs.

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

directors of the Company.

Effective as of January 1, 2021, the Company and each optionee executed Stock Option Agreements evidencing

the option grants.

While stockholder approval (or ratification) of the grants was not required (under either the Stock Option Agreements

or by the resolutions of the Board of Directors approving such grants), the Board of Directors voluntarily caused the Company to seek

shareholder ratification of the grants to limit any potential exposure to breach of fiduciary duty claims.

As a result, based on the

guidance in ASC 718, the date the stockholders ratified the grants (March 31, 2021) is the deemed grant date solely with respect to GAAP

for those stock options.

Of the stock options:

(i) 480,000 options will vest on January 1, 2022 and (ii) the remaining options vested

(prior to March 31, 2021) based upon the Company’s stock price meeting certain milestones.

April 1, 2021, the Company granted 35,000 stock options with an exercise price of $ 10.30 to Charles B.

Lee and Carol Van Cleef, directors

of the Company.

Of the stock options:

(i) 14,000 options will vest on April 1, 2022 and (ii) the remaining 21,000 options vest based

upon the Company’s stock price meeting certain milestones.

The Company received shareholder approval on July 11, 2023 to increase the authorized

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

the year ended December 31, 2023, the Company granted 85,000 stock options with a weighted average exercise price of $ 1.29 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

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 years

ended December 31, 2023 and 2022 for the Black-Scholes formula:

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 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 options activity under the Company’s stock option plan for the years ended December 31, 2023 and 2022 are presented

Summary of Option Activity

2 unchanged sentences

Average Remaining Contractual Life (in years)

Outstanding as

of December 31, 2021

options granted

options expired

Outstanding as of December 31, 2021

Employee options granted

Employee 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.

Effective as of January 1, 2021, the Company and each recipient executed a Restricted Stock Agreement evidencing the

stock grants.

While stockholder approval (or ratification) of the grants was not required (under either the Restricted Stock Agreements

or by the resolutions of the Board of Directors approving such grants), the Board of Directors voluntarily caused the Company to seek

shareholder ratification of the grants to limit any potential exposure to breach of fiduciary duty claims.

As a result, based on the

guidance in ASC 718, the date the stockholders ratified the grants (March 31, 2021) is the deemed grant date solely with respect to GAAP

for those restricted stock grants.

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

As of 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.

The restricted

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

20 % of the 50,781 restricted stock units were to vest on the one-year anniversary

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

each respective month.

On November 30, 2021, this Chief Financial Officer resigned.

The 50,781 restricted stock units granted to this

Chief Financial Officer were forfeited accordingly.

December 1, 2021, the Company granted 29,363 restricted stock units to the Company’s current Chief Financial Officer.

The restricted

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

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 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.

As of December 31,

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

Outstanding as of December 31, 2022

Options vested and exercisable as of December

Average Exercise Price

Intrinsic Value

Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2022

Employee options granted

Employee options forfeited

Outstanding as of December 31, 2023

Options vested and exercisable as of December

TO FINANCIAL STATEMENTS

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

1 unchanged sentence

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.

20 % of the 45,767 restricted stock units vested 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 $ 200,000 .

January 2, 2022, the Board 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 “2022 Board Grants”).

The 2022 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.

value of approximately $ 300,000 .

January 2, 2022, the Board, as approved by its Compensation Committee, ratified grants of RSUs to the Company’s executive officers

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.

February 22, 2022, upon appointment of Manish Paranjape as Chief Technology Officer of the Company, Mr.

2 unchanged sentences

market capitalization thresholds.

January 1, 2023 (the “LTI RSU Amendment Date”), upon recommendation of the Compensation Committee of the Board 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:

1 unchanged sentence

Cap Vesting Thresholds

Executive Officer

Operations Officer

Financial Officer

Technology Officer

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.

17 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 year ended December 31, 2022

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 valued

to be approximately $ 83,000 and 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 years ended December 31, 2023

and 2022 for the Monte-Carlo simulation:

Weighted-Average Assumptions Used to Estimate Fair Value

stock price volatility

rate of interest

(Modification)

Vesting Hurdle Price

Expected stock price volatility

Risk-free rate of interest

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

14 unchanged sentences

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.

The Board agreed to fully vest Mr.

Garrity’s remaining

unvested restricted stock units ( 7,962 shares) and pay Mr.

Garrity approximately $ 5,600 , which represents the remaining unpaid 2022 director

fees as of the date of resignation.

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, 2023 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:

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.

The fair value of the RSUs on the grant date was approximately $ 16,000 , each.

summary of the Company’s restricted stock units granted under the 2021 Plan during the years ended December 31, 2023 and 2022 are

Summary of Restricted Stock

Average Grant

Day Fair Value

of Restricted Stock Units

Average Grant Date Fair Value

Nonvested at December 31, 2022

Nonvested at December 31, 2023

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:

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

Stock-based compensation expenses for the years ended December 31, 2023 and 2022 were as follows:

Schedule of Stock-based Compensation Expense

the Year Ended December 31,

Employee bonus

Employee bonus stock awards

Employee stock option awards

Employee restricted stock

Non-employee restricted stock

C-2 Allocation

Employee restricted stock unit awards

Non-employee restricted

Purchase Warrants

1 unchanged sentence

Summary of Warrant Activity

Outstanding as

of December 31, 2020

Issuance of Series C Warrants

Warrants exercise for cash

Issuance of Warrants pursuant

to Registered Direct Offering

shares adjusted for reverse split

Outstanding as of December 31,

1 unchanged sentence

Outstanding as of December 31, 2022

Expiration of warrants

Outstanding as of December 31, 2023

TO FINANCIAL STATEMENTS

6 unchanged sentences

Allen shall be eligible

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

Allen shall be entitled to participate

in all benefits plans we provide to our senior executives.

for an annual bonus if we meet certain criteria, as established by the Board.

Allen shall be entitled to participate in all benefits

plans we provide to our senior executives.

We shall reimburse Mr.

Allen for all reasonable expenses incurred in the course

of his employment.

Allen 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.

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

February 6, 2019 we amended the Allen Employment Agreement whereby the annual salary was increased to $ 345,000 per year effective January

12 unchanged sentences

Handerhan shall be eligible

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

Handerhan shall be entitled to participate

in all benefits plans we provide to our senior executives.

for an annual bonus if we meet certain criteria, as established by the Board.

Handerhan shall be entitled to participate in all benefits

plans we provide to our senior executives.

We shall reimburse Mr.

Handerhan for all reasonable expenses incurred in the

course of his employment.

Handerhan for all reasonable expenses incurred in the course of his

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.

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.

February 6, 2019 we amended the Handerhan Employment Agreement whereby the annual salary was increased to $ 215,000 per year effective

2 unchanged sentences

Employment Agreement remained unchanged, including the Annual Increase.

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

January 19, 2022, the Board approved a salary increase for Michael Handerhan to $ 275,000 , effective January 1, 2022.

For the year ended

3 unchanged sentences

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

NOTES TO FINANCIAL STATEMENTS

Prevoznik – Chief Financial Officer

4 unchanged sentences

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

by the Board of Directors.

by the Board.

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

shall reimburse Mr.

We shall reimburse

Prevoznik 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.

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

For the year ended December

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.

June 1, 2022, the Board approved a salary increase for Michael Prevoznik to $ 225,000 , effective June 1, 2022.

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

annual base salary, effective January 1, 2023.

January 12, 2024, upon recommendation of the Compensation Committee of the Board approved a 4.5 % inflationary increase in Mr.

annual base salary, effective January 1, 2024.

the year ended December 31, 2023 Mr.

Prevoznik’s annual base salary was $ 235,125 .

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

4 unchanged sentences

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.

established by the Board.

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

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.

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 approved a 4.5 % inflationary increase in Mr.

annual base salary, effective January 1, 2023.

January 12, 2024, upon recommendation of the Compensation Committee of the Board approved a 4.5 % inflationary increase in Mr.

annual base salary, effective January 1, 2024.

the year ended December 31, 2023 Mr.

Prevoznik’s annual base salary was $ 235,125 .

TO FINANCIAL STATEMENTS

28 unchanged sentences

including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a

majority of the Board of Directors of the Company.

majority of the Board of the Company.

Additionally,

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

November 17, 2023, our Board adopted a clawback policy in accordance with the rules of the Nasdaq

Stock Exchange, to recoup “excess” incentive compensation, if any, earned by current and former executive officers during

a three year look back period in the event of a financial restatement due to material noncompliance with any financial reporting requirement

under the securities laws (with no fault required) .

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

1 unchanged sentence

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:

May 12, 2022, the Compensation Committee of the Board 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.

NOTES TO FINANCIAL STATEMENTS

December 9, 2022, upon recommendation of the Compensation Committee, the Board 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

Charles Allen - CEO

Michal Handerhan - COO

Michael Prevoznik - CFO

Manish Paranjape - CTO

Total Performance Bonuses

May 11, 2023, the Compensation Committee of the Board of the Company approved a performance based Annual Cash Incentive Plan (“ACIP”)

for the Company’s executives for fiscal year 2023 whereby if an executive meets their performance milestones, the executive will

receive a bonus in amount up to 64 % to 128 % of the applicable executive’s base salary.

December 29, 2023, upon recommendation of the Compensation Committee, the Board approved an annual performance payout in the aggregate

amount of $ 705,061 , to be paid in stock and cash in the closing price of the Company’s common stock on January 1, 2023 as follows:

Charles Allen

Michal Handerhan - COO

Michael Prevoznik - CFO

Paranjape - CTO

Performance Bonuses Earned

Total Performance Bonuses

TO FINANCIAL STATEMENTS

7 – Accrued Compensation

8 – Accrued Expenses

of December 31, 2023 and 2022, 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.

of Accrued Expenses

Accrued compensation

Accounts payable and

accrued expenses

compensation and related expenses include approximately $ 710,000 and $ 284,000 related to performance bonus accruals as of December 31,

2023 and 2022, respectively.

9 – Employee Benefit Plans

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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 December 31,

2022, 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

$ 138,677,000 at December 31, 2023, and net cash used in operating activities of approximately $ 3,562,000 for the reporting period then

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.

Company has sustained recurring losses and negative cash flows from operations.

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funded through the sale of common stock equity.

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

As of December 31, 2023, the Company had approximately $ 1,458,000 of unrestricted cash.

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

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capital to accomplish its business plan over the next several years.

The Company expects to seek to obtain additional funding through

The Company expects to seek additional funding through

debt or equity financing.

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of Deferred Tax Assets and Liabilities

As of December 31,

of December 31,

Deferred tax assets:

Federal Net-operating loss carryforward

State Net-operating loss carryforward

Other (Non-Qualified Stock Options)

Federal net-operating

loss carryforward

State net-operating loss

Other (non-qualified

stock options)

Total deferred tax assets

Deferred tax liabilities:

Unrealized gains on crypto assets

Total deferred tax liabilities

Valuation allowance

1 unchanged sentence

( 3,363,555 )

Deferred Tax Asset, Net of Allowance

December 31, 2022, the Company had net operating loss carry forwards for federal and state tax purposes of approximately $ 18.6 million

which begins to expire in 2034 .

The 20-year carryforward period has been replaced with an indefinite carryforward period for these NOLs

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

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 .

Deferred tax assets,

December 31, 2023, the Company had net operating loss (“NOL”) carry forwards for federal and state tax purposes of

approximately $ 25,753,000

which begins to expire

20-year carryforward period has been replaced with an indefinite carryforward period for these NOLs generated in tax years beginning

after December 31, 2017 and future years .

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

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

1 unchanged sentence

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

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

The NOLs generated in the tax years December 31, 2018 in the amounts of $ 11,899,437 and onwards will have an indefinite life

per current U.S.

federal income tax legislation.

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

As of December 31, 2023, the Company had a deferred tax liability related

to the unrealized gains on its crypto assets amounting to $ 715,899 .

The final tax impact could significantly differ from current estimates

due to future market fluctuations and changes in tax laws.

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

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assets at December 31, 2023 and 2022.

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

The valuation allowance increased by approximately $ 18,000 as of December 31, 2023.

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

1 unchanged sentence

of Income Tax Rate

For the years ended December 31,

the years ended December 31,

Statutory Federal Income Tax Rate

1 unchanged sentence

Federal tax rate change

Change in Valuation Allowance

Income Taxes Provision (Benefit)

Change in Valuation

Income Taxes Provision

Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2023 and 2022.

5 unchanged sentences

in the financial statements other than disclosed.

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.

December 29, 2023, upon recommendation of the Compensation Committee, the Board of BTCS Inc.

approved the grant of 50,000 RSUs to each

of its executive officers (Mr.

Handerhan, 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.

Paranjape), effective January 1, 2024.

The RSUs granted vest

annually over a 5-year period (10,000 per year) with the first vesting date of December 31, 2024 and each subsequent vesting on the one-year

anniversary of the first vesting date, subject to continued employment on each applicable vesting date .

January 12, 2024, Messrs.

Allen and Handerhan both informed the Compensation Committee, that for personal reasons, they each do not accept,

and forfeit, the 50,000 restricted stock units granted to them each by the Company effective January 1, 2024.

Subsequently, effective

January 12, 2024, approved the grant of 50,000 additional RSUs to Mr.

Prevoznik and Mr.

Paranjape, each, which vest annually over a 5-year

period (10,000 per year) with the first vesting date of December 31, 2024 and each subsequent vesting on the one-year anniversary of

the first vesting date, subject to continued employment on each applicable vesting date .

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