What changed in this filing

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Item 1. Financial Statements

2024-05-14 compared with 2023-11-09 · 472 added, 417 removed, 378 unchanged (70% of the section changed)

1 Financial Statements

September 30, 2023

March 31, 2024

December 31, 2023

3 unchanged sentences

Staked crypto assets

Investments, at value (Cost $ 100,000 )

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 - long term

Total other assets

Liabilities and Stockholders’ Equity:

Accounts payable and accrued expense

Accounts payable and accrued expenses

Accrued compensation

5 unchanged sentences

Series V preferred stock:

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

14,567,829 and 14,567,829 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Preferred stock value

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

Common stock, 975,000,000 shares authorized at $ 0.001 par value, 15,705,415 and 15,320,281 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid in capital

7 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

Validator revenue (net of fees)

Blockchain infrastructure revenues (net of fees)

Total revenues

Cost of revenues

Validator expenses

Blockchain infrastructure costs

Operating expenses:

2 unchanged sentences

Compensation and related expenses

Impairment loss on crypto assets

Realized gains on crypto asset transactions

Realized (gains) losses on crypto asset transactions

Total operating expenses

Other income (expenses):

Change in unrealized appreciation (depreciation) on crypto assets

Change in fair value of warrant liabilities

Distributions to warrant holders

Total other income (expenses)

$ ( 640,071 )

$ ( 1,030,248 )

$ ( 3,071,893 )

$ ( 14,495,664 )

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

Weighted average number of common shares outstanding, basic and diluted

Basic net income (loss) per share attributable to common stockholders

Diluted net income (loss) per share attributable to common stockholders

Basic weighted average number of common shares outstanding

Diluted weighted average number of common shares outstanding

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

of Changes in Stockholders’ Equity

the Nine Months Ended September 30, 2023

Series V Preferred Stock

Stockholders’

Balance December 31, 2022

$ 160,800,263

$ ( 151,482,208 )

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

Issuance of Series V preferred stock

( 2,559,533 )

Stock-based compensation

( 3,071,893 )

Balance September 30, 2023

$ 160,410,794

$ ( 154,554,101 )

the Nine Months Ended September 30, 2022

the Three Months Ended March 31, 2024

Preferred Stock

Additional Paid-in

Total Stockholders’

Balance December 31, 2023

1 unchanged sentence

$ ( 138,677,103 )

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

Stock-based compensation

Dividend distributions

( 14,495,664 )

Balance September 30, 2022

$ 160,374,041

$ ( 150,085,134 )

the Three Months Ended September 30, 2023

Series V Preferred Stock

Stockholders’

Balance June 30, 2023

$ 159,955,610

$ ( 153,914,030 )

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

Stock-based compensation

Balance September 30, 2023

Balance March 31, 2024

$ 163,141,291

$ ( 126,420,517 )

the Three Months Ended September 30, 2022

Stockholders’

Balance June 30, 2022

the Three Months Ended March 31, 2023

Additional Paid-in

Total Stockholders’

Balance December 31, 2022, as adjusted

$ 160,800,263

4 unchanged sentences

Stock-based compensation

Dividend distributions

( 1,030,248 )

Balance September 30, 2022

Balance March 31, 2023

$ 161,839,971

2 unchanged sentences

$ ( 141,530,363 )

Includes an adjustment to the opening balance of $ 4,986,377 resulting from a change in accounting principle.

See Note 4 for further details.

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

of Cash Flows

For the Nine Months Ended

September 30,

For the Three Months Ended

Net Cash flows used from operating activities:

$ ( 3,071,893 )

$ ( 14,495,664 )

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

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

Depreciation expense

Stock-based compensation

Validator revenue

( 1,013,503 )

( 1,421,560 )

Blockchain network fees (non-cash)

Blockchain infrastructure revenue

Change in fair value of warrant liabilities

Realized gains on crypto assets transactions

Change in unrealized (appreciation) depreciation on crypto assets

( 13,102,667 )

Sale of non-productive crypto assets

Realized gain on crypto assets transactions

Impairment loss on crypto assets

( 6,293,207 )

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

Receivable for capital shares sold

Accounts payable and accrued expenses

4 unchanged sentences

Purchase of productive crypto assets for validating

( 1,804,482 )

( 9,274,055 )

Sale of productive crypto assets

Purchase of property and equipment

Sale of property and equipment

Net cash provided by (used in) investing activities

( 8,846,747 )

Cash flows from financing activities:

Dividend distributions

Cash flow from financing activities:

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

1 unchanged sentence

Net (decrease)/increase in cash

( 1,393,550 )

Cash, beginning of period

Cash, end of period

Supplemental disclosure of non-cash financing and investing activities:

Series V Preferred Stock Distribution

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

1 unchanged sentence

1 - Business Organization and Nature of Operations

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

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

market with a primary focus on blockchain infrastructure and staking.

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

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

those blockchains to earn rewards.

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

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

validator nodes (or “nodes”).

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

asset holders to participate in blockchain networks’ consensus mechanisms, thereby promoting the growth and adoption of blockchain

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

StakeSeeker is a personal

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

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

The internally-developed dashboard reads

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

allow for the trading or custody of crypto assets.

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

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

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

signing up for the StakeSeeker platform;

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

and sign up for StakeSeeker to utilize our software.

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

any such related services.

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

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

The current functionality allows for crypto asset holders to

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

In the future,

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

align with historical research and development expenses.

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

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

of blockchain technology.

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

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

operations and StaaS business.

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

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

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

(“BTCS” or the “Company”), a Nevada corporation listed on Nasdaq, has operated in the blockchain technology

sector since 2014 with a primary focus on blockchain infrastructure.

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, 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.

internally developed “StakeSeeker” platform is a personal finance software that allows crypto asset holders to monitor and

analyze their portfolios across exchanges and wallets.

It includes tracking capabilities utilizing application programming interfaces

(APIs) as well as educational features, 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 is an informational monitoring

tool and does not facilitate trading, delegation or custody of crypto assets on the platform.

Company developed “Builder+”, an Ethereum block builder (“Builder”) that utilizes algorithms to optimize

block construction for on-chain validation and maximize revenue.

Company’s business is subject to various risks, including regulatory uncertainties, crypto asset price volatility, and the

adoption of blockchain technology.

Future success depends on the growth of the crypto asset market and the Company’s ability

to effectively grow its StaaS and blockchain infrastructure operations.

2 - Basis of Presentation

of Presentation

accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted

4 unchanged sentences

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

Interim results for the three and nine months ended September

30, 2023 are not necessarily indicative of results for the full year ended December 31, 2023.

The unaudited condensed financial statements

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

Interim results for the three months ended March 31, 2024 are

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

The unaudited condensed financial statements and notes

should be read in conjunction with the financial statements and notes for the year ended December 31, 2023.

Reclassifications

Certain prior period amounts have been reclassified in order to conform with the current period presentation in the

unaudited condensed financial statements and accompanying notes.

The reclassifications did not have a material impact on the Company’s

unaudited condensed financial statements and related disclosures.

The impact on any prior period disclosures was immaterial.

3 - Summary of Significant Accounting Policies

have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2023 Annual

of presentation

accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”).

Reclassifications

prior period amounts have been reclassified in order to conform with the current period presentation.

These reclassifications have no

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

and Cash Equivalents

1 unchanged sentence

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

As of September 30, 2023

As of March 31, 2024

and December 31, 2023, the Company had approximately $ 670,000 and $ 1,458,000 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.

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.

1 unchanged sentence

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

As of September 30, 2023 and

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

As of March 31, 2024 and December

31, 2023, the Company had approximately $ 144,000 and $ 933,000 in excess of the FDIC insured limit, respectively.

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

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

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

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

payments to third-party vendors.

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

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

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

services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those

goods or services.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when the Company satisfies a performance obligation

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

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 Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other .

While not accounted for as

cash or cash equivalents, these stablecoins are considered a liquidity resource.

Value Measurement

Company’s accounts for the fair value measurement for its crypto assets in accordance with ASC 820, Fair Value Measurement .

ASC 820 defines fair value as the price that would be received for an asset in a current sale, assuming an orderly transaction between

market participants on the measurement date.

Market participants are considered to be independent, knowledgeable, and willing and able

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.

serves as the principal market for the Company’s crypto assets, being the Company’s primary cryptocurrency exchange for both

purchases and sales.

Coinbase is designated as the secondary principal market.

This determination results from a comprehensive evaluation

considering various factors, including compliance, trading activity, and price stability.

fair value of crypto assets is primarily determined based on pricing data obtained from Kraken, the Company’s principal market.

In the absence of Kraken data, pricing from Coinbase serves as a secondary source.

Kraken is designated as the primary exchange, the Company retains flexibility to conduct 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.

selection of Kraken as the principal market reflects the Company’s commitment to informed decision-making and achieving the most

accurate representation of fair value for its crypto assets.

Regular reviews ensure alignment with the Company’s objectives and

cryptocurrency market dynamics.

for Crypto Assets

cost basis of the Company’s crypto assets is initially recorded at their fair value using the last close price of the day in the

UTC (Coordinated Universal Time) time zone on the date of receipt.

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 4.

Company employs the specific identification method to determine the cost basis of our assets for the computation of gains and losses,

in accordance with ASC 350-60-50-2a.

This method involves identifying and using the actual cost of each individual asset sold or disposed

of to calculate the gain or loss on its sale.

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 $ 11,000 and $ 8,000 during

the three months ended March 31, 2024 and 2023, respectively.

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

The core principle of the revenue standard is

that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects

the consideration to which the Company expects to be entitled in exchange for those goods or services.

The following five steps are applied

to achieve that core principle:

Identify the contract

with the customer

Identify the performance

obligations in the contract

Determine the transaction

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 1) staking rewards

Company has entered into network-based smart contracts by running its own crypto asset validator nodes as well as by staking crypto assets

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

Through these contracts, the Company provides crypto

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

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

by the operator and requires that the crypto assets staked remain locked up during the duration of the smart contract.

In exchange for

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

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

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

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

The Company’s fractional share of

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

node to the total crypto assets staked by delegators to the node.

generated from its blockchain infrastructure operations, and 2) gas fees earned from successful Ethereum block building through Builder+.

These revenues are collectively termed ‘ Blockchain infrastructure revenues ’ in the statements of 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.

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 staked crypto assets 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 awards earned from the network when delegating to the Company’s own node and is entitled to a fractional share of

the fixed crypto asset awards 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.

certain blockchain networks on which the Company operates a validator node, the Company earns a validator node fee (“Validator

Fee”), determined as a node operator’s published percentage of the crypto asset rewards earned on crypto assets delegated

rewards earned from staking, as well as tokens earned as Validator Fees, are calculated and distributed directly to BTCS digital wallets

by the blockchain networks as part of their consensus mechanisms.

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

1 unchanged sentence

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

The transaction consideration the Company receives

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

The fair value

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

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

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

Additionally,

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

maintenance and node operations.

Assets Translations and Remeasurements

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 intraday

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

The crypto assets can only be marked down when impaired

and not marked up when their value increases.

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

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

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

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

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 $ 806,000 and $ 490,000 during the nine months ended September 30, 2023 and 2022, respectively.

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

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.

Block Building (Builder+)

Company participates in the Ethereum blockchain network by engaging in the construction of blocks (“block building”)

containing strategically bundled transactions from the Ethereum mempool and from searchers who connect to the Company’s

endpoint with the intent of the Company’s builder proposing their transactions.

Revenue recognition for these

activities, conducted through Builder+, entails the recognition of gas fees (or “transaction fees”) earned in

exchange for successfully constructing blocks of bundled transactions and having these blocks selected and proposed by a validator to the Ethereum

network for validation.

These gas fees

are earned as a direct result of the Company’s fulfillment of its performance obligations, which include the construction of

blocks by bundling transactions to maximize the value of the included fees and the proposal of that block to a Validator.

constructed block under a smart contract with the Ethereum network signifies a distinct performance obligation.

part of the block construction and proposal process, the Company’s Builder purchases block space through a fixed

non-negotiable fee paid to a Validator (a “Validator Payment”) embedded in each proposed block.

The Validator Payment,

predetermined by the Builder, is paid to Validators as compensation for selecting and proposing the Company’s block to the

network for validation.

The Validator Payment is intrinsically linked to the Company’s performance obligations and is

only disbursed when a block constructed by the Builder is selected by a Validator, proposed, and successfully finalized on the Ethereum

It represents a direct and fixed pre-determined cost.

satisfaction of the performance obligation occurs at a point in time when the constructed block is proposed by a Validator and successfully

finalized on the Ethereum network.

At this juncture, the Company has fulfilled its obligations, and the gas fees associated with the

transactions included in the block become available and are transferred to the Company’s digital wallet, simultaneous with the

disbursement of the related Validator payment.

Company recognizes revenue, reflecting the fair value of the total gas fees earned from the constructed block net of the related

Validator Payments disbursed.

For the three months ended March 31, 2024 this resulted in the recognition of negative revenue, as Validator Payments exceed the total value of the gas fees associated with proposed blocks.

following table summarizes the revenues earned from the Company’s operations for the three months ended March 31, 2024 and 2023.

Schedule of Revenues Earned from Company’s Operations

For the Three Months Ended March 31,

Revenues from blockchain infrastructure operations

Staking to BTCS nodes

Staking to third-party nodes

Total revenues

following tables detail the native token rewards and their respective fair market value recognized as revenue for the three months ended

March 31, 2024 and 2023.

The tables differentiate between three sources of revenue:

token rewards earned through delegating cryptocurrency

assets to validator nodes operated by third parties, and revenue generated from BTCS blockchain infrastructure operations, which includes

token rewards earned from staking crypto assets to validator nodes operated by BTCS, Validator Fees calculated as a percentage of rewards

earned from crypto assets delegated by third-parties to BTCS nodes, as well as block rewards earned by BTCS Builders.

The following tables detail the

native token rewards and their respective fair market value recognized as revenue for the three months ended March 31, 2024 and 2023.

Revenues are derived from three primary sources:

(1) token rewards earned from the delegation of cryptocurrency assets to third-party

validator nodes;

(2) token rewards derived from BTCS-operated validator nodes, which include staking of the Company’s crypto assets

to BTCS nodes as well as Validator Fees earned from third parties asset delegations to our nodes;

and (3) net block rewards accrued generated

by BTCS Builders.

assets earned from BTCS validator nodes

Schedule of Crypto Assets Earned From Validator Nodes

For the Three Months Ended March 31,

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

Ethereum (ETH)

Cosmos (Atom)

NEAR Protocol (NEAR)

Oasis Network (ROSE)

Total earned from BTCS validator nodes

assets earned from Ethereum block building through Builder+

Schedule of Crypto Assets Earned From

For the Three Months Ended March 31,

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

Ethereum (ETH)

Total earned from Ethereum block building through Builder+

assets earned from staking to third-party validator nodes

Schedule of Crypto Assets Earned From Third Party

For the Three Months Ended March 31,

Token Rewards

Revenue ($USD)

Token Rewards

Revenue ($USD)

Axie Infinity (AXS)

Polygon (MATIC)

Polkadot (DOT)

Evmos (EVMOS)

Cardano (ADA)

Total earned from staking to third-party validator nodes

Total revenue earned

Company’s cost of revenues 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 Builders, and allocated

employee salaries dedicated to node maintenance and support.

Additionally, the cost of revenues encompasses fees paid to third parties

for their assistance in software maintenance and node operations.

These costs directly related to the production of revenues are collectively

termed ‘ Blockchain infrastructure expenses ’ in the statements of operations.

following table further details the costs of revenues for the three months ended March 31, 2024 and 2023.

Schedule of Costs of Revenues

For the Three Months Ended March 31,

Cost of staking revenues

Cost of Builder revenues

Total cost of revenues

Developed Software

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

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

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

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

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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 settlement).

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 6).

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

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.

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 shares.

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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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 $ 635,000 during the nine months

ended September 30, 2023 and 2022, respectively.

In June 2023,

the Series V shares commenced trading on Upstream, a Merj Exchange market (“Upstream”).

In November 2023, Upstream announced

that it was no longer providing U.S.

individuals with the ability to trade on Upstream.

All Series V shares owned by U.S investors were

returned to the transfer agent.

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

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Advertising and marketing expenses amounted to approximately $ 58,000

and $ 74,000 for the nine months ended September 30, 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.

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

their effect was anti-dilutive:

of Earnings Per Share Anti-diluted

As of September 30,

Warrants to purchase common stock

Non-vested restricted stock awards units

Anti-dilutive securities

and $ 6,000 for the three months ended March 31, 2024 and 2023, respectively.

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 income (loss) per share excludes the shares issuable upon the conversion of preferred stock,

notes and warrants from the calculation of net income (loss) per share if their effect would be anti-dilutive.

Accounting Pronouncements

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

December 2023, the FASB issued ASU No.

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.

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

impact to its financial statement and related disclosures, which are further discussed in Note 4.

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

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

present or future financial statements.

4 - 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 principles related

to the Company’s accounting treatment of crypto assets.

a result of the adoption of ASU No.

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 periods.

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 period 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 .

5 – Crypto Assets

following table presents the Company’s crypto assets held as of March 31, 2024:

Schedule 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)

6 – Fair Value of Financial Assets and Liabilities

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

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

between market participants at the measurement date.

Fair value is estimated by applying the following hierarchy, which prioritizes the

inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input

that is available and significant to the fair value measurement:

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

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

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

data for substantially the full term of the assets or liabilities.

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

would use in pricing the asset or liability.

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

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

of Fair Value of Assets and Liabilities Valued on Recurring Basis

Fair Value Measured at September 30, 2023

September 30,

Quoted prices in active markets (Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)

estimated level within the fair value hierarchy of those assets and liabilities as of March 31, 2024 and December 31, 2023:

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

Fair Value Measured at March 31, 2024

Total at March 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Crypto Assets

Warrant Liabilities

Fair Value Measured at December 31, 2023

Quoted prices in active markets (Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Total at December 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Crypto Assets

Warrant Liabilities

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

Company did not make any transfers between the levels of the fair value hierarchy during the three months ended March 31, 2024 and 2023.

3 Valuation Techniques

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determination of fair value requires significant judgment or estimation.

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

As of March 31, 2024 and December 31, 2023, the Company’s

Level 3 investments were carried at original cost of the investments, with a value of $ 100,000 .

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were initially classified in equity.

As of December 31, 2022, the Company no longer maintained control of certain fundamental transactions

As of March 31, 2024, the Company no longer maintained control of certain fundamental transactions

as they did not control a majority of shareholder votes.

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

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

warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of March 31, 2024

and December 31, 2023, is as follows:

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

September 30, 2023

March 31, 2024

December 31, 2023

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

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

of Changes in Fair Value and Other Adjustments of Warrants

for the Three Months ended March 31, 2024 and 2023, that are measured at fair value on a recurring basis:

Schedule of Changes in Fair Value and Other Adjustments of Warrants

Fair Value of Level 3 Financial Assets

September 30, 2023

September 30, 2022

March 31, 2024

March 31, 2023

Beginning balance

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Fair Value of Level 3 Financial Liabilities

September 30, 2023

September 30, 2022

March 31, 2024

March 31, 2023

Beginning balance

1 unchanged sentence

Fair value adjustment of warrant liabilities

( 1,140,000 )

Ending balance

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

At-The-Market Offering Agreement

At-The-Market

Offering Agreement

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

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

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

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

$ 1,114,000 after deducting commissions and other transaction costs.

the three months ended March 31, 2024, the Company did not sell any shares of Common Stock under the ATM Agreement.

Based Payments

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

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

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

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

For the nine months ended September 30, 2023,

For the three months ended March 31, 2024,

14,206 shares of common stock were issued to independent directors.

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

of 2022 accrued bonus compensation.

the three months ended March 31, 2024, 414,148 shares of common stock were issued to officers related to payment of 2023 accrued bonus

compensation totaling approximately $ 675,000 .

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

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to shareholders on June 2, 2023.

The Series V is listed to trade on 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.

fair value of the Series V 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

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

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

non-executive employees.

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

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

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

months ended March 31, 2024 and 2023 for the Black-Scholes formula:

Weighted-Average Assumptions Used to Estimate Fair Value

Nine Months Ended

September 30,

Three Months Ended

Exercise price

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using a Monte-Carlo simulation.

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

summary of option activity under the Company’s stock option plan for three months ended March 31, 2024 is presented below:

Summary of Option Activity

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Employee options forfeited

Outstanding as of September 30, 2023

Options vested and exercisable as of September 30, 2023

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

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

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

market capitalization thresholds of $ 100 million, $ 150 million, $ 200 million and $ 400 million.

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

Paranjape was also granted RSUs

as part of the LTI plan, with consistent vesting terms set for when the Company’s market capitalization above the same four defined

market capitalization thresholds.

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

approved an amendment to the LTI plan, whereby the market capitalization threshold targets were lowered to $ 50 million, $ 100 million,

$ 150 million, and $ 300 million.

RSUs granted to each executive employee are as follows:

Schedule of Restricted Stock Units

Market Cap Vesting Thresholds

Charles Allen

Chief Executive Officer

Michal Handerhan

Chief Operations Officer

Michael Prevoznik

Chief Financial Officer

Manish Paranjape

Chief Technology Officer

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

Outstanding as of March 31 ,2024

Options vested and exercisable as of March 31 ,2024

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.

Paranjape are achieved, the RSUs will also be

subject to the following five-year vesting schedule:

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

the one-year anniversary of the grant date, and the remaining 80 % of the LTI RSUs which have met a market capitalization criteria will

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

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

basis over the vesting period.

Stock-based compensation expense for the market-based restricted stock units with explicit service conditions

is recognized on a straight-line basis over the longer of the derived service period or the explicit service period, regardless of whether

the market condition is satisfied.

However, in the event that the explicit service period is not met, previously recognized compensation

cost would be reversed.

Market-based restricted stock units subject to market-based performance targets require achievement of the performance

target as well as a service condition in order for these RSUs to vest.

Company estimates the fair value of market-based RSUs as of the grant date and expected derived term using a Monte Carlo simulation that

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

As of the LTI RSU

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

the amended market cap criteria.

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

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

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

on the date of the modification.

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

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

Weighted-Average Assumptions Used to Estimate Fair Value

Valuation Dates

January 1, 2023

(Modification)

January 2, 2022

(Original Issuance)

Vesting Hurdle Price

$ 3.81 - $ 30.52

$ 8.07 - $ 36.99

Expected stock price volatility

Risk-free rate of interest

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

Historical volatility

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

Interest Rate :

The risk-free interest rate is based on the U.S.

treasury zero-coupon yield curve in effect at the time of grant for

the expected term of the RSUs.

The Company’s expected term represents the weighted-average period that the Company’s RSUs are expected to be outstanding.

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

market-based criteria are not achieved within the five-year period from the grant date, the RSUs will not vest and shall expire.

Hurdle Price:

The vesting hurdle price is determined as the average of the vesting Market Cap criteria divided by the shares outstanding

as of the valuation dates.

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

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, the Compensation Committee approved the grant of 50,000 additional RSUs to Mr.

Prevoznik and Mr.

Paranjape each, effective January 1, 2023, which vest annually over a five-year period with the first vesting date

being on the one-year anniversary of the execution date of the effective grant date, subject to continued employment on each applicable

vesting date.

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

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.

summary of the Company’s restricted stock units granted under the 2021 Plan during the three months ended March 31, 2024 are as

Summary of Restricted Stock

Weighted Average

Number of Restricted Stock Units

Weighted Average Grant

Date Fair Value

Nonvested at December 31, 2023

Nonvested at September 30, 2023

Nonvested at March 31, 2024

Based Compensation

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

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

Stock-based compensation expense for the three months ended March 31, 2024 and 2023 was as follows:

Schedule of Stock-based Compensation Expense

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Employee bonus stock awards

For the Three Months

Ended March 31,

Employee stock option awards

1 unchanged sentence

Non-employee restricted stock awards

Stock-based compensation

8 – Accrued Expenses

1 unchanged sentence

of Accrued Expenses

September 30, 2023

March 31, 2024

December 31, 2023

1 unchanged sentence

Accounts payable and accrued expenses

Accrued Expenses

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

2023 and December 31, 2022, respectively.

compensation includes approximately $ 0 and $ 710,000 related to performance bonus accruals as of March 31, 2024 and December 31, 2023,

respectively.

9 – Employee Benefit Plans

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up to 100 % of employee contributions.

For the nine months ended September 30, 2023 and 2022, the Company made contributions to the 401(k)

For the three months ended March 31, 2024 and 2023, the Company made contributions to the 401(k)

Plan of $ 109,000 and $ 95,000 , respectively.

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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 of

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

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

The Company is

implementing its business plan and generating revenue;

however, the Company’s cash position and liquid crypto assets are

sufficient to support its daily operations over the next twelve months.

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

$ 126,421,000 at March 31, 2024, and net cash used in operating activities of approximately $ 769,000 for the reporting period then ended.

The Company is implementing its business plan and generating revenue;

however, the Company’s cash position and liquid crypto assets

are sufficient to support its daily operations over the next twelve months.

11 – Subsequent Events

3 unchanged sentences

in the financial statements other than disclosed.

April 11, 2024, the Board of Directors of the Company, upon recommendation of the Compensation Committee, approved a performance based

Annual Cash Incentive Plan for the Company’s executives for fiscal year 2024.

If an executive meets their performance milestones,

the executive will receive a bonus, payable in cash and/or equity at the discretion of the Board, in an amount up to 163 % to 195 % of

the applicable executive’s base salary , as detailed below:

Charles Allen, the Company’s

Chief Executive Officer, is eligible to receive up to 195 % of his base salary.

Allen’s current base salary is $ 429,933 ;

Michal Handerhan, the Company’s

Chief Operating Officer, is eligible to receive up to 179 % of his base salary.

Handerhan’s base salary is $ 300,307 ;

Michael Prevoznik, the

Company’s Chief Financial Officer, is eligible to receive up to 163 % of his base salary.

Prevoznik’s base salary

is $ 245,706 ;

Manish Paranjape, the Company’s

Chief Technology Officer is eligible to receive up to 163 % of his base salary.

Paranjape’s base salary is $ 245,706 .

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

What changed 10-Q

Item 1. Financial Statements