What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-20 compared with 2024-03-21 · 822 added, 657 removed, 768 unchanged (66% of the section changed)

31 unchanged sentences

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.

November 17, 2024 , Charles Allen , our Chief Executive Officer , adopted a trading plan pursuant to Rule 10b5-1 under the Exchange Act

(a “Rule 10b5-1 trading plan”), in accordance

with the Company’s insider trading policies and procedures .

The plan was effective

as of February 18, 2025 and is scheduled to terminate on October 15, 2027 , unless terminated earlier in accordance with its terms.

the plan, up to 1.75 million shares of the Company’s common stock may be sold, subject to the terms and conditions of the plan.

October 22, 2024 , Michal Handerhan , our Chief Operating Officer , adopted a Rule 10b5-1 trading plan in accordance with the company’s

insider trading policies and procedures.

The plan was effective as of March 5, 2025 and is scheduled to terminate on October 15, 2025 ,

unless terminated earlier in accordance with its terms.

Under the plan, up to 750,000 shares of the Company’s common stock may

be sold, subject to the terms and conditions of the plan.

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 2024 Annual Meeting of Stockholders

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

information required by this item is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders to

be filed with the SEC within 120 days of the year ended December 31, 2024.

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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Documents filed as part of the report.

Financial Statements.

See Index to Financial Statements, which appears on page F-1 hereof.

The financial statements listed in the accompanying

Index to Financial Statements are filed herewith in response to this Item.

Financial Statements Schedules.

All schedules are omitted because they are not applicable or because the required information is contained

in the financial statements or notes included in this report.

Consolidated Financial Statements.

See Index to Consolidated Financial Statements, which appears on page F-1 hereof.

The financial statements

listed in the accompanying Index to Financial Statements are filed herewith in response to this Item.

Consolidated Financial Statements Schedules.

All schedules are omitted because they are not applicable or because the required information

is contained in the consolidation financial statements or notes included in this report.

See the Exhibit Index.

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Wainwright & Co., LLC

and Plan of Merger

of Incorporation

Articles of Merger

Agreement and Plan of Merger

Articles of Incorporation

Amendment No.

1 To Articles of Incorporation

Amendment No.

2 To Articles of Incorporation

of Amendment filed February 13, 2017

Certificate of Amendment filed February 13, 2017

Amendment No.

3 To Articles of Incorporation

of Change – Reverse Split

of Designation – Series V

Certificate of Change – Reverse Split

Certificate of Designation – Series V

Certificate of Amendment to the Series V Certificate of Designation

1 unchanged sentence

4 to Articles of Incorporation – Increase Authorized Capital

of TouchIT Technologies, Inc.

1 to the Bylaws

Amended and Restated Bylaws of BTCS Inc.

2021 Equity Incentive Plan, as amended

2 unchanged sentences

Amendment to Employment Agreement - Charles Allen

Employment Agreement - Michael Handerhan

Employment Agreement - Michal Handerhan

Amendment to Employment Agreement – Michal Handerhan

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Michal Handerhan

/s/ Ashley DeSimone

March 20, 2025

Ashley DeSimone

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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2024, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations

and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally

In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows

for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally

accepted in the United States of America .

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

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.

Corporate Crypto Assets Held

Audit Matter Description

Crypto assets are generally accessible only by the

possessor of the unique private key relating to the digital wallet or node in which the crypto assets are held.

Accordingly, private keys

must be safeguarded and secured in order to prevent an unauthorized party from accessing the crypto assets within a digital wallet.

Company primarily holds crypto assets for its own use in wallets.

The loss, theft, or otherwise compromise of access to the private keys

required to access the crypto assets could adversely affect the Company’s ability to access the crypto assets within its environment.

This could result in loss of corporate crypto assets held.

We identified crypto assets held as a critical audit

matter due to the nature and extent of audit effort required to obtain sufficient appropriate audit evidence to address the risks of material

misstatement related to the existence and rights & obligations of crypto assets in storage.

The nature and extent of audit effort

required to address the matter includes significant involvement of more experienced engagement team members and discussions and consultations

with subject matter experts related to the matter.

How the Critical Audit Matter Was Addressed in

Our audit procedures related to crypto assets in storage

included the following, among others:

We consulted with subject matter experts regarding our planned audit response

to address certain risks of material misstatement of crypto assets in storage.

We noted the controls within the Company’s private key management

process including controls related to physical access, key generation, and segregation of duties across the processes.

We tested the effectiveness of management’s reconciliation control of internal

books and records to external blockchains.

We independently obtained evidence from public blockchains to test the existence

of crypto asset balances.

We obtained evidence that management has control of the private keys required

to access crypto assets held through observing the wallets signed in using selected private keys or through observing the movement of

selected crypto asset transactions.

We evaluated the reliability of audit evidence obtained from public blockchains.

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

Balance Sheets

Current assets:

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Property and equipment, net

Staked crypto assets - long term

Total other assets

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Series V preferred stock:

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

15,033,231 and 14,567,829 shares issued and outstanding at December 31, 2024 and December 31, 2023, 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

Common stock, 975,000,000 shares authorized at $ 0.001 par value, 18,717,743 and 15,320,281 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

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Total Liabilities and Stockholders’ Equity

accompanying notes are an integral part of these financial statements.

of Operations

accompanying notes are an integral part of these consolidated financial statements.

Statements of Operations

For the Year Ended

Validator revenue (net of fees)

Blockchain infrastructure revenues (net of fees)

Total revenues

Cost of revenues

Validator expenses

Blockchain infrastructure costs

Operating expenses:

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Compensation and related expenses

Impairment loss on crypto assets

Realized (gains) losses on crypto asset transactions

Realized losses on crypto asset transactions

Total operating expenses

Other income (expenses):

Change in unrealized appreciation (depreciation) on crypto assets

Change in unrealized appreciation on crypto assets

Change in fair value of warrant liabilities

Distributions to warrant holders

Total other income (expenses)

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$ ( 1,271,174 )

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

Weighted average number of common shares outstanding, basic and diluted

accompanying notes are an integral part of these financial statements.

of Stockholders’ Equity

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, basic and diluted

accompanying notes are an integral part of these consolidated financial statements.

Statements of Stockholders’ Equity

the Years Ended December 31, 2024 and 2023

Preferred Stock

Stockholders’

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Stock-based compensation

Dividend distributions

Net income (loss)

( 1,271,174 )

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18,717,743 (2)

$ 171,283,199

$ ( 139,948,277 )

98,294 restricted shares of Series V Preferred Stock held by employees that remain subject to forfeiture based on time-based vesting

See Note 6 – Stockholders’ Equity (Deficit) for further details.

270,794 restricted shares of Common Stock held by employees that remain subject to forfeiture based on time-based vesting conditions.

See Note 6 – Stockholders’ Equity (Deficit) for further details.

Preferred Stock

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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.

of Cash Flows

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

See Note 3 – Changes

in Accounting Principle for further details.

accompanying notes are an integral part of these consolidated financial statements.

Statements of Cash Flows

For the Year Ended

2 unchanged sentences

$ ( 1,271,174 )

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

Blockchain infrastructure revenue

( 4,073,518 )

( 1,339,628 )

Blockchain network fees (non-cash)

Builder payments (non-cash)

Change in fair value of warrant liabilities

Realized losses on crypto assets transactions

Change in unrealized appreciation on crypto assets

( 7,683,772 )

Sale of non-productive crypto assets

Realized gain on crypto assets transactions

Change in unrealized (appreciation) depreciation on crypto assets

( 12,135,648 )

Impairment loss on crypto assets

Changes in operating assets and liabilities:

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( 3,530,108 )

( 3,562,247 )

Cash flows from investing activities:

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Sale of productive crypto assets

Purchase of investments

Purchase of property and equipment

3 unchanged sentences

Cash flow from financing activities:

Dividend distributions

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

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Series V Preferred Stock Distribution

accompanying notes are an integral part of these financial statements.

TO FINANCIAL STATEMENTS

accompanying notes are an integral part of these consolidated financial statements.

TO CONSOLIDATED FINANCIAL STATEMENTS

1 - Organization and Description of Business and Recent Developments

(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

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.

TO FINANCIAL STATEMENTS

(“BTCS” or the “Company”), a Nevada corporation listed on Nasdaq, is a U.S.-based blockchain technology

company focused on blockchain infrastructure.

The Company’s primary operations center on the Ethereum network, reflecting its strategic

emphasis on Ethereum block-building (“Builder+”) and validator node operations (“NodeOps”) across various proof-of-stake

(“PoS”) and delegated proof-of-stake (“dPoS”) networks.

operates non-custodial validator nodes (or “nodes”) that participate in blockchain network consensus by performing transaction

validation (“attestation”) and block proposal services.

The Company earns native token rewards by staking its PoS crypto

assets (also referred to “cryptocurrencies”, “crypto”, “crypto assets”, “digital assets”,

or “tokens”) to validator nodes operated by both BTCS and third-parties.

Additionally, on certain dPoS networks, BTCS enables

third-party crypto asset holders to delegate their assets to its validator nodes, earning validator node fees as a percentage of staking

rewards generated from delegated crypto assets.

2024, BTCS launched its Builder+ operations, a core component of its blockchain infrastructure strategy.

Builder+ leverages advanced

algorithms to optimize the construction of Ethereum blocks for on-chain validation, focusing on maximizing gas fee revenue.

has become a central revenue driver for BTCS, positioning the Company as an integral participant in Ethereum’s transaction cycle.

addition to its blockchain infrastructure operations, BTCS has developed ChainQ, an AI-powered blockchain data and analytics platform

designed to enhance transparency and accessibility within the blockchain ecosystem.

Currently in beta, ChainQ provides intuitive tools

for exploring and analyzing on-chain data, leveraging insights from BTCS’s blockchain infrastructure activities.

part of its strategic focus on Builder+ and Validator Node operations, BTCS discontinued support for its StakeSeeker platform on December

Company’s operations are subject to regulatory uncertainties, technological risks and market volatility inherent to blockchain

technology and crypto assets.

BTCS’s future success depends on the continued adoption of blockchain technology as well as the Company’s

ability to scale its Ethereum block-building operations and expand its broader blockchain infrastructure operations.

TO CONSOLIDATED FINANCIAL STATEMENTS

2 - Summary of Significant Accounting Policies

of Presentation

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

accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles

(“GAAP”), and include the accounts of the Company and its subsidiaries.

The Company’s subsidiaries are entities in

which the Company holds, directly or indirectly, more than 50% of the voting rights, or where it exercises control.

All intercompany

accounts and transactions have been eliminated in consolidation.

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).

amounts in prior period financial statements have been reclassified to conform to the current period’s presentation.

These reclassifications

did not affect previously reported net income (loss), total assets, total liabilities, or equity, nor did they impact previously disclosed

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

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

As of December 31, 2024

and 2023, the Company had approximately $ 1,978,000 and $ 1,458,000 in cash.

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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.

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 ASC 350, Intangibles – Goodwill

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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

Company’s accounts for the fair value measurement for its crypto assets in accordance with Financial Accounting Standards Board

(“FASB”) Accounting Standards Codification (“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 to transact.

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

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.

TO CONSOLIDATED 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”).

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

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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.

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 consolidated 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

Acquisitions 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

Staked 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 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 – Changes in Accounting Principle .

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 gains (losses) on sale of crypto assets are included in other income (expenses)

in the consolidated statements of operations.

The Company recorded realized losses on crypto assets of approximately $ 767,000 and $ 604,000

during the years ended December 31, 2024 and 2023, respectively.

TO CONSOLIDATED FINANCIAL STATEMENTS

Company’s blockchain infrastructure operations include two primary revenue-generating activities:

Ethereum block building (“Builder+”)

and validator node operations (“NodeOps”).

Company’s Chief Operating Decision Maker (“CODM”) is comprised of several members of its executive management team,

including the Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”) and Chief Financial Officer (“CFO”),

who are responsible for evaluating the Company’s financial performance, managing operations, and allocating capital and resources.

CODM regularly reviews discrete financial information related to Builder+ and NodeOps, assessing financial performance based on gross

profit (loss), direct operating expenses, and key financial metrics.

These financial reviews direct operational decisions and shape capital

deployment strategies for each activity.

the CODM evaluates Builder+ and NodeOps separately, these activities share common economic characteristics, infrastructure, and operational

oversight and are therefore aggregated into a single operating segment under ASC 280, Segment Reporting.

with ASU 2023-07, the Company discloses significant segment expenses that are regularly provided to the CODM for decision-making purposes.

See Note 12 – Segment Information for more information.

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

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:

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

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The Company generates revenue through 1) staking rewards

generated from its blockchain infrastructure operations.

generated from its blockchain infrastructure operations (NodeOps), and 2) gas fees earned from successful Ethereum block-building through

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

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

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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.

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At that point, revenue is recognized.

TO FINANCIAL STATEMENTS

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 and successfully finalized

on the network.

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 by a Validator.

Each 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 disbursed in the block constructed

by the Builder if our Builder’s block is both selected by a Validator and successfully proposed to, and finalized on, the Ethereum

otherwise, our Validator Payment may be included in a subsequent block.

The Validator Payment represents a direct and fixed

pre-determined cost.

satisfaction of the performance obligation occurs at a point in time when the constructed block is both 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.

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

TO CONSOLIDATED FINANCIAL STATEMENTS

following table summarizes the revenues earned from the Company’s operations for the years ended December 31, 2024 and 2023:

Schedule of Revenues Earned from Company’s Operations

For the Year Ended

Revenues from blockchain infrastructure operations

Total revenues

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

December 31, 2024 and 2023.

Revenues earned from blockchain infrastructure staking activities through NodeOps include token rewards earned

from the delegation of cryptocurrency assets to third-party validator nodes as well as token rewards derived from BTCS-operated validator

nodes, which include staking of the Company’s crypto assets to BTCS nodes and Validator Fees earned from third parties asset delegations

to our nodes.

Revenues earned from Ethereum block-building through Builder+ includes block rewards generated by BTCS Builders.

assets earned from blockchain infrastructure staking activities through NodeOps

of Crypto Assets Earned from Blockchain Infrastructure Staking Activities

For the Year Ended December 31,

Token Rewards

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Cosmos (ATOM)

Evmos (EVMOS)

Axie Infinity (AXS) *

Solana (SOL) *

Avalanche (AVAX)

NEAR Protocol (NEAR) *

Polygon (POL fka MATIC) *

Polkadot (DOT) *

Rocket Pool (RPL) *

Tezos (XTZ) *

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

Cardano (ADA) *

Evmos (EVMOS) *

Total earned from blockchain infrastructure staking activities through NodeOps

* All or a portion

of revenue earned from staking to third-party validator nodes

assets earned from Ethereum block-building through Builder+

Schedule of Crypto Assets Earned From

For the Year Ended December 31,

Token Rewards

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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

Ethereum (ETH)

Total earned from Ethereum block building through Builder+

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 Validator Payments made from

our Builder to Validators as well as fees paid to third parties for their assistance in software maintenance and node operations.

costs directly related to the production of revenues are collectively termed ‘Blockchain infrastructure expenses’ in the

consolidated statements of operations.

following table further details the costs of revenues for the years ended December 31, 2024 and 2023:

Schedule of Costs of Revenues

For the Year Ended

Cost of staking revenues

Cost of Builder+ revenues

Total cost of revenues

TO CONSOLIDATED FINANCIAL STATEMENTS

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 cryptocurrency portfolio holdings by connecting their crypto exchanges and digital wallets

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

For internally developed software,

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

The Company accounts

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

developed software consists of the core technology of the Company’s StakeSeeker and ChainQ platforms.

For internally developed

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

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

985-20, Software-Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires that software development costs

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

Depreciation and

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

not be recoverable.

accompanying financial statements have been prepared in conformity with U.S.

This requires management to make estimates and assumptions

that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the

financial statements, and the reported amounts of revenue and expenses during the period.

The Company’s significant estimates and

assumptions include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation, and the valuation

allowance related to the Company’s deferred tax assets.

Certain of the Company’s estimates, including the carrying amount

of the indefinite life intangible assets, could be affected by external conditions, including those unique to the Company and general

economic conditions.

It is reasonably possible that these external factors could have an effect on the Company’s estimates and

could cause actual results to differ from those estimates and assumptions.

Depreciation and amortization

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

assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.

accompanying consolidated financial statements have been prepared in conformity with U.S.

This requires management to make estimates

and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at

the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period.

The Company’s

significant estimates and assumptions include the recoverability and useful lives of indefinite life intangible assets, stock-based compensation,

and the valuation allowance related to the Company’s deferred tax assets.

Certain of the Company’s estimates, including the

carrying amount of the indefinite life intangible assets, could be affected by external conditions, including those unique to the Company

and general economic conditions.

It is reasonably possible that these external factors could have an effect on the Company’s estimates

and could cause actual results to differ from those estimates and assumptions.

Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns.

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approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that

have been recognized in the Company’s financial statements or tax returns.

A valuation allowance is established to reduce deferred

tax assets if all, or some portion, of such assets will more than likely not be realized.

Should they occur, the Company’s policy

is to classify interest and penalties related to tax positions as income tax expense.

Since the Company’s inception, no such interest

or penalties have been incurred.

TO FINANCIAL STATEMENTS

have been recognized in the Company’s consolidated financial statements or tax returns.

A valuation allowance is established to

reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized.

Should they occur, the Company’s

policy is to classify interest and penalties related to tax positions as income tax expense.

Since the Company’s inception, no

such interest or penalties have been incurred.

TO CONSOLIDATED FINANCIAL STATEMENTS

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

the provisions of ASC 815, Derivatives and Hedging .

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.

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

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

The fair value of the warrants has been estimated using

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

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

The fair value of the warrants has been estimated

using a Black-Scholes valuation model (see Note 5- Fair Value of Financial Assets and Liabilities ).

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.

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.

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

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

options issued under the Company’s equity incentive plans are granted with an exercise price equal to no less than the market price

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

Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating

1 unchanged sentence

of management’s judgment.

TO FINANCIAL STATEMENTS

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

granted prior to January 1, 2025, historical volatility was based on the most recent volatility of the stock price over a period equivalent

to the expected term of the option.

For the most recent options granted on January 1, 2025, historical volatility was determined using

a two-year lookback period.

Management selected this approach to better reflect the Company’s current market conditions and exclude

periods of non-representative volatility associated with significant changes in the Company’s business, market conditions, and

capital structure.

The two-year lookback period balances capturing industry and market cycles with avoiding outdated and non-representative

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 option.

Term – The Company’s expected term represents the weighted-average period that the Company’s stock options are

expected to be outstanding.

The expected term is based on the expected time to post-vesting exercise of options by employees.

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

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

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

TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Units (“RSUs”)

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

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

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.

Term – The Company’s expected term represents the weighted-average period that the Company’s RSUs are expected

to be outstanding.

The expected term is based on the stipulated 5-year period from the grant date until the market-based criteria are

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

Hurdle Price – The vesting hurdle prices are determined by taking the vesting Market Cap criteria divided by the shares outstanding

as of the valuation dates

January 27, 2023, the Company’s Board of Directors (the “Board”) approved the issuance of a newly designated Series

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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 $ 631,000 during the years

ended December 31, 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 $ 81,000

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

and $ 12,000 for the years ended December 31, 2024 and 2023, respectively.

Income (Loss) per Share

3 unchanged sentences

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:

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 and warrants

from the calculation of net loss per share if their effect would be anti-dilutive.

the year ended December 31, 2024, diluted loss per share excludes all potential common shares, including restricted stock units, options,

warrants, and other convertible instruments, as their inclusion would be anti-dilutive due to the net loss reported for the period.

the year ended December 31, 2023, the Company reported net income.

As a result, diluted net income per share included potential common

shares that were dilutive during the period.

following financial instruments were from the calculation of diluted loss per share for the year ended December 31, 2024, as their effect

was anti-dilutive:

of Earnings Per Share Anti-diluted

As of December 31,

Warrants to purchase common stock

Non-vested restricted stock awards units

Non-vested restricted stock unit awards

Non-vested restricted common stock

Anti-dilutive securities

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

Accounting Pronouncements

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.

Company continually assesses new accounting pronouncements to determine their applicability.

When it is determined that a new accounting

pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of such change

to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated

Financial Statements properly reflect the change.

December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60) (“ASU

2023-08”), 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.

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 3.

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 –

Changes in Accounting Principle .

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU

ASU 2023-07 is intended to enhance reportable segment disclosures by requiring disclosures of significant segment expenses

regularly provided to the CODM, requiring disclosure of the title and position of the CODM and explanation of how the reported measures

of segment profit and loss are used by the CODM in assessing segment performance and a location of resources.

ASU 2023-07 is effective

for the Company for annual periods beginning after December 31, 2023.

The Company adopted ASU 2023-07 for the year ended December 31,

As a result of the adoption, the Company expanded its disclosures in Note 12 – Segment Information , to present significant

expenses that are included within cost of revenue, by reportable segment, which are presented to the CODM.

December 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

(Subtopic 220-40) (“ASU 2024-03”).

ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified

information about certain costs and expenses specified in the updated guidance.

ASU 2024-03 is effective for annual reporting periods

beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

Company is evaluating the impact the updated guidance will have on its disclosures.

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

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

present or future financial statements.

present or future consolidated financial statements.

3 - Changes in Accounting Principle

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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).

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 consolidated 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

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 year of adoption and moving forward.

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.

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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.

and accuracy of the consolidated financial statements.

adoption of ASU No.

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to approximately $ 4,986,000 .

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

4 – Crypto Assets

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

of Crypto Assets Held

following tables present the Company’s crypto assets held as of December 31, 2024 and 2023:

Schedule of Crypto Assets Held

Fair Market Value

As of December 31, 2024

Fair Market Value

Ethereum (ETH)

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Axie Infinity (AXS)

NEAR Protocol (NEAR)

Polkadot (DOT)

Rocket Pool (RPL)

Total as of December 31, 2024

Fair Market Value

As of December 31, 2023

Fair Market Value

Ethereum (ETH)

Cosmos (Atom)

Avalanche (Avax)

Axie Infinity (AXS)

Polygon (Matic)

5 unchanged sentences

Band Protocol (BAND)

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

Total December 31, 2023

following table presents a roll forward of the Company’s crypto asset activities for the years ended December 31, 2024 and 2023:

of Crypto Asset Activities

31, 2021 - Book Value

of crypto assets

earned from staking

of crypto assets

December 31, 2022 - Book Value

Opening adjustment for change in accounting principle

Purchases of crypto assets

Rewards earned from blockchain infrastructure operations

Sales of crypto assets

( 1,994,851 )

gains on sale of crypto assets

Realized gains on sale of crypto assets

Realized losses on sale of crypto assets

Change in unrealized appreciation (depreciation) of crypto assets

December 31, 2023 - Fair Market Value

Purchases of crypto assets

Rewards earned from blockchain infrastructure operations

Sales of crypto assets

Crypto payments

( 2,765,731 )

31, 2022 - Book Value

adjustment for change in accounting principle

of crypto assets

earned from staking

of crypto assets

Realized gains on sale of crypto assets

Realized losses on sale of crypto assets

( 1,173,008 )

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

Change in unrealized appreciation (depreciation) of crypto assets

December 31, 2024 - Fair Market Value

TO CONSOLIDATED FINANCIAL STATEMENTS

5 - Fair Value of Financial Assets and Liabilities

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

of Fair Value of Assets and Liabilities Valued on Recurring Basis

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

Fair Value Measured at December 31, 2024

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Quoted prices

Crypto Assets

1 unchanged sentence

Fair Value Measured at December 31, 2023

Total at December 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Quoted prices

Crypto Assets

Warrant Liabilities

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

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

for the years ended December 31, 2023 and 2022, that are measured at fair value on a recurring basis:

Schedule of Changes in Fair Value and Other

Adjustments of Warrants

Value of Level 3 Financial Assets

Beginning balance

appreciation (depreciation)

Ending balance

Value of Level 3 Financial Liabilities

Beginning balance

Warrant liabilities classification

value adjustment of warrant liabilities

( 1,638,750 )

Ending balance

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

3 Valuation Techniques

12 unchanged sentences

Changes in the values of the warrant liabilities are recorded in “change in fair value

of warrant liabilities” in the Company’s statements of operations.

of warrant liabilities” in the Company’s consolidated statements of operations.

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

36 unchanged sentences

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

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

for the years ended December 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

Beginning balance

Unrealized appreciation (depreciation)

Ending balance

Value of Level 3 Financial Liabilities

Beginning balance

Warrant liabilities classification

Fair value adjustment of warrant liabilities

Ending balance

TO CONSOLIDATED FINANCIAL STATEMENTS

6 - Stockholders’ Equity (Deficit)

6 unchanged sentences

& Co., LLC, as agent (“H.C.

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”).

The Company will pay H.C.

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

of the Company’s Common Stock through H.C.

Wainwright, as agent.

Initially, the aggregate offering price of shares issuable under

the ATM Agreement was $ 98,767,500 (the “Shares”).

October 4, 2024, the Company’s new Form S-3 registration statement became effective, increasing the total amount of securities

that may be offered and sold under the prospectus to $ 250,000,000 .

Company will pay H.C.

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

5 unchanged sentences

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

Based Payments

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

4 unchanged sentences

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.

For the year ended December 31, 2024, 87,498 shares of common

stock approximating $ 136,000 were issued to independent directors related to the quarterly approved issuances.

For the year ended December

31, 2023, 122,124 shares of common stock approximating $ 150,000 were issued to independent directors related to the quarterly approved

Issued in Lieu of Cash Compensation

September 12, 2024, the Board approved a resolution to allow all employees, officers, and directors of the Company to elect to receive

up to three months of their cash compensation in advance in the form of restricted common stock.

This decision aimed to prevent disruptions

in operations that could arise from the need to unstake and sell cryptocurrency to meet upcoming cash requirements.

The approval of this

equity compensation plan was in response to extensive delays (over 4 months) by the U.S.

Securities and Exchange Commission in reviewing

our responses to a comment letter that contained seven comments primarily comprised of future filing requests and immaterial comments.

On September 13, 2024, in a collective effort to support the Company’s operations and strategy, all employees, directors, and officers

(collectively 9 individuals) accepted part of their compensation as equity.

This resulted in the issuance of 380,399 restricted common

stock shares approximating $ 430,000 .

Of the shares issued, 32,429 were returned to net settle the issuance and pay related taxes, resulting

in a net share issuance of 347,970 shares.

Bonus Payments

the year ended December 31, 2024, 414,148 shares of common stock were issued to officers related to payment of 2023 accrued bonus compensation

totaling approximately $ 675,000 .

Of the shares issued, 43,220 shares were returned to net settle the issuance and pay related taxes,

resulting in a net share issuance of 370,928 shares.

the year ended December 31, 2023, 410,317 shares of common stock were issued to officers related to payment of 2022 accrued bonus compensation

totaling approximately $ 264,000 .

Of the shares issued, 55,604 shares were returned to net settle the issuance and pay related taxes,

resulting in a net share issuance of 354,713 shares.

December 12, 2024, the Board of Directors approved the issuance of 12,500 shares of restricted common stock to a non-executive employee

as a discretionary bonus.

These shares will vest in equal installments over five years , with 2,500 shares vesting at the end of each

calendar year, beginning December 31, 2025, and continuing through December 31, 2029.

of Restricted Stock to Service Providers

1 unchanged sentence

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

TO FINANCIAL STATEMENTS

TO CONSOLIDATED 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

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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 .

1 unchanged sentence

valuation model to determine the fair value of the preferred stock.

the year ended December 31, 2023, an additional 25,026 shares of Series V were issued related to the vesting of eligible employee RSUs.

September 6, 2024, at the 2024 Annual Meeting the Company’s stockholders voted to approve an amendment to the Certificate of Designation

of the Series V to provide the Board the discretion to convert each share of the Series V into one share of Common Stock.

The Board has

not filed an amendment to the Series V Certificate of Designation nor chosen to convert the Series V.

the year ended December 31, 2024, the Company issued 465,402 additional shares of Series V Preferred Stock in connection with the vesting

of employee RSUs.

Of these, 367,108 shares were unrestricted, and 98,294 shares were restricted and remain subject to time-based vesting

The restricted shares of Series V will vest over a period of one to three years, with full vesting expected by December 31,

Equity Incentive Plan

3 unchanged sentences

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

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

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 option.

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 option.

The Company’s expected term represents the weighted-average period that the Company’s stock options are expected

to be outstanding.

The expected term is based on the expected time to post-vesting exercise of options by employees.

The Company uses

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

summary of options activity under the Company’s stock option plan for the years ended December 31, 2024 and 2023 are presented

Summary of Option Activity

Average Exercise Price

Intrinsic Value

Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2021

Contractual Life (in years)

Options outstanding as of December 31, 2022

Employee options granted

Employee options expired

options forfeited

Outstanding as of December 31, 2022

Employee options forfeited

Options outstanding as of December 31, 2023

Options vested and exercisable as of December 31, 2023

Average Exercise Price

Intrinsic Value

Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2022

Life (in years)

Options outstanding as of December 31, 2023

Employee options granted

Employee options forfeited

Outstanding as of December 31, 2023

Employee options expired

Options outstanding as of December 31, 2024

Options vested and exercisable as of December 31, 2024

TO FINANCIAL STATEMENTS

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

The restricted

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

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

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 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

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.

following weighted-average assumptions were used to estimate the fair value of options granted during the years ended December 31, 2024

and 2023, using the Black-Scholes model:

Weighted-Average Assumptions Used to Estimate Fair Value

the Year Ended

Exercise price

Expected stock price volatility

Risk-free rate of interest

assumptions are consistent with the methods described in Note 2 – Summary of Significant Accounting Policies .

TO CONSOLIDATED FINANCIAL STATEMENTS

December 29, 2023, upon recommendation of the Compensation Committee, the Board approved the grant of 50,000 RSUs to each of its executive

officers (Messrs.

Allen, Handerhan, Prevoznik and 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 forfeited their respective 50,000 RSUs for personal reasons, effective January 1, 2024.

Subsequently, effective January 12, 2024, the Board approved the grant of 50,000 additional RSUs to 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.

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.

Incentive Plan (LTI) RSUs

January 2, 2022, the Board approved grants of RSUs (“LTI RSUs”) under the Company’s Long-Term Incentive Plan (“LTI”)

to executive officers.

These RSUs were initially subject to vesting upon achievement of market capitalization

thresholds of $ 100 million, $ 150 million, $ 200 million, and $ 400 million, sustained for 30 consecutive days.

On February 22, 2022, upon

the appointment of the Chief Technology Officer, additional LTI RSUs were granted under the same terms.

January 1, 2023, the Board approved an amendment to the LTI plan, reducing the market capitalization thresholds to $ 50 million, $ 100

million, $ 150 million, and $ 300 million.

The modification resulted in an increase in fair value of $ 83,000 , which was added to unrecognized

compensation expense in accordance with ASC 718 – Share-Based Compensation .

fair value of market-based LTI RSUs is estimated using a Monte Carlo simulation.

The following assumptions were used to determine fair

value as of the January 1, 2023, modification date:

Weighted-Average Assumptions Used to Estimate Fair Value

January 1, 2023

(Modification)

Vesting Hurdle Price

$ 3.81 - $ 30.52

Expected stock price volatility

Risk-free rate of interest

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

6 unchanged sentences

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

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

TO FINANCIAL STATEMENTS

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

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

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

(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.

Historical volatility

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

Interest Rate :

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

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

the expected term of the RSUs.

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

The expected term is based on the stipulated 5 -year period from the grant date until the market-based criteria are achieved.

If the market-based

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

Hurdle Price:

The vesting hurdle prices are determined by taking the vesting Market Cap criteria divided by the shares outstanding

as of the valuation dates.

September 30, 2022, Mr.

David Garrity resigned as a director of BTCS, Inc.

The Board 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 .

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

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

December 12, 2024, the Company achieved the $ 50 million market capitalization threshold, triggering the vesting of certain performance-based

LTI RSUs granted to the Company’s executive officers.

As a result of meeting this threshold, 342,082 shares of common stock and

342,082 shares of Series V preferred stock vested and were issued to executive officers.

Of the common stock, 45,479 shares of common

stock were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 296,603 shares of common stock.

addition, 38,242 restricted shares of common stock and 38,242 restricted shares of Series V were issued as a result of achieving the

performance milestone under the LTI plan.

These restricted shares remain subject to time-based vesting conditions and will vest over

a two -year period, with full vesting expected by December 31, 2026.

TO CONSOLIDATED FINANCIAL STATEMENTS

Vesting of RSUs and Conversion to Restricted Common Stock

December 12, 2024, the Board approved a resolution allowing recipients of RSUs with time-based vesting criteria to elect to accelerate

vesting and convert their RSUs into restricted shares of Common Stock.

The restricted shares issued under this resolution remain subject

to the original time-based vesting schedules of the RSUs.

Additionally, the Board approved a resolution to accelerate the vesting of

RSUs that were originally scheduled to vest on December 31, 2024 without restriction.

This action was taken to reduce the administrative

burden on the Company and align the vesting date with the issuance of other accelerated RSUs.

December 12, 2024, the vesting of 220,052 RSUs was accelerated and converted into restricted shares of Common Stock issued to executive

As a portion of these RSUs was eligible for the Series V share dividend, an additional 60,052 restricted shares of Series V

preferred stock were issued.

These restricted shares retained their original time-based vesting schedules, ranging from one to five years.

Additionally,

65,026 shares of unrestricted Common Stock and, due to dividend eligibility, 25,026 unrestricted shares of Series V preferred stock were

issued as a result of the Board-approved accelerated vesting of outstanding RSUs originally scheduled to vest on December 31, 2024.

the total issuances related to the accelerated vesting of RSUs on December 12, 2024, 62,718 unrestricted shares were returned to net

settle the issuance and pay related taxes, resulting in a net share issuance of 2,308 shares of unrestricted Common Stock.

following table summarizes restricted Common Stock activity under the 2021 Plan for the years ended December 31, 2024 and 2023:

of Restricted Stock

Restricted Shares

of Common Stock

Outstanding and nonvested as of December 31, 2023

Converted from restricted stock units

Outstanding and nonvested as of December 31, 2024

Activity Summary

following table summarizes RSU activity under the 2021 Plan for the years ended December 31, 2024 and 2023:

Summary of Restricted Stock

of Restricted Stock Units

Average Grant Date Fair Value

Nonvested at December 31, 2022

Nonvested at December 31, 2023

TO FINANCIAL STATEMENTS

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:

Nonvested as of December 31, 2022

Nonvested as of December 31, 2023

Vested and converted to restricted common shares

Nonvested as of December 31, 2024

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

compensation expenses for the years ended December 31, 2024 and 2023 were as follows:

Schedule of Stock-based Compensation Expense

the Year Ended December 31,

Employee bonus stock awards

For the Year Ended December 31,

Employee stock option awards

Employee restricted stock unit awards

Non-employee restricted

Employee stock-based salary payments and bonus awards

Non-employee restricted stock awards

Purchase Warrants

6 unchanged sentences

Outstanding as of December 31, 2024

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

7 – Executive Compensation

19 unchanged sentences

Allen’s annual base salary was $ 429,933 .

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

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

Handerhan – Chief Operating Officer and Director

21 unchanged sentences

Handerhan’s annual base salary was $ 300,307 .

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

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

NOTES TO FINANCIAL STATEMENTS

Prevoznik – Chief Financial Officer

19 unchanged sentences

Prevoznik’s annual base salary was $ 245,706 .

January 1, 2025, the Board approved a salary increase for Michael Prevoznik to $ 260,000 , effective January 1, 2025.

Paranjape – Chief Technology Officer

17 unchanged sentences

the year ended December 31, 2024 Mr.

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

TO FINANCIAL STATEMENTS

Paranjape’s annual base salary was $ 245,706 .

February 3, 2025, Mr.

Paranjape resigned as Chief Technology Officer of BTCS Inc.

TO CONSOLIDATED FINANCIAL STATEMENTS

Termination/Severance

34 unchanged sentences

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

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

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

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

TO CONSOLIDATED FINANCIAL STATEMENTS

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

for fiscal year 2023.

Under the ACIP, executives were eligible to receive bonuses of up to 64 % to 128 % of their base salary, contingent

on achieving key performance milestones established by the Board.

Bonuses were payable in cash and/or equity, at the sole discretion

of the Board, and based on the closing price of the Company’s Common Stock on December 31, 2023.

December 29, 2023, the Board approved aggregate payouts of $ 705,061 for fiscal year 2023 performances allocated as follows:

of Annual Performance Layout

Bonuses for the Year Ended

December 31, 2023

Charles Allen - CEO

2 unchanged sentences

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

Total Performance Bonuses Earned

Of the total performance bonuses earned by Officers for fiscal year 2023,

$ 30,000 was paid in cash, with the remainder awarded in 414,148 shares of restricted Common Stock.

April 11, 2024, the Board approved the ACIP for fiscal year 2024, increasing the potential bonus range to 163 % to 195 % of base salary.

As in prior years, bonuses were contingent on achieving performance milestones established by the Board and payable in cash, incentive

stock options, and/or restricted shares of Common Stock, at the sole discretion of the Board, and based on the closing price of the Company’s Common Stock on December

January 1, 2025, the Board approved aggregate payouts of $ 1,916,909 for fiscal year 2024 performance, allocated as follows:

Bonuses for the Year Ended

December 31, 2024

Charles Allen - CEO

Michal Handerhan - COO

Michael Prevoznik - CFO

Paranjape - CTO

Total Performance Bonuses

TO FINANCIAL STATEMENTS

Manish Paranjape - CTO

Total Performance Bonuses Earned

Of the total performance bonuses

earned by Officers for fiscal year 2024, approximately $ 200,000 was paid in cash, with the remainder awarded in 319,930 shares of restricted

Common Stock and 1,234,795 incentive stock options.

The equity awards disclosed here pertain only to Officers, whereas Footnote 6 –

Stockholders’ Equity includes total equity awards granted to both Officers and other employees.

TO CONSOLIDATED FINANCIAL STATEMENTS

8 – Accrued Expenses

2 unchanged sentences

Accrued compensation

Accounts payable and

accrued expenses

Accounts payable and accrued expenses

compensation and related expenses include approximately $ 3,907,000 and $ 710,000 related to performance bonus accruals as of December

31, 2024 and 2023, respectively.

accrued compensation balance for 2024 reflects stock-based compensation expenses associated with the performance bonuses approved by

the Board on January 1, 2025 as well as discretionary bonuses accrued for non-officer employees.

While the total bonus amounts for officers

approved for fiscal year 2024 were $ 1,916,909 (as disclosed in Note 7 – Executive Compensatio n), the portion allocated to

incentive stock options was recognized at a higher expense for accounting purposes, as required under U.S.

The stock-based compensation

charges for the options component were determined using the Black-Scholes valuation model, resulting in a higher accrued amount.

9 – Employee Benefit Plans

9 unchanged sentences

an Entity’s Ability to Continue as a Going Concern ”.

The Company’s financial statements have been prepared assuming

that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities

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

$ 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’s consolidated financial statements have been

prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation

of liabilities in the normal course of business.

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

approximately $ 139,948,000 as of December 31, 2024, and net cash used in operating activities of approximately $ 3,530,000 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.

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

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

funded through the sale of common stock equity.

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

operations, as well as an ongoing requirement for additional capital investment.

The Company expects that it will need to raise additional

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

The Company expects to seek additional funding through

debt or equity financing.

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

TO FINANCIAL STATEMENTS

however, the Company’s cash position and

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

TO CONSOLIDATED FINANCIAL STATEMENTS

11 - Income Taxes

Company had no income tax expense due to operating loss incurred for the years ended December 31, 2023 and 2022.

Company had no income tax expense due to operating losses incurred for the years ended December 31, 2024 and 2023.

tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets

1 unchanged sentence

of Deferred Tax Assets and Liabilities

of December 31,

As of December 31,

Deferred tax assets:

Federal net-operating

loss carryforward

State net-operating loss

Other (non-qualified

stock options)

Federal net-operating loss carryforward

State net-operating loss carryforward

Other (non-qualified stock options)

R&D Capitalization Sec 174

Total deferred tax assets

5 unchanged sentences

( 3,381,131 )

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 .

Deferred tax assets, net

December 31, 2024, the Company had net operating loss (“NOL”) carry forwards for federal and state tax purposes of approximately

$ 33,665,000 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 Federal NOLs that were generated in the tax year December 31, 2014 in the amount of $ 1,290,156 will expire after December

9 unchanged sentences

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

the deferred tax assets.

of December 31, 2024, the Company had a deferred tax liability related to the unrealized gains on its crypto assets amounting to approximately

$ 2,338,000 .

The final tax impact could significantly differ from current estimates due to future market fluctuations and changes in tax

Management of the Company has recorded a full valuation reserve, since it is more likely than not that no benefit will be realized for

the deferred tax assets.

assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of

the deferred tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future

taxable income during the period in which those temporary differences become deductible.

Management considers the scheduled reversal

of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment.

In case the deferred tax

assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax

assets at December 31, 2023 and 2022.

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

The ultimate realization of deferred tax assets depends on the generation of future taxable

income during the period in which those temporary differences become deductible.

Management evaluates the scheduled reversal of deferred

tax liabilities, projected future taxable income, and available tax planning strategies in making this assessment.

a result of the deferred tax liability arising from unrealized crypto gains, the valuation allowance was partially reduced by approximately

$ 387,000 as of December 31, 2024.

However, due to the Company’s continued history of operating losses and lack of clear evidence

of sustained profitability, a full release of the valuation allowance remains unjustified at this time.

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

1 unchanged sentence

of Income Tax Rate

the years ended December 31,

For the years ended December 31,

Statutory Federal Income Tax Rate

1 unchanged sentence

Federal tax rate change

Change in Valuation

Income Taxes Provision

Change in Valuation Allowance

Income Taxes Provision (Benefit)

Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2024 and 2023.

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

12 – Segment Information

Company operates as a single reportable segment focused on blockchain infrastructure, which consists of two primary revenue-generating

Validator Node Operations (“NodeOps”) and Ethereum Block Building (“Builder+”).

NodeOps includes

revenue generated from staking rewards earned by BTCS’s own proof-of-stake crypto assets, as well as validator fees collected from

third-party delegations.

Builder+ generates revenue from gas fees embedded in successfully finalized Ethereum blocks constructed by the

profit (loss) is the primary segment performance measure reviewed by the CODM for operational and capital allocation decisions.

following tables present segment revenue and gross profit (loss), including the significant expense items reviewed by the CODM, for the

years ended December 31, 2024 and 2023:

of Segment Revenue and Gross Profit (loss)

For the Year Ended December 31, 2024

Revenues from blockchain infrastructure operations

Cost of Revenues

Validator Payments

Cloud and server hosting costs

Compensation costs

Third-party contractor support costs

Gross profit (loss)

$ ( 487,627 )

For the Year Ended December 31, 2023

Revenues from blockchain infrastructure operations

Cost of Revenues

Validator Payments

Cloud and server hosting costs

Compensation costs

Third-party contractor support costs

Gross profit (loss)

following table reconciles total segment gross profit to consolidated net income (loss):

For the Year Ended December 31,

Total operating expenses

( 9,874,805 )

( 5,296,770 )

Other income (expense)

Net income (loss)

$ ( 1,271,174 )

13 - Subsequent Events

Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued.

Based upon the

evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure

in the financial statements other than disclosed.

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), 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 .

Company evaluates events that have occurred after the balance sheet date but before the consolidated financial statements are issued.

Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment

or disclosure in the consolidated financial statements other than disclosed.

During the period from January

1, 2025 to March 17, 2025, the Company sold a total of 33,352 shares of Common Stock under the ATM Agreement for aggregate total gross

proceeds of approximately $ 69,000 at an average selling price of $ 2.08 per share, resulting in net proceeds of approximately $ 67,000 after

deducting commissions and other transaction costs.

of 2024 Performance Bonuses

January 1, 2025, the Company issued 329,110 shares of common stock to officers and employees as part of the payment of accrued bonus

compensation for the year ended December 31, 2024.

The total fair value of the shares issued was approximately $ 813,000 based on the

Company’s closing stock price on the issuance date.

Of the shares issued, 33,731 shares were returned to net settle the issuance

and pay related taxes, resulting in a net share issuance of 295,379 shares of common stock.

addition to the stock issuance, the Company paid approximately $ 221,000 in cash bonuses to officers and employees, consistent with the

terms of the 2024 Annual Incentive Plan.

part of the payment of accrued bonus compensation for the year ended December 31, 2024, the Company also issued 1,312,068 options to

employees and officers.

The options were granted under the Company’s 2021 Equity Incentive Plan with an expiration term of 7 years.

fair value of the options was estimated at approximately $ 2,872,000 using the Black-Scholes valuation model with the following assumptions:

of Fair Value of the Options Using the Black-scholes Valuation Model

Exercise Price

Expected Stock Price Volatility

Risk-Free Interest Rate

Expiration Term (Years)

Dividend Yield

total compensation expense associated with the 2024 performance bonuses was accrued as of December 31, 2024, in accordance with ASC 718

– Share-Based Compensation and ASC 710 – Compensation.

The settlement of the bonuses in 2025 via a combination of cash, shares,

and options aligns with the terms of the 2024 Annual Incentive Plan.

There is no additional financial impact in 2025 related to the settlement,

as the full expense was recognized in 2024.

LTI RSU Issuance

On January 1, 2025, the Board

approved the grant of 150,000 RSUs under the Company’s Long-Term Incentive Plan (“LTI”) to a non-officer employee.

RSUs are subject to both market capitalization and time-based vesting conditions.

vest in three equal tranches of 50,000 RSUs each, based on the Company achieving and sustaining specific market capitalization thresholds

for 30 consecutive days on or before December 31, 2026, as follows:

Schedule of Restricted Stock Units

Market Cap Vesting Thresholds

for which the market capitalization condition is not met by December 31, 2026, will expire.

tranche in which the market capitalization condition is achieved, the RSUs remain subject to a time-based vesting schedule, with 20 % of

eligible RSUs vesting annually over five years , beginning on each December 31, 2025 through 2029, provided the grantee remains in continuous

service through each vesting date.

value of these market-based RSUs was determined using a Monte Carlo simulation.

The following assumptions were used to determine fair

value as of the grant date, January 1, 2025:

Schedule of Weighted-Average Assumptions Used to Estimate Fair Value

January 1, 2025

Vesting Hurdle Price

5.26 - $ 15.79

Expected stock price volatility

Risk-free rate of interest

will recognize compensation expense for these RSUs over the requisite service period, subject to acceleration upon meeting the market

capitalization criteria.

Accelerated Vesting of RSUs

and Conversion to Restricted Common Stock

13, 2025, the vesting of 1,170,834 RSUs was accelerated and converted into restricted shares of Common Stock issued to executive officers

and employees.

As a portion of these RSUs was eligible for the Series V share dividend, an additional 1,020,834 restricted shares of Series

V preferred stock were issued.

issued restricted shares of Common Stock and Series V preferred stock retain their original market capitalization-based vesting conditions,

as well as their time-based vesting schedules, which range from one to five years .

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