UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

☐ TRANSITION REPORT ~~PURSUANT TO~~UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ~~_______________.~~_______________.

Commission file number: 001-40792

BTCS Inc.

(Exact name of registrant as specified in its charter)

Nevada

90-1096644

(State or other jurisdiction of

of incorporation or organization)

(I.R.S. Employer

Identification No.)

9466 Georgia Avenue #124

, Silver Spring, MD

20910

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area ~~code:~~ code (202) 430-6576

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001

BTCS

The Nasdaq Stock Market

(The Nasdaq Capital Market)

Securities registered under Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) ~~has~~ filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☒ No ☐ ~~No.~~

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act). Yes ☐ No ☒

~~Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.~~ As of November ~~4, 2021,~~8, 2022, there were ~~10,275,258~~13,077,390 shares of common stock, par value $0.001, issued and outstanding.

BTCS INC.

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION

ITEM 1	Financial Statements	4

	Condensed Balance Sheets as of September 30, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021	4

	Condensed Statements of Operations for the ~~three~~Three and ~~nine months ended~~Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	5

	Condensed Statements of Changes in Stockholders’ ~~(Deficit)~~ Equity for the ~~three~~Three and ~~nine months ended~~Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	6

	Condensed Statements of Cash Flows for the ~~nine months ended~~Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	7

	Notes to the Unaudited Condensed Financial Statements	8~~8-21~~-19

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2220

ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	28

ITEM 4	Controls and Procedures	28

PART II - OTHER INFORMATION

ITEM 1	Legal Proceedings	29

ITEM 1A	Risk Factors	29

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	29

ITEM 3	Defaults Upon Senior Securities	29

ITEM 4	Mine Safety Disclosures	29

ITEM 5	Other Information	29

ITEM 6	Exhibits	29

	Signature	30

BTCS INC.

As used in this Quarterly Report on Form 10-Q (this “Quarterly Report”), the terms “we,” “us,” “our,” the “Company,” the “Registrant,” and “BTCS Inc.,” mean BTCS Inc. and its consolidated subsidiaries, unless otherwise indicated.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This ~~Quarterly Report, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations,~~report contains forward-looking statements, including our liquidity, our ~~beliefs regarding~~belief that our ~~disclosure on~~revenues will increase, our blockchain infrastructure efforts will form the ~~effectiveness~~core growth for our Digital Asset Platform, our plans and development of our ~~disclosure controls~~Digital Asset Platform and ~~procedures~~the integration of Staking-as-a-Service, our Digital Asset treasury strategy, our belief regarding blockchain, plans to expand the proof-of-stake (“PoS”) operations and ~~internal controls over financial reporting, and~~other future business plans. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “may,” “potential,” “continues,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The results anticipated by any or all of these forward-looking statements might not occur. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the rewards and costs associated with staking or validating transactions on blockchains, regulatory issues related to our business model, a drop in the price of our Digital Assets, significant decrease in the value of our digital assets and rewards, loss or theft of the private withdrawal keys resulting in the complete loss of digital assets and reward, and others which are contained in our filings with the SEC, including our Form 10-K for the year ended December 31, ~~2020 and our Prospectus filed with the SEC on February 16, 2021 and the Prospectus Supplement dated September 14,~~ 2021. Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

PART I - FINANCIAL INFORMATION

ITEM 1 Financial Statements

BTCS Inc.

~~Condensed~~ Balance Sheets

September 30, December 31,
2021 2020
(Unaudited)
Assets:
Current assets:
Cash $ 658,931 $ 524,135
Digital assets/currencies 3,159,976 995,652
Prepaid expense 472,389 31,875
Total current assets 4,291,296 1,551,662

Other assets:
Property and equipment, net 4,330 230
Staked digital assets/currencies 8,838,046 -
Total other assets 8,842,376 230

Total Assets $ 13,133,672 $ 1,551,892

Liabilities and Stockholders’ Equity:
Accounts payable and accrued expense $ 102,122 $ 26,288
Accrued compensation 1,501 350,376
Convertible notes payable, net 848,685 131,941
Warrant liabilities 3,705,000 -
Total current liabilities 4,657,308 508,605

Stockholders’ equity:
Preferred stock; 20,000,000 shares authorized at $0.001 par value: -
Series C-1 Convertible Preferred stock: 0 and 29,414 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively; Liquidation preference $0.001 per share - 29
Series C-2 Convertible Preferred stock: 0 shares issued and outstanding at September 30, 2021 and December 31, 2020; Liquidation preference $0.001 per share - -
Common stock, 97,500,000 shares authorized at $0.001 par value, 10,102,711 and 4,201,035 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively 10,103 4,201
Additional paid in capital 143,472,733 120,578,944
Accumulated deficit (135,006,472 ) (119,539,887 )
Total stockholders’ equity 8,476,364 1,043,287

Total Liabilities and stockholders’ equity $ 13,133,672 $ 1,551,892

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

~~BTCS Inc.~~

~~Condensed Statements of Operations~~

~~(Unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020

Revenues
Validator revenue $ 323,376 $ - $ 776,399 $ -
Total revenues 323,376 - 776,399 -

Cost of revenues
Validator expense 71,690 - 145,935 -
Gross profit 251,686 - 630,464 -

Operating expenses:
General and administrative $ 282,558 $ 650,049 $ 1,149,506 $ 935,118
Research and development 273,909 - 602,178 -
Compensation and related expenses 4,747,106 228,540 13,788,556 469,935
Marketing 7,559 1,365 10,345 5,420
Total operating expenses 5,311,132 879,954 15,550,585 1,410,473

Other (expenses) income:
Interest expense (58,521 ) (96,068 ) (172,603 ) (35,289 )
Amortization on debt discount (581,973 ) - (1,716,744 ) (186,199 )
Change in fair value of warrant liabilities 2,066,250 - 2,066,250 -
Impairment loss on digital assets/currencies (208,647 ) (29,302 ) (3,777,785 ) (162,254 )
Realized gains (loss) on digital asset/currency transactions - - 3,054,418 (1,682 )
Total other income (expenses) 1,217,109 (125,370 ) (546,464 ) (385,424 )

Net loss $ (3,842,337 ) $ (1,005,324 ) $ (15,466,585 ) $ (1,795,897 )
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock (13,188 ) - (45,541 ) -
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock - - (5,020,883 ) -
Net loss attributable to common stockholders $ (3,855,525 ) $ (1,005,324 ) $ (20,533,009 ) $ (1,795,897 )

Net loss per share attributable to common stockholders, basic and diluted $ (0.59 ) $ (0.33 ) $ (3.63 ) $ (0.66 )

Weighted average number of common shares outstanding, basic and diluted 6,518,645 3,083,246 5,660,966 2,700,947

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

~~BTCS Inc.~~

~~Statements of Changes in Stockholders’ (Deficit) Equity~~

~~(Unaudited)~~

~~For the Three Months Ended September 30, 2021~~

Series C-1 Convertible Series C-2 Convertible Additional Total Stockholders’
Preferred Stock Preferred Stock Common Stock Paid-in Accumulated Equity
Shares Amount Shares Amount Shares Amount Capital Deficit (Deficit)
Balance June 30, 2021 - $ - 1,100,000 $ 6,203,101 5,712,215 $ 5,712 $ 137,959,473 $ (131,164,135 ) $ 13,004,151
Common stock issued including equity commitment fee, net - - - - 32,963 33 199,839 - 199,872
Conversion of convertible notes
Conversion of convertible notes, shares
Beneficial conversion features associated with convertible notes payable
Issuance of common stock, net of offering cost / At-the-market offering - - - - 41,290 41 219,705 - 219,746
Issuance of common stock and warrants for cash, net
Issuance of common stock and warrants for cash, net, shares
Warrant liabilities value related to Issuance of common stock - - - - (5,771,250 ) - (5,771,250 )
Issuance of Series C-2 convertible preferred stock
Issuance of Series C-2 convertible preferred stock, shares
Conversion of Series C-2 Convertible Preferred stock (1,100,000 ) (6,216,289 ) 4,011,766 4,012 6,212,277 - -
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock - - - 13,188 - - (13,188 ) - -
Conversion of Series C-1 Convertible Preferred stock
Conversion of Series C-1 Convertible Preferred stock, shares
Beneficial conversion features associated with convertible notes payable
Beneficial conversion feature of Series C-2 convertible preferred stock
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock
Fractional shares adjusted for reverse split - 14,477 15 (15 ) - -
Warrant exercise
Warrant exercise, shares
Stock-based compensation - - - - 290,000 290 4,665,892 - 4,666,182
Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock
Net loss - - - - - - - (3,842,337 ) (3,842,337 )
Balance September 30, 2021 - $ - - $ - 10,102,711 $ 10,103 $ 143,472,733 $ (135,006,472 ) $ 8,476,364

~~For the Three Months Ended September 30, 2020~~

Series C-1 Convertible Additional Total Stockholders’
Preferred Stock Common Stock Paid-in Accumulated Equity
Shares Amount Shares Amount Capital Deficit (Deficit)
Balance June 30, 2020 29,414 $ 29 - 2,819,025 $ 2,819 $ 117,834,086 $ (117,774,366 ) $ 62,568
Common stock issued including equity commitment fee, net - - 485,395 485 828,796 - 829,281
Net loss - - - - - - (1,005,324 ) (1,005,324 )
Balance September 30, 2020 29,414 $ 29 - 3,304,420 $ 3,304 $ 118,662,882 $ (118,779,690 ) $ (113,475 )

~~For the Nine Months Ended September 30, 2021~~

Series C-1 Convertible Series C-2 Convertible Additional Total Stockholders’
Preferred Stock Preferred Stock Common Stock Paid-in Accumulated (Deficit)
Shares Amount Shares Amount Shares Amount Capital Deficit Equity
Balance December 31, 2020 29,414 $ 29 - $ - 4,201,035 $ 4,201 $ 120,578,944 $ (119,539,887 ) $ 1,043,287
Common stock issued including equity commitment fee, net - - - - 321,738 322 3,013,683 - 3,014,005
Issuance of common stock, net of offering cost / At-the-market offering - - - - 41,290 41 219,705 - 219,746
Issuance of common stock and warrants for cash, net - - - - 950,000 950 8,864,050 - 8,865,000
Warrant liabilities value related to Issuance of common stock - - - - - - (5,771,250 ) - (5,771,250 )
Issuance of Series C-2 convertible preferred stock - - 1,100,000 1,100,000 - - - - 1,100,000
Conversion of Series C-1 Convertible Preferred stock (29,414 ) (29 ) - - 19,609 20 9 - -
Conversion of Series C-2 Convertible Preferred stock - - (1,100,000 ) (6,216,289 ) 4,011,766 4,012 6,212,277 - -
Beneficial conversion features associated with convertible notes payable - - - - - - 1,000,000 - 1,000,000
Beneficial conversion feature of Series C-2 convertible preferred stock - - - (129,412 ) - - 129,412 - -
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock - - - 45,541 - - (45,541 ) - -
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock - - - 5,020,883 - - (5,020,883 ) - -
Fractional shares adjusted for reverse split - - 14,477 15 (15 ) - -
Warrant exercise - - - - 200,000 200 399,800 - 400,000
Stock-based compensation - - - - 342,796 342 13,892,542 - 13,892,884
Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock - - - 179,277 - - - - 179,277
Net loss - - - - - - - (15,466,585 ) (15,466,585 )
Balance September 30, 2021 - $ - - $ - 10,102,711 $ 10,103 $ 143,472,733 $ (135,006,472 ) $ 8,476,364

~~For the Nine Months Ended September 30, 2020~~

Series C-1 Convertible Additional Total
Preferred Stock Common Stock Paid-in Accumulated Stockholders’
Shares Amount Shares Amount Capital Deficit Deficit
Balance December 31, 2019 29,414 $ 29 - 1,983,047 $ 1,983 $ 116,798,021 $ (116,983,793 ) $ (183,760 )
Balance 29,414 $ 29 - 1,983,047 $ 1,983 $ 116,798,021 $ (116,983,793 ) $ (183,760 )
Common stock issued including equity commitment fee, net - - 1,180,989 1,181 1,384,313 - 1,385,494
Conversion of convertible notes - - 140,384 140 211,317 - 211,457
Beneficial conversion features associated with convertible notes payable - - - - 269,231 - 269,231
Net loss - - - - - - (1,795,897 ) (1,795,897 )
Balance September 30, 2020 29,414 $ 29 - 3,304,420 $ 3,304 $ 118,662,882 $ (118,779,690 ) $ (113,475 )
Balance 29,414 $ 29 - 3,304,420 $ 3,304 $ 118,662,882 $ (118,779,690 ) $ (113,475 )

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

~~BTCS Inc.~~

~~Condensed Statements of Cash Flows~~

~~(Unaudited)~~

2021 2020
For the Nine Months Ended
September 30,
2021 2020

Net Cash flows used from operating activities:
Net loss $ (15,466,585 ) $ (1,795,897 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense 443 895
Amortization on debt discount 1,716,744 186,199
Stock-based compensation 13,892,884 -
Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock 179,277
Validator revenue (776,399 ) -
Change in fair value of warrant liabilities (2,066,250 )
Purchase of non-productive digital assets/currencies (5,761,550 ) (808,355 )
Sale of non-productive digital assets/currencies 4,274,491 -
Realized gain on digital assets/currencies transactions (3,054,418 ) -
Impairment loss on digital assets/currencies 3,777,785 162,254
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (440,514 ) (11,466 )
Accounts payable and accrued expenses 168,546 13,015
Accrued compensation (348,875 ) 589,466
Net cash used in operating activities (3,904,421 ) (1,663,889 )

Net cash used in investing activities:
Purchase of productive digital assets/currencies for validating (9,462,279 ) - ��
Purchase of property and equipment (4,543 ) -
Net cash used in investing activities (9,466,822 ) -

Net cash provided by financing activities:
Proceeds from short term loan - 500,000
Proceeds from exercise of warrants 400,000 -
Proceeds from issuance of Series C-2 convertible preferred stock 1,100,000 -
Net proceeds from issuance of convertible notes 1,000,000 -
Net proceeds from issuance of common stock and warrants for cash 8,865,000 -
Net proceeds from issuance of common stock 3,014,005 1,385,494
Net proceeds from issuance common stock/ At-the-market offering 219,746 -
Payment to convertible notes principle and accrued interest (1,092,712 ) -
Net cash provided by financing activities 13,506,039 1,885,494

Net increase in cash 134,796 221,605
Cash, beginning of period 524,135 143,098
Cash, end of period $ 658,931 $ 364,703

Supplemental disclosure of non-cash financing and investing activities:
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock $ 45,541 $ -
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock $ 5,020,883 $ -
Conversion of Series C-1 Preferred Stock $ 20 $ -
Conversion of Series C-1 Preferred Stock $ 6,216,289
Beneficial conversion feature of Series C-2 convertible preferred stock $ 129,412 $ -
Beneficial conversion features associated with convertible notes payable $ 1,000,000 $ 269,231
Conversion of convertible note to common stock $ - $ 211,457

	September 30,			December 31,
	2022			2021
	(Unaudited)
Assets:
Current assets:
Cash	$	2,888,998		$	1,400,867
Digital assets/currencies		36,561			3,117,360
Staked digital assets/currencies		2,586,575			623,754
Prepaid expense		207,078			324,551
Total current assets		5,719,212			5,466,532

Other assets:
Property and equipment, net		12,330			9,783
Staked digital assets/currencies - long term		5,600,122			8,625,678
Total other assets		5,612,452			8,635,461

Total Assets	$	11,331,664		$	14,101,993

Liabilities and Stockholders’ Equity:
Accounts payable and accrued expense	$	104,631		$	138,716
Accrued compensation		212,571			7,334
Warrant liabilities		712,500			1,852,500
Total current liabilities		1,029,702			1,998,550

Stockholders’ equity:
Common stock, 97,500,000 shares authorized at $0.001 par value, 13,053,712 and 10,528,212 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		13,055			10,529
Additional paid in capital		160,374,041			147,682,384
Accumulated deficit		(150,085,134	)		(135,589,470	)
Total stockholders’ equity		10,301,962			12,103,443

Total Liabilities and Stockholders’ Equity	$	11,331,664		$	14,101,993

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

BTCS Inc.

Statements of Operations

(Unaudited)

	2022			2021			2022			2021
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021

Revenues
Validator revenue (net of fees)	$	344,196		$	323,376		$	1,421,560		$	776,399
Total revenues		344,196			323,376			1,421,560			776,399

Cost of revenues
Validator expense		82,203			71,690			313,972			145,935
Gross profit		261,993			251,686			1,107,588			630,464

Operating expenses:
General and administrative	$	432,956		$	282,558		$	1,595,296		$	1,149,506
Research and development		126,857			273,909			448,579			602,178
Compensation and related expenses		669,792			4,747,106			2,731,713			13,788,556
Marketing		8,765			7,559			74,249			10,345
Impairment loss on digital assets/currencies		145,247			208,647			12,347,472			3,777,785
Realized gains on digital asset/currency transactions		(20,126	)		-			(489,682	)		(3,054,418	)
Total operating expenses		1,363,491			5,519,779			16,707,627			16,273,952

Other income (expenses):
Interest expense		-			(58,521	)		-			(172,603	)
Amortization on debt discount		-			(581,973	)		-			(1,716,744	)
Change in fair value of warrant liabilities		71,250			2,066,250			1,140,000			2,066,250
Distributions to warrant holders		-			-			(35,625	)		-
Total other income (expenses)		71,250			1,425,756			1,104,375			176,903

Net loss	$	(1,030,248	)	$	(3,842,337	)	$	(14,495,664	)	$	(15,466,585	)
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock		-			(13,188	)		-			(45,541	)
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock		-			-			-			(5,020,883	)
Net loss attributable to common stockholders	$	(1,030,248	)	$	(3,855,525	)	$	(14,495,664	)	$	(20,533,009	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.08	)	$	(0.59	)	$	(1.15	)	$	(3.63	)

Weighted average number of common shares outstanding, basic and diluted		12,952,645			6,518,645			12,616,805			5,660,966

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

BTCS Inc.

Statements of Changes in Stockholders’ Equity

(Unaudited)

For the Nine Months Ended September 30, 2022

							Additional						Total
			Common Stock				Paid-in			Accumulated			Stockholders’
			Shares		Amount		Capital			Deficit			Equity
Balance December 31, 2021	-	-		10,528,212	$	10,529	$	147,682,384		$	(135,589,470	)	$	12,103,443
Issuance of common stock, net of offering cost / At-the-market offering				2,148,658		2,149		11,092,983			-			11,095,132
Stock-based compensation				376,842		377		2,233,231			-			2,233,608
Dividend distributions				-		-		(634,557	)		-			(634,557	)
Net loss	-	-		-		-		-			(14,495,664	)		(14,495,664	)
Balance September 30, 2022	-	-		13,053,712	$	13,055	$	160,374,041		$	(150,085,134	)	$	10,301,962

For the Nine Months Ended September 30, 2021

	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit			Equity
	Series C-1 Convertible						Series C-2 Convertible										Additional
	Preferred Stock						Preferred Stock						Common Stock				Paid-in			Accumulated			Total Stockholders’
	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit			Equity
Balance December 31, 2020		29,414		$	29			-		$	-			4,201,035	$	4,201	$	120,578,944		$	(119,539,887	)	$	1,043,287
Common stock issued including equity commitment fee, net		-			-			-			-			321,738		322		3,013,683			-			3,014,005
Issuance of common stock, net of offering cost / At-the-market offering		-			-			-			-			41,290		41		219,705			-			219,746
Issuance of common stock and warrants for cash, net		-			-			-			-			950,000		950		8,864,050			-			8,865,000
Warrant liabilities value related to Issuance of common stock		-			-			-			-			-		-		(5,771,250	)		-			(5,771,250	)
Issuance of Series C-2 convertible preferred stock		-			-			1,100,000			1,100,000			-		-		-			-			1,100,000
Conversion of Series C-1 Convertible Preferred stock		(29,414	)		(29	)		-			-			19,609		20		9			-			-
Conversion of Series C-2 Convertible Preferred stock		-			-			(1,100,000	)		(6,216,289	)		4,011,766		4,012		6,212,277			-			-
Beneficial conversion features associated with convertible notes payable		-			-			-			-			-		-		1,000,000			-			1,000,000
Beneficial conversion feature of Series C-2 convertible preferred stock		-			-			-			(129,412	)		-		-		129,412			-			-
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock		-			-			-			45,541			-		-		(45,541	)		-			-
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock		-			-			-			5,020,883			-		-		(5,020,883	)		-			-
Fractional shares adjusted for reverse split								-			-			14,477		15		(15	)		-			-
Warrant exercise		-			-			-			-			200,000		200		399,800			-			400,000
Stock-based compensation		-			-			-			-			342,796		342		13,892,542			-			13,892,884
Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock		-			-			-			179,277			-		-		-			-			179,277
Net loss		-			-			-			-			-		-		-			(15,466,585	)		(15,466,585	)
Balance September 30, 2021		-		$	-			-		$	-			10,102,711	$	10,103	$	143,472,733		$	(135,006,472	)	$	8,476,364

For the Three Months Ended September 30, 2022

							Additional					Total
			Common Stock				Paid-in		Accumulated			Stockholders’
			Shares		Amount		Capital		Deficit			Equity
Balance June 30, 2022	-	-		12,703,794	$	12,705	$	159,432,894	$	(149,054,886	)	$	10,390,713
Issuance of common stock, net of offering cost / At-the-market offering				318,070		318		490,374		-			490,692
Stock-based compensation				31,848		32		450,773		-			450,805
Dividend distributions				-		-		-		-			-
Net loss	-	-		-		-		-		(1,030,248	)		(1,030,248	)
Balance September 30, 2022	-	-		13,053,712	$	13,055	$	160,374,041	$	(150,085,134	)	$	10,301,962

For the Three Months Ended September 30, 2021

	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Deficit			Equity (Deficit)
	Series C-1 Convertible				Series C-2 Convertible										Additional						Total
	Preferred Stock				Preferred Stock						Common Stock				Paid-in			Accumulated			Stockholders’
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Deficit			Equity
Balance June 30, 2021		-	$	-		1,100,000		$	6,203,101			5,712,215	$	5,712	$	137,959,473		$	(131,164,135	)	$	13,004,151
Common stock issued including equity commitment fee, net		-		-		-			-			32,963		33		199,839			-			199,872
Issuance of common stock, net of offering cost / At-the-market offering		-		-		-			-			41,290		41		219,705			-			219,746
Warrant liabilities value related to Issuance of common stock						-			-			-		-		(5,771,250	)		-			(5,771,250	)
Conversion of Series C-2 Convertible Preferred stock						(1,100,000	)		(6,216,289	)		4,011,766		4,012		6,212,277			-			-
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock		-		-		-			13,188			-		-		(13,188	)		-			-
Fractional shares adjusted for reverse split									-			14,477		15		(15	)		-			-
Stock-based compensation		-		-		-			-			290,000		290		4,665,892			-			4,666,182
Net loss		-		-		-			-			-		-		-			(3,842,337	)		(3,842,337	)
Balance September 30, 2021		-	$	-		-		$	-			10,102,711	$	10,103	$	143,472,733		$	(135,006,472	)	$	8,476,364

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

BTCS Inc.

Statements of Cash Flows

(Unaudited)

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

	2022			2021
	For the Nine Months Ended
	September 30,
	2022			2021

Net Cash flows used from operating activities:
Net loss	$	(14,495,664	)	$	(15,466,585	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		2,862			443
Amortization on debt discount		-			1,716,744
Stock-based compensation		2,233,608			13,892,884
Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock		-			179,277
Validator revenue		(1,421,560	)		(776,399	)
Blockchain network fees (non-cash)		1,321			-
Change in fair value of warrant liabilities		(1,140,000	)		(2,066,250	)
Purchase of non-productive digital assets/currencies		-			(5,761,550	)
Sale of non-productive digital assets/currencies		2,547,322			4,274,491
Realized gain on digital assets/currencies transactions		(489,682	)		(3,054,418	)
Impairment loss on digital assets/currencies		12,347,472			3,777,785
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		117,473			(440,514	)
Accounts payable and accrued expenses		(37,842	)		168,546
Accrued compensation		205,237			(348,875	)
Net cash used in operating activities		(129,453	)		(3,904,421	)

Net cash used in investing activities:
Purchase of productive digital assets/currencies for validating		(9,274,055	)		(9,462,279	)
Sale of productive digital assets/currencies		432,716			-
Purchase of property and equipment		(5,408	)		(4,543	)
Net cash used in investing activities		(8,846,747	)		(9,466,822	)

Net cash provided by financing activities:
Dividend distributions		(630,801	)		-
Proceeds from exercise of warrants		-			400,000
Proceeds from issuance of Series C-2 convertible preferred stock		-			1,100,000
Net proceeds from issuance of convertible notes		-			1,000,000
Net proceeds from issuance of common stock and warrants for cash		-			8,865,000
Net proceeds from issuance of common stock		-			3,014,005
Net proceeds from issuance common stock/ At-the-market offering		11,095,132			219,746
Payment to convertible notes principle		-			(1,092,712	)
Net cash provided by financing activities		10,464,331			13,506,039

Net increase in cash		1,488,131			134,796
Cash, beginning of period		1,400,867			524,135
Cash, end of period	$	2,888,998		$	658,931

Supplemental disclosure of non-cash financing and investing activities:
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock	$	-		$	45,541
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock	$	-		$	5,020,883
Conversion of Series C-1 Preferred Stock	$	-		$	20
Conversion of Series C-2 Preferred Stock	$	-		$	6,216,289
Beneficial conversion feature of Series C-2 convertible preferred stock	$	-		$	129,412
Beneficial conversion features associated with convertible notes payable	$	-		$	1,000,000

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

BTCS Inc.

Notes to Unaudited Condensed Financial Statements

Note 1 - Business Organization and Nature of Operations

BTCS Inc. (formerly Bitcoin Shop, Inc.), a Nevada corporation (the “Company”) was incorporated in 2008. In February 2014, the Company entered the business of hosting an online e-commerce marketplace where consumers could purchase merchandise using ~~digital assets,~~Digital Assets, including Bitcoin. The Company is currently focused on blockchain and digital currency ecosystems. In late 2014 we shifted our focus towards our transaction verification service business, also known as ~~bitcoin~~Bitcoin mining, though in mid-2016 we ceased our mining operation at our North Carolina facility due to capital constraints. In January 2015, the Company began a rebranding campaign using its BTCS.com domain to better reflect its broadened strategy. The Company ~~recently~~ released ~~its~~a new website which included broader information on its strategy.

~~In the first quarter of 2021, the Company resumed its~~The Company’s blockchain infrastructure operations ~~(previously referred to as transaction verification services) with a focus~~focuses on securing ~~proof-of-stake~~next-generation blockchains and ~~anticipates this will be a core focus going forward. Blockchain infrastructure operations can broadly be defined as~~operating validator nodes on various proof of stake-based blockchain networks, earning ~~a reward for securing a blockchain~~rewards of additional Digital Assets by authenticating and validating transactions on ~~that blockchain.~~the networks. The Company is in the late stages of developing a ~~proprietary staking-as-a-service platform~~Digital Asset Platform that would enable ~~clients to stake and delegate supported cryptocurrencies through a non-custodial platform.~~

~~The Company is also developing a proprietary digital asset data analytics platform aimed at enabling~~ users to aggregate their Digital Asset portfolio holdings from multiple exchanges and wallets into a single platform to view and analyze performance, risk metrics, and potential tax implications. The internally developed platform utilizes ~~digital asset~~Digital Asset exchange APIs to read user data and does not allow for the trading of assets.

~~The Company employs~~ We also are developing an integrated proprietary Staking-as-a-Service feature on the Digital Asset Platform that would enable users to participate in asset leveraging through securing blockchain protocols and to stake and delegating supported cryptocurrencies to BTCS operated validator nodes through a digital asset treasury strategy with a primary focus on disruptive non-security protocol layer assets such as Bitcoin and Ethereum. The Company receives digital assets from its blockchain infrastructure business and acquires digital assets through open market purchases. The Company is not limiting its assets to a single type of digital asset and may hold a variety of digital assets. The Company will carefully review its purchases of digital securities to avoid violating the 1940 Act and seek to reduce potential liabilities under the federal securities laws.non-custodial platform.

The market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or may have greater resources than us.

Amendment to Articles of Incorporation

On August 12, 2021, the Company filed a Certificate of Change with the Nevada Secretary of State to affect a 1-for-10 reverse split of the Company’s class of ~~common stock~~Common Stock (the “Reverse Split”). The Certificate of Change became effective on August 13, 2021.

No fractional shares were issued in connection with the Reverse Split and all such fractional interests were rounded up to the nearest whole number of shares of ~~common stock.~~Common Stock. The Company now has 97,500,000 shares of ~~common stock~~Common Stock authorized. Numbers of shares of the Company’s preferred stock were not affected by the Reverse Split; however, the conversion ratios have been adjusted to reflect the Reverse Split. The financial statements and notes to the financial statements have been retroactively restated to reflect the Reverse Split.

Note 2 - Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements do not include all of the information and notes required by GAAP for annual financial statements, but in the opinion of the Company’s management, reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of results for athe full ~~year.~~year ended December 31, 2022. The unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, ~~2020.~~2021.

~~Note 3 -~~ ~~Liquidity, Financial Condition and Management’s Plans~~

The Company has commenced its planned operations but has limited operating activities to date. The Company has financed its operations since inception using proceeds received from investments from third-party investors as well as from officers and directors of the Company. ~~The Company has plans to continue to raise proceeds from sale of common stock and issuance of debt to fund operations as needed for the next twelve months.~~

~~During the nine months ended September 30, 2021, the Company received net proceeds of approximately $14.6~~ million from the issuance of: Series C-2 convertible preferred stock, a convertible note, common stock and warrants issued pursuant to the Purchase agreement, common stock issued pursuant to the Equity Line Purchase Agreement, the cash exercise of warrants, and the proceeds from the common stock sold pursuant to the ATM Agreement. On September 30, 2021, the fair market value of the Company’s liquid digital assets was approximately $~~6.2~~ ~~million and the Company had approximately $0.66~~ ~~million of cash. As such, the Company has adequate cash to fund operations for at least the next twelve months.~~

Note 43 - Summary of Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the ~~2020~~2021 Annual Report.

~~Validator Revenue~~Basis of presentation

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

Reclassifications

Certain 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).

Concentration of Cash

The Company ~~runs its own digital asset validator nodes~~maintains cash balances at two financial institutions in checking accounts and money market accounts. The Company considers all highly liquid investments with original maturities of nine months or less when purchased to be cash and cash equivalents. As of September 30, 2022 and December 31, 2021, the Company had approximately $2.9 million and $1.4 million in cash. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of September 30, 2022 and December 31, 2021, the Company had approximately $2.5 million and $0.9 million in excess of the FDIC insured limit, respectively.

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

	●	Step 1: Identify the contract with the customer
	●	Step 2: Identify the performance obligations in the contract
	●	Step 3: Determine the transaction price
	●	Step 4: Allocate the transaction price to the performance obligations in the contract
	●	Step 5: Recognize revenue when the Company satisfies a performance obligation

Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue through staking rewards.

The Company has entered into network-based smart ~~contracts.~~contracts by running its own Digital Asset validating nodes as well as by staking Digital Assets with staking pools on nodes run by third-party operators (either directly or through exchanges). Through these contracts, the Company provides cryptocurrency to stake on a node for the purpose of validating transactions and adding blocks to a respective blockchain network. The term of a smart contract can vary based on the rules of the respective blockchain and typically last a few weeks to months after it is ~~cancelled~~canceled by the operator and requires that the cryptocurrency staked remain locked up during the duration of the smart contract. In exchange for ~~validating transactions and~~ staking the cryptocurrency and validating transactions on blockchain networks, the Company is entitled to all of the fixed cryptocurrency award for running the Company’s own node and is entitled to a fractional share of the fixed cryptocurrency award a third-party staking pool operator receives (less digital asset transaction fees payable to the pool operator or exchanges, which are immaterial and are recorded as a deduction from revenue), for successfully ~~processing,~~ validating ~~and/~~or adding a block to the blockchain. The Company’s fractional share of awards received by a third-party staking pool is based on the proportion of cryptocurrency the Company staked to the staking pool node to the total cryptocurrency staked by all pool participants validating blockchain transactions.

The provision of validating blockchain transactions is an output of the Company’s ordinary activities. Each separate block creation or validation under a smart contract with a network represents a performance obligation. The transaction consideration the Company receives –- the ~~fixed~~ cryptocurrency awards –- is a non-cash consideration, which the Company measures at fair value on the date received. The fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency onat the ~~date~~time of receipt. The satisfaction of the performance obligation for ~~processing and validating blockchain transactions~~transaction verification services occurs at a point in time when confirmation is received from the network indicating that the validation is complete, and the awards are available for transfer. At that point, revenue is recognized.

Cost of ~~Revenue~~revenue

The Company’s cost of revenue consists primarily of direct production costs related to the operations of validating transactions on the network, rent and utilities for locations housing server nodes to the extent applicable, hosting costs if cloud-based servers are utilized and fees (including stock-based fees) paid to 3rd parties to assist in ~~the~~ software maintenance and operations of its nodes.

Digital Assets Translations and ~~Impairments~~Remeasurements

The Company accounts for its Digital Assets as indefinite-lived intangible assets ~~are included~~ in ~~the balance sheets as either current assets or other assets if they are staked~~accordance with ASC 350, Intangibles –Goodwill and ~~locked up for over one year. Digital assets are recorded at cost less impairment.~~

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 fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

~~Realized gain (loss) on sale of digital assets~~Digital Assets held are included in the balance sheets as either current assets or other ~~income (expense) in~~assets if they are staked and locked up for over one year. The Company’s Digital Assets are initially recorded at fair value upon receipt (or “carrying value”). The fair value of Digital Assets is determined using the ~~statements~~average U.S. dollar spot price of ~~operations. We assign costs to transactions on~~the related Digital Asset. On a ~~first-in, first-out basis.~~

quarterly basis, Digital Assets are measured at carrying value, net of any impairment losses incurred since receipt. The Company ~~assesses~~will record impairment ~~of digital assets quarterly if~~losses as the fair value falls below the carrying value of ~~digital assets is less than its cost basis. The Company recognizes impairment losses on digital assets caused by decreases in fair value~~the Digital Assets at any time during the period, as determined using the lowest U.S. dollar spot price of the related ~~digital asset as of each impairment date.~~ Digital Asset subsequent to its acquisition. The Digital Assets can only be marked down when impaired and not marked up when their value increases.

Such impairment in the value of ~~digital assets~~Digital Assets are recorded as a component of costs and expenses in our statements of operations. The Company recorded impairment losses related to Digital Assets of approximately $12.3 million and $3.8 million during the nine months ended September 30, 2022, and 2021, respectively

Impairment losses cannot be recovered for any subsequent increase in fair value until the sale or disposal of the asset. Realized gain (loss) on sale of Digital Assets are included in other income (expense) in the statements of operations. The Company recorded realized gains (losses) on Digital Assets of approximately $490,000 and $3.1 million during the nine months ended September 30, 2022 and 2021, respectively.

The presentation of purchases and sales of Digital Assets on the Statement of Cash Flows is determined by the nature of the Digital Assets, which can be characterized as productive (i.e. purchased for purposes of staking) or non-productive. The purchase of non-productive Digital Assets and currencies are included as an operating activity, whereas the purchase of productive Digital Assets and currencies are included as investing activities in accordance with ASC 230-10-20 Investing activities. Productive Digital Assets that are staked with a lock-up period of less than 12 months are presented on the Balance Sheet as current assets. Staked Digital Assets with remaining lock-up periods of greater than 12 months are presented as long-term other assets on the Balance Sheet.

Internally Developed Software

Internally developed software ~~consisting~~consists of the core technology of the Company’s ~~digital asset data analytics platform~~Digital Asset Platform, which is being designed to allow ~~user~~users to ~~aggregate~~track, monitor and analyze ~~data from~~their aggregate cryptocurrency portfolio holdings by connecting their Digital Asset exchanges and digital ~~asset exchanges.~~wallets as well as providing a non-custodial delegation process to earn staking rewards on Digital Asset holdings. For internally developed software, the Company uses both its own employees as well as the services of external vendors and independent contractors. The Company accounts for computer software used in the business in accordance with ASC 985-20 and ASC 350.

ASC 985-20, Software-Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established. Thereafter, until the product is released for sale, software development costs must be capitalized and reported at the lower of unamortized cost or net realizable value of the related product. Some companies use a “tested working model” approach to establishing technological feasibility (i.e., beta version). Under this approach, software under development will pass the technological feasibility milestone when the Company has completed a version that contains essentially all the functionality and features of the final version and has tested the version to ensure that it works as expected.

ASC 350, Intangibles-Goodwill and Other, requires computer software costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met. Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying costs incurred during the application development stage are capitalized as property, equipment and software. These costs generally consist of internal labor during configuration, coding, and testing activities. Capitalization begins when (i) the preliminary project stage is complete, (ii) management with the relevant authority authorizes and commits to the funding of the software project, and (iii) it is probable both that the project will be completed and that the software will be used to perform the function intended.

Property and Equipment

Property and equipment consists of computer, equipment and office furniture and fixtures, all of which are recorded at cost. Depreciation and amortization is recorded using the straight-line method over the respective useful lives of the assets ranging from three to five years. Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.

Use of Estimates

The accompanying ~~unaudited condensed~~ financial statements have been prepared in conformity with U.S. GAAP. 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, ~~the valuation of derivative liabilities, the valuation of convertible preferred stock~~ 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, ~~if any,~~ 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.

Income Taxes

The Company recognizes income taxes on an accrual basis based on tax positions taken or expected to be taken in its tax returns. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability 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.

1011

Accounting for Warrants

The Company accounts for the issuance of ~~common stock~~Common Stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of ASC 815, Derivatives and Hedging (“ASC 815”). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). In addition, Under ASC 815, registered ~~common stock~~Common Stock warrants that require the issuance of registered shares upon exercise and do not expressly preclude an implied right to cash settlement are accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the balance sheet as a current liability.

The Company assessed the classification of ~~common stock~~Common Stock purchase warrants as of the date of each offering and determined that such instruments originally met the criteria for equity classification; however, as a result of the Company no longer being in control of whether the warrants may be cash settled, the instruments no longer qualify for equity classification. Accordingly, the Company classified the warrants as a liability at their fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement 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 6)4).

Stock-based ~~Compensation~~compensation

The Company accounts for stock-based compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.

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

Options

Stock 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. These options often vest over a one-year period.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

~~Expected Term~~ - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Restricted Stock Units (RSUs)

~~Expected Volatility~~ ~~- The Company computes stock price volatility over expected terms based on its historical common stock trading prices.~~

~~Risk-Free Interest Rate~~ ~~- The Company bases~~For awards vesting upon the ~~risk-free interest rate~~achievement of a service condition, compensation cost measured on the ~~implied yield available~~grant date will be recognized on ~~U. S. Treasury zero-coupon issues with an equivalent remaining term.~~

~~Expected Dividend~~ - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

~~Effective January 1, 2017, the Company elected to account for forfeited awards as they occur, as permitted by ASU 2016-09. Ultimately, the actual expenses recognized~~a straight-line basis over the vesting period. Stock-based compensation expense for the market-based restricted stock units with explicit service conditions is recognized on a straight-line basis over the longer of the derived service period ~~will~~or the explicit service period, regardless of whether the market condition is satisfied. However, in the event that the explicit service period is not met, previously recognized compensation cost would be reversed. Market-based restricted stock units subject to market-based performance targets require achievement of the performance target as well as a service condition in order for ~~those shares that vested. Prior~~these RSUs to ~~making this election, the Company estimated a forfeiture rate for awards at~~ 0~~%, as the Company did not have a significant history of forfeitures.~~

~~Convertible Preferred Stock~~vest.

The Company ~~applies~~estimates the ~~accounting standards for distinguishing liabilities from equity when determining the classification and measurement~~fair value of ~~its preferred stock. Preferred stock subject to mandatory redemption are classified~~market-based RSUs as ~~liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control~~ of the ~~holder or subject to redemption upon~~grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the ~~occurrence~~period from the grant date through the end of ~~uncertain events not solely within~~ the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity. The Company evaluated the classification of its convertible preferred stock and determined that such instruments meet the criteria for equity classification.derived service period.

Dividends

On January 5, 2022, the board of directors of the Company declared a non-recurring special dividend of $0.05 for each outstanding share of Common Stock of the Company, payable to holders of record as of the close of business on March 17, 2022. The dividend distributions are considered a return of capital as the distributions are in excess of the Company’s current and accumulated earnings and profits. The return of capital distribution reduces the Company’s additional paid in capital balance. The Company ~~has also evaluated~~will evaluate the appropriateness of potential future dividends as the Company continues to grow its ~~convertible preferred stock in accordance with~~operations. Dividend distributions amounted to $635,000 and $0 during the ~~provisions of ASC 815,~~ ~~Derivatives~~nine months ended September 30, 2022 and ~~Hedging~~, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature, which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date.2021, respectively.

~~Beneficial Conversion Feature of Convertible Notes Payable~~Advertising Expense

~~The Company accounts~~Advertisement costs are expensed as incurred and included in marketing expenses. Advertising and marketing expenses amounted to approximately $74,000 and $10,000 for ~~convertible notes payable in accordance with~~ the ~~guidelines established by the FASB Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion~~nine months ended September 30, 2022 and Other Options. The beneficial conversion feature of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a beneficial conversion feature related to the issuance of a convertible note when issued.

The discounted face value is then used to measure the effective conversion price of the note. The effective conversion price and the market price of the Company’s common stock are used to calculate the intrinsic value of the conversion feature. The intrinsic value is recorded in the financial statements as a debt discount from the face amount of the note and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.2021, respectively.

Net Loss per Share

Basic loss per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the Company’s convertible preferred stock, convertible notes, restricted stock units, options and warrants. Diluted loss per share excludes the shares issuable upon the conversion of preferred stock, notes and warrants from the calculation of net loss per share if their effect would be anti-dilutive.

The following financial instruments were not included in the diluted loss per share calculation as of September 30, ~~2021~~2022 and ~~2020~~2021 because their effect was anti-dilutive:

Schedule of Earnings Per Share Anti-diluted

					2022		2021
	As of September 30,				As of September 30,
	2021		2020		2022		2021
Warrants to purchase common stock		962,823		50,323		945,837		962,823
Series C-1 Convertible Preferred stock		-		19,609
Convertible notes		285,429		466,201		-		285,429
Options						1,285,000		-
Non-vested restricted stock awards units						1,612,350		-
Total		1,248,252		536,133		3,843,187		1,248,252

1213

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company ~~is currently evaluating~~adopted ASU No. 2019-12 effective January 1, 2021, and the adoption did not have a material impact ~~of this standard~~ on its financial statements and related disclosures.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company ~~is currently evaluating~~adopted ASU No. 2019-12 effective January 1, 2021, and the adoption did not have a material impact ~~of this standard~~ on its financial statements and related disclosures.

Other 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.

~~Note 5 -~~ ~~Note Payable~~

~~2020 December Promissory Note (Retired)~~

~~On December 16, 2020, the Company issued Cavalry Fund I LP (“Cavalry”) a $1,000,000~~ ~~promissory note (the “2020 December Promissory Note”) in consideration for $1,000,000. The 2020 December Promissory Note is (i) due on~~ ~~October 16, 2021, (ii) convertible at a~~ 35~~% discount to the closing price of the Company’s common stock on the date before exercise with a floor price of $0.40~~ ~~per share and (iii) shall bear interest at~~ 12% per annum (payable at maturity). Subject to certain limitations, the Company may force conversion of the 2020 December Promissory Note. In connection with issuance of the 2020 December Promissory Note, the Company issued a Series C warrant to purchase ~~200,000~~ ~~shares of the Company’s common stock at an exercise price of $2.00, the Series C warrants were exercised for cash on January 15, 2021, resulting in proceeds of $400,000~~ ~~to the Company.~~

~~During the nine months ended September 30, 2021, the Company recorded approximately $868,000~~ ~~amortization of debt discount related to the 2020 December Promissory Note.~~

~~During the nine months ended September 30, 2021, the Company recorded interest expense of approximately $88,000~~ ~~for the 2020 December Promissory Note.~~

~~On September 24, 2021, the Company paid off in full the 2020 December Promissory Note. Repayment to Cavalry consisted of $1,000,000~~ ~~in principal and $92,712~~ ~~in accrued interest, for a total of $1,092,712. Cavalry confirmed the 2020 December Promissory Note had been fully paid and the Company has no further obligations with respect to the note.~~

~~2021 January Promissory Note~~

~~On January 15, 2021, the Company issued Calvary a $1,000,000~~ ~~promissory note (the “2021 Promissory Note”) in consideration for $1,000,000. The 2021 Promissory Note is (i) due on~~ ~~November 15, 2021, (ii) convertible at a~~ 35~~% discount to the closing price of the Company’s common stock on the date before exercise with a floor price of $7.50~~ ~~per share and (iii) shall bear interest at~~ 12~~% per annum (payable at maturity). Subject to certain limitations, the Company may force conversion of the 2021 Promissory Note.~~

~~In connection with issuance of the 2021 Promissory Note, the Company issued a Series D warrant to purchase~~ ~~200,000~~ ~~shares of the Company’s common stock at an exercise price of $21.60~~ per share (the “Series D Warrant”). Detachable warrants issued in a bundled transaction with debt and equity offerings are accounted for on a separate basis. The allocation of the issuance proceeds to the base instrument and to the warrants depends on the accounting classification of the separate warrant as equity or liability. If the warrants are classified as equity, then the allocation is made based upon the relative fair values of the base instrument and the warrants following the guidance in ASC 470-20-25-2. In this case, the Series D Warrant is equity-classified, with the fair value at issuance was approximately $~~3,580,000. As such, the Company recognized a beneficial conversion feature, resulting in a discount to the 2021 Promissory Note of approximately $782,000~~ ~~with a corresponding credit to additional paid-in capital.~~

~~In addition, the 2021 Promissory Note does not contain any embedded features that require bifurcation pursuant to ASC 815-15. At the issuance date, the 2021 Promissory Note was convertible into~~ ~~70,572~~ ~~shares of common stock at $14.10~~ ~~per share, but the Company’s fair value of underlying common stock was $21.8~~ ~~per share. As such, the Company recognized a beneficial conversion feature, resulting in an additional discount to the 2021 Promissory Note of approximately $218,000~~ ~~with a corresponding credit to additional paid-in capital.~~

~~During the nine months ended September 30, 2021, the Company recorded approximately $848,000~~ ~~amortization of debt discount related to the 2021 Promissory Note.~~

~~During the nine months ended September 30, 2021, the Company recorded interest expense of approximately $85,000~~ ~~for the 2021 Promissory Note. As of September 30, 2021, the principal balance of the 2021 Promissory Note was $~~1 ~~million and accrued interest on the note payable amounted to approximately $85,000~~.

Note 64 - Fair Value of Financial Assets and Liabilities

Financial instruments, including cash and cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

The Company uses three levels of inputs that may be used to measure fair value:

Level 1 - quoted prices in active markets for identical assets or liabilities

Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

The following table presents the Company’s assets and liabilities that are measured at fair value at September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

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

	Fair value measured at September 30, 2021								Fair value measured at September 30, 2022
	Total at September 30,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs		Total at September 30,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
	2021		(Level 1)		(Level 2)		(Level 3)		2022		(Level 1)		(Level 2)		(Level 3)
Liabilities
Warrant Liabilities	$	3,705,000	$	-	$	-	$	3,705,000	$	712,500	$	-	$	-	$	712,500

~~Fair value measured at December 31, 2020~~

~~Total at December 31,~~

~~Quoted prices in active markets~~

~~Significant other observable inputs~~

~~Significant unobservable inputs~~

~~2020~~

~~(Level 1)~~

~~(Level 2)~~

~~(Level 3)~~

~~Liabilities~~

~~Warrant Liabilities~~

	Fair value measured at December 31, 2021
	Total at December 31,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
	2021		(Level 1)		(Level 2)		(Level 3)
Liabilities
Warrant Liabilities	$	1,852,500	$	-	$	-	$	1,852,500

Level 3 Valuation Techniques

Level 3 financial liabilities consist of the warrant liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. 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.

On March 2, 2021, the Company entered into a securities purchase agreement (the “Offering”) with certain purchasers pursuant to which the Company agreed to sell an aggregate of (i) 950,000 shares of ~~common stock,~~Common Stock, and (ii) ~~common stock~~Common Stock warrants (the “Warrants”) to purchase up to 712,500 shares of ~~common stock~~Common Stock for gross proceeds of $~~9.5~~$9.5 million in a private placement. The closing of the Offering occurred on March 4, 2021.

The Warrants require, at the option of the holder, a net-cash settlement following certain fundamental transactions (as defined in the Warrants) at the Company. At the time of issuance, the Company maintained control of certain fundamental transactions and as such the Warrants were initially classified in equity. As of ~~September 30,~~December 31, 2021, the Company no longer maintained control of certain fundamental transactions as they did not control a majority of shareholder votes. As such, the Company may be required to cash settle the Warrants if a fundamental transaction occurs which is outside the Company’s control. Accordingly, the Warrants are classified as liabilities. The Warrants have been recorded at their fair value using the Black-Scholes valuation model, and will be recorded at their respective fair value at each subsequent balance sheet date. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility.

The Warrants require the issuance of registered shares upon exercise, do not expressly preclude an implied right to cash settlement and are therefore accounted for as derivative liabilities. The Company classifies these derivative warrant liabilities on the balance sheet as a current liability.

A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company’s warrant liabilities that are categorized within Level 3 of the fair value hierarchy at the date of issuance and, as of September 30, 2022 and December 31, 2021, is as follows:

Summary of Valuation Methodology and Significant Unobservable Inputs Warrant Liabilities

	September 14, 2021			September 30, 2021			September 30, 2022			December 31, 2021
Risk-free rate of interest		0.79	%		0.98	%		4.06	%		1.26	%
Expected volatility		192.2	%		169.4	%		157.1	%		162.5	%
Expected life (in years)		4.47			4.43			3.43			4.18
Expected dividend yield		-			-			-			-

The risk-free interest rate was based on rates established by the Federal Reserve Bank. For the Warrants, the Company estimates expected volatility giving primary consideration to the historical volatility of its ~~common stock.~~Common Stock. The general expected volatility is based on the standard deviation of the Company’s underlying stock price’s daily logarithmic returns. The expected life of the warrants was determined by the expiration date of the warrants. The expected dividend yield was based on the fact that the Company has not historically paid dividends on its ~~common stock~~Common Stock and does not expect to pay recurring dividends on its ~~common stock~~Common Stock in the future.

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, 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 liabilities					Fair Value of Level 3 financial liabilities
	September 30,			September 30,		September 30,			September 30,
	2021			2010		2022			2021
Beginning balance	$	-		$	-	$	1,852,500		$	-
Warrant liabilities classification		5,771,250			-		-			-
Fair value adjustment of warrant liabilities		(2,066,250	)		-		(1,140,000	)		-
Ending balance	$	3,705,000		$	-	$	712,500		$	-

Note 75 - Stockholders’ Equity

~~Preferred~~Common Stock

~~The Company is authorized to issue up to~~ ~~2,000,000~~ shares of preferred stock. This preferred stock may be issued in one or more series, and shall have such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as shall be determined at the time of issuance by the Company’s board of directors without further action by the Company’s shareholders.

~~On January 1, 2021, members of the Company’s management subscribed for~~ ~~110,000~~ ~~shares of the Company’s Series C-2 Convertible Preferred Stock (the “Series C-2”), for a total of $1,100,000~~ ~~at $10.00~~ ~~per Share of Series C-2. The Company obtained an independent valuation of the Series C-2 and $179,277~~ ~~of compensation expense was recognized, representing the difference between the fair value and the proceeds received.~~

The Series C-2 is not mandatorily redeemable and is not unconditionally redeemable. The Series C-2 is callable by the Company. The Certificate of Designation required that the Company, within 180 days of the Initial Issuance Date, call a special meeting of stockholders seeking shareholder ratification of the issuance of the Series C-2. If the ratification of the issuance was not approved prior to the twelve-month anniversary of the Initial Issuance Date (the “Vote Deadline”), the Series C-2 would be redeemed at a price equal to ~~107~~% of (i) the Stated Value per share plus (ii) all unpaid dividends thereon. Provided; further, if the Company had filed a proxy with the SEC prior to the Vote Deadline but was unable to conduct a vote prior to the Vote Deadline then the Vote Deadline would have been extended until such time as the vote was conducted. The Series C-2 holders were not entitled to vote on the ratification. The call provision would have been automatically triggered if the ratification of the issuance was not approved in a special meeting of stockholders prior to the twelve-month anniversary of the Initial Issuance Date. The Company held the meeting within the required period and the Series C-2 is no longer redeemable.

Based on the guidance in ASC 480-10-S99 (“ASR 268”), a redeemable equity instrument is not to be included in permanent equity. Rather, it should be reported between long-term debt and stockholders’ equity, without a subtotal that might imply it is a part of stockholders’ equity (i.e., “temporary equity” or “mezzanine capital”). ASR 268 specifies that redeemable stock is any type of equity security, including common or preferred stock, when it has any condition for redemption which is not solely within the control of the issuer without regard to probability.

The Series C-2 Certificate of Designation required the Company to redeem the Series C-2 if stockholder approval was not received by the Vote Deadline. Stockholder approval was not considered to be “solely within the Company’s control.” Stockholder approval occurred on March 31, 2021, at which time the Series C-2 was no longer callable by the Company. As such, the Series C-2 was initially classified in temporary equity under ASR 268 and was reclassified to permanent equity upon stockholder approval on March 31, 2021.

The holders of Series C-2 shall be entitled to receive dividends or distributions on each share of Series C-2 on an “as-converted basis” into common stock when and if dividends are declared on the common stock by the Board of Directors. Dividends shall be paid in cash or property, as determined by the Board of Directors.

At any time or times on or after the two-year anniversary of the Initial Issuance Date, each Holder shall be entitled to convert any portion of the outstanding Series C-2 held by such Holder into validly issued, fully-paid and non-assessable shares of Common at the Conversion Rate. The Conversion Amount is subject to adjustment for certain capitalization and Anti-Dilution Events. The Series C-2 will automatically be converted at the earlier of: (i) the four-year anniversary of the Initial Issuance Date, and (ii) simultaneously with the Company’s common stock being listed on a national securities exchange. The Conversion Rate is based upon the Conversion Price of $~~1.70~~ ~~which resulted in a beneficial conversion feature at the time of issuance. As such, the Company recognized a beneficial conversion amount of $129,412~~ as a reduction to the carrying amount of the convertible instrument. This discount will be amortized as a dividend over two years, the earliest conversion date. Upon the conversion of Series C-2 into common stock on September 14, 2021, the total amortization of the beneficial conversion feature is $~~45,541~~ ~~and the remaining discount is netted against additional paid in capital.~~

~~The Conversion Amount may be adjusted due to certain Anti-Dilution Events.~~ If at any time after the Initial Issuance Date, the Company raises capital equal to or in excess of $5 million by issuing common stock or Common Stock Equivalents then the Anti-Dilution Amount per share of Series C-2 shall be the product of: (i) 0.0000004, and (ii) the aggregate amount of all capital raised by the Company after the Initial Issuance Date (the “Capital Raised”). Provided; further, for the determination of the Anti-Dilution Amount, the amount of Capital Raised shall be limited to $13 million, regardless of how much capital the Company raises. In the event capital is raised simultaneous with a listing on a national securities exchange and the automatic conversion of the Series C-2 then such funds shall be included in the Capital Raised for the purpose of determining the Anti-Dilution Amount. As of September 30, 2021, over $13 million of capital was raised and the adjustment to the Conversion Amount was fully triggered. The Company recognized the effect of the down-round protection when capital raises occur as the difference between: (1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price, and (2) the financial instrument’s fair value (without the down round feature) using the reduced exercise price. The value of the effect of the down round feature of $5,020,883 was treated as a dividend and a reduction to income available to common shareholders in the basic EPS calculation. ~~On September 14, 2021, the Series C-2 was converted into~~ ~~4,011,766~~ ~~shares of common stock.~~

~~Common Stock~~

Reverse Stock Split

On August 25, 2021, the Company issued approximately ~~14,477~~14,500 shares of ~~common stock~~Common Stock in connection with the 1-for-10 Reverse Split resulting from the rounding up of fractional shares of ~~common stock~~Common Stock to the whole shares of ~~common~~Common Stock.

~~Issuance of Shares Pursuant~~ The financial statements have been retroactively restated to ~~Equity Line of Credit Purchase Agreement~~reflect the reverse stock split.

~~On January 28, 2021, the Company filed a registration statement on Form S-1 seeking to register~~ ~~400,000~~ shares (the “Registration Statement”) pursuant to the equity line of credit purchase agreement with Cavalry (the “Equity Line Purchase Agreement”). The Registration Statement was declared effective by the SEC on February 1, 2021.

~~During the nine months ended September 30, 2021, the Company issued approximately~~ ~~321,740~~ ~~shares of common stock (inclusive of approximately~~ ~~17,590~~ ~~pro-rata commitment shares) under the Registration Statement resulting in aggregate net proceeds of $3,014,005~~ ~~(net of $1,000~~ ~~in transfer agent fees) and $3,015,005~~ ~~in gross proceeds at a per share price of approximately $9.37~~ ~~(inclusive of the pro-rata commitment shares).~~

~~Issuance of Shares Pursuant to Registered Direct Offering~~

On March 4, 2021, the Company entered into a securities purchase agreement (the “RD Purchase Agreement”) with institutional investors, pursuant to which the Company sold and issued, in a registered direct offering, ~~950,000~~ ~~shares of the Company’s common stock, at a purchase price per share of $10.00~~ ~~and immediately exercisable~~ ~~five-year~~ ~~warrants to purchase~~ ~~712,500~~ ~~shares of common stock at an exercise price of $11.50~~ ~~per share. Gross proceeds from the Offering was $9.5~~ ~~million. Net proceeds were $8.9~~ ~~million after deducting placement agent fees and other offering expenses paid for by the Company.~~

The RD Purchase Agreement contains representations, warranties, indemnifications and other provisions customary for transactions of this nature. Pursuant to the RD Purchase Agreement, subject to limited exceptions, each of the Company and its officers and directors agreed not to, and not to publicly disclose the intention to, sell or otherwise dispose of, any shares of common stock or any securities convertible into, or exchangeable or exercisable for, common stock, for a period ending 60 days after the date of the prospectus supplement for this offering.

The Company also entered into a placement agent agreement with A.G.P./Alliance Global Partners (“AGP”), pursuant to which AGP agreed to serve as the exclusive placement agent for the Company in connection with that offering. The Company paid AGP a cash placement fee equal to ~~7.0% of the aggregate gross proceeds raised in the offering (reduced to~~ ~~3.5% for certain investors) and reimbursed the placement agent for its legal fees and other accountable expenses in the amount of $40,000~~.

At The Market Offering Agreement

On September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”), pursuant to which the Company may offer and sell, from time-to-time through H.C. Wainwright, shares of the Company’s ~~common stock~~Common Stock having an aggregate offering price of up to $98,767,500 million (the “Shares”). The Company will pay H.C. Wainwright a commission rate equal to ~~3.0~~3.0%% of the aggregate gross proceeds from each sale of Shares.

During the nine months ended September 30, ~~2021,~~2022, the Company sold a total of ~~41,290~~2,148,658 shares of ~~common stock~~Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $~~279,000~~11,454,000 at an average selling price of $~~6.76~~5.33 per share, resulting in net proceeds of approximately $~~219,746~~11,095,000 after deducting commissions and other transaction costs.

~~Issuance of Shares Pursuant to Cash Exercise of Series C Warrants~~

~~On January 15, 2021, the Company issued~~ ~~200,000~~ ~~shares of the Company’s common stock to Cavalry upon the exercise of all their Series C warrants and payment of the exercise amount of $400,000. Cavalry and the Company entered into an agreement whereby Cavalry would exercise early for cash provided that the Company register the underlying shares of common stock within 30 days of exercise.~~

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

~~On March 30, 2021, the Company issued~~ ~~19,609~~ ~~shares of common stock upon the conversion of~~ ~~29,414~~ shares of Series C-1 Convertible Preferred stock. After this conversion, there were no Series C-1 shares outstanding so the Company filed a Certificate of Withdrawal with the Secretary of State of the State of Nevada. The Certificate of Withdrawal eliminated from the Articles of Incorporation of the Company all matters set forth in the Series C-1.

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

~~On September 14, 2021, the Series C-2 was converted into~~ ~~4,011,766~~ ~~shares of common stock. Please refer to the discussion above.~~

~~Issuance of Restricted Stock to Service Providers~~

~~During the nine months ended September 30, 2021, the Company issued to four service providers a total of approximately~~ ~~52,800~~ ~~shares of restricted common stock, representing a total fair value of $0.6~~ ~~million.~~

2021 Equity Incentive Plan

The Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was effective on January 1, 2021 and approved by shareholders on March 31, ~~2021.~~2021 and amended on June 13, 2022. The Company has reserved ~~2,000,000~~7,000,000 shares of ~~common stock~~Common Stock for issuance pursuant to the 2021 Plan.

Options

~~On January 1, 2021,~~During the ~~Board of Directors of~~three months ended September 30, 2022, the Company ~~approved the grant of~~granted ~~1.2~~50,000 ~~million~~ stock options with ana weighted average exercise price of $~~1.90~~ under the Company’s 2021 Plan to Messrs. David Garrity a director, and Charles Allen and Michal Handerhan, executive officers and directors of the Company. Effective as of January 1, 2021, the Company and each optionee executed Stock Option Agreements evidencing the option grants. While stockholder approval (or ratification) of the grants was not required (under either the Stock Option Agreements or by the resolutions of the Board of Directors approving such grants), the Board of Directors voluntarily caused the Company to seek shareholder ratification of the grants to limit any potential exposure to breach of fiduciary duty claims. As a result, based on the guidance in ASC 718, the date the stockholders ratified the grants (March 31, 2021) is the deemed grant date solely with respect to GAAP for those stock options. Of the stock options: (i) ~~480,000~~ ~~options will vest on~~ ~~January 1, 2022~~ ~~and (ii) the remaining options vested (prior to March 31, 2021) based upon the Company’s stock price meeting certain milestones.~~

~~On April 1, 2021, the Company granted~~ ~~35,000~~ ~~stock options with an exercise price of $10.30~~1.51 to ~~Charles B. Lee and Carol Van Cleef, directors of the Company. Of the stock options: (i)~~ ~~14,000~~ ~~options will vest on~~ ~~April 1, 2022~~ ~~and (ii) the remaining~~ ~~21,000~~ ~~options vest based upon the Company’s stock price meeting certain milestones.~~

~~The Company records compensation expense for the~~ ~~14,000~~ options granted on April 1, 2021 based on the estimated fair value of the options on the deemed grant date using the Black-Scholes formula, utilizing assumptions laid out in the table below. The Company uses historical data to determine exercise behavior, volatility and forfeiture rate of the options. For the ~~21,000~~ options granted on April 1, 2021 that vest based upon the Company’s stock price meeting certain milestones, the Company records compensation expense based on the estimated fair value of the options using a Monte-Carlo simulation.

non-executive employees. The following weighted-average assumptions were used to estimate the fair value of options granted on the deemed grant date during the nine months ended ~~2021~~September 30, 2022 and ~~2020~~2021 for both the Black-Scholes formula and the Monte-Carlo ~~simulation:~~simulation formula, applicable to 2021 options granted:

Summary of Weighted-average Assumptions Used to Estimate Fair Value

For the nine months ended
September 30,

2021 2020
Exercise price $ 2.1 -
Term (years) 2.25-3.05 -
Expected stock price volatility 185.9 % -
Risk-free rate of interest 0.34 % -

	For the nine months ended September 30,
	2022			2021
Exercise price	$	1.51		$	0.21
Term (years)		5.00			2.25-3.05
Expected stock price volatility		165.8	%		185.9	%
Risk-free rate of interest		2.77	%		0.34	%

Expected Volatility: 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.

Risk-Free 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.

Expected 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. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.

For awards vesting upon the achievement of ~~a service condition, compensation cost measured on the grant date will be recognized on a straight-line basis over the vesting period. For awards vesting upon the achievement of~~ the market conditions which were met at the date of grant, compensation cost measured on the date of grant was immediately recognized. For awards vesting upon the achievement of the market conditions which were not met at the date of grant, compensation cost measured on the grant date will be recognized on a straight-line basis over the vesting period based on estimation using a Monte-Carlo simulation.

A summary of ~~options~~option activity under the Company’s stock option plan for nine months ended September 30, ~~2021~~2022 is presented below:

Summary of Option Activity

Number of Shares Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2020 - $ - $ - -
Employee options granted 1,235,000 2.14 4,188,000 4.5
Outstanding as of September 30, 2021 1,235,000 $ 2.14 $ 4,188,000 4.5
Options vested and exercisable 720,000 $ 1.90 $ 2,512,800 4.5

	Number of Shares		Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		1,235,000	$	2.14	$	1,488,000		4.3
Employee options granted		50,000		1.51		-		4.8
Outstanding as of September 30, 2022		1,285,000	$	2.11	$	-		3.6
Options vested and exercisable as of September 30, 2022		1,229,750	$	2.10	$	-		3.5

RSUs

OnEffective January ~~1, 2021,~~2, 2022, the Board of Directors of the Company ~~approved~~ ~~275,000~~ restricted stock unit grants under the Company’s 2021 Equity Incentive Plan to Messrs. David Garrity a director, and Charles Allen and Michal Handerhan, executive officers and directors of the Company. Effective as of January 1, 2021, the Company and each recipient executed a Restricted Stock Agreement evidencing the stock grants. While stockholder approval (or ratification) of the grants was not required (under either the Restricted Stock Agreements or by the resolutions of the Board of Directors approving such grants), the Board of Directors voluntarily caused the Company to seek shareholder ratification of the grants to limit any potential exposure to breach of fiduciary duty claims. As a result, based on the guidance in ASC 718, the date the stockholders ratified the ~~grants (March 31, 2021) is the deemed grant date solely with respect to GAAP for those restricted stock grants. The restricted stock units vest when the Company lists~~following arrangements approved by its ~~common stock on a national securities exchange. As of September 30, 2021, all~~ ~~275,000~~ ~~restricted stock units vested with a total fair value of approximately $2.8~~ million. The cost of stock-based compensation for restricted stock units is measured based on the closing fair market value of the Company’s common stock at the deemed grant date and was recorded on the ~~September 14, 2021~~ ~~vesting date when the listing occurred.~~Compensation Committee:

~~On April 1, 2021,~~The Board of Directors of the Company ~~granted a total~~ratified grants of ~~15,000~~ ~~restricted stock units~~RSUs to ~~two non-employee directors of the Company. The restricted stock units vest when the Company lists its common stock on a national securities exchange. As of September 30, 2021, all~~ ~~15,000~~ ~~restricted stock units vested with a total fair value of approximately $0.2~~ ~~million. The cost of stock-based compensation for restricted stock units is measured based on the closing fair market value of the Company’s common stock at the deemed grant date~~each independent director. David Garrity, Carol Van Cleef and ~~was recorded on the~~ ~~September 14, 2021vesting date when the listing occurred.~~

~~On June 28, 2021, the Company~~Charles Lee were each granted ~~50,781~~ ~~restricted stock units to the Company’s then Chief Financial Officer.~~ ~~The restricted stock units were to vest over a five-year period as follows:~~ 20~~% of the~~ ~~50,781~~31,848 restricted stock units (the “Board Grants”). The Board Grants vest in four equal installments at the end of each calendar quarter in 2022.

The Company’s executive officers were granted RSUs as part of a long-term incentive plan (“LTI”), with vesting terms set for when the Company’s market capitalization reaches and sustains a market capitalization for 30 consecutive days above four defined market capitalization thresholds of $100 million, $150 million, $200 million and $400 million.

Effective 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.

The RSUs granted to each executive employee are as follows:

Schedule of Restricted Stock Units

			Total		Market Cap Vesting Thresholds
Officer Name	Title	Grant Date	RSUs Granted		$ 100 million		$ 150 million		$ 200 million		$ 400 million
Charles Allen	Chief Executive Officer	1/2/2022		694,444		173,611		173,611		173,611		173,611
Michal Handerhan	Chief Operations Officer	1/2/2022		444,444		111,111		111,111		111,111		111,111
Michael Prevoznik	Chief Financial Officer	1/2/2022		222,224		55,556		55,556		55,556		55,556
Manish Paranjape	Chief Technology Officer	2/22/2022		160,184		40,046		40,046		40,046		40,046
				1,521,296		380,324		380,324		380,324		380,324

To the extent any market capitalization targets set forth above for 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% ~~were to~~ of the LTI RSUs which have met a market capitalization criteria will vest monthly over the ~~following~~ four years ~~with~~following the one year anniversary of the grant date.

For awards vesting ~~occurring~~upon the achievement of a service condition, compensation cost measured on the ~~last day~~grant date will be recognized on a straight-line basis over the vesting period. Stock-based compensation expense for the market-based restricted stock units with explicit service conditions is recognized on a straight-line basis over the longer of ~~each respective month.~~the derived service period or the explicit service period, regardless of whether the market condition is satisfied. However, in the event that the explicit service period is not met, previously recognized compensation cost would be reversed. Market-based restricted stock units subject to market-based performance targets require achievement of the performance target as well as a service condition in order for these RSUs to vest.

The ~~grant date~~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.

The following weighted-average assumptions were used to estimate the fair value of options granted during the nine months ended September 30, 2022 and 2021 for the Monte-Carlo simulation:

Schedule of Weighted-Average Assumptions Used to Estimate Fair Value

	Nine Months Ended September 30,
	2022			2021
Vesting Hurdle Price	$	19.39			-
Term (years)		5.00			-
Expected stock price volatility		103.7	%		-
Risk-free rate of interest		1.32	%		-

Risk-Free 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.

Expected 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 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.

Vesting 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.

Effective September 30, 2022, Mr. David Garrity resigned as a director of BTCS, Inc. The Board of Directors of the Company agreed to fully vest Mr. Garrity’s remaining unvested restricted stock units ~~was~~(7,962 shares) and pay Mr. Garrity approximately $~~0.3~~ 5,600~~million.~~, which represents the remaining 2022 director fees.

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

Summary of Restricted Stock

	Number of Restricted Stock Units			Weighted Average Grant Day Fair Value		Number of Restricted Stock Units			Weighted Average Grant Day Fair Value
Nonvested at December 31, 2020		-		$	-
Nonvested at December 31, 2021							29,363		$	5.96
Granted		340,781			9.72		1,662,607			3.29
Vested		(290,000	)		10.29		(79,620	)		3.14
Nonvested at September 30, 2021		50,781		$	6.42
Forfeited							-			-
Nonvested at September 30, 2022							1,612,350		$	3.35

~~Stock-based~~Stock Based Compensation

~~Stock-based compensation expense for the nine months ended September 30, 2021 was approximately $13.8~~ ~~million, comprised of $203,000~~ ~~restricted common stock issued to service providers not pursuant to the 2021 Plan and approximately $10.3~~ ~~million in connection with options issued pursuant to the 2021 Plan. Unrecognized compensation expense for the Company was $2.0~~ ~~million on September 30, 2021.~~ Stock-based compensation expense is recorded as a part of selling, general and administrative expenses, compensation expenses and cost of revenues.

Stock-based compensation expense for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 was as follows:

Schedule of Stock-based Compensation Expense

	Three Months Ended September 30,				Nine Months Ended September 30,				2022		2021		2022		2021
	2021		2020		2021		2020		For the Three Months Ended September 30,				For the Nine Months Ended September 30,
									2022		2021		2022		2021
Employee bonus stock awards									$	-	$	-	$	894,027	$	-
Employee stock option awards	$	1,638,516	$	-	$	10,298,844	$	-		16,455		1,638,516		98,901		10,298,844
Employee restricted stock units awards		3,027,665		-		3,029,040		-
Employee restricted stock unit awards										434,349		3,027,665		1,182,053		3,029,040
Non-employee restricted stock awards		75,000		-		237,806		-		30,480		75,000		202,218		237,806
Series C-2 allocation		-		-		179,277		-
	$	4,741,181	$	-	$	13,744,967	$	-
Series C-2 Allocation										-		-		-		179,277
Stock-based compensation									$	481,284	$	4,741,181	$	2,377,199	$	13,744,967

Note 6 – Accrued Expenses

Accrued expenses consist of the following:

Schedule of Accrued Expenses

	September 30, 2022		December 31, 2021
Compensation and related expenses	$	212,571	$	7,334
Accounts Payable		100,875		138,372
Other		3,757		343
Accrued Expenses	$	317,203	$	146,050

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

Note 87 - Employee Benefit Plans

The Company maintains defined contribution benefit plans under Section 401(k) of the Internal Revenue Code covering substantially all qualified employees of the Company (the “401(k) Plan”). Under the 401(k) Plan, the Company may make discretionary contributions of up to ~~100~~100%% of employee contributions. ~~During~~For the nine months ended September 30, ~~2021,~~2022, the Company made contributions to the 401(k) Plan of $~~39,000~~45,000.

Note 8 – Liquidity

The Company follows “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about 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.

As reflected in the financial statements, the Company has historically incurred a net loss and has an accumulated deficit at September 30, 2022, a net loss and net cash used in operating activities for the reporting period then ended. The Company is implementing its business plan and generating revenue; however, the Company’s cash position and liquid Digital Assets are sufficient to support its daily operations over the next twelve months.

Note 9 - Subsequent Events

~~From~~The 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.

During the period from October 1, ~~2021~~2022 to November ~~4, 2021,~~8, 2022, the Company sold a total of ~~172,547~~23,678 shares of ~~common stock~~Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $~~1,185,474~~33,000 at an average selling price of $ $~~6.87~~1.38 per share, resulting in net proceeds of approximately $~~1,147,886~~31,000 after deducting commissions and other transaction costs.

On October ~~25, 2021,~~1, 2022, the ~~Company received~~Board of Directors of BTCS Inc. appointed Melanie Pump as a ~~filing acknowledgment with respect to a Certificate of Withdrawal with the Secretary of State~~new independent director of the ~~State of Nevada. The Certificate of Withdrawal,~~Board. Ms. Pump was ~~effective on October 25, 2021, and eliminated from~~also appointed as the ~~Articles of Incorporation~~Chairperson of the ~~Company all matters set forth in the Company’s Certificate of Designation with respect to the Company’s Series C-2 Preferred Stock that had been previously filed with the Secretary of State~~Audit and Compensation Committees. As compensation for her service as a director and Chairperson of the ~~State~~Committees, Ms. Pump will receive: (i) annual cash compensation of ~~Nevada~~$25,000 and $5,000 for each Committee ($10,000 in total), and (ii) 7,962 restricted stock units which will vest on ~~January 5, 2021. No shares of the Series C-2 Preferred Stock were issued and outstanding at the time of the filing of the Certificate of Withdrawal, and none will be issued.~~

~~On November 4, 2021, Mr. Andrew Lee resigned as the Company’s Chief Financial Officer. In connection with the resignation, Mr. Charles Allen was appointed interim Chief Financial Officer.~~

December 31, 2022.

2119

ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical financial statements and the notes to those statements that appear elsewhere in this report. Certain statements in the ~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations” are~~discussion contain forward-looking statements based upon current expectations that involve risks and ~~uncertainties. Words~~uncertainties, such as ~~may, will, should, would, anticipates, expects, intends,~~ plans, ~~believes, seeks, estimates~~objectives, expectations and ~~similar expressions identify such forward-looking statements. Readers are cautioned not to place undue reliance on~~intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements ~~which reflect management’s analysis only~~ as a result of ~~the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in~~a number of factors, ~~or assumptions affecting forward-looking statements. Factors that could cause or contribute to these differences include~~including those discussed in the Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020 and our Prospectus filed with~~2021. When we refer to the ~~SEC on February 16, 2021~~“2022 Quarter” and the ~~Prospectus Supplement dated~~“2021 Quarter” we are referring to the three months ended September ~~14, 2021.~~ 30, 2022 and September 30, 2021 quarters, respectively. Further, when we refer to the “2022 Period” and the “2021 Period” we are referring to the nine months ended September 30, 2022 and September 30, 2021 periods, respectively. Additionally, the twelve months ending December 31, 2022 is referred to as “Fiscal 2022.”

Overview

BTCS is an early entrant in the ~~digital asset~~Digital Asset market and one of the first U.S. publicly-traded companies to focus on ~~digital assets~~Digital Assets and blockchain technologies. Through our blockchain-infrastructure operations, we secure disruptive next-generation blockchains and operate validator nodes on various proof-of-stake blockchain networks, earning rewards of additional Digital Assets by ~~actively~~authenticating and validating ~~transactions. We are then rewarded with digital assets, while this process is similar to bitcoin mining the consensus mechanism is different. Now we are building~~transactions on the ~~foundation~~networks. The Company is in the late stages of ~~our pre-established infrastructure with the development of~~developing a ~~digital asset data analytics dashboard. The first feature of the dashboard, which is an open beta, allows~~Digital Asset Platform that would enable users to ~~evaluate~~aggregate their ~~digital asset portfolios~~Digital Asset portfolio holdings from multiple exchanges onand wallets into a single ~~platform.~~platform to view and analyze performance, risk metrics, and potential tax implications. The internally developed platform utilizes Digital Asset exchange APIs to read user data and does not allow for the trading of assets. We also are developing ~~and plan to integrate into~~an integrated proprietary Staking-as-a-Service feature on the ~~platform a staking-as-a-service feature~~Digital Asset Platform that ~~once launched, will allow~~would enable users to participate in asset leveraging through securing blockchain ~~protocols.~~protocols and to stake and delegating supported cryptocurrencies to BTCS operated validator nodes through a non-custodial platform.

Blockchain Infrastructure

Blockchain infrastructure ~~solutions~~operations can broadly be defined as earning a reward for securing a blockchain by validating transactions on that blockchain. There are currently two main consensus mechanisms used to secure blockchains: i), proof-of-work (“PoW”), in which nodes dedicate computational resources, and ii) proof-of-stake (“PoS”), in which nodes dedicate financial resources. The intention behind both PoW and PoS is to make it practically ~~infeasible~~impossible for any single malicious actor to have enough computational power or ownership stake to successfully attack the blockchain.

In the case of PoW, a miner does “work” using energy-consuming computers and is rewarded for this “work” with ~~digital assets.~~Digital Assets. The miner, typically through pools running nodes, validates transactions on the blockchain, essentially converting electricity and computing power into a digital currency reward comprised of transaction fees and newly-minted ~~digital assets.~~Digital Assets. Bitcoin is an example of PoW and is by far the largest and most secure PoW blockchain.

PoS miners, often referred to as validators in PoS systems, ~~actively~~ operate nodes and validate transactions. Validators are required to stake holdings of a digital currency to participate in the consensus algorithm and are rewarded in tokens for aligning behavior with the rules of the algorithm. Bad behavior can be penalized by “slashing” the validator’s holdings and/or rewards. Validators can also be removed from the network for breaking the rules. Ill-intentioned behavior among validators is discouraged, allowing for the blockchain to be properly maintained and secured. Compared to PoW, PoS blockchains require less energy.

Depending on the PoS blockchain protocol, native token holders have the opportunity to leverage their asset holdings by either running their own validator (“Validating”) or delegating their rights to a validator (“Delegating”~~), staking their token holdings in a staking pool (“Staking”),~~ or ~~running their own validator (“Pooling”~~“Staking”). With Delegating or Staking, token holders ~~indirectly~~ participate in blockchain networks by maintaining control of their private keys and delegating their tokens to an existing validator. Therefore, ~~delegating~~Delegating is more akin to assigning voting rights of stock to another person or entity via a power of attorney. With ~~Pooling, an~~Validating, a node operator and token holder combine tokens in order to improve the ~~constituents’~~node’s collective odds of earning token rewards for successfully validating new transactions and blocks ~~and typically~~on the ~~operator takes custody of token holders funds i.e. private keys. If chosen for validation, the group is rewarded in tokens.~~network. With both Delegating and ~~Pooling,~~Validating, the validator operators earn a fee for providing the technical administerial capabilities of running a node 24/7 that requires regular, ~~active~~ maintenance and industry expertise.

~~The Company built~~BTCS uses its ~~foundation~~blockchain infrastructure to operate validator nodes on ~~securing~~various proof of stake-based blockchain networks. In connection with the validation of transactions occurring on those blockchain networks, BTCS will stake the Digital Assets native to those blockchains on the validator nodes it operates in order to earn staking rewards. BTCS may also use its blockchain infrastructure to validate and authenticate transactions on behalf of customers that delegate their validation and voting rights to BTCS-operated validator nodes (referred to as “Staking-as-a-Service” or “SaaS”).

A SaaS provider maintains an administerial role in validating transactions on a given PoS ~~blockchains. Apart from Bitcoin~~network on behalf of its delegators by maintaining the validator nodes we operate to ensure they remain online and ~~Ethereum, all~~ready to validate transactions.

All of the Company’s ~~digital asset~~Digital Asset holdings are in tokens secured by PoS or similar consensus ~~mechanisms that allow for Delegating and asset leveraging.~~mechanisms. The Company is currently actively operating validator nodes on ~~Ethereum’s beacon chain, Cardano,~~Ethereum, Cosmos, Kava, Tezos, Avalanche, Kusama, Polygon, Mina, Akash and ~~Cosmos.~~Cardano. The Company has also staked the following tokens Polkadot, Algorand, Axie Infinity, Oasis and Solana. Building on that base, the Company plans to expand its PoS operations to secure other disruptive blockchain ~~protocols.~~protocols that also allow for Delegating and asset leveraging.

The ~~Company’s plan is that this~~Company believes its blockchain infrastructure efforts will form the core growth for ~~the growth of~~ its ~~platform.~~Digital Asset Platform. The Company utilizes cloud infrastructure to operate and run its validator nodes and does not maintain its own physical assets, but may add this infrastructure in the future. ~~The Company is not currently securing PoW blockchains, such as Bitcoin’s blockchain, but may in the future.~~

The ~~Company currently holds~~table below describes our Digital Asset holdings as of the ~~following digital assets which are core to its blockchain infrastructure efforts. The table also includes bitcoin which is not core to our infrastructure operations.~~end of the third quarter of 2021 until the end of the 2022 Period.

Digital Assets Held at Period End

Digital Assets
Asset	2019Q3		2019Q4		2020Q1		2020Q2		2020Q3		2020Q4		2021Q1		2021Q2		2021Q3		2021 Q3		2021 Q4		2022 Q1		2022 Q2		2022 Q3
Bitcoin (BTC)		14.9		20.6		20.6		54.3		63.6		66.9		90.0		90.0		90.0		90		90		90		-		-
Ethereum (ETH)		584.7		985.0		985.0		2,304.6		2,554.7		2,674.2		7,732.5		7,878.6		7,992.4		7,992		8,098		8,196		8,283		8,380
Cardano (ADA)																257,757.4		257,757.4		257,757		257,757		257,757		260,555		262,860
Kusama (KSM)																123.4		374.2		374		374		5,278		5,550		6,297
Tezos (XTZ)																14,965.6		24,171.9		24,172		24,504		70,453		71,369		72,578
Solana (SOL)																		4,787.5		4,788		4,779		7,043		7,136		7,238
Polkadot (DOT)																		8,032.1		8,032		8,032		38,816		39,986		23,905
Terra (Luna)																		3,584.2
Cosmos (Atom)																		3,072.4
Polygon (Matic)																		67,114.1
Avalanche (Avax)																		2,024.7
Algorand (Algo)																		50,583.9
Terra (LUNA)																				3,584		3,584		3,621		-		-
Cosmos (ATOM)																				3,072		3,072		80,474		86,613		91,181
Polygon (MATIC)																				67,114		67,114		454,486		466,022		474,207
Avalanche (AVAX)																				2,025		2,073		14,273		14,594		14,888
Algorand (ALGO)																				50,584		51,103		51,197		51,201		51,201
Axie Infinity (AXS)																								22,322		31,763		37,402
Kava (KAVA)																								183,966		264,917		280,293
Band Protocol (BAND)																												992
Mina (MINA)																												71,297
Oasis Network (ROSE)																												349,661
Akash (AKT)																												103,730

Fair Market Value of Digital Assets at Period End

Fair Market Value of Digital Assets
Asset 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3
Bitcoin (BTC) $ 123,733 $ 148,406 $ 132,831 $ 496,027 $ 686,580 $ 1,962,572 $ 5,302,695 $ 3,153,675 $ 3,941,180
Ethereum (ETH)* $ 105,175 $ 127,662 $ 131,582 $ 521,552 $ 919,748 $ 1,976,126 $ 14,833,709 $ 17,920,148 $ 23,990,541
Cardano (ADA) $ 356,600 $ 545,028
Kusama (KSM) $ 26,501 $ 123,957
Tezos (XTZ) $ 45,495 $ 146,914
Solana (SOL) $ 675,373
Polkadot (DOT) $ 229,558
Terra (Luna) $ 138,351
Cosmos (Atom) �� $ 111,252
Polygon (Matic) $ 75,644
Avalanche (Avax) $ 135,191
Algorand (Algo) $ 82,381
Total $ 228,908 $ 276,068 $ 264,413 $ 1,017,579 $ 1,606,328 $ 3,938,698 $ 20,136,404 $ 21,502,420 $ 30,195,370
QoQ Change 21 % -4 % 285 % 58 % 145 % 411 % 7 % 40 %
YoY Change 1,327 % 7,516 % 2,013 % 1,780 %

Asset	2021 Q3			2021 Q4			2022 Q1			2022 Q2			2022 Q3
Bitcoin (BTC)		3,941,180			4,167,579			4,098,481			-			-
Ethereum (ETH)*		23,990,541			29,820,477			26,894,723			8,840,595			11,128,675
Cardano (ADA)		545,028			337,716			294,320			119,555			114,190
Kusama (KSM)		123,957			103,866			992,851			267,583			265,505
Tezos (XTZ)		146,914			106,679			262,023			101,102			103,210
Solana (SOL)		675,373			813,791			863,854			239,700			240,377
Polkadot (DOT)		229,558			214,616			826,875			281,496			150,964
Terra (LUNA)		138,351			306,353			373,005			-			-
Cosmos (ATOM)		111,252			99,761			2,325,374			651,909			1,186,824
Polygon (MATIC)		75,644			169,604			735,034			222,466			368,671
Avalanche (AVAX)		135,191			226,499			1,383,403			247,059			256,021
Algorand (ALGO)		82,381			84,830			47,492			16,115			18,044
Axie Infinity (AXS)								1,416,264			461,649			470,116
Kava (KAVA)								828,742			468,634			423,326
Band Protocol (BAND)														1,215
Mina (MINA)														42,085
Oasis Network (ROSE)														21,330
Akash (AKT)														26,881
Total		30,195,370			36,451,772			41,342,441			11,917,864			14,817,434
QoQ Change		40	%		21	%		13	%		-71	%		24	%
YoY Change		1780	%		825	%		105	%		-45	%		-51	%

* Approximately 9 ETH is not ~~staked on Ethereum 2.0’s Beacon Chain.~~staked.

Prices of Digital Assets at Period End

Asset	2021 Q3		2021 Q4			2022 Q1		2022 Q2		2022 Q3
Bitcoin (BTC)	$	43,791	$	46,306		$	45,539	$	19,785	$	19,432
Ethereum (ETH)	$	3,002	$	3,683		$	3,282	$	1,067	$	1,328
Cardano (ADA)	$	2.11	$	1.31		$	1.14	$	0.46	$	0.43
Kusama (KSM)	$	331	$	278		$	188	$	48	$	42
Tezos (XTZ)	$	6.08	$	4.35	��	$	3.72	$	1.42	$	1.42
Solana (SOL)	$	141	$	170		$	123	$	34	$	33
Polkadot (DOT)	$	28.58	$	26.72		$	21.30	$	7.04	$	6.32
Terra (LUNA)	$	38.60	$	85.47		$	103	$	-	$	-
Cosmos (ATOM)	$	36.21	$	32.47		$	28.90	$	7.53	$	13.02
Polygon (MATIC)	$	1.13	$	2.53		$	1.62	$	0.48	$	0.78
Avalanche (AVAX)	$	66.77	$	109		$	96.92	$	16.93	$	17.20
Algorand (ALGO)	$	1.63	$	1.66		$	0.93	$	0.31	$	0.35
Axie Infinity (AXS)						$	63.45	$	14.53	$	12.57
Kava (KAVA)						$	4.50	$	1.77	$	1.51
Band Protocol (BAND)										$	1.22
Mina (MINA)										$	0.59
Oasis Network (ROSE)										$	0.06
Akash (AKT)										$	0.26

* The prices have been rounded to the nearest whole dollar for prices above $100

AsThe following table presents the Fair Market Value of ~~November 4, 2021~~Digital Assets held compared to the ~~fair market value of our digital assets was approximately $45.7 million.~~GAAP Book Value reported on the Company’s balance sheet.

	September 30, 2022				December 31, 2021
	Book Value		Fair Value		Book Value		Fair Value
Bitcoin (BTC)	$	-	$	-	$	2,600,426	$	4,167,579
Ethereum (ETH)		5,633,111		11,128,675		8,642,983		29,820,477
Cardano (ADA)		106,883		114,190		258,527		337,716
Kusama (KSM)		237,906		265,505		81,296		103,866
Tezos (XTZ)		87,412		103,210		62,651		106,679
Solana (SOL)		189,103		240,377		248,698		813,791
Polkadot (DOT)		143,413		150,964		182,570		214,616
Terra (LUNA)		-		-		80,968		306,353
Cosmos (ATOM)		532,006		1,186,824		46,174		99,761
Polygon (MATIC)		156,353		368,671		68,362		169,604
Avalanche (AVAX)		206,808		256,021		50,190		226,499
Algorand (ALGO)		14,157		18,044		43,948		84,830
Axie Infinity (AXS)		437,876		470,116		-		-
Kava (KAVA)		394,140		423,326		-		-
Band Protocol (BAND)		1,076		1,215		-		-
Mina (MINA)		40,180		42,085		-		-
Oasis Network (ROSE)		16,322		21,330		-		-
Akash (AKT)		26,513		26,881		-		-
Total	$	8,223,259	$	14,817,434	$	12,366,792	$	36,451,772

Digital Asset Platform

The Company is ~~also~~in the late stages of developing a proprietary ~~digital asset data analytics dashboard~~Digital Asset Platform aimed at allowing users to evaluate their crypto portfolio holdings across multiple exchanges and ~~chains~~wallets on a single platform. The internally-developed dashboard utilizes ~~digital asset exchange~~ APIs to read user data and does not allow for the trading of assets. In addition to portfolio monitoring, we are also working to integrate a full suite of ~~other features including decentralized exchanges, wallets, risk metrics~~additional analytical, tracking and ~~potentially a way for users to calculate end-of year-reports for tax purposes.~~reporting features. We believe that increasing the number of features we offer may create a sticky user experience across multiple, interrelated products.

~~Additionally, the~~The Company is also currently developing and plans to integrate into the ~~platform~~Digital Asset Platform a proprietary ~~staking-as-a-service~~Staking-as-a-Service feature aimed at allowing users to delegate ~~their tokens on next-generation PoS blockchains~~supported cryptocurrencies to ~~Company~~BTCS operated validator ~~nodes.~~

nodes through a non-custodial platform. Delegation (or “staking”) involves committing (or locking) Digital ~~Asset Treasury Strategy~~

~~The Company employs~~Assets on a ~~digital~~blockchain network to support and secure the network and allows delegators to earn native token rewards on their staked assets during the duration of their stake. Validator node operators charge a fee on delegated staked asset ~~treasury strategy with a primary focus~~rewards earned in addition to earning rewards on ~~disruptive protocol layer assets such~~their own staked assets. In turn, the highly scalable nature of both staking Digital Assets as ~~Bitcoin which are not able~~well as allowing users to ~~be staked (i.e. non-productive). They are distinct from digital assets used as~~stake Digital Assets to earn token rewards is the ~~foundation for our blockchain infrastructure operations previously discussed. The Company’s digital asset treasury holding is comprised of 90 bitcoins as set forth above.~~

The Company is not limiting its assets to a single type of digital asset and may hold a variety of digital assets. The Company will carefully review its purchases of digital securities to avoid violating the 1940 Act and seek to reduce potential liabilities under the federal securities laws.

~~The market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or may have greater resources than us.~~premise behind BTCS’ Staking-as-a-Service platform.

~~Non-GAAP financial measure~~

In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA, a non-GAAP measure, is useful in evaluating our operating performance. We believe that Adjusted EBITDA may be helpful to investors because it provides consistency and comparability with past financial performance and the economic realities of our business specifically, but not limited to, the accounting for digital assets. However, Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Among other non-cash and non-recurring items, Adjusted EBITDA excludes stock-based compensation expense (including stock-based compensation issued to service providers), which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

We calculate Adjusted EBITDA as net income (loss), adjusted to exclude, depreciation and amortization, interest expense, change in fair value of warrant liabilities, stock-based compensation expense (including stock-based compensation issued to service providers), and impairment of intangible digital assets.

~~The following table provides a reconciliation of net income (loss) to Adjusted EBITDA:~~

Nine Months Ended September 30,
2021 2020

Net income (loss) $ (15,466,585 ) $ (1,795,897 )
Adjusted to exclude the following:
Depreciation and amortization 1,716,744 16,606
Interest expense 172,603 204,882
Change in fair value of warrant liabilities (2,066,250 ) -
Stock-based compensation 13,744,967 -
Impairment of intangible digital assets 3,777,785 162,254
Adjusted EBITDA 1,879,264 (1,412,155 )

Results of Operations for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

The following ~~table reflects~~tables reflect our operating results for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:

							For the Three Months Ended
	Three Months Ended September 30,						September 30,						$ Change			% Change
	2021			2020			2022			2021			2022			2022

Revenues
Validator revenue	$	323,376		$	-		$	344,196		$	323,376		$	20,820			6	%
Total revenues		323,376			-			344,196			323,376			20,820			6

Cost of revenues
Validator expense		71,690			-			82,203			71,690			10,513			15
Gross profit		251,686			-			261,993			251,686			10,307			4

Operating expenses:
General and administrative	$	282,558		$	650,049		$	432,956		$	282,558		$	150,398			53	%
Research and development		273,909			-			126,857			273,909			(147,052	)		(54	)
Compensation and related expenses		4,747,106			228,540			669,792			4,747,106			(4,077,314	)		(86	)
Marketing		7,559			1,365			8,765			7,559			1,206			16
Impairment loss on digital assets/currencies								145,247			208,647			(63,400	)		(30	)
Realized gains on digital asset/currency transactions								(20,126	)		-			(20,126	)		N/A
Total operating expenses		5,311,132			879,954			1,363,491			5,519,779			(4,156,288	)		(75	)

Other (expenses) income:
Other income (expenses):
Interest expense		(58,521	)		(96,068	)		-			(58,521	)		58,521			(100	)
Amortization on debt discount		(581,973	)		-			-			(581,973	)		581,973			(100	)
Change in fair value of warrant liabilities		2,066,250			-			71,250			2,066,250			(1,995,000	)		(97	)
Impairment loss on digital assets/currencies		(208,647	)		(29,302	)
Distributions to warrant holders								-			-			-			N/A
Total other income (expenses)		1,217,109			(125,370	)		71,250			1,425,756			(1,354,506	)		95

Net loss	$	(3,842,337	)	$	(1,005,324	)	$	(1,030,248	)	$	(3,842,337	)		2,812,089			(73	)
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock		(13,188	)		-
Net loss attributable to common stockholders	$	(3,855,525	)	$	(1,005,324	)

	For the Nine Months Ended
	September 30,						$ Change			% Change
	2022			2021			2022			2022

Revenues
Validator revenue	$	1,421,560		$	776,399		$	645,161			83	%
Total revenues		1,421,560			776,399			645,161			83
	��
Cost of revenues
Validator expense		313,972			145,935			168,037			115
Gross profit		1,107,588			630,464			477,124			76

Operating expenses:
General and administrative	$	1,595,296		$	1,149,506		$	445,790			39	%
Research and development		448,579			602,178			(153,599	)		(26	)
Compensation and related expenses		2,731,713			13,788,556			(11,056,843	)		(80	)
Marketing		74,249			10,345			63,904			618
Impairment loss on digital assets/currencies		12,347,472			3,777,785			8,569,687			227
Realized gains on digital asset/currency transactions		(489,682	)		(3,054,418	)		2,564,736			84
Total operating expenses		16,707,627			16,273,952			433,675			3

Other income (expenses):
Interest expense		-			(172,603	)		172,603			(100	)
Amortization on debt discount		-			(1,716,744	)		1,716,744			(100	)
Change in fair value of warrant liabilities		1,140,000			2,066,250			(926,250	)		(45	)
Distributions to warrant holders		(35,625	)		-			(35,625	)		N/A
Total other income (expenses)		1,104,375			176,903			927,472			(524	)

Net loss	$	(14,495,664	)	$	(15,466,585	)		970,921			(6	)

Validator Revenue

~~Revenue for the three months ended September 30, 2021 and 2020 were approximately $0.3 million and $0, respectively.~~ The increase in revenue during the 2022 Quarter and 2022 Period as compared to the 2021 Quarter and 2021 Period is from the expansion of our blockchain infrastructure ~~solutions~~ validating revenue. We believe revenues may increase for the period ending December 31, 2022 as a result of an improvement in market prices of the Digital Assets we have earned and/or purchased, rebounding from 2022 market low prices in June 2022.

Cost of Revenues

~~Cost~~The increase in cost of revenues ~~for the three months ended September 30, 2021 and 2020 were approximately $72,000 and $0, respectively. The increase~~ is ~~from~~due to our blockchain infrastructure validating operating costs, including, web service hosting fees, and cash and stock-based compensation related to services provided by ~~vendor.~~vendors. We believe our cost of revenues will increase as we continue to ramp up our business. However, we believe gross margin will improve as we add scale to our blockchain infrastructure operations and reduce costs as a result of increased operational efficiencies, leading to improved gross profits.

Operating Expenses

~~Operating~~The decrease in operating expenses ~~for~~in the ~~three months ended September 30, 2021 and 2020 were approximately $5.3 million and $0.9 million, respectively. The increase~~2022 Quarter is primarily due to the ~~issuance of 1.2 million options and issuance of 290,000 RSUs, which vested in September, rendering~~ $4.7 million ~~in stock-based compensation expense~~non-cash contingent bonuses granted to employees and our non-employee directors during the ~~three months ended September 30, 2021.~~2021 Quarter for the achievement of performance milestones.

The increase in operating expenses in the 2022 Period is primarily due to the $12.3 million impairment loss on Digital Assets (“Digital Asset Impairment”) in the 2022 Period, compared to only $3.8 million Digital Asset Impairment in the 2021 Period. This is partially offset by the $13.3 million non-cash contingent bonuses granted to employees and our non-employee directors during the 2021 Period for the achievement of performance milestones.

We believe operating expenses will remain consistent as the Company continues to utilize equity-based bonus incentives as a core part of our compensation strategy. However, volatility in the Digital Asset markets will subject the Company to the possibility of additional impairment charges on its Digital Asset holdings.

The Company is evaluating additional opportunities to reduce costs. As part of our cost cutting measures, in June 2022, the Board of Directors reduced all director fees for 2022 from $50,000 to $25,000 and reduced the Audit, Compensation and Nominating and Corporate Governance committee chair fees for 2022 to $5,000. Additionally, Charles Allen and Michal Handerhan, the Company’s Chief Executive Officer and Chief Operating Officer, respectively, agreed to forfeit $25,000 of their annual base salaries for 2022. Collectively, these cost-cutting measures will result in cost savings of approximately $141,000 for 2022.

Other Income (Expenses)

~~Other~~The changes in other income ~~(expenses)~~ for the ~~three months ended September 30, 2021 and 2020~~periods reported was ~~approximately $1.2 million and $(0.1) million, respectively. The decrease in other expenses is~~ primarily due to ~~a $2.0 million change~~the decrease in the fair value of warrant ~~liabilities, partially offset~~liabilities. This non-cash expense is driven by ~~$0.6 million increase in amortization~~the value of ~~debt discount on~~ our ~~convertible notes and $0.2 million increase in impairment loss on digital assets/currencies.~~stock price at the end of each quarter which we cannot predict.

Net loss

~~Net~~The decrease in our net loss for the ~~three months ended September 30, 2021 and 2020~~periods reported was ~~approximately $3.8 million and $1.0 million, respectively. The increase is primarily due to an increase of operating expenses, as discussed above.~~

~~Net loss attributable to common stockholders~~

We incurred approximately $13,000 and $0 related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock for the three months ended September 30, 2021 and 2020, respectively.

~~Digital Asset Rewards Fair Market Value~~

~~The fair market value as of September 30, 2021 of earned digital assets rewards for operating validator nodes for the three months ended September 30, 2021 was $343,725.~~

~~Results of Operations for the Nine Months Ended September 30, 2021 and 2020~~

~~The following table reflects our operating results for the nine months ended September 30, 2021 and 2020:~~

Nine Months Ended September 30,
2021 2020

Revenues
Validator revenue $ 776,399 $ -
Total revenues 776,399 -

Cost of revenues
Validator expense 145,935 -
Gross profit 630,464 -

Operating expenses:
General and administrative $ 1,149,506 $ 935,118
Research and development 602,178 -
Compensation and related expenses 13,788,556 469,935
Marketing 10,345 5,420
Total operating expenses 15,550,585 1,410,473

Other (expenses) income:
Interest expense (172,603 ) (204,882 )
Amortization on debt discount (1,716,744 ) (16,606 )
Change in fair value of warrant liabilities 2,066,250 -
Impairment loss on digital assets/currencies (3,777,785 ) (162,254 )
Realized gains (loss) on digital asset/currency transactions 3,054,418 (1,682 )
Total other expenses (546,464 ) (385,424 )

Net loss $ (15,466,585 ) $ (1,795,897 )
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock (45,541 ) -
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock (5,020,883 ) -
Net loss attributable to common stockholders $ (20,533,009 ) $ (1,795,897 )

~~Revenue~~

~~Revenue for the nine months ended September 30, 2021 and 2020 were approximately $0.8 million and $0, respectively. The increase is from our blockchain infrastructure validating revenue.~~

~~Cost of Revenues~~

Cost of revenues for the nine months ended September 30, 2021 and 2020 were approximately $146,000 and $0, respectively. The increase is from our blockchain infrastructure validating operating costs, including, web service hosting fees, and cash and stock-based compensation related to services provided by vendor.

~~Operating Expenses~~

~~Operating expenses for the nine months ended September 30, 2021 and 2020 were approximately $15.6 million and $1.4 million, respectively. The increase is~~ primarily due to the ~~issuance~~decrease in operating expenses and changes in other income (expense) as discussed above. We believe that our net loss will increase as the Company incurs increased costs related to the development of ~~1.2 million options, 0.7 million of which vested during~~its Digital Asset Platform and incurs additional Digital Asset Impairment losses due to volatility in the nine months ended September 30, 2021, and issuance of 340,782 RSUs, 290,000 of which vested during the nine months ended September 30, 2021, rendering $13.3 million in stock-based compensation expense.Digital Asset markets.

~~Other Expenses~~Liquidity and Capital Resources

Other expenses for the nine months ended September 30, 2021 and 2020 was approximately $0.5 million and $0.4 million, respectively. The increase in other expenses is primarily due to a $3.8 million impairment loss on digital assets/currencies and $1.7 million amortization of debt discount and interest expense on our convertible notes, partially offset by $3.1 million in realized gains on digital assets/currency transactions.ATM Financing

~~Net loss~~On September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, as agent (“H.C. Wainwright”), pursuant to which the Company may offer and sell, from time-to-time through H.C. Wainwright, shares of the Company’s Common Stock having an aggregate offering price of up to $98,767,500. From the period September 14, 2021 through November 8, 2022, the Company sold a total of 2,639,127 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $14,465,000 at an average selling price of $5.48 per share, resulting in net proceeds of approximately $14,008,000 after deducting commissions and other transaction costs.

Net loss for the nine months ended September 30, 2021 and 2020 was approximately $15.5 million and $1.8 million, respectively. The increase is primarily due to increase of operating expenses, as mentioned above.Liquidity

~~Net loss attributable~~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. Liquidity is the ability of a company to ~~common stockholders~~generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At September 30, 2022, the Company had $2.9 million of cash.

We ~~incurred approximately $46,000~~view our Digital Assets as long-term holdings and ~~$0 related~~we do not plan to ~~amortization~~engage in regular trading of ~~beneficial conversion feature~~Digital Assets. During times of ~~Series C-2 convertible preferred stock, and $5.0 million and $0~~instability in the market of ~~deemed dividends related~~Digital Assets, we may not be able to ~~recognition~~sell our Digital Assets at reasonable prices or at all. As a result, our Digital Assets may not be able to serve as a source of ~~anti-dilution adjustment to conversion amount~~liquidity for ~~Series C-2 convertible preferred stock for the nine months ended September 30, 2021 and 2020, respectively.~~

~~Digital Asset Rewards Fair Market Value~~

~~The fair market value as of September 30, 2021 of earned digital assets rewards for operating validator nodes for the nine months ended September 30, 2021 was $906,339.~~

~~Liquidity and Capital Resources~~

~~Net Cash from Operating Activities~~

For the nine months ended September 30, 2021, net cash used in operating activities was $3.9 million, which was primarily driven by a $15.5 million net loss and $5.8 million purchase of non-productive digital currencies, a $3.1 million realized gain on non-productive digital assets/currencies transaction; this was partially offset by the sale of non-productive digital assets/currencies of $4.3 million, a $3.8 million impairment loss on digital currencies, and $13.9 million in stock-based compensation.

Net cash used in operating activities was approximately $1.7 million for the nine months ended September 30, 2020. Net cash used in operating activities for the nine months ended September 30, 2020 was primarily driven by a $1.8 million net loss and $0.8 million purchase of digital currencies, and partially offset by an impairment loss on digital currencies of $0.2 million.

~~Net Cash from Investing Activities~~

For the nine months ended September 30, 2021, net cash used in investing activities was $9.5 million, which stemmed from the $9.5 million purchase of productive digital assets/currencies for our blockchain infrastructure validator operations.

~~For the nine months ended September 30, 2020, there were no investing activities.~~

~~Net Cash from Financing Activities~~

For the nine months ended September 30, 2021, net cash provided by financing activities was approximately $13.5 million, which was primarily driven by approximately $3.0 million in aggregate proceeds from common stock sold under our Equity Line Purchase Agreement, $1.0 million proceeds from the issuance of convertible notes, $8.9 million in net proceeds from the issuance of common stock and warrants for cash, $0.4 million from the cash exercise of Series C Warrants, $1.1 million in proceeds from the issuance of Series C-2 convertible preferred stock, and $0.2 million in proceeds from common stock sold pursuantus to the ~~ATM Agreement.~~

~~For the nine months ended September 30, 2020, net~~same extent as cash provided by financing activities was approximately $1.9 million, which was primarily driven by approximately $1.4 million in aggregate proceeds from common stock sold under our Equity Line Purchase Agreement, and ~~the issuance of a $500,000 short term convertible note payable in April 2020.~~

~~Liquidity~~cash equivalents.

As of November ~~4, 2021,~~8, 2022, the Company had approximately ~~$1.4~~$2.6 million of cash ~~approximately $97 million available under the ATM Agreement,~~ and the fair market value of the Company’s liquid ~~digital assets~~Digital Assets was approximately ~~$8.8 million.~~

~~On September 30, 2021, we had current assets~~$3.3 million, which excludes $11.1 million of ~~$4.3 million, long term assets~~staked Ethereum. The Company has no outstanding debt. As of ~~$8.8 million, and current liabilities of $4.7 million; working capital amounted to $(0.4) million.~~

~~During the nine months ended September 30, 2021,~~November 8, 2022, the Company ~~received net proceeds of~~also has approximately ~~$14.6~~$17.6 million available under the At the Market Offering Agreement under the Form S-3 baby shelf rules, although, the amount that we may raise under the Form S-3 may increase or decrease based upon our stock price. The Company believes that the existing cash and liquid Digital Assets held by us, in addition to the funds available to the Company from the issuance ~~of: Series C-2 convertible preferred~~of additional stock a convertible note, common stock and warrants issued pursuant to the Purchase agreement, common stock issued pursuant to the Equity Line Purchase Agreement, the cash exercise of warrants, and the proceeds from the common stock sold pursuant tothrough the ATM ~~Agreement. On September 30, 2021, the fair market value of the Company’s liquid digital assets was approximately $6.2 million. As such, the Company has adequate cash~~Agreement, provide sufficient liquidity to ~~fund operations~~meet working capital requirements, anticipated capital expenditures and contractual obligations for at least the next twelve months.

Cash Flows

Cash used in operating activities was approximately $130,000 during the 2022 Period compared to $3.9 million for the 2021 Period.

Cash used in investing activities was $8.8 million during the 2022 Period compared to $9.5 million for the 2021 Period. Net cash outflow for investing activities was used primarily for the purchase of Digital Assets for our blockchain infrastructure operations.

Cash provided by financing activities was $10.5 million during the 2022Period compared to $13.5 million for the 2021 Period. The cash inflows from financing activities were primarily from proceeds from the Common Stock sold pursuant to the ATM Agreement ($11.1 million). This was partially offset by a one-time return of capital distribution of $635,000 made to record holders as of March 17, 2022. The Company has plans to continue to raise proceeds from the sale of Common Stock to fund operations as needed.

Off Balance Sheet Transactions

~~We are~~As of September 30, 2022, there were no off-balance sheet arrangements and we were not a party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations.

RECENT ACCOUNTING PRONOUNCEMENTS

For information on recent accounting pronouncements, see Note 43 to the Unaudited Condensed Financial Statements.

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

ITEM 4 Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~We conducted an evaluation,~~Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, ofhave evaluated the effectiveness of the ~~design and operation of our~~Company’s disclosure controls and procedures as(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act,~~Act) as of September 30, 2021 to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, our management has concluded that our2022. Our disclosure controls and procedures are ~~effective as of the end of the period covered by this report~~designed to ~~ensure~~provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the ~~SEC’s~~ rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to ~~our~~the company’s management, including ~~our Principal Executive Officer~~its principal executive and ~~Principal Financial Officer,~~principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, management concluded that our disclosure controls and procedures were effective as of September 30, 2022.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during ~~our most recently completed fiscal quarter~~the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 Legal Proceedings

None.

ITEM 1A Risk Factors

Not applicable to smaller reporting companies.

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

In addition to those unregistered securities previously disclosed in reports filed with the Securities and Exchange Commission, we have issued securities without registration under the Securities Act of 1933 (the “Securities Act”), as described below.None.

~~Name or Class of Investor~~	~~Date of Issuance~~	~~No. of Securities(1)~~	~~Reason for Issuance (2)~~
~~Investor Relations~~	~~January 2021~~	~~40,000~~	~~Investor Relation Services~~

~~Consultant~~	~~February 2021~~	~~65,790~~	~~Staking Solution Services~~

~~Series C-1 Holder~~	~~March 2021~~	~~19,610~~	~~Conversion of Series C-1 Preferred Stock~~

~~Legal Counsel~~	~~April 2021~~	~~4,855~~	~~In lieu of cash payment for legal services~~

~~Digital Analytics Consultant~~	~~April 2021~~	~~1,364~~	~~Digital Analytics Services~~

~~Series C-2 Holders (Related party)~~	~~September 2021~~	~~4,011,766~~	~~Conversion of Series C-2 Preferred Stock~~

~~(1)~~

~~Approximate as a result of rounding for Reverse Split. Represents shares of common stock.~~

~~(2)~~

Unless otherwise noted, exempt under Section 4(a)(2) of the Securities Act and Regulation 506(b) thereunder. The securities were issued to accredited investors and there was no general solicitation. The conversion of the Series C-1 was exempt under Section 3(a)(9) of the Securities Act.

ITEM 3 Defaults Upon Senior Securities

None.

ITEM 4 Mine Safety Disclosures

Not applicable.

ITEM 5 Other Information

On November 4, 2021, Mr. Andrew Lee resigned as the Company’s Chief Financial Officer. In connection with the resignation, the Board of Directors appointed Mr. Charles Allen, the Company’s current Chairman of the Board and Chief Executive Officer as the Company’s interim Chief Financial Officer. Mr. Allen will not receive any additional compensation for his interim role as Chief Financial Officer. The Company anticipates hiring a new Chief Financial Officer by December 31, 2021.None.

Mr. Allen has served as our Chief Executive Officer since February 2014 and as our Chairman of the Board since September 2014. Mr. Allen previously served as the Company’s Chief Financial Officer from February 2014 until June 28, 2021.

ITEM 6 Exhibits

The exhibits listed in the accompanying “Exhibit Index” are filed or incorporated by reference as part of this Form 10-Q.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BTCS Inc.

November ~~9, 2021~~10, 2022
	By:	/s/ Charles Allen
		Charles W. Allen
		Chief Executive Officer ~~and Chief Financial Officer~~
		(Principal Executive ~~Officer and Principal Financial~~ Officer)

EXHIBIT INDEX

Incorporated by Reference Filed or Furnished
Exhibit # Exhibit Description Form Date Number Herewith
1.1 At-The-Market Offering Agreement, dated September 14, 2021, 2020, by and between BTCS Inc. and H.C. Wainwright & Co., LLC. 8-K
9/14/21
1.1
3.1 Amended and Restated Articles of Incorporation, as of May 2010 10-K 3/31/11 3.1
3.1(a) Certificate of Amendment to Articles of Incorporation - Increase Authorized Capital 8-K 3/25/13 3.1
3.1(b) Certificate of Amendment to Articles of Incorporation - Increase Authorized Capital 8-K 2/5/14 3.1
3.1(c) Certificate of Amendment to Articles of Incorporation - Reverse Stock Split 8-K 2/16/17 3.1
3.1(d) Certificate of Amendment to Articles of Incorporation - Reverse Stock Split 8-K 4/9/19 3.1
3.1(e) Certificate of Designation for Series A Preferred Stock 8-K 12/9/16 3.1
3.1(f) Certificate of Withdrawal of Certificate of Designation for Series A Preferred Stock 8-K 1/22/21 3.1
3.1(g) Certificate of Designation for Series B Convertible Preferred Stock 8-K 3/15/17 3.1
3.1(h) Certificate of Correction to Series B Convertible Preferred Stock 8-K 3/30/17 3.1
3.1(i) Certificate of Withdrawal of Certificate of Designation for Series B Convertible Preferred Stock 8-K 1/22/21 3.2
3.1(j) Certificate of Designation for Series C-1 Convertible Preferred Stock 8-K 10/10/17 3.1
3.1(k) Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C-1 Convertible Preferred Stock 8-K 12/7/17 3.2
3.1(l) Certificate of Amendment to the Series C-1 Certificate of Designation 8-K 12/3/19 4.1
3.1(m) Certificate of Withdrawal of Certificate of Designation for Series C-1 Preferred Stock 8-K 3/31/21 3.1
3.1(n) Certificate of Designation for Series C-2 Convertible Preferred Stock 8-K 1/4/21 4.1
3.1(o) Certificate of Correction to Series C-2 Convertible Preferred Stock 8-K 1/22/21 3.3
3.1(p) Certificate of Change – Reverse Split
8-K

8/17/21

3.1

3.1(q) Certificate of Withdrawal of Certificate of Designation with respect to the Company’s Series C-2 Preferred Stock.
8-K

10/26/21

3.1

3.2 Bylaws S-1 5/29/08 3.2
4.1 Convertible Note dated as of January 15, 2021 8-K 1/22/21 4.1
4.2 2021 Equity Incentive Plan 10-Q 5/13/21 4.2
10.1 Form of Subscription Agreement – Series C-2 Convertible Preferred Stock 8-K 1/4/21 10.1
10.2 Series D Warrant dated January 15, 2021 8-K 1/22/21 10.1
10.3 Form of Securities Purchase Agreement, dated March 2, 2021, by and between the Company, the Purchasers and the Placement Agent+ 8-K 3/4/21 10.1
10.4 Placement Agent Agreement dated March 2, 2021 by and between the Company and A.G.P./Alliance Global Partners 8-K 3/4/21 10.2
10.5 Common Stock Purchase Warrant dated March 2, 2021, by and between the Company and the Purchasers 8-K 3/4/21 10.3
10.6 Employment Agreement - CFO 10-Q 8/6/21 10.6
31.1 Certification of Principal Executive Officer (302) Filed
32.1 Certification of Principal Executive and Principal Financial Officer (906) Furnished**
101.INS Inline XBRL Instance Document Filed
101.SCH Inline XBRL Taxonomy Extension Schema Document Filed
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed
104 Cover Page Interactive Data File (embedded within the Inline XBRL document) Filed
Incorporated by Reference Filed or Furnished
Exhibit # Exhibit Description Form Date Number Herewith
3.1 Amended and Restated Articles of Incorporation, as of May 2010 10-K 3/31/11 3.1
3.1(a) Certificate of Amendment to Articles of Incorporation - Increase Authorized Capital 8-K 3/25/13 3.1
3.1(b) Certificate of Amendment to Articles of Incorporation - Increase Authorized Capital 8-K 2/5/14 3.1
3.1(c) Certificate of Amendment to Articles of Incorporation - Reverse Stock Split 8-K 2/16/17 3.1
3.1(d) Certificate of Amendment to Articles of Incorporation - Reverse Stock Split 8-K 4/9/19 3.1
3.1(e) Certificate of Change – Reverse Split 8-K 8/17/21 3.1
3.2 Bylaws S-1 5/29/08 3.2
3.2(a) Amendment No. 1 to the Bylaws 8-K 4/12/22 3.1
4.1 2021 Equity Incentive Plan DEF 14A 4/26/22 Annex A
31.1 Certification of Principal Executive and Financial Officer (302) Filed
31.2 Certification of Principal Financial Officer (302) Filed
32.1 Certification of Principal Executive and Principal Financial Officer (906) Furnished**
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
+ Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission staff upon request.

Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to BTCS Inc., 9466 Georgia Avenue #124, Silver Spring, MD 20910, Attention: Corporate Secretary.

31


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020

Revenues
Validator revenue	$	323,376		$	-		$	776,399		$	-
Total revenues		323,376			-			776,399			-

Cost of revenues
Validator expense		71,690			-			145,935			-
Gross profit		251,686			-			630,464			-


Operating expenses:
General and administrative	$	282,558		$	650,049		$	1,149,506		$	935,118
Research and development		273,909			-			602,178			-
Compensation and related expenses		4,747,106			228,540			13,788,556			469,935
Marketing		7,559			1,365			10,345			5,420
Total operating expenses		5,311,132			879,954			15,550,585			1,410,473

Other (expenses) income:
Interest expense		(58,521	)		(96,068	)		(172,603	)		(35,289	)
Amortization on debt discount		(581,973	)		-			(1,716,744	)		(186,199	)
Change in fair value of warrant liabilities		2,066,250			-			2,066,250			-
Impairment loss on digital assets/currencies		(208,647	)		(29,302	)		(3,777,785	)		(162,254	)
Realized gains (loss) on digital asset/currency transactions		-			-			3,054,418			(1,682	)
Total other income (expenses)		1,217,109			(125,370	)		(546,464	)		(385,424	)

Net loss	$	(3,842,337	)	$	(1,005,324	)	$	(15,466,585	)	$	(1,795,897	)
Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock		(13,188	)		-			(45,541	)		-
Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock		-			-			(5,020,883	)		-
Net loss attributable to common stockholders	$	(3,855,525	)	$	(1,005,324	)	$	(20,533,009	)	$	(1,795,897	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.59	)	$	(0.33	)	$	(3.63	)	$	(0.66	)

Weighted average number of common shares outstanding, basic and diluted		6,518,645			3,083,246			5,660,966			2,700,947


	Series C-1 Convertible									Additional					Total
	Preferred Stock					Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount			Shares		Amount		Capital		Deficit			Deficit
Balance December 31, 2019		29,414	$	29	-		1,983,047	$	1,983	$	116,798,021	$	(116,983,793	)	$	(183,760	)
Balance		29,414	$	29	-		1,983,047	$	1,983	$	116,798,021	$	(116,983,793	)	$	(183,760	)
Common stock issued including equity commitment fee, net		-		-			1,180,989		1,181		1,384,313		-			1,385,494
Conversion of convertible notes		-		-			140,384		140		211,317		-			211,457
Beneficial conversion features associated with convertible notes payable		-		-			-		-		269,231		-			269,231
Net loss		-		-	-		-		-		-		(1,795,897	)		(1,795,897	)
Balance September 30, 2020		29,414	$	29	-		3,304,420	$	3,304	$	118,662,882	$	(118,779,690	)	$	(113,475	)
Balance		29,414	$	29	-		3,304,420	$	3,304	$	118,662,882	$	(118,779,690	)	$	(113,475	)

	Number of Shares		Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2020		-	$	-	$	-		-
Employee options granted		1,235,000		2.14		4,188,000		4.5
Outstanding as of September 30, 2021		1,235,000	$	2.14	$	4,188,000		4.5
Options vested and exercisable		720,000	$	1.90	$	2,512,800		4.5

Fair Market Value of Digital Assets
Asset	2019Q3		2019Q4			2020Q1			2020Q2			2020Q3			2020Q4			2021Q1			2021Q2			2021Q3
Bitcoin (BTC)	$	123,733	$	148,406		$	132,831		$	496,027		$	686,580		$	1,962,572		$	5,302,695		$	3,153,675		$	3,941,180
Ethereum (ETH)*	$	105,175	$	127,662		$	131,582		$	521,552		$	919,748		$	1,976,126		$	14,833,709		$	17,920,148		$	23,990,541
Cardano (ADA)																					$	356,600		$	545,028
Kusama (KSM)																					$	26,501		$	123,957
Tezos (XTZ)																					$	45,495		$	146,914
Solana (SOL)																								$	675,373
Polkadot (DOT)																								$	229,558
Terra (Luna)																								$	138,351
Cosmos (Atom)																				��				$	111,252
Polygon (Matic)																								$	75,644
Avalanche (Avax)																								$	135,191
Algorand (Algo)																								$	82,381
Total	$	228,908	$	276,068		$	264,413		$	1,017,579		$	1,606,328		$	3,938,698		$	20,136,404		$	21,502,420		$	30,195,370
QoQ Change				21	%		-4	%		285	%		58	%		145	%		411	%		7	%		40	%
YoY Change																1,327	%		7,516	%		2,013	%		1,780	%

		Incorporated by Reference			Filed or Furnished
Exhibit #	Exhibit Description	Form	Date	Number	Herewith
1.1	At-The-Market Offering Agreement, dated September 14, 2021, 2020, by and between BTCS Inc. and H.C. Wainwright & Co., LLC.	8-K	9/14/21	1.1
3.1	Amended and Restated Articles of Incorporation, as of May 2010	10-K	3/31/11	3.1
3.1(a)	Certificate of Amendment to Articles of Incorporation - Increase Authorized Capital	8-K	3/25/13	3.1
3.1(b)	Certificate of Amendment to Articles of Incorporation - Increase Authorized Capital	8-K	2/5/14	3.1
3.1(c)	Certificate of Amendment to Articles of Incorporation - Reverse Stock Split	8-K	2/16/17	3.1
3.1(d)	Certificate of Amendment to Articles of Incorporation - Reverse Stock Split	8-K	4/9/19	3.1
3.1(e)	Certificate of Designation for Series A Preferred Stock	8-K	12/9/16	3.1
3.1(f)	Certificate of Withdrawal of Certificate of Designation for Series A Preferred Stock	8-K	1/22/21	3.1
3.1(g)	Certificate of Designation for Series B Convertible Preferred Stock	8-K	3/15/17	3.1
3.1(h)	Certificate of Correction to Series B Convertible Preferred Stock	8-K	3/30/17	3.1
3.1(i)	Certificate of Withdrawal of Certificate of Designation for Series B Convertible Preferred Stock	8-K	1/22/21	3.2
3.1(j)	Certificate of Designation for Series C-1 Convertible Preferred Stock	8-K	10/10/17	3.1
3.1(k)	Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C-1 Convertible Preferred Stock	8-K	12/7/17	3.2
3.1(l)	Certificate of Amendment to the Series C-1 Certificate of Designation	8-K	12/3/19	4.1
3.1(m)	Certificate of Withdrawal of Certificate of Designation for Series C-1 Preferred Stock	8-K	3/31/21	3.1
3.1(n)	Certificate of Designation for Series C-2 Convertible Preferred Stock	8-K	1/4/21	4.1
3.1(o)	Certificate of Correction to Series C-2 Convertible Preferred Stock	8-K	1/22/21	3.3
3.1(p)	Certificate of Change – Reverse Split	8-K	8/17/21	3.1
3.1(q)	Certificate of Withdrawal of Certificate of Designation with respect to the Company’s Series C-2 Preferred Stock.	8-K	10/26/21	3.1
3.2	Bylaws	S-1	5/29/08	3.2
4.1	Convertible Note dated as of January 15, 2021	8-K	1/22/21	4.1
4.2	2021 Equity Incentive Plan	10-Q	5/13/21	4.2
10.1	Form of Subscription Agreement – Series C-2 Convertible Preferred Stock	8-K	1/4/21	10.1
10.2	Series D Warrant dated January 15, 2021	8-K	1/22/21	10.1
10.3	Form of Securities Purchase Agreement, dated March 2, 2021, by and between the Company, the Purchasers and the Placement Agent+	8-K	3/4/21	10.1
10.4	Placement Agent Agreement dated March 2, 2021 by and between the Company and A.G.P./Alliance Global Partners	8-K	3/4/21	10.2
10.5	Common Stock Purchase Warrant dated March 2, 2021, by and between the Company and the Purchasers	8-K	3/4/21	10.3
10.6	Employment Agreement - CFO	10-Q	8/6/21	10.6
31.1	Certification of Principal Executive Officer (302)				Filed
32.1	Certification of Principal Executive and Principal Financial Officer (906)				Furnished**
101.INS	Inline XBRL Instance Document				Filed
101.SCH	Inline XBRL Taxonomy Extension Schema Document				Filed
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				Filed
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)				Filed

**	This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

+	Certain schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission staff upon request.