UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________. Commission file number: 000-55141 BTCS Inc. (Exact name of registrant as specified in its charter) | --- | --- | --- | |-------- ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=ITEM%201%20Financial%20Statements) The unaudited condensed financial statements for June 30, 2020, show increased assets and liabilities, widened net losses due to interest and digital asset impairment, and negative operating cash flow offset by financing activities [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) As of June 30, 2020, total assets more than doubled to **$862,709** driven by digital currency holdings, while liabilities increased to **$800,141**, resulting in a shift from a stockholders' deficit to positive equity Condensed Balance Sheet Comparison (Unaudited) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $83,788 | $143,098 | | Digital currencies | $728,305 | $252,903 | | Total current assets | $862,042 | $420,009 | | **Total Assets** | **$862,709** | **$421,353** | | **Liabilities & Equity** | | | | Convertible notes payable, net | $295,877 | $159,854 | | Total current liabilities | $800,141 | $605,113 | | Total stockholders' equity (deficit) | $62,568 | ($183,760) | | **Total Liabilities and stockholders' equity (deficit)** | **$862,709** | **$421,353** | [Condensed Statements of Operations](index=6&type=section&id=Condensed%20Statements%20of%20Operations) For the three and six months ended June 30, 2020, net loss significantly widened to **$420,302** and **$790,573** respectively, primarily driven by increased interest expenses and new digital currency impairment losses Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Total operating expenses | $257,301 | $299,732 | $530,519 | $552,231 | | Interest expense | ($102,792) | ($6,000) | ($125,420) | ($12,000) | | Impairment loss on digital currencies | ($58,527) | $0 | ($132,952) | $0 | | **Net loss** | **($420,302)** | **($305,732)** | **($790,573)** | **($564,231)** | | Net loss per share | ($0.02) | ($0.02) | ($0.03) | ($0.05) | [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, net cash used in operating activities increased to **$1.12 million** due to digital currency purchases, while financing activities provided **$1.06 million** from loans and stock issuance, resulting in a net cash decrease of **$59,310** Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,115,523) | ($405,061) | | Net cash provided by financing activities | $1,056,213 | $913,376 | | **Net (decrease) increase in cash** | **($59,310)** | **$508,315** | | Cash, end of period | $83,788 | $560,432 | [Notes to the Unaudited Condensed Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Financial%20Statements) The notes detail the company's digital asset acquisition strategy, highlight significant liquidity challenges and a 'going concern' warning, outline digital asset accounting policies, and provide specifics on convertible notes and equity financing - The company's strategy focuses on acquiring digital assets like **bitcoin** and **ether**, seeking controlling interests in blockchain businesses, and developing a digital asset data analytics platform[30](index=30&type=chunk)[32](index=32&type=chunk)[75](index=75&type=chunk) - Recurring operating losses, negative operating cash flow, and an accumulated deficit raise substantial doubt about the Company's ability to continue as a going concern[41](index=41&type=chunk) - Digital assets are treated as indefinite-lived intangible assets, recorded at cost less impairment, with quarterly impairment testing and no subsequent reversals permitted[44](index=44&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk) - In April 2020, the company issued a **$500,000** promissory note due February 2021, bearing **12% interest** and convertible at a **35% discount** to market price[60](index=60&type=chunk) - During the first six months of 2020, the company issued approximately **7.0 million** common shares under its Purchase Agreement with Cavalry, raising aggregate proceeds of about **$558,000**[63](index=63&type=chunk)[64](index=64&type=chunk) - Subsequent to quarter end, from July 15 to July 21, 2020, the company issued an additional **1.9 million** common shares, raising approximately **$302,000**[67](index=67&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=ITEM%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's digital asset strategy, reports increased net losses for the three and six months ended June 30, 2020, due to digital asset impairment and interest expenses, and highlights significant liquidity concerns with substantial doubt about its going concern ability [Overview and Strategy](index=16&type=section&id=MD%26A%20Overview) The company, an early U.S. public entrant in the Digital Asset space, focuses its strategy on acquiring non-security digital assets, seeking controlling interests in blockchain businesses, and developing a data analytics platform, with digital assets valued at approximately **$1.49 million** as of August 4, 2020 - The company's strategy includes acquiring Digital Assets like **bitcoin** and **ether**, seeking controlling interests in blockchain businesses, and developing a digital asset data analytics platform[71](index=71&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) Fair Market Value of Digital Assets as of August 4, 2020 | Digital Asset | Units Held | Fair Market Value | | :--- | :--- | :--- | | Bitcoin (BTC) | 54.28 | $602,868 | | Ethereum (ETH) | 2,304.58 | $884,271 | | **Total** | | **$1,487,139** | - The company does not plan to re-enter the digital asset mining business in the near term, as it does not believe it offers a positive return on investment at current price levels[82](index=82&type=chunk) [Results of Operations](index=18&type=section&id=MD%26A%20Results%20of%20Operations) For the three and six months ended June 30, 2020, net loss increased to **$420,302** and **$790,573** respectively, primarily due to higher other expenses driven by interest and digital asset impairment, despite stable operating expenses Operating Results for the Three Months Ended June 30 | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Total operating expenses | $257,301 | $299,732 | | Total other expenses | ($163,001) | ($6,000) | | **Net loss** | **($420,302)** | **($305,732)** | Operating Results for the Six Months Ended June 30 | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Total operating expenses | $530,519 | $552,231 | | Total other expenses | ($260,054) | ($12,000) | | **Net loss** | **($790,573)** | **($564,231)** | [Liquidity and Capital Resources](index=19&type=section&id=MD%26A%20Liquidity%20and%20Capital%20Resources) The company faces significant liquidity pressure with **$1.12 million** net cash used in operations for the first six months of 2020, funded by **$1.06 million** in financing activities, resulting in **$62,000** working capital and substantial doubt about its going concern ability - Net cash used in operating activities was approximately **$1.12 million** for the six months ended June 30, 2020, primarily driven by a **$790,573** net loss and a **$608,000** purchase of digital currencies[98](index=98&type=chunk) - Net cash from financing activities was approximately **$1.06 million** for the six months ended June 30, 2020, from a **$500,000** convertible note and **$556,000** in proceeds from stock issuance[100](index=100&type=chunk) - As of June 30, 2020, the company had cash of approximately **$84,000** and working capital of approximately **$62,000**[104](index=104&type=chunk) - The company's auditors have expressed substantial doubt about its ability to continue as a going concern due to recurring operating losses and negative cash flows[83](index=83&type=chunk)[108](index=108&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=ITEM%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable to the company for this reporting period - Not applicable[115](index=115&type=chunk) [Controls and Procedures](index=22&type=section&id=ITEM%204%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2020, due to material weaknesses including limited segregation of duties, reliance on outside consultants, and difficulties with complex accounting principles, with no material changes to internal controls during the quarter - The Chief Executive Officer concluded that as of June 30, 2020, the company's disclosure controls and procedures were not effective[116](index=116&type=chunk) - Material weaknesses identified include limited segregation of duties, reliance on outside consultants for financial report preparation, and difficulty applying complex accounting principles[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - There were no material changes in internal control over financial reporting during the quarter[120](index=120&type=chunk) [PART II - OTHER INFORMATION](index=23&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=23&type=section&id=ITEM%201%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[123](index=123&type=chunk) [Risk Factors](index=23&type=section&id=ITEM%201A%20Risk%20Factors) This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[124](index=124&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=ITEM%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities - None[125](index=125&type=chunk) [Defaults Upon Senior Securities](index=23&type=section&id=ITEM%203%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[126](index=126&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=ITEM%204%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[127](index=127&type=chunk) [Other Information](index=23&type=section&id=ITEM%205%20Other%20Information) The company reported no other information - None[128](index=128&type=chunk) [Exhibits](index=23&type=section&id=ITEM%206%20Exhibits) This section lists the exhibits filed or incorporated by reference as part of the Form 10-Q - The exhibits listed in the 'Exhibit Index' are filed or incorporated by reference as part of this Form 10-Q[129](index=129&type=chunk)

PART I [Financial Statements](index=4&type=section&id=ITEM%201%20Financial%20Statements) For the three months ended March 31, 2020, BTCS Inc. reported an increased net loss of $370,271, a working capital deficit of approximately $0.1 million, and a reliance on external financing to fund operations [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2020, total assets increased to $466,317, primarily due to higher cash, while total liabilities remained stable at $607,337, resulting in a stockholders' deficit of $141,020 Condensed Balance Sheet Highlights (Unaudited) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $278,566 | $143,098 | | Digital currencies | $161,999 | $252,903 | | Total Current Assets | $465,312 | $420,009 | | **Total Assets** | **$466,317** | **$421,353** | | **Liabilities & Stockholders' Deficit** | | | | Total Current Liabilities | $607,337 | $605,113 | | Total Stockholders' Deficit | ($141,020) | ($183,760) | | **Total Liabilities and Stockholders' Deficit** | **$466,317** | **$421,353** | [Condensed Statements of Operations](index=6&type=section&id=Condensed%20Statements%20of%20Operations) The first quarter of 2020 saw a net loss of $370,271, or ($0.02) per share, primarily due to increased operating expenses and a $74,425 impairment loss on digital currencies Statement of Operations Summary (Unaudited) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Total Operating Expenses | $273,218 | $252,499 | | Impairment loss on digital currencies | ($74,425) | $0 | | Interest Expense | ($22,628) | ($6,000) | | **Net Loss** | **($370,271)** | **($258,499)** | | Net Loss Per Share (Basic & Diluted) | ($0.02) | ($0.03) | | Weighted Average Shares Outstanding | 23,004,360 | 13,033,038 | [Condensed Statements of Changes in Stockholders' Deficit](index=7&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders%27%20Deficit) The stockholders' deficit improved to ($141,020) by March 31, 2020, primarily due to the issuance of 6,186,633 common shares, which added $413,011 to equity, partially offset by the quarterly net loss - In Q1 2020, the company issued **6,186,633 shares** of common stock, raising **$413,011**, which partially offset the net loss for the period[21](index=21&type=chunk) [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operating activities totaled $277,543 for the three months ended March 31, 2020, offset by $413,011 from financing activities, resulting in a net cash increase of $135,468 Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($277,543) | ($203,401) | | Net cash provided by financing activities | $413,011 | $228,370 | | **Net increase in cash** | **$135,468** | **$24,969** | | **Cash, end of period** | **$278,566** | **$77,086** | [Notes to the Unaudited Condensed Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Financial%20Statements) Key notes highlight the company's digital asset strategy, substantial doubt about its going concern ability due to recurring losses and negative working capital, and its reliance on additional capital, including subsequent debt and equity transactions - The company's strategy is to acquire Digital Assets (like **bitcoin** and **ether**) and develop a digital asset data analytics platform. It avoids initial coin offerings (ICOs) due to regulatory concerns[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - There is substantial doubt about the Company's ability to continue as a going concern due to recurring operating losses, net operating cash flow deficits, and an accumulated deficit. The company requires significant additional capital to sustain operations[40](index=40&type=chunk)[41](index=41&type=chunk) - Digital Assets are treated as indefinite-lived intangible assets, recorded at cost less impairment. Impairment is tested quarterly and subsequent reversals of impairment losses are not permitted[44](index=44&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk) - Subsequent to the quarter end, the company issued a new **$500,000 promissory note** due in February 2021 and converted all remaining principal and interest on its 2019 promissory note into common stock[60](index=60&type=chunk)[61](index=61&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=ITEM%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's digital asset market strategy, acknowledging significant financial challenges including recurring losses, a negative working capital of approximately $0.1 million, and insufficient liquidity, necessitating further funding - The company's primary initiatives are: - Acquiring Digital Assets like **bitcoin** and **ether** through open market purchases - Internally developing a digital asset data analytics platform - Seeking to acquire controlling interests in other businesses in the blockchain industry[65](index=65&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) Digital Asset Holdings as of May 8, 2020 | Digital Asset | Units Held | Fair Market Value | | :--- | :--- | :--- | | Bitcoin (BTC) | 37.44 | $373,589 | | Ethereum (ETH) | 1,644.23 | $348,447 | | **Total** | | **$722,036** | - Auditors have expressed substantial doubt about the company's ability to continue as a going concern due to recurring operating losses and cash flow deficits[75](index=75&type=chunk)[91](index=91&type=chunk) - Net loss for Q1 2020 was **$370,271**, compared to **$258,499** in Q1 2019. The increase is primarily due to a **$74,425 impairment loss** on digital currencies and higher interest expense[81](index=81&type=chunk)[82](index=82&type=chunk) - The company had a negative working capital of approximately **$0.1 million** at March 31, 2020 and does not have sufficient cash to support operations for the next 12 months, requiring additional funding[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=18&type=section&id=ITEM%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable to the company - The company has indicated that this disclosure is not applicable[98](index=98&type=chunk) [Controls and Procedures](index=18&type=section&id=ITEM%204%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2020, citing material weaknesses in internal control over financial reporting, including limited segregation of duties and accounting complexities, with remediation contingent on capital - The CEO concluded that disclosure controls and procedures were not effective as of March 31, 2020[99](index=99&type=chunk) - Material weaknesses identified include: - Limited segregation of duties due to small staff size - Reliance on outside consultants for financial reporting - Difficulty applying complex accounting principles[99](index=99&type=chunk) - The company acknowledged a past failure to follow GAAP in accounting for digital assets and a recent failure to correctly classify Digital Asset transactions as an Operating Activity on the Cash Flow Statement in its 2019 Form 10-K[101](index=101&type=chunk) - The company's remediation plan involves hiring additional accounting and administrative staff, but this is dependent on having sufficient capital resources[102](index=102&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=19&type=section&id=ITEM%201%20Legal%20Proceedings) The company reports that there are no legal proceedings - None[104](index=104&type=chunk) [Risk Factors](index=19&type=page&id=ITEM%201A%20Risk%20Factors) This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[105](index=105&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=19&type=section&id=ITEM%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or use of proceeds for the period - None[106](index=106&type=chunk) [Defaults Upon Senior Securities](index=19&type=section&id=ITEM%203%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[107](index=107&type=chunk) [Mine Safety Disclosures](index=19&type=section&id=ITEM%204%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[108](index=108&type=chunk) [Other Information](index=19&type=section&id=ITEM%205%20Other%20Information) The company reports no other information - None[109](index=109&type=chunk) [Exhibits](index=19&type=section&id=ITEM%206%20Exhibits) This section lists the exhibits that are filed or incorporated by reference as part of the Form 10-Q, including certifications and XBRL data files - The exhibits listed in the Exhibit Index are filed or incorporated by reference with this Form 10-Q[110](index=110&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ______________ Commissions file number 000-55141 BTCS Inc. (Exact name of registrant as specified in its charter) Nevada 90-1096644 (State or other jurisdictio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________. Commission file number: 000-55141 BTCS Inc. (Exact name of registrant as specified in its charter) | --- | --- | --- | |-------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________. Commission file number: 000-55141 BTCS Inc. (Exact name of registrant as specified in its charter) | --- | --- | --- | |------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________. Commission file number: 000-55141 BTCS Inc. (Exact name of registrant as specified in its charter) | --- | --- | |------- ...

PART I [Business](index=4&type=section&id=Item%201.%20Business) BTCS Inc. plans to acquire Digital Assets and blockchain businesses, having suspended mining due to market conditions, while avoiding Digital Securities to maintain regulatory compliance - The company's primary business plan, subject to financing, is to acquire Digital Assets (such as bitcoin and ether) and controlling interests in blockchain industry businesses[29](index=29&type=chunk)[32](index=32&type=chunk) - BTCS has suspended its transaction verification services (mining) business because it is not currently profitable, but plans to monitor the market and may re-enter if a positive return on investment becomes achievable[35](index=35&type=chunk)[128](index=128&type=chunk) - The company actively avoids participating in Initial Coin Offerings (ICOs), believing most constitute offerings of Digital Securities, to prevent violations of securities laws and the Investment Company Act of 1940[30](index=30&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk) - The company's auditors have issued a going concern warning due to recurring operating losses, net operating cash flow deficits, and an accumulated deficit[38](index=38&type=chunk) [Industry and Market Overview (Bitcoin and Blockchain Technologies)](index=8&type=section&id=Industry%20and%20Market%20Overview%20(Bitcoin%20and%20Blockchain%20Technologies)) This section details Bitcoin's decentralized nature, blockchain function, mining process, capped supply, and the evolving, uncertain global regulatory landscape for Digital Assets - Bitcoin is a decentralized Digital Asset operating on a peer-to-peer network, with transactions recorded on a public ledger called the Blockchain, with its value determined by supply and demand[39](index=39&type=chunk)[42](index=42&type=chunk) - New bitcoins are created through a competitive process called "mining," where participants solve complex mathematical problems to add blocks to the Blockchain; the reward for mining halves approximately every four years, and the total supply is capped at **21 million**[48](index=48&type=chunk)[58](index=58&type=chunk) - The regulatory environment for Digital Assets is uncertain and evolving, with U.S. agencies like the SEC and CFTC asserting jurisdiction and international regulation varying widely from restrictive measures in China to licensing frameworks in Japan[84](index=84&type=chunk)[100](index=100&type=chunk)[111](index=111&type=chunk) - The company analyzes whether Digital Assets are securities under the "investment contract" test to avoid inadvertently becoming an investment company under the 1940 Act, concluding that bitcoin is not a security, but acknowledging a risk that the SEC could deem ether a security[86](index=86&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) The company, as a smaller reporting company, directs readers to principal risk factors detailed in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - As a smaller reporting company, a separate Risk Factors section is not provided, with principal risks detailed within Item 7, the MD&A section[130](index=130&type=chunk) [Properties](index=25&type=section&id=Item%202.%20Properties) The company operates virtually with no leased office space, providing monthly stipends to its two employees for home office expenses - The company has no leased properties and its employees work virtually[130](index=130&type=chunk)[136](index=136&type=chunk) - The two executive officers are each paid **$1,000** per month to cover expenses associated with their virtual office setups[130](index=130&type=chunk) [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The company is not aware of any material, active, or pending legal proceedings against it - There are no known material, active, or pending legal proceedings against the company[131](index=131&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Mine safety disclosures are not applicable[137](index=137&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock is quoted on the OTCQB, has never paid cash dividends, and details historical stock prices and recent unregistered security issuances - The company's common stock is quoted on the OTCQB under the symbol "**BTCS**"[133](index=133&type=chunk) Common Stock Price History | Fiscal Year/Quarter | High ($) | Low ($) | | :--- | :--- | :--- | | **Fiscal 2019** | | | | First Quarter (through Jan 24) | 0.213 | 0.0158 | | **Fiscal 2018** | | | | First Quarter | 0.235 | 0.040 | | Second Quarter | 0.116 | 0.043 | | Third Quarter | 0.071 | 0.037 | | Fourth Quarter | 0.042 | 0.015 | | **Fiscal 2017** | | | | First Quarter | 0.32 | 0.04 | | Second Quarter | 0.15 | 0.03 | | Third Quarter | 0.58 | 0.05 | | Fourth Quarter | 0.26 | 0.08 | - The company has never paid cash dividends and does not anticipate paying them in the foreseeable future, intending to use all available funds for business development[141](index=141&type=chunk) - During 2018, the company issued common stock through conversions of Series B and Series C-1 Preferred Stock, a cashless warrant exercise, and a cash exercise of Series A Warrants that raised **$57,000**, and also issued a **$200,000** promissory note[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[150](index=150&type=chunk) [Selected Financial Data](index=29&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not applicable as the company has not provided selected financial data - No selected financial data was provided[153](index=153&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section details the company's financial performance, critical liquidity challenges, and extensive risks related to its operations, personnel, and the volatile Digital Asset industry - The company has very limited operating capital and its existing liquidity is insufficient to fund operations for the foreseeable future, raising substantial doubt about its ability to continue as a going concern[165](index=165&type=chunk)[167](index=167&type=chunk)[179](index=179&type=chunk) - Digital Assets are accounted for as indefinite-lived intangible assets, recorded at cost less any impairment, with impairment assessed quarterly and subsequent reversals of impairment losses not permitted[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - The company's internal controls were deemed ineffective, leading to erroneous accounting for Digital Assets and requiring a restatement of financial statements for the year ended December 31, 2017, and interim periods in 2018[201](index=201&type=chunk)[202](index=202&type=chunk) [Results of Operations for the Years Ended December 31, 2018 and 2017](index=30&type=section&id=Results%20of%20Operations%20for%20the%20Years%20Ended%20December%2031%2C%202018%20and%202017) For 2018, the company reported zero revenue and a significantly reduced net loss of $0.8 million, primarily due to the absence of large non-cash fair value adjustments recorded in 2017 Consolidated Statements of Operations Summary | Metric | 2018 | 2017 (Restated) | | :--- | :--- | :--- | | Total Revenues | $0 | $4,480 | | Gross Profit | $0 | $4,320 | | Total Operating Expenses | $990,169 | $1,574,093 | | Net Loss from Operations | ($990,169) | ($1,569,773) | | Total Other Income (Expense) | $163,749 | ($43,894,796) | | Net Loss | ($826,420) | ($45,464,569) | | Net Loss Attributable to Common Stockholders | ($832,020) | ($45,464,569) | | Net Loss Per Share | ($0.00) | ($0.37) | - The substantial decrease in net loss from 2017 to 2018 was mainly due to a **$43.7 million** reduction in 'Other Expenses', primarily because 2017 included significant non-cash charges for fair value adjustments of warrant liabilities (**$39.2 million**) and convertible notes (**$16.8 million**) that did not recur in 2018[161](index=161&type=chunk)[162](index=162&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces a severe liquidity crisis with insufficient cash to fund operations for the next 12 months, leading to a "going concern" warning from auditors and an urgent need for additional capital - As of January 31, 2019, the company had approximately **$91,850** in cash and no Digital Assets[169](index=169&type=chunk) - The company does not have sufficient capital to meet its expenses over the next 12 months and requires significant additional financing to sustain operations[165](index=165&type=chunk)[170](index=170&type=chunk) - Due to recurring operating losses and cash flow deficits, there is substantial doubt about the company's ability to continue as a going concern[167](index=167&type=chunk)[171](index=171&type=chunk) [Risk Factors](index=36&type=section&id=Risk%20Factors) This section outlines numerous risks, including the urgent need for financing, a history of losses, ineffective internal controls, dependence on key personnel, and the volatile regulatory and technological environment of Digital Assets - The company needs to secure additional financing, as its cash of **$91,850** (as of Jan 31, 2019) is only sufficient to cover public company costs through May 1, 2019, without paying employees[193](index=193&type=chunk) - The company's success is solely dependent on its two executive officers, Charles Allen and Michal Handerhan; the loss of either could have a material adverse effect, and the company has been unable to make payroll for them since December 1, 2018[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - There is a significant risk that Digital Assets the company holds could be deemed securities by regulators; if the value of such securities exceeds **40%** of its total assets (excluding cash), the company could inadvertently violate the Investment Company Act of 1940, potentially forcing it to liquidate assets at a loss or cease operations[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) - The Bitcoin Network is subject to risks including malicious actors gaining over **50%** of processing power, forks in the blockchain creating competing networks, and the potential for alternative Digital Assets to reduce Bitcoin's prominence[276](index=276&type=chunk)[287](index=287&type=chunk)[298](index=298&type=chunk) [Quantitative And Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%207A.%20Quantitative%20And%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, BTCS Inc. is not required to provide the information for this item - The company is not required to provide this information as it qualifies as a smaller reporting company[362](index=362&type=chunk) [Financial Statements and Supplementary Data](index=65&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item is marked as "Not applicable" as the audited financial statements are provided later in the report - This section is marked "Not applicable," with the full financial statements presented at the end of the report[363](index=363&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=65&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - There were no disagreements with accountants reported[363](index=363&type=chunk) [Controls and Procedures](index=65&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of December 31, 2018, due to material weaknesses in internal control over financial reporting, leading to a financial restatement - Management concluded that disclosure controls and procedures were not effective as of December 31, 2018[364](index=364&type=chunk) - Material weaknesses in internal control were identified, including insufficient segregation of duties, lack of controls over material transactions, and difficulty with complex accounting principles[367](index=367&type=chunk) - The company's failure to follow GAAP for digital assets, which required a financial restatement, was a result of these ineffective controls[370](index=370&type=chunk) [Other Information](index=67&type=section&id=Item%209B.%20Other%20Information) This section provides the company's capitalization table as of January 31, 2019, detailing outstanding common stock and shares issuable from preferred stock and warrants Capitalization Table as of January 31, 2019 | Class of Security | Shares of Common Stock as Converted | | :--- | :--- | | Common Stock Issued and Outstanding | 387,281,530 | | Series C-1 Preferred Stock | 5,882,800 | | Warrants to Purchase Common Stock | 46,832,367 | PART III [Directors, Executive Officers and Corporate Governance](index=67&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's leadership includes Charles W. Allen, Michal Handerhan, and David Garrity, with potential conflicts of interest noted for the executive officers and no formal code of ethics adopted - The executive team and board consist of Charles W. Allen (CEO, CFO, Chairman), Michal Handerhan (COO, Director), and David Garrity (Independent Director)[375](index=375&type=chunk) - Potential conflicts of interest exist as CEO Charles Allen and COO Michal Handerhan are also officers and directors of Global Bit Ventures Inc. (GBV), another company in the cryptocurrency industry[382](index=382&type=chunk)[212](index=212&type=chunk)[216](index=216&type=chunk) - The company has not yet adopted a code of ethics, citing its focus on business growth and financing[386](index=386&type=chunk) [Executive Compensation](index=70&type=section&id=Item%2011.%20Executive%20Compensation) This section details executive and director compensation for 2018 and 2017, including accrued but unpaid salaries, employment agreements, and contingent bonuses Summary Compensation Table | Name and Principal Position | Year | Salary ($) | Bonus ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Charles W. Allen, CEO | 2018 | 256,025 | - | 256,025 | | | 2017 | 235,389 | 75,000 | 310,389 | | Michal Handerhan, COO | 2018 | 198,550 | - | 198,550 | | | 2017 | 182,792 | 35,000 | 217,792 | - A significant portion of executive salaries for 2018 was accrued but unpaid: **$66,506** for CEO Charles Allen and **$52,138** for COO Michal Handerhan[396](index=396&type=chunk) - Effective January 1, 2019, the annual salaries for the CEO and COO were increased to **$345,000** and **$215,000**, respectively[402](index=402&type=chunk)[404](index=404&type=chunk) - The company agreed to pay contingent cash bonuses for 2018 of **$256,025** to the CEO and **$150,000** to the COO, which are deemed earned and payable upon the repayment or settlement of a **$200,000** promissory note[409](index=409&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=73&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section presents beneficial ownership as of January 31, 2019, showing executive officers and directors own less than 1% of common stock, with two institutional investors holding significant preferred stock - As of January 31, 2019, all officers and directors as a group beneficially owned less than **1%** of the company's common stock[419](index=419&type=chunk) - Two entities, Cavalry Fund I LP and DiamondRock LLC, are the most significant security holders, each owning **14,707** shares, or **50%**, of the Series C-1 Convertible Preferred Stock[419](index=419&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=75&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company lacks a formal related-party transaction policy, notes a 2017 transaction where executives settled accrued salaries with shares, and identifies only one independent director - The company lacks a formal written policy for reviewing related-person transactions; the Board of Directors handles this responsibility[423](index=423&type=chunk) - In March 2017, executives Charles Allen and Michal Handerhan settled accrued salaries by accepting shares in BitVault, Inc. and GCZ, Inc. that the company had previously written off as unrecoverable[424](index=424&type=chunk) - Using NASDAQ standards, David Garrity is considered the only independent director on the board[425](index=425&type=chunk) [Principal Accounting Fees and Services](index=75&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This section details fees paid to the independent auditor, RBSM, for 2018 and 2017, and states the company's policy for Board pre-approval of all audit and non-audit services Audit Fees and Services | Fee Type | 2018 | 2017 | | :--- | :--- | :--- | | Audit Fees | $39,500 | $29,000 | | Tax Fees | $2,800 | $5,200 | | All Other Fees | - | - | | **Total** | **$42,300** | **$34,200** | - The company's policy is for the Board of Directors to pre-approve all audit and non-audit services provided by the independent accountants[427](index=427&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=76&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides a comprehensive list of all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and required certifications - A comprehensive list of exhibits is provided, including Articles of Incorporation, Bylaws, various Certificates of Designation for preferred stock, securities purchase agreements, warrant forms, and employment agreements for executive officers[431](index=431&type=chunk) [Form 10-K Summary](index=77&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section is not applicable - This section is marked as not applicable[435](index=435&type=chunk) Financial Statements and Notes [Report of Independent Registered Public Accounting Firm](index=79&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an opinion on the fair presentation of financial statements, including a "Going Concern" paragraph due to the company's accumulated deficit and recurring losses - The auditor's report includes a "Going Concern" paragraph, citing the company's accumulated deficit, recurring losses, and expected future losses as raising substantial doubt about its ability to continue[444](index=444&type=chunk) [Consolidated Financial Statements](index=80&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements for 2018 and 2017 (restated) show a significant decrease in total assets, a shift to a stockholders' deficit, zero revenue in 2018, and a net loss of $0.8 million Consolidated Balance Sheets | Balance Sheet Data (End of Period) | Dec 31, 2018 | Dec 31, 2017 (Restated) | | :--- | :--- | :--- | | Cash | $52,117 | $303,334 | | Digital Currencies | $0 | $217,119 | | Total Current Assets | $60,450 | $588,189 | | Total Assets | $63,153 | $589,424 | | Total Current Liabilities | $319,146 | $75,997 | | Total Stockholders' (Deficit) Equity | ($255,993) | $513,427 | Consolidated Statements of Operations | Statement of Operations Data (Full Year) | 2018 | 2017 (Restated) | | :--- | :--- | :--- | | Total Revenues | $0 | $4,480 | | Net Loss | ($826,420) | ($45,464,569) | | Net Loss Per Share | ($0.00) | ($0.37) | Consolidated Statements of Cash Flows | Cash Flow Data (Full Year) | 2018 | 2017 (Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | ($505,619) | ($1,488,254) | | Net cash used in investing activities | ($2,598) | $400 | | Net cash provided by financing activities | $257,000 | $1,696,120 | | Net (decrease) increase in cash | ($251,217) | $208,266 | [Notes to Consolidated Financial Statements](index=86&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide critical context, detailing the 2017 financial restatement, reiterating the going concern doubt, outlining Digital Asset accounting policies, and summarizing equity transactions - The 2017 financial statements were restated to correct the accounting for digital currencies, now treated as intangible assets at cost less impairment rather than fair value, which reduced 2017 year-end digital currency assets and stockholders' equity by approximately **$399,000**[471](index=471&type=chunk)[476](index=476&type=chunk) - The company's ability to continue as a going concern is in substantial doubt due to recurring operating losses, net operating cash flow deficits, and an accumulated deficit, with its continuation dependent on obtaining additional financial support[486](index=486&type=chunk) - The accounting policy for Digital Assets is to record them at cost and assess for impairment quarterly, where impairment exists if fair value is less than cost basis, and subsequent reversals are not permitted once an impairment loss is recognized[489](index=489&type=chunk)[490](index=490&type=chunk)[492](index=492&type=chunk) - As of December 31, 2018, the company had approximately **$5.54 million** in federal and state net operating loss carryforwards, beginning to expire in 2034, with a full valuation allowance recorded against related deferred tax assets as realization is not more likely than not[561](index=561&type=chunk)