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Stockholders’ Equity (Deficit)
 12 Months Ended
Dec. 31, 2024
Equity [Abstract]  
Stockholders’ Equity (Deficit)

Note 6 - Stockholders’ Equity (Deficit)

 

Common Stock

 

The Company received shareholder approval on July 11, 2023 to amend our Articles of Incorporation to increase the number of authorized shares of common stock from 97,500,000 shares to 975,000,000. On July 12, 2023, the Company filed a Certificate of Amendment to the Articles of Incorporation to effectuate the increase of our authorized shares of common stock to 975,000,000.

 

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, shares of the Company’s Common Stock through H.C. Wainwright, as agent. Initially, the aggregate offering price of shares issuable under the ATM Agreement was $98,767,500 (the “Shares”).

 

On October 4, 2024, the Company’s new Form S-3 registration statement became effective, increasing the total amount of securities that may be offered and sold under the prospectus to $250,000,000.

 

The Company will pay H.C. Wainwright a commission rate equal to 3.0% of the aggregate gross proceeds from each sale of Shares.

 

During the year ended December 31, 2024, the Company sold a total of 2,021,361 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $6,905,000 at an average selling price of $3.42 per share, resulting in net proceeds of approximately $6,682,000 after deducting commissions and other transaction costs.

 

During the year ended December 31, 2023, the Company sold a total of 1,707,621 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $2,790,000 at an average selling price of $1.63 per share, resulting in net proceeds of approximately $2,688,000 after deducting commissions and other transaction costs.

 

Share-based Payments

 

Board Compensation

 

Effective January 19, 2023, the Board approved the issuance of $50,000 of common stock to each independent director. The shares will be issued in four equal installments ($12,500 each) at the end of each calendar quarter beginning March 31st, subject to continued service on each applicable issuance date. The number of shares issuable will be based on the closing price of the Company’s common stock on the last trading day prior to the end of the applicable calendar quarter. For the year ended December 31, 2024, 87,498 shares of common stock approximating $136,000 were issued to independent directors related to the quarterly approved issuances. For the year ended December 31, 2023, 122,124 shares of common stock approximating $150,000 were issued to independent directors related to the quarterly approved issuances.

 

Shares Issued in Lieu of Cash Compensation

 

On September 12, 2024, the Board approved a resolution to allow all employees, officers, and directors of the Company to elect to receive up to three months of their cash compensation in advance in the form of restricted common stock. This decision aimed to prevent disruptions in operations that could arise from the need to unstake and sell cryptocurrency to meet upcoming cash requirements. The approval of this equity compensation plan was in response to extensive delays (over 4 months) by the U.S. Securities and Exchange Commission in reviewing our responses to a comment letter that contained seven comments primarily comprised of future filing requests and immaterial comments. On September 13, 2024, in a collective effort to support the Company’s operations and strategy, all employees, directors, and officers (collectively 9 individuals) accepted part of their compensation as equity. This resulted in the issuance of 380,399 restricted common stock shares approximating $430,000. Of the shares issued, 32,429 were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 347,970 shares.

 

Performance Bonus Payments

 

For the year ended December 31, 2024, 414,148 shares of common stock were issued to officers related to payment of 2023 accrued bonus compensation totaling approximately $675,000. Of the shares issued, 43,220 shares were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 370,928 shares.

 

For the year ended December 31, 2023, 410,317 shares of common stock were issued to officers related to payment of 2022 accrued bonus compensation totaling approximately $264,000. Of the shares issued, 55,604 shares were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 354,713 shares.

 

Bonus shares

 

On December 12, 2024, the Board of Directors approved the issuance of 12,500 shares of restricted common stock to a non-executive employee as a discretionary bonus. These shares will vest in equal installments over five years, with 2,500 shares vesting at the end of each calendar year, beginning December 31, 2025, and continuing through December 31, 2029.

 

Issuance of Restricted Stock to Service Providers

 

During the year ended December 31, 2023, the Company issued to one service provider a total of approximately 12,500 shares of restricted Common Stock, representing a total fair value of $59,000.

 

 

BTCS Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Preferred Stock

 

Series V

 

Effective January 27, 2023, the Board approved the issuance of a newly designated Series V Preferred Stock (“Series V”) on a one-for-one basis to the Company’s shareholders (including restricted stock unit holders and warrant holders). The distribution of Series V shares was approved and completed on June 2, 2023 to shareholders as of the record date of May 12, 2023. The Series V: (i) is non-convertible, (ii) has a 20% liquidation preference over the shares of common stock, (iii) is non-voting and (iv) has certain rights to dividends and distributions (at the discretion of the Board). A total of 14,542,803 shares of Series V Preferred Stock were distributed to shareholders on June 2, 2023.

 

The fair value of the Preferred stock as of the record date, May 12, 2023, amounted to approximately $2,560,000. The Company used a probability valuation model to determine the fair value of the preferred stock.

 

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

 

On September 6, 2024, at the 2024 Annual Meeting the Company’s stockholders voted to approve an amendment to the Certificate of Designation of the Series V to provide the Board the discretion to convert each share of the Series V into one share of Common Stock. The Board has not filed an amendment to the Series V Certificate of Designation nor chosen to convert the Series V.

 

For the year ended December 31, 2024, the Company issued 465,402 additional shares of Series V Preferred Stock in connection with the vesting of employee RSUs. Of these, 367,108 shares were unrestricted, and 98,294 shares were restricted and remain subject to time-based vesting conditions. The restricted shares of Series V will vest over a period of one to three years, with full vesting expected by December 31, 2027.

 

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 and amended on June 13, 2022. The Company received shareholder approval on July 11, 2023 to increase the authorized amount under the 2021 Plan from 7,000,000 shares to 12,000,000 shares.

 

Options

 

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

  

Number of

Shares

  

Weighted

Average

Exercise

Price

  

Total

Intrinsic

Value

  

Weighted

Average

Remaining

Contractual Life (in years)

 
Options outstanding as of December 31, 2022   1,150,000   $2.15   $-    3.3 
Employee options granted   85,000    1.29    -    5.0 
Employee options forfeited   (35,000)   1.02    11,100    - 
Options outstanding as of December 31, 2023   1,200,000   $2.12   $8,700    2.4 
Options vested and exercisable as of December 31, 2023   1,145,000   $2.15   $-    2.3 

 

  

Number of

Shares

  

Weighted

Average

Exercise

Price

  

Total

Intrinsic

Value

  

Weighted

Average

Remaining

Contractual

Life (in years)

 
Options outstanding as of December 31, 2023   1,200,000   $2.12   $8,700    2.4 
Employee options granted   120,000    1.52    -    4.6 
Employee options expired   (17,500)   10.30    -    - 
Options outstanding as of December 31, 2024   1,302,500   $1.96   $804,300    1.7 
Options vested and exercisable as of December 31, 2024   1,141,250   $2.02   $649,125    1.3 

 

The following weighted-average assumptions were used to estimate the fair value of options granted during the years ended December 31, 2024 and 2023, using the Black-Scholes model:

Schedule of Weighted-Average Assumptions Used to Estimate Fair Value 

  

For the Year Ended

December 31,

 
   2024   2023 
Exercise price  $1.52   $1.29 
Term (years)   5.00    5.00 
Expected stock price volatility   141.86%    151.32% 
Risk-free rate of interest   4.50%    3.97% 

 

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

 

 

BTCS Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

RSUs

 

On December 29, 2023, upon recommendation of the Compensation Committee, the Board approved the grant of 50,000 RSUs to each of its executive officers (Messrs. Allen, Handerhan, Prevoznik and Paranjape), effective January 1, 2024. The RSUs granted vest annually over a 5-year period (10,000 per year) with the first vesting date of December 31, 2024 and each subsequent vesting on the one-year anniversary of the first vesting date, subject to continued employment on each applicable vesting date.

 

On January 12, 2024, Messrs. Allen and Handerhan forfeited their respective 50,000 RSUs for personal reasons, effective January 1, 2024. Subsequently, effective January 12, 2024, the Board approved the grant of 50,000 additional RSUs to Mr. Prevoznik and Mr. Paranjape, each, which vest annually over a 5-year period (10,000 per year) with the first vesting date of December 31, 2024 and each subsequent vesting on the one-year anniversary of the first vesting date, subject to continued employment on each applicable vesting date.

 

Long-Term Incentive Plan (LTI) RSUs

 

On January 2, 2022, the Board approved grants of RSUs (“LTI RSUs”) under the Company’s Long-Term Incentive Plan (“LTI”) to executive officers. These RSUs were initially subject to vesting upon achievement of market capitalization thresholds of $100 million, $150 million, $200 million, and $400 million, sustained for 30 consecutive days. On February 22, 2022, upon the appointment of the Chief Technology Officer, additional LTI RSUs were granted under the same terms.

 

Effective January 1, 2023, the Board approved an amendment to the LTI plan, reducing the market capitalization thresholds to $50 million, $100 million, $150 million, and $300 million. The modification resulted in an increase in fair value of $83,000, which was added to unrecognized compensation expense in accordance with ASC 718 – Share-Based Compensation.

 

The fair value of market-based LTI RSUs is estimated using a Monte Carlo simulation. The following assumptions were used to determine fair value as of the January 1, 2023, modification date:

 

  

January 1, 2023

(Modification)

 
Vesting Hurdle Price  $ 3.81 - $30.52   
Term (years)   4.00 
Expected stock price volatility   97.30%
Risk-free rate of interest   4.10%

 

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. Stock-based compensation expense for the market-based restricted stock units with explicit service conditions is recognized on a straight-line basis over the longer of the derived service period or the explicit service period, regardless of whether the market condition is satisfied. However, in the event that the explicit service period is not met, previously recognized compensation cost would be reversed. Market-based restricted stock units subject to market-based performance targets require achievement of the performance target as well as a service condition in order for these LTI RSUs to vest.

 

On December 12, 2024, the Company achieved the $50 million market capitalization threshold, triggering the vesting of certain performance-based LTI RSUs granted to the Company’s executive officers. As a result of meeting this threshold, 342,082 shares of common stock and 342,082 shares of Series V preferred stock vested and were issued to executive officers. Of the common stock, 45,479 shares of common stock were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 296,603 shares of common stock.

 

In addition, 38,242 restricted shares of common stock and 38,242 restricted shares of Series V were issued as a result of achieving the performance milestone under the LTI plan. These restricted shares remain subject to time-based vesting conditions and will vest over a two-year period, with full vesting expected by December 31, 2026.

 

 

BTCS Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Accelerated Vesting of RSUs and Conversion to Restricted Common Stock

 

On December 12, 2024, the Board approved a resolution allowing recipients of RSUs with time-based vesting criteria to elect to accelerate vesting and convert their RSUs into restricted shares of Common Stock. The restricted shares issued under this resolution remain subject to the original time-based vesting schedules of the RSUs. Additionally, the Board approved a resolution to accelerate the vesting of RSUs that were originally scheduled to vest on December 31, 2024 without restriction. This action was taken to reduce the administrative burden on the Company and align the vesting date with the issuance of other accelerated RSUs.

 

Effective December 12, 2024, the vesting of 220,052 RSUs was accelerated and converted into restricted shares of Common Stock issued to executive officers. As a portion of these RSUs was eligible for the Series V share dividend, an additional 60,052 restricted shares of Series V preferred stock were issued. These restricted shares retained their original time-based vesting schedules, ranging from one to five years.

 

Additionally, 65,026 shares of unrestricted Common Stock and, due to dividend eligibility, 25,026 unrestricted shares of Series V preferred stock were issued as a result of the Board-approved accelerated vesting of outstanding RSUs originally scheduled to vest on December 31, 2024.

 

Of the total issuances related to the accelerated vesting of RSUs on December 12, 2024, 62,718 unrestricted shares were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 2,308 shares of unrestricted Common Stock.

 

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

  

Number of

Restricted Shares

of Common Stock

 
Outstanding and nonvested as of December 31, 2023   - 
Converted from restricted stock units   220,052 
Granted   12,500 
Outstanding and nonvested as of December 31, 2024   232,552 

 

RSU Activity Summary

 

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

 

  

Number of

Restricted

Stock Units

  

Weighted

Average Grant

Date Fair

Value

 
Nonvested as of December 31, 2022   1,590,553   $3.34 
Granted   50,000    0.63 
Vested   (34,180)   3.55 
Nonvested as of December 31, 2023   1,606,373   $3.25 
Granted   300,000    1.71 
Vested   (445,350)   3.13 
Vested and converted to restricted common shares   (220,052)   2.04 
Forfeited   (100,000)   1.63 
Nonvested as of December 31, 2024   1,140,971   $3.27 

 

Stock-based Compensation

 

Stock-based compensation expenses are recorded as a part of general and administrative expenses, compensation expenses and cost of revenues. Stock-based compensation expenses for the years ended December 31, 2024 and 2023 were as follows:

 

   2024   2023 
   For the Year Ended December 31, 
   2024   2023 
Employee stock option awards  $2,973,503   $11,726 
Employee restricted stock unit awards   1,188,963    956,526 
Employee stock-based salary payments and bonus awards   1,176,679    675,061 
Non-employee restricted stock awards   165,011    195,784 
Stock-based compensation  $5,504,156   $1,839,097 

 

Stock Purchase Warrants

 

The following is a summary of warrant activity for the years ended December 31, 2024 and 2023:

 

  

Number of

Warrants

 
Outstanding as of December 31, 2022   912,500 
Expiration of warrants   (200,000)
Outstanding as of December 31, 2023   712,500 
Expiration of warrants   - 
Outstanding as of December 31, 2024   712,500 

 

 

BTCS Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS