BTCS Inc. (OTCMKTS:BTCS) Files An 8-K Unregistered Sales of Equity Securities

Item 3.02Unregistered Sales of Equity Securities.

On March 9, 2017, BTCS Inc. (the Company)
completed a securities exchange offer (the Note
Offer) with its three convertible note holders (the
Note Holders). to the Note Offer the Note
Holders agreed to exchange i) $868,897 of 5% Original Issue
Discount 10% Senior Convertible Note Due September 16, 2016,
originally issued in December 2015 and all accrued interest and
liquidated damages owed (collectively the Senior
Notes), ii) $175,000 of 20% Original Issue Discount
Junior Convertible Notes Due December 5, 2016, originally issued
in June 2016 and all accrued interest and liquidated damages owed
(collectively the Junior Notes), iii) $220,000
of 8% Convertible Notes Due June 6, 2017, originally issued in
December 2016 and all accrued interest owed (collectively the
Convertible Notes), and iv) 97,423,579 warrants
(the Senior Warrants) for 845,631 shares of
Series B Convertible Preferred Stock (the
Preferred). After giving effect to the Note
Offer the Company no longer has any Senior Notes, Junior Notes or
Convertible Notes outstanding. The Note Offer also provided the
Note Holders with a three month right of first refusal to
participate in the Companys next financing and a one year
participation right with respect to the Company next fully
underwritten offering.

On March 9, 2017, as a result of the Note Offer becoming
effective, a securities exchange offer made to the Companys
January 19, 2015 investors (the January Offer)
was accepted by certain of those investors (the January
Investors). to the January Offer the January Investors
agreed to exchange i) 12,052,344 shares of common stock owed to
the favored nations provision of the January 19, 2015
subscription agreement (the January Agreement),
and ii) 30,130,861 warrants owed to the favored nations provision
of the January Agreement for 210,919 shares of Preferred.

On March 9, 2017, as a result of the Note Offer becoming
effective, a securities exchange offer made to the Companys April
19, 2015 investors (the April Offer) was
accepted by certain of those investors (the April
Investors). to the April Offer, the April Investors
agreed to exchange i) 20,110,699 shares of common stock owed to
the favored nations provision of the April 19, 2015 subscription
agreement (the April Agreement), and ii)
28,154,980 warrants owed to the favored nations provision of the
April Agreement for 52,311 shares of Preferred.

The April Investors also agreed to: i) waive their right to their
pro-rata portion of the remaining $240,216 payment under the May
27, 2016 amendment to the April Agreement (the
Payment), ii) release the Company from its
$50,000 management salary restriction as it relates to their
pro-rata portion of the Payment, and iii) cancel their rights in
the April Agreement to the favored nations provision. After
giving effect to the April Investors release from the Payment,
the Company is still obligated to pay those investors who
participate in the April 2015 financing but did not accept the
April Offer $187,330 prior to either Charles Allen, its Chief
Executive Officer, Chief Financial Officer and Chairman and
Michal Handerhan, its Chief Operating Officer and corporate
secretary (collectively, the Companys sole officers, directors
and employees, the Officers) receiving
disbursements towards their annual salaries or bonuses in excess
of $50,000. As of March 1, 2017 the Company has a liability of
$318,667 for accrued and unpaid cash compensation to the
Officers.

On March 15, 2017, the Company filed a Certificate of Designation
for the Preferred with the Secretary of State of the State of
Nevada. The Preferred Certificate of Designation provides
authorization for the issuance of 1,108,861 shares of Preferred,
par value $0.001. Each holder of Preferred may, from time to
time, convert any or all of such holders shares of Preferred into
fully paid and non-assessable shares of common stock in an amount
equal to two hundred (200) shares of common stock for each one
(1) share of Preferred surrendered. However, at no time may all
or a portion of shares of Preferred stock be converted if the
number of shares of common stock to be issued to such conversion
which would exceed, when aggregated with all other shares of
common stock owned by such holder at such time, the number of
shares of common stock which would result in such holder
beneficially owning more than 4.99% of all of the common stock
outstanding at such time.

The Preferred issued to the Note Holders, January Investors and
April Investors was not registered under the Securities Act, and
was issued in reliance upon the exemption from registration
provided by Section 4(a)(2) of the Securities Act of 1933, as
amended (the Securities Act) and Rule 506
promulgated thereunder. Certificates representing these shares
will contain a legend stating the restrictions applicable to such
shares.

The following table details the Companys capitalization after
giving effect to the Note Offer, January Offer, April Offer
(collectively the Offers) and shares and
warrants issued to investors to the favored nations provisions of
the January Agreement and April Agreement.

The 112,782,888 warrants include: i) 12,645,085 warrants with a
strike price of $0.025 and an expiration date of January 21,
2020, and ii) 100,137,402 warrants with a strike price of $0.032
and an expiration date of April 16, 2020.

Each of the three Note Holders agreed to a leak-out agreement
(the Note Leak-Out) with respect to the sale of
common stock underlying the Preferred in the form attached hereto
as Exhibit 99.1. The Note Leak-Out agreement restricts the number
of shares of common stock that can be sold to 30% of the previous
trading days volume until May 18, 2017 and thereafter to 20% of
the previous days trading volume until February 6, 2018.

Each of the five January Investors agreed to a leak-out agreement
(the January Leak-Out) with respect to the sale
of common stock underlying the Preferred in the form attached
hereto as Exhibit 99.2. The January Leak-Out agreement restricts
the number of shares of common stock that can be sold to 7.8% of
the previous trading days volume until February 6, 2018.

Each of the seven April Investors agreed to a leak-out agreement
(the April Leak-Out) with respect to the sale of
common stock underlying the Preferred in the form attached hereto
as Exhibit 99.3. The April Leak-Out agreement restricts the
number of shares of common stock that can be sold to 12.2% of the
previous trading days volume until February 6, 2018.

Each of the five January Investors agreed to a lockup agreement
(the January Lockup) with respect to the sale of
the common stock underlying the Preferred in the form attached
hereto as Exhibit 99.4, whereby they agreed not to sell the
common stock underlying the Preferred until May 19, 2017.

Each of the seven April Investors agreed to a lockup agreement
(the April Lockup) with respect to the sale of
the common stock underlying the Preferred in the form attached
hereto as Exhibit 99.5, whereby they agreed not to sell the
common stock underlying the Preferred until May 19, 2017.

The foregoing does not purport to be a complete description of
the terms of the securities exchange offers, Note Leak-Out
agreement, January Leak-Out agreement, April Leak-Out agreement,
January Lockup agreement, and April Lockup agreement and is
qualified in its entirety by the full text of the forms of
agreements, which are attached hereto to this Current Report on
Form 8-K as Exhibits 99.1, 99.2, 99.3, 99.4 and 99.5 respectively
and are incorporated herein by reference. Readers should review
these agreements for a complete understanding of the terms and
conditions associated with these transaction.

Item 5.03Amendments To Articles Of Incorporation Or
Bylaws; Change In Fiscal Year

See Item 3.02, incorporated by reference herein, disclosing the
filing of the Certificate of Designation.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits.

About BTCS Inc. (OTCMKTS:BTCS)

BTCS Inc., formerly Bitcoin Shop, Inc., is engaged in the business of hosting an online e-commerce marketplace where consumers can purchase merchandise using digital currencies, including bitcoin and with operations in the blockchain and digital currency ecosystems. The Company operates a beta e-commerce marketplace, which accepts a range of digital currencies, have designed a beta secure digital currency storage solution BTCS Wallet. The Company’s transaction verification services business (bitcoin mining) enables running application-specific integrated circuit (ASIC) servers. The ASIC servers solve a set of prescribed mathematical calculations in order to add a block to the blockchain and thereby confirm bitcoin transactions. The Company’s beta e-commerce marketplace offers approximately 250,000 curated products and utilizes its Intelligent Shopping Engine to find competitive prices on products from over 250 retailers.