BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain
technology-focused company, announced its results for the second
quarter ending June 30, 2023 (“Q2 2023”).
Second Quarter
2023 Financial
HighlightsQ2 2023 revenue improved 21% over Q1
2023 to $0.4 million but remained lower than Q2 2022 by 25% as a
result of the depressed crypto asset prices.
Gross margins for Q2 2023 were 71% compared to
74% for Q1 2022, with gross margins of 72% for the first half of
2023.
Net loss for Q2 2023 decreased to $1.0 million
($0.07 per share) compared to $1.4 million ($0.10 per share) for Q1
2023 and $7.7 million ($0.61 per share) for Q2 2022.
Net loss for the first half of 2023 was $2.4
million ($0.18 per share) compared to $13.5 million ($1.08 per
share) for the first half of 2022. Net losses during the first half
of 2022 were largely driven by $12.2 million crypto asset
impairment losses realized, compared to only $0.9 million
impairment charges in the first half of 2023.
As of June 30, 2023, the Company had $0.9
million in cash.
The fair value of our crypto assets increased
63% YoY to $19.4 million in Q2 2023.
The fair value of our crypto assets together
with our cash equated to approximately $1.47 per share as of June
30, 2023.
Management Commentary
Business UpdateIn Q2 2023, BTCS continued its
momentum from the successful beta launch of the StakeSeeker
platform in January. Through our StakeSeeker platform, a
comprehensive crypto dashboard and education center for crypto
asset holders, and our blockchain infrastructure operations we
believe we’ve laid the core foundation for significant growth into
key blockchain verticals that leverage the knowledge and expertise
we’ve honed over the last few years. Our team is dedicated and hard
at work, developing new initiatives built on our core expertise,
and look forward to sharing these initiatives later in the
year.
Industry CommentaryWhile crypto prices have been
relatively flat on average in Q2 2023. Ethereum and other cryptos
held by BTCS have seen substantial price increases since 2022 lows
underscoring the potential and opportunities within the
cryptocurrency market.
We are aware of recent incidents that have
raised concerns about regulatory clarity and the need for greater
transparency within the crypto sphere. At BTCS, we firmly support
the need for a robust regulatory framework that fosters innovation
while safeguarding investors' interests. As a company focused on
non-custodial staking and other regulatory light operations, we
adhere to industry best practices, ensuring compliance and
transparency in our operations.
Our flagship StakeSeeker platform, with its
non-custodial staking-as-a-service solution, sets us apart from
others in the staking market. By allowing users to maintain control
over their crypto assets while participating in the network's
consensus mechanism, we ensure greater security and promote a
stronger sense of trust in the crypto community. We remain
committed to educating the public about emerging blockchain
technologies and the benefits of self-custody of crypto assets. As
we believe that blockchain technologies are still in their early
stages, we are dedicated to driving awareness and adoption across
various sectors.
Looking ahead, we remain optimistic about both
the future of the crypto industry and BTCS. We’re enthusiastic
about driving new innovations that contribute to the broader
adoption and acceptance of blockchain technologies, providing value
to our shareholders. With our dedication and focus, we aim to
continue positioning ourselves as leaders in this dynamic
landscape.
About BTCS:BTCS Inc. is a
Nasdaq listed company operating in the blockchain technology space
since 2014 and is one of the first U.S. publicly traded companies
with a primary focus on blockchain infrastructure and staking. BTCS
secures and operates validator nodes on disruptive next-generation
blockchain networks that power Web 3, earning native token rewards
by staking our proof-of-stake crypto assets. “StakeSeeker” is BTCS’
newly introduced proprietary Cryptocurrency Dashboard and
Staking-as-a-Service platform, developed to empower users to better
understand and grow their crypto holdings with innovative portfolio
analytics and a non-custodial process to earn staking rewards on
crypto asset holdings. Users can easily link and monitor their
cryptocurrency portfolios across exchanges, wallets, validator
nodes, and other sources; and have access to a suite of data
analytic tools such as performance and reward tracking.
StakeSeeker’s Staking Hub allows users to earn rewards by directly
participating in network consensus mechanisms by staking and
delegating their cryptocurrencies to company-operated validator
nodes for a growing number of supported blockchains. As a
non-custodial validator operator, BTCS receives a percentage of
token holders staking rewards generated as a validator node fee,
creating the potential opportunity for a highly scalable business
with limited additional costs. For more information visit:
www.btcs.com.
Forward-Looking
Statements:Certain statements in this press release,
constitute “forward-looking statements” within the meaning of the
federal securities laws including statements regarding the growth
of our StakeSeeker use base, our beliefs regarding the
transformational potential of blockchain technologies, the
potential and opportunities within the cryptocurrency market,
developing new inns built on our core expertise, leveraging our
knowledge and expertise, and the optimism regarding delivering
shareholder value. Words such as “may,” “might,” “will,” “should,”
“believe,” “expect,” “anticipate,” “estimate,” “continue,”
“predict,” “forecast,” “project,” “plan,” “intend” or similar
expressions, or statements regarding intent, belief, or current
expectations, are forward-looking statements. While the Company
believes these forward-looking statements are reasonable, undue
reliance should not be placed on any such forward-looking
statements, which are based on information available to us on the
date of this release. These forward-looking statements are based
upon current estimates and assumptions and are subject to various
risks and uncertainties, including without limitation regulatory
issues unexpected issues with our proprietary Digital Asset
Analytic and Staking-as-a-Service Platform: StakeSeeker, regulatory
issues, unexpected issues with our Staking-as-a-Service Platform
and the reluctance of users to try or accept our product, as well
as risks set forth in the Company’s filings with the Securities and
Exchange Commission including its Form 10-K for the year ended
December 31, 2022 which was filed on March 31, 2023. Thus, actual
results could be materially different. The Company expressly
disclaims any obligation to update or alter statements, whether as
a result of new information, future events or otherwise, except as
required by law.
Investor Relations:ir@btcs.com
Financials
The tables below are derived from the Company’s
financial statements included in its Form 10-Q filed on August 14,
2023 with the Securities and Exchange Commission. Please refer to
the Form 10-Q for complete financial statements and further
information regarding the Company’s results of operations and
financial condition relating to the fiscal quarter ended June 30,
2023 and 2022. Please also refer to the Company’s Form 10-K for a
discussion of risk factors applicable to the Company and its
business.
BTCS Inc.Balance
Sheets
|
|
June 30, |
|
|
December
31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
(Unaudited) |
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
|
943,418 |
|
|
$ |
2,146,783 |
|
Crypto assets/currencies |
|
|
948 |
|
|
|
982 |
|
Investments, at value (Cost $100,000) |
|
|
100,000 |
|
|
|
100,000 |
|
Staked crypto assets/currencies |
|
|
8,185,089 |
|
|
|
1,826,307 |
|
Prepaid expense |
|
|
175,395 |
|
|
|
123,727 |
|
Total current assets |
|
|
9,404,850 |
|
|
|
4,197,799 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
8,834 |
|
|
|
11,152 |
|
Staked crypto assets/currencies - long term |
|
|
- |
|
|
|
5,708,624 |
|
Total other assets |
|
|
8,834 |
|
|
|
5,719,776 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
9,413,684 |
|
|
$ |
9,917,575 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expense |
|
$ |
188,144 |
|
|
$ |
76,727 |
|
Accrued compensation |
|
|
253,995 |
|
|
|
295,935 |
|
Warrant liabilities |
|
|
356,250 |
|
|
|
213,750 |
|
Total current liabilities |
|
|
798,389 |
|
|
|
586,412 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Preferred stock; 20,000,000 shares authorized at $0.001 par
value: |
|
|
- |
|
|
|
- |
|
Series V Preferred stock: 14,542,803 and 0 shares issued and
outstanding at June 30, 2023 and December 31, 2022,
respectively |
|
|
2,559,533 |
|
|
|
- |
|
Common stock, 97,500,000 shares authorized at $0.001 par value,
14,181,410 and 13,107,149 shares issued and outstanding at June 30,
2023 and December 31, 2022, respectively |
|
|
14,182 |
|
|
|
13,108 |
|
Additional paid in capital |
|
|
159,955,610 |
|
|
|
160,800,263 |
|
Accumulated deficit |
|
|
(153,914,030 |
) |
|
|
(151,482,208 |
) |
Total stockholders' equity |
|
|
8,615,295 |
|
|
|
9,331,163 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
|
$ |
9,413,684 |
|
|
$ |
9,917,575 |
|
BTCS Inc.Statements of
Operations(Unaudited)
|
|
For the Three
Months Ended |
|
|
For the Six
Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Validator revenue (net of fees) |
|
$ |
385,753 |
|
|
$ |
514,349 |
|
|
$ |
697,261 |
|
|
$ |
1,077,364 |
|
Total revenues |
|
|
385,753 |
|
|
|
514,349 |
|
|
|
697,261 |
|
|
|
1,077,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Validator expense |
|
|
113,612 |
|
|
|
93,900 |
|
|
|
195,626 |
|
|
$ |
231,769 |
|
Gross profit |
|
|
272,141 |
|
|
|
420,449 |
|
|
|
501,635 |
|
|
|
845,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
617,569 |
|
|
$ |
512,051 |
|
|
$ |
1,227,398 |
|
|
$ |
1,162,340 |
|
Research and development |
|
|
180,903 |
|
|
|
185,004 |
|
|
|
382,528 |
|
|
|
321,722 |
|
Compensation and related expenses |
|
|
578,496 |
|
|
|
638,025 |
|
|
|
1,040,586 |
|
|
|
2,061,921 |
|
Marketing |
|
|
2,723 |
|
|
|
23,691 |
|
|
|
8,966 |
|
|
|
65,484 |
|
Impairment loss on crypto assets/currencies |
|
|
784,602 |
|
|
|
8,894,797 |
|
|
|
879,509 |
|
|
|
12,202,225 |
|
Realized gains on crypto asset/currency transactions |
|
|
(731,199 |
) |
|
|
(398,446 |
) |
|
|
(748,030 |
) |
|
|
(469,556 |
) |
Total operating expenses |
|
|
1,433,094 |
|
|
|
9,855,122 |
|
|
|
2,790,957 |
|
|
|
15,344,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities |
|
|
142,500 |
|
|
|
1,710,000 |
|
|
|
(142,500 |
) |
|
|
1,068,750 |
|
Distributions to warrant holders |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(35,625 |
) |
Total other income (expenses) |
|
|
142,500 |
|
|
|
1,710,000 |
|
|
|
(142,500 |
) |
|
|
1,033,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,018,453 |
) |
|
$ |
(7,724,673 |
) |
|
$ |
(2,431,822 |
) |
|
$ |
(13,465,416 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common stockholders,
basic and diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.61 |
) |
|
$ |
(0.18 |
) |
|
$ |
(1.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic
and diluted |
|
|
13,873,331 |
|
|
|
12,644,719 |
|
|
|
13,773,782 |
|
|
|
12,446,102 |
|
BTCS Inc.Statements of
Cash Flows(Unaudited)
|
|
For the Six
Months Ended |
|
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Net Cash flows used from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,431,822 |
) |
|
$ |
(13,465,416 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
2,318 |
|
|
|
1,727 |
|
Stock-based compensation |
|
|
789,453 |
|
|
|
1,782,802 |
|
Validator revenue |
|
|
(697,261 |
) |
|
|
(1,077,364 |
) |
Blockchain network fees (non-cash) |
|
|
- |
|
|
|
1,321 |
|
Change in fair value of warrant liabilities |
|
|
142,500 |
|
|
|
(1,068,750 |
) |
Sale of non-productive crypto assets/currencies |
|
|
- |
|
|
|
2,547,322 |
|
Realized gain on crypto assets/currencies transactions |
|
|
(748,030 |
) |
|
|
(469,556 |
) |
Impairment loss on crypto assets/currencies |
|
|
879,509 |
|
|
|
12,202,225 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
- |
|
Prepaid expenses and other current assets |
|
|
(51,668 |
) |
|
|
63,376 |
|
Accounts payable and accrued expenses |
|
|
111,417 |
|
|
|
565 |
|
Accrued compensation |
|
|
(41,940 |
) |
|
|
132,853 |
|
Net cash used in operating activities |
|
|
(2,045,524 |
) |
|
|
651,105 |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities: |
|
|
|
|
|
|
|
|
Purchase of productive crypto assets/currencies for validating |
|
|
(1,804,213 |
) |
|
|
(9,141,785 |
) |
Sale of productive crypto assets/currencies |
|
|
1,719,871 |
|
|
|
310,149 |
|
Purchase of investments |
|
|
- |
|
|
|
- |
|
Purchase of property and equipment |
|
|
- |
|
|
|
(2,558 |
) |
Net cash used in investing activities |
|
|
(84,342 |
) |
|
|
(8,834,194 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities: |
|
|
|
|
|
|
|
|
Dividend distributions |
|
|
- |
|
|
|
(630,801 |
) |
Net proceeds from issuance common stock/ At-the-market
offering |
|
|
926,501 |
|
|
|
10,604,441 |
|
Net cash provided by financing activities |
|
|
926,501 |
|
|
|
9,973,640 |
|
|
|
|
|
|
|
|
|
|
Net increase in cash |
|
|
(1,203,365 |
) |
|
|
1,790,551 |
|
Cash, beginning of period |
|
|
2,146,783 |
|
|
|
1,400,867 |
|
Cash, end of period |
|
$ |
943,418 |
|
|
$ |
3,191,418 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash financing and investing
activities: |
|
|
|
|
|
|
|
|
Series V Preferred Stock Distribution |
|
$ |
2,559,533 |
|
|
$ |
- |
|
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