BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain
technology-focused company, today announced its results for the
first quarter ended March 31, 2022.
Q1 2022
Highlights
- Expanding
blockchain infrastructure operations drove Q1 revenue up 29% over
Q4 2021 and up 776% over Q1 2021 to $0.6 million
- 76% gross
margins for the three months ended March 31, 2022 compared to 79%
and 72% for Q1 2021 and Q4 2021 respectively
- $5.8 million
GAAP net loss, primarily triggered by non-cash charges compared to
$11.6 million GAAP net loss for Q1 2021
- Stockholders’
equity increased 44% to $17.4 million at March 31, 2022, up $5.3
million from December 31, 2021
- Fair market
value of digital assets increased to approximately $41.3 million as
of March 31, 2022, up 13% compared to December 31, 2021, and up
105% versus March 31, 2021
- Cash and fair
market value of digital assets $43.6 million or $3.45 per share as
of March 31, 2022
- Declared a
special one-time $0.05 per share dividend payable in Bitcoin at
election of shareholders, becoming the first U.S. public company to
issue such a dividend
- Strengthened
leadership team with the addition of Chief Technology Officer
Blockchain Infrastructure
Update
BTCS continued to expand its blockchain
infrastructure operations in the first quarter of 2022, announcing
the addition of Algorand, Kusama, Solana, Polkadot, and Terra.
Subsequent to the quarter end, the Company announced the addition
of Polygon and Kava to its infrastructure operations. A primary
driver of revenue growth, the Company’s blockchain infrastructure
operations are a high profit margin component of its business
model, and margins are expected to improve as operations scale.
Research and development related to the technical work needed to
run additional validator nodes on new blockchains remains
ongoing.
Management Commentary
“We continued to grow our blockchain
infrastructure segment in Q1 and anticipate ongoing growth in the
quarters ahead as we add new blockchains to our expanding
operations,” stated Charles Allen, Chief Executive Officer of BTCS.
“As a high-margin component of our business, our blockchain
infrastructure operations were a key driver behind the 76% gross
margins achieved in Q1. The fact that we were able to grow
high-margin revenues despite the backdrop of extreme volatility in
the crypto markets is a strong testament to the strength of our
strategy, and I believe we are in a great position to build on this
success as we continue to capitalize on opportunities to create new
value for shareholders.”
“Our ability to effectively execute our strategy
during Q1 was integral to our ability to accomplish yet another
first for a U.S. public company– the declaration and payment of a
‘Bividend’, a dividend that was paid in Bitcoin to shareholders of
record who elected as such,” added Allen. “Innovation is the
cornerstone of the blockchain industry and a foundational component
of our success.”
“While expansion of our blockchain
infrastructure operations is the key focus during Q1 and the coming
quarters, our team is advancing the development of our Digital
Asset Platform toward full commercial launch during the quarter,”
added Michal Handerhan, COO of BTCS. “With the February appointment
of our new Chief Technology Officer, Manish Paranjape, who has been
involved in the development of our Digital Asset Platform since
early 2021, we believe ongoing development will further accelerate,
enabling us to complete the current Beta phase and enter the market
in the second half of this year.”
“As crypto market participants, we are well
aware of its current turmoil. Market cycles are inevitable,
however, the way they take shape is always different. The overall
cycles repeat with pullbacks every ten years or so, and smaller
slumps in markets appear much more frequently – Nasdaq retraced
during the Dot Com Era and again during the Great Recession in
2007-2008. Crypto cycles have tended to be more frequent and
recover more quickly than stock market cycles. Despite the recent
turmoil our cash and crypto positions remain strong, and we believe
we’re well positioned to not only weather the storm but thrive in
the future” added Allen.
About BTCS:
BTCS is an early mover in the blockchain and
digital currency ecosystem, and the first “Pure Play” U.S. publicly
traded company focused on blockchain infrastructure and technology.
Through its blockchain infrastructure operations, the Company
secures Proof-of-Stake blockchains by actively processing and
validating blockchain transactions and is rewarded with native
digital tokens. The Company is developing a proprietary
Staking-as-a-Service platform to allow users to stake and delegate
supported cryptocurrencies through a non-custodial platform, which
it plans to integrate with its Digital Asset Dashboard, now in beta
release. BTCS’ proprietary Digital Asset Platform currently
supports six exchanges and over 800 digital assets, and the Company
plans to further broaden its suite of performance-tracking tools,
add additional centralized and decentralized exchanges, as well as
wallets, and stake pool monitoring. 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 our belief
regarding expected improvement in margins, anticipated growth in
our operations, continuing to capitalize on opportunities to create
shareholder value, launching our Digital Asset Platform and the
acceleration of such launch during the second half of 2022, our
ability to thrive in this market. 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, the rewards
and costs associated with validating transactions on proof-of-stake
blockchains, a significant decrease in the value in the crypto that
we currently own, loss or theft of the private withdrawal keys
resulting in the complete loss of digital assets and reward,
unexpected issues with our Digital Asset Platform, reluctance of
users to 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, 2021 and
the Prospectus Supplement dated September 14, 2021. 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:Dave GentryRedChip Companies, Inc.Phone:
(407) 491-4498BTCS@redchip.com
Public Relations: Mercy Chikoworem.chikowore@btcs.com
GAAP Financials
The tables below (preceding the section titled
“Non-GAAP – Financial Measure”) are derived from the Company’s
financial statements included in its Form 10-Q filed on May 13,
2022 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 March 31,
2022 and 2021. 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
|
|
March 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
(Unaudited) |
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
2,245,062 |
|
|
$ |
1,400,867 |
|
Digital assets/currencies |
|
|
2,617,730 |
|
|
|
3,117,360 |
|
Staked digital
assets/currencies |
|
|
6,601,777 |
|
|
|
623,754 |
|
Prepaid expense |
|
|
315,169 |
|
|
|
324,551 |
|
Total current assets |
|
|
11,779,738 |
|
|
|
5,466,532 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
11,544 |
|
|
|
9,783 |
|
Staked digital
assets/currencies - long term |
|
|
8,684,238 |
|
|
|
8,625,678 |
|
Total other assets |
|
|
8,695,782 |
|
|
|
8,635,461 |
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
20,475,520 |
|
|
$ |
14,101,993 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
expense |
|
$ |
106,144 |
|
|
$ |
138,716 |
|
Accrued compensation |
|
|
3,209 |
|
|
|
7,334 |
|
Capital shares payable |
|
|
75,002 |
|
|
|
- |
|
Dividends payable |
|
|
266,231 |
|
|
|
- |
|
Warrant liabilities |
|
|
2,493,750 |
|
|
|
1,852,500 |
|
Total current liabilities |
|
|
2,944,336 |
|
|
|
1,998,550 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, 97,500,000
shares authorized at $0.001 par value, 12,616,010 and 10,528,212
shares issued and outstanding at March 31, 2022 and December 31,
2021, respectively |
|
|
12,617 |
|
|
|
10,529 |
|
Additional paid in
capital |
|
|
158,848,780 |
|
|
|
147,682,384 |
|
Accumulated deficit |
|
|
(141,330,213 |
) |
|
|
(135,589,470 |
) |
Total stockholders’
equity |
|
|
17,531,184 |
|
|
|
12,103,443 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders’ Equity |
|
$ |
20,475,520 |
|
|
$ |
14,101,993 |
|
BTCS Inc.Statements of
Operations(Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Validator revenue (net of fees) |
|
$ |
563,015 |
|
|
$ |
72,524 |
|
Total revenues |
|
|
563,015 |
|
|
|
72,524 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
Validator expense |
|
|
137,869 |
|
|
|
14,996 |
|
Gross profit |
|
|
425,146 |
|
|
|
57,528 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
650,289 |
|
|
$ |
553,981 |
|
Research and development |
|
|
136,718 |
|
|
|
82,933 |
|
Compensation and related expenses |
|
|
1,423,896 |
|
|
|
7,337,679 |
|
Marketing |
|
|
41,793 |
|
|
|
1,421 |
|
Total operating expenses |
|
|
2,252,696 |
|
|
|
7,976,014 |
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
- |
|
|
|
(54,247 |
) |
Amortization on debt discount |
|
|
- |
|
|
|
(562,096 |
) |
Change in fair value of warrant liabilities |
|
|
(641,250 |
) |
|
|
- |
|
Distributions to warrant holders |
|
|
(35,625 |
) |
|
|
- |
|
Impairment loss on digital assets/currencies |
|
|
(3,307,428 |
) |
|
|
(1,301,764 |
) |
Realized gains (loss) on digital asset/currency transactions |
|
|
71,110 |
|
|
|
3,054,418 |
|
Total other income (expenses) |
|
|
(3,913,193 |
) |
|
|
1,136,311 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,740,743 |
) |
|
$ |
(6,782,175 |
) |
Deemed dividends related to
amortization of beneficial conversion feature of Series C-2
convertible preferred stock |
|
|
- |
|
|
|
(16,176 |
) |
Deemed dividends related to
recognition of downround adjustment to conversion amount for Series
C-2 convertible preferred stock |
|
|
- |
|
|
|
(4,822,220 |
) |
Net loss attributable
to common stockholders |
|
$ |
(5,740,743 |
) |
|
$ |
(11,620,571 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common stockholders, basic and
diluted |
|
$ |
(0.47 |
) |
|
$ |
(2.43 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding, basic and
diluted |
|
|
12,245,278 |
|
|
|
4,777,894 |
|
BTCS Inc.Statements of
Cash Flows(Unaudited)
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Net Cash flows used
from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,740,743 |
) |
|
$ |
(6,782,175 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
797 |
|
|
|
212 |
|
Amortization on debt discount |
|
|
- |
|
|
|
562,096 |
|
Stock-based compensation |
|
|
1,289,274 |
|
|
|
7,539,560 |
|
Stock-based compensation in connection with issuance of Series C-2
convertible preferred stock |
|
|
- |
|
|
|
179,277 |
|
Validator revenue |
|
|
(563,015 |
) |
|
|
(72,524 |
) |
Blockchain network fees (non-cash) |
|
|
1,321 |
|
|
|
|
|
Change in fair value of warrant liabilities |
|
|
641,250 |
|
|
|
- |
|
Purchase of non-productive digital assets/currencies |
|
|
- |
|
|
|
(5,761,549 |
) |
Sale of non-productive digital assets/currencies |
|
|
- |
|
|
|
4,274,491 |
|
Realized gain on digital assets/currencies transactions |
|
|
(71,110 |
) |
|
|
(3,054,418 |
) |
Impairment loss on digital assets/currencies |
|
|
3,307,428 |
|
|
|
1,301,764 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
9,382 |
|
|
|
(421,384 |
) |
Accounts payable and accrued expenses |
|
|
(36,329 |
) |
|
|
42,267 |
|
Accrued compensation |
|
|
(4,125 |
) |
|
|
(348,875 |
) |
Capital shares payable |
|
|
75,002 |
|
|
|
- |
|
Dividends payable - distributions to warrant holders |
|
|
35,625 |
|
|
|
- |
|
Net cash used in operating
activities |
|
|
(1,055,243 |
) |
|
|
(2,541,258 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities: |
|
|
|
|
|
|
|
|
Purchase of productive digital assets/currencies for
validating |
|
|
(8,521,726 |
) |
|
|
(7,994,887 |
) |
Sale of productive digital assets/currencies |
|
|
310,149 |
|
|
|
- |
|
Purchase of property and equipment |
|
|
(2,558 |
) |
|
|
- |
|
Net cash used in investing
activities |
|
|
(8,214,135 |
) |
|
|
(7,994,887 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by
financing activities: |
|
|
|
|
|
|
|
|
Dividend distributions |
|
|
(400,194 |
) |
|
|
- |
|
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 |
|
|
- |
|
|
|
2,014,259 |
|
Net proceeds from issuance common stock/ At-the-market
offering |
|
|
10,513,767 |
|
|
|
- |
|
Payment to convertible notes principle |
|
|
- |
|
|
|
- |
|
Net cash provided by financing
activities |
|
|
10,113,573 |
|
|
|
13,379,259 |
|
|
|
|
|
|
|
|
|
|
Net increase in cash |
|
|
844,195 |
|
|
|
2,843,114 |
|
Cash, beginning of period |
|
|
1,400,867 |
|
|
|
524,135 |
|
Cash, end of period |
|
$ |
2,245,062 |
|
|
$ |
3,367,249 |
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
- |
|
|
$ |
16,176 |
|
Deemed dividends related to recognition of downround adjustment to
conversion amount for Series C-2 convertible preferred stock |
|
$ |
- |
|
|
$ |
4,822,220 |
|
Conversion of Series C-1 Preferred Stock |
|
$ |
- |
|
|
$ |
196 |
|
Beneficial conversion feature of Series C-2 convertible preferred
stock |
|
$ |
- |
|
|
$ |
129,412 |
|
Beneficial conversion features associated with convertible notes
payable |
|
$ |
- |
|
|
$ |
1,000,000 |
|
Dividends payable |
|
$ |
230,606 |
|
|
$ |
- |
|
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. 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, and
stock-based compensation expense (including stock-based
compensation issued to service providers). Adjusted EBITDA
presented does not include adjustments for impairment of intangible
digital assets. Note: In previous disclosures of Adjusted EBTIDA
impairment of intangible assets had been included as an adjustment
added back.
The table below presents our Adjusted EBITDA
reconciled to our net loss, the closest GAAP measure, for the
period indicated:
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
(5,740,743 |
) |
|
$ |
(6,782,175 |
) |
Adjusted to exclude the
following: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
797 |
|
|
|
562,096 |
|
Interest expense |
|
|
- |
|
|
|
54,247 |
|
Change in fair value of warrant liabilities |
|
|
641,250 |
|
|
|
- |
|
Stock-based compensation |
|
|
1,364,276 |
|
|
|
7,281,477 |
|
Adjusted
EBITDA |
|
|
(3,734,420 |
) |
|
|
1,115,645 |
|
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