BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain
technology-focused company, announced results for the second
quarter ending June 30, 2022.
Second Quarter 2022 Financial
HighlightsRevenue increased 35% to $0.5 million
from the prior-year quarter and decreased by 9% from the first
quarter of 2022. The slight revenue decline from the first quarter
of 2022 resulted from a decrease in Digital Asset prices throughout
the quarter, partially offset by an increase in Digital Asset
production as a result of our expanded blockchain infrastructure.
Revenue for the first six months of 2022 rose to $1.1 million
compared to $0.5 million for the same period in 2021, nearly
reaching 2021 full-year revenue of $1.2 million.
Gross margins improved during the quarter to 82%
compared to 76% in the first quarter of 2022, with gross margins of
79% for the first half of 2022. This was a direct result of an
increase in Digital Asset production efficiencies and offset by the
sharp decline in Digital Asset prices.
Despite increased production from the Company’s
blockchain infrastructure validation operations, U.S. GAAP (“GAAP”)
net loss for the quarter totaled $7.7 million ($0.61 per share) and
$13.5 million ($1.08 per share) for the three and six months ended
June 30, 2022, compared to $4.8 million and $11.6 million GAAP net
loss for respective periods ended June 30, 2021. The net loss is
primarily driven by non-cash charges related to the impairment of
Digital Assets, as GAAP requires us to impair our Digital Assets to
their lowest price since acquisition. Under GAAP, there is no
ability to mark Digital Assets up if prices rebound (e.g.,
Ethereum, BTCS’ largest holding, is up 77% subsequent to the end of
Q2). Digital Asset impairment charges during the period amounted to
$8.9 million and $12.2 million for the three and six months ended
June 30, 2022, respectively, resulting from crypto market
volatility, compared to impairment on Digital Assets of $2.3
million and $3.6 million during the respective periods in 2021.
As of June 30, 2022, the Company had $3.2
million in cash.
Business
HighlightsThroughout the market downturn, we have
taken the necessary steps to reduce our cash operating costs by
decreasing vendor spending and increasing operational efficiencies
to best position the Company to weather this economic cycle and
ultimately benefit our shareholders. Additionally, we are keenly
focused on the continued development of our Digital Asset Platform,
specifically the integration of our planned proprietary
staking-as-a-service platform to allow users to stake and delegate
supported cryptocurrencies through a non-custodial platform to
BTCS-operated validator nodes.
Management Commentary“In spite
of macroeconomic factors and increased crypto market volatility, we
ended the quarter with solid revenue, gross margin expansion, a
strong cash balance, and no debt. Looking forward, we are steadfast
in our business model value proposition and are confident in our
ability to navigate uncertain times,” stated Charles Allen, Chief
Executive Officer of BTCS. Mr. Allen continued, “we continue to
remain extremely bullish on next-generation blockchains, including
Ethereum our largest holding which recently reached $1,894 up 111%
from its Q2 low of $896, and are optimistic that its planned
transition to a Proof-of-Stake consensus mechanism will generate
additional interest.”
“We view the current market conditions as an
opportunity to build our platform and create value for our
shareholders and remain optimistic about the growing utility and
presence of blockchain technology,” stated Michael Prevoznik, BTCS’
Chief Financial Officer.
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 validator
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 optimism
of the Ethereum transition, the Ethereum transition generating
additional interest in the Company, opportunity to build value for
our shareholders. 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,
regulatory issues, 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:Adele CareyVP, Investor
Relationsir@btcs.com
Public Relations: Mercy Chikoworem.chikowore@btcs.com
GAAP Financials
The tables below are derived from the Company’s
financial statements included in its Form 10-Q filed on August 11,
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 June 30,
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
|
|
June 30, |
|
|
December
31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
(Unaudited) |
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
3,191,418 |
|
|
$ |
1,400,867 |
|
Digital assets/currencies |
|
|
19,803 |
|
|
|
3,117,360 |
|
Staked digital assets/currencies |
|
|
2,475,868 |
|
|
|
623,754 |
|
Prepaid expense |
|
|
261,175 |
|
|
|
324,551 |
|
Total current assets |
|
|
5,948,264 |
|
|
|
5,466,532 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
10,615 |
|
|
|
9,783 |
|
Staked digital assets/currencies - long term |
|
|
5,498,808 |
|
|
|
8,625,678 |
|
Total other assets |
|
|
5,509,423 |
|
|
|
8,635,461 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
11,457,687 |
|
|
$ |
14,101,993 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expense |
|
$ |
143,037 |
|
|
$ |
138,716 |
|
Accrued compensation |
|
|
140,187 |
|
|
|
7,334 |
|
Warrant liabilities |
|
|
783,750 |
|
|
|
1,852,500 |
|
Total current liabilities |
|
|
1,066,974 |
|
|
|
1,998,550 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Common stock, 97,500,000 shares authorized at $0.001 par value,
12,703,794 and 10,528,212 shares issued and outstanding at June 30,
2022 and December 31, 2021, respectively |
|
|
12,705 |
|
|
|
10,529 |
|
Additional paid in capital |
|
|
159,432,894 |
|
|
|
147,682,384 |
|
Accumulated deficit |
|
|
(149,054,886 |
) |
|
|
(135,589,470 |
) |
Total stockholders' equity |
|
|
10,390,713 |
|
|
|
12,103,443 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
|
$ |
11,457,687 |
|
|
$ |
14,101,993 |
|
BTCS Inc.Statements of
Operations(Unaudited)
|
|
For the Three
Months Ended |
|
|
For the Six
Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Validator revenue (net of fees) |
|
$ |
514,349 |
|
|
$ |
380,499 |
|
|
$ |
1,077,364 |
|
|
$ |
453,023 |
|
Total revenues |
|
|
514,349 |
|
|
|
380,499 |
|
|
|
1,077,364 |
|
|
|
453,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Validator expense |
|
|
93,900 |
|
|
|
59,249 |
|
|
|
231,769 |
|
|
|
74,245 |
|
Gross profit |
|
|
420,449 |
|
|
|
321,250 |
|
|
|
845,595 |
|
|
|
378,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
512,051 |
|
|
$ |
312,967 |
|
|
$ |
1,162,340 |
|
|
$ |
866,948 |
|
Research and development |
|
|
185,004 |
|
|
|
245,336 |
|
|
|
321,722 |
|
|
|
328,269 |
|
Compensation and related expenses |
|
|
638,025 |
|
|
|
1,703,771 |
|
|
|
2,061,921 |
|
|
|
9,041,450 |
|
Marketing |
|
|
23,691 |
|
|
|
1,365 |
|
|
|
65,484 |
|
|
|
2,786 |
|
Impairment loss on digital assets/currencies |
|
|
8,894,797 |
|
|
|
2,267,374 |
|
|
|
12,202,225 |
|
|
|
3,569,138 |
|
Realized gains on digital asset/currency transactions |
|
|
(398,446 |
) |
|
|
- |
|
|
|
(469,556 |
) |
|
|
(3,054,418 |
) |
Total operating expenses |
|
|
9,855,122 |
|
|
|
4,530,813 |
|
|
|
15,344,136 |
|
|
|
10,754,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
- |
|
|
|
(59,835 |
) |
|
|
- |
|
|
|
(114,082 |
) |
Amortization on debt discount |
|
|
- |
|
|
|
(572,675 |
) |
|
|
- |
|
|
|
(1,134,771 |
) |
Change in fair value of warrant liabilities |
|
|
1,710,000 |
|
|
|
- |
|
|
|
1,068,750 |
|
|
|
- |
|
Distributions to warrant holders |
|
|
- |
|
|
|
- |
|
|
|
(35,625 |
) |
|
|
- |
|
Total other income (expenses) |
|
|
1,710,000 |
|
|
|
(632,510 |
) |
|
|
1,033,125 |
|
|
|
(1,248,853 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(7,724,673 |
) |
|
$ |
(4,842,073 |
) |
|
$ |
(13,465,416 |
) |
|
$ |
(11,624,248 |
) |
Deemed dividends related to amortization of beneficial
conversion feature of Series C-2 convertible preferred stock |
|
|
- |
|
|
|
(16,177 |
) |
|
|
- |
|
|
|
(32,353 |
) |
Deemed dividends related to recognition of downround adjustment
to conversion amount for Series C-2 convertible preferred
stock |
|
|
- |
|
|
|
(198,663 |
) |
|
|
- |
|
|
|
(5,020,883 |
) |
Net loss attributable to common stockholders |
|
$ |
(7,724,673 |
) |
|
$ |
(5,056,913 |
) |
|
$ |
(13,465,416 |
) |
|
$ |
(16,677,484 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common stockholders,
basic and diluted |
|
$ |
(0.61 |
) |
|
$ |
(0.89 |
) |
|
$ |
(1.08 |
) |
|
$ |
(3.19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic
and diluted |
|
|
12,644,719 |
|
|
|
5,667,229 |
|
|
|
12,446,102 |
|
|
|
5,225,019 |
|
BTCS Inc.Statements of
Cash Flows(Unaudited)
|
|
For the Six
Months Ended |
|
|
|
June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Net Cash flows used from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(13,465,416 |
) |
|
$ |
(11,624,248 |
) |
Adjustments to reconcile net loss to net cash provided by (used
in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
1,727 |
|
|
|
299 |
|
Amortization on debt discount |
|
|
- |
|
|
|
1,134,771 |
|
Stock-based compensation |
|
|
1,782,802 |
|
|
|
9,226,702 |
|
Stock-based compensation in connection with issuance of Series C-2
convertible preferred stock |
|
|
- |
|
|
|
179,277 |
|
Validator revenue |
|
|
(1,077,364 |
) |
|
|
(453,023 |
) |
Blockchain network fees (non-cash) |
|
|
1,321 |
|
|
|
- |
|
Change in fair value of warrant liabilities |
|
|
(1,068,750 |
) |
|
|
- |
|
Purchase of non-productive digital assets/currencies |
|
|
- |
|
|
|
(5,761,549 |
) |
Sale of non-productive digital assets/currencies |
|
|
2,547,322 |
|
|
|
4,274,491 |
|
Realized gain on digital assets/currencies transactions |
|
|
(469,556 |
) |
|
|
(3,054,418 |
) |
Impairment loss on digital assets/currencies |
|
|
12,202,225 |
|
|
|
3,569,138 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
63,376 |
|
|
|
(566,337 |
) |
Accounts payable and accrued expenses |
|
|
565 |
|
|
|
130,541 |
|
Accrued compensation |
|
|
132,853 |
|
|
|
(346,689 |
) |
Net cash provided by (used in) operating activities |
|
|
651,105 |
|
|
|
(3,291,045 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in investing activities: |
|
|
|
|
|
|
|
|
Purchase of productive digital assets/currencies for
validating |
|
|
(9,141,785 |
) |
|
|
(8,493,136 |
) |
Sale of productive digital assets/currencies |
|
|
310,149 |
|
|
|
- |
|
Purchase of property and equipment |
|
|
(2,558 |
) |
|
|
(3,245 |
) |
Net cash used in investing activities |
|
|
(8,834,194 |
) |
|
|
(8,496,381 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities: |
|
|
|
|
|
|
|
|
Dividend distributions |
|
|
(630,801 |
) |
|
|
- |
|
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 |
|
|
- |
|
|
|
2,814,133 |
|
Net proceeds from issuance common stock/ At-the-market
offering |
|
|
10,604,441 |
|
|
|
- |
|
Payment to convertible notes principle |
|
|
- |
|
|
|
- |
|
Net cash provided by financing activities |
|
|
9,973,640 |
|
|
|
14,179,133 |
|
|
|
|
|
|
|
|
|
|
Net increase in cash |
|
|
1,790,551 |
|
|
|
2,391,707 |
|
Cash, beginning of period |
|
|
1,400,867 |
|
|
|
524,135 |
|
Cash, end of period |
|
$ |
3,191,418 |
|
|
$ |
2,915,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
- |
|
|
$ |
32,353 |
|
Deemed dividends related to recognition of downround adjustment to
conversion amount for Series C-2 convertible preferred stock |
|
$ |
- |
|
|
$ |
5,020,883 |
|
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 |
|
BTCS (NASDAQ:BTCS)
Historical Stock Chart
From Aug 2024 to Sep 2024
BTCS (NASDAQ:BTCS)
Historical Stock Chart
From Sep 2023 to Sep 2024