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 Nov 2022 to Dec 2022 Click Here for more BTCS Charts.
BTCS (NASDAQ:BTCS)
Historical Stock Chart
From Dec 2021 to Dec 2022 Click Here for more BTCS Charts.