BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain
technology-focused company, announced its results for the fiscal
year ended December 31, 2022.
2022 Financial
Highlights
Revenue for fiscal year 2022 rose 39% to $1.7
million compared to $1.2 million in 2021.
Gross margins were 75% for fiscal year 2022,
compared to 78% during 2021.
In 2022, net loss decreased to $15.9 million
($1.25 per share) compared to $21.1 million ($3.09 per share) net
loss for 2021. BTCS’s net loss is primarily driven by non-cash
charges related to the impairment of crypto assets, because U.S.
Generally Accepted Accounting Principles requires BTCS to impair
its crypto assets to their lowest price since acquisition, with no
ability to mark-to-market if crypto prices rebound. Crypto asset
impairment charges during the fourth quarter of 2022 amounted to
$1.0 million, compared to $145,000 in the third quarter of 2022 and
$12.2 million in the first six months of 2022, highlighting the
impact of the crypto market’s decline throughout the year on our
financial statements. Crypto asset impairment for fiscal year 2022
totaled $13.3 million compared to $3.8 million in 2021.
The fair value of BTCS’s crypto assets totaled
$12.5 million as of December 31, 2022, however, crypto prices have
since rebounded and the fair value of our crypto assets was $18.8
million and together with our cash equate to approximately $1.37
per share as of March 28, 2023.
As of December 31, 2022, the Company had $2.1
million in cash.
Management Commentary
“Building on the momentum of staking our own
crypto assets over the past several years and through extensive
research and development in the necessary technology to create and
run validator nodes on a growing number of proof-of-stake
blockchains, we successfully completed the beta launch of our
innovative StakeSeeker platform in early January 2023,” said
Charles Allen, Chief Executive Officer of BTCS. “The launch of this
proprietary digital asset analytics and non-custodial
staking-as-a-service platform represents a significant step forward
for our organization.”
StakeSeeker is a comprehensive crypto dashboard
and education center for crypto asset holders to learn how to earn
crypto rewards by staking through its non-custodial Stake Hub and
evaluate their crypto portfolios across exchanges and wallets in a
single analytics platform. StakeSeeker sets itself apart by solving
the common problem of central tracking for crypto holdings stored
on various crypto exchanges and digital wallets, providing crypto
holders with an improved user experience and the ability to easily
track and analyze the performance of their entire portfolio. The
platform was developed to empower crypto holders, to self-custody
their crypto, and to better understand and grow their crypto asset
holdings with innovative portfolio analytics and a non-custodial
process to earn staking rewards through the direct participation in
blockchain consensus algorithms.
“Since launching StakeSeeker, we have continued
to expand its features and functionality, with a particular focus
on integrating new blockchain networks and improving user
experience,” added Michael Prevoznik, Chief Financial Officer of
BTCS. “We remain committed to growing StakeSeeker's user base and
building a strong delegator base on our validator nodes to provide
an attractive non-custodial staking option for crypto asset
holders. Our team is passionate about empowering users to keep
control of their crypto assets and make informed decisions with
respect to their crypto assets. We have developed in-depth
educational materials that emphasize the benefits of non-custodial
staking and the importance of self-custody of assets.”
“At BTCS, we recognize that blockchain
technologies are still emerging, and we remain committed to being
at the forefront of the industry’s ongoing evolution,” continued
Allen, “As such, we continue to invest time and resources into
educating the public on emerging blockchain technologies, the
benefits of self-custody of crypto assets, and the importance of
secure staking practices. We firmly believe in the transformational
potential of blockchain technologies and passionately advocate for
its increasing use in both the private and public sectors. We are
optimistic about the future and excited to continue driving new
innovations that strengthen long-term shareholder value.”
Industry and
Business Highlights
The recent failures of Silicon Valley Bank,
Silvergate, and Signature Bank have had a significant impact on
both the crypto and financial markets, sparking a shift in capital
flows as people look for alternative places to store their wealth.
BTC and ETH in particular have shone brightly in this market
environment, providing signs of optimism in the sector following
FTX's recent collapse.
BTCS believes the failure of FTX as well as
recent actions taken by the SEC against Kraken and ongoing
investigations into crypto's classification as securities
underscore the need for greater regulatory clarity and transparency
in the crypto market. Importantly, the Company's StakeSeeker
platform, a non-custodial staking-as-a-service solution, differs
materially from other industry staking programs such as Kraken's
custodial model.
In non-custodial staking, users retain control
over their crypto assets and directly participate in the network’s
consensus mechanism by staking their crypto and earning rewards. In
contrast, centralized staking, such as that employed by Kraken and
other exchanges, involves entrusting a third-party with your crypto
assets. While centralized staking may seem convenient, they often
come with significant undisclosed risks, such as hacking, theft,
and going bankrupt.
“As the crypto industry continues to grow and
mature, it is vital that we maintain a clear understanding of the
differences between non-custodial and centralized staking,”
continued Allen. “By doing so, we can ensure the general public is
informed and make wise decisions about how they participate in
consensus mechanisms and earn rewards.”
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 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, 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
Public Relations: Mercy Chikoworem.chikowore@btcs.com
Financials
The tables below are derived from the Company’s
financial statements included in its Form 10-K filed on March 31,
2023, with the Securities and Exchange Commission. Please refer to
the Form 10-K for complete financial statements and further
information regarding the Company’s results of operations and
financial condition relating to the fiscal quarter and fiscal year
ended December 31, 2022 and 2021. The Company’s Form 10-K also
includes a discussion of risk factors applicable to the Company and
its business.
BTCS Inc.Balance
Sheets
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
2,146,783 |
|
|
$ |
1,400,867 |
|
Crypto assets |
|
|
982 |
|
|
|
3,117,360 |
|
Investments, at value (Cost
$100,000) |
|
|
100,000 |
|
|
|
- |
|
Staked crypto assets |
|
|
1,826,307 |
|
|
|
623,754 |
|
Prepaid expense |
|
|
123,727 |
|
|
|
324,551 |
|
Total current assets |
|
|
4,197,799 |
|
|
|
5,466,532 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
11,152 |
|
|
|
9,783 |
|
Staked crypto assets |
|
|
5,708,624 |
|
|
|
8,625,678 |
|
Total other assets |
|
|
5,719,776 |
|
|
|
8,635,461 |
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
9,917,575 |
|
|
$ |
14,101,993 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
expense |
|
$ |
76,727 |
|
|
$ |
138,716 |
|
Accrued compensation |
|
|
295,935 |
|
|
|
7,334 |
|
Warrant liabilities |
|
|
213,750 |
|
|
|
1,852,500 |
|
Total current liabilities |
|
|
586,412 |
|
|
|
1,998,550 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Common stock, 97,500,000
shares authorized at $0.001 par value, 13,107,149 and 10,528,212
shares issued and outstanding at December 31, 2022 and 2021,
respectively |
|
|
13,108 |
|
|
|
10,529 |
|
Additional paid in
capital |
|
|
160,800,263 |
|
|
|
147,682,384 |
|
Accumulated deficit |
|
|
(151,482,208 |
) |
|
|
(135,589,470 |
) |
Total stockholders'
equity |
|
|
9,331,163 |
|
|
|
12,103,443 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
|
$ |
9,917,575 |
|
|
$ |
14,101,993 |
|
BTCS Inc.Statements of
Operations
|
|
For the Year Ended |
|
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
Validator revenue (net of fees) |
|
$ |
1,692,454 |
|
|
$ |
1,213,284 |
|
Total revenues |
|
|
1,692,454 |
|
|
|
1,213,284 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
|
Validator expense |
|
|
426,440 |
|
|
$ |
268,346 |
|
Gross profit |
|
|
1,266,014 |
|
|
|
944,938 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
$ |
1,916,193 |
|
|
$ |
1,590,707 |
|
Research and development |
|
|
611,758 |
|
|
|
712,736 |
|
Compensation and related expenses |
|
|
3,313,638 |
|
|
|
15,583,258 |
|
Marketing |
|
|
78,171 |
|
|
|
180,290 |
|
Impairment loss on crypto assets |
|
|
13,348,874 |
|
|
|
3,845,899 |
|
Realized gains on crypto asset transactions |
|
|
(506,757 |
) |
|
|
(3,054,418 |
) |
Total operating expenses |
|
|
18,761,877 |
|
|
|
18,858,472 |
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
Interest expense |
|
|
- |
|
|
|
(186,740 |
) |
Amortization on debt discount |
|
|
- |
|
|
|
(1,868,059 |
) |
Change in fair value of warrant liabilities |
|
|
1,638,750 |
|
|
|
3,918,750 |
|
Distributions to warrant holders |
|
|
(35,625 |
) |
|
|
- |
|
Total other income (expenses) |
|
|
1,603,125 |
|
|
|
1,863,951 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(15,892,738 |
) |
|
$ |
(16,049,583 |
) |
Deemed dividends related to
amortization of beneficial conversion feature of Series C-2
convertible preferred stock |
|
|
- |
|
|
|
(45,541 |
) |
Deemed dividends related to
recognition of downround adjustment to conversion amount for Series
C-2 convertible preferred stock |
|
|
- |
|
|
|
(5,020,883 |
) |
Net loss attributable
to common stockholders |
|
$ |
(15,892,738 |
) |
|
$ |
(21,116,007 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common stockholders, basic and
diluted |
|
$ |
(1.25 |
) |
|
$ |
(3.09 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding, basic and
diluted |
|
|
12,732,914 |
|
|
|
6,840,665 |
|
BTCS Inc.Statements of
Cash Flows
|
|
For the Year Ended |
|
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Net Cash flows used
from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(15,892,738 |
) |
|
$ |
(16,049,583 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
4,039 |
|
|
|
939 |
|
Amortization on debt discount |
|
|
- |
|
|
|
1,868,059 |
|
Stock-based compensation |
|
|
2,625,270 |
|
|
|
15,490,555 |
|
Stock-based compensation in connection with issuance of Series C-2
convertible preferred stock |
|
|
- |
|
|
|
179,277 |
|
Validator revenue |
|
|
(1,692,454 |
) |
|
|
(1,213,284 |
) |
Blockchain network fees (non-cash) |
|
|
1,321 |
|
|
|
- |
|
Change in fair value of warrant liabilities |
|
|
(1,638,750 |
) |
|
|
(3,918,750 |
) |
Purchase of non-productive crypto assets |
|
|
- |
|
|
|
(5,761,550 |
) |
Sale of non-productive crypto assets |
|
|
2,547,325 |
|
|
|
4,274,491 |
|
Realized gain on crypto asset transactions |
|
|
(506,757 |
) |
|
|
(3,054,418 |
) |
Impairment loss on crypto assets |
|
|
13,348,874 |
|
|
|
3,845,899 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
200,824 |
|
|
|
(292,676 |
) |
Accounts payable and accrued expenses |
|
|
(62,332 |
) |
|
|
112,428 |
|
Accrued compensation |
|
|
288,601 |
|
|
|
(343,042 |
) |
Net cash used in operating
activities |
|
|
(776,777 |
) |
|
|
(4,861,655 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities: |
|
|
|
|
|
|
|
|
Purchase of productive crypto assets for validating |
|
|
(9,453,024 |
) |
|
|
(9,462,279 |
) |
Sale of productive crypto assets |
|
|
585,595 |
|
|
|
- |
|
Purchase of investments |
|
|
(100,000 |
) |
|
|
- |
|
Purchase of property and equipment |
|
|
(5,408 |
) |
|
|
(10,491 |
) |
Net cash used in investing
activities |
|
|
(8,972,837 |
) |
|
|
(9,472,770 |
) |
|
|
|
|
|
|
|
|
|
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 |
|
|
- |
|
|
|
3,014,005 |
|
Net proceeds from issuance common stock/ At-the-market
offering |
|
|
11,126,331 |
|
|
|
2,832,152 |
|
Payment to convertible notes principle |
|
|
- |
|
|
|
(2,000,000 |
) |
Net cash provided by financing
activities |
|
|
10,495,530 |
|
|
|
15,211,157 |
|
|
|
|
|
|
|
|
|
|
Net increase in cash |
|
|
745,916 |
|
|
|
876,732 |
|
Cash, beginning of period |
|
|
1,400,867 |
|
|
|
524,135 |
|
Cash, end of period |
|
$ |
2,146,783 |
|
|
$ |
1,400,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
- |
|
|
$ |
45,541 |
|
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 |
|
$ |
- |
|
|
$ |
20 |
|
Conversion of Series C-2 Preferred Stock |
|
$ |
- |
|
|
$ |
6,216,289 |
|
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 |
|
$ |
- |
|
|
$ |
- |
|
BTCS (NASDAQ:BTCS)
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BTCS (NASDAQ:BTCS)
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