BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain
technology-focused company, announced its results for the three
months ended March 31, 2023.
First Quarter
2023 Financial
HighlightsQ1 2023 revenue improved 15% over Q4
2022 to $0.3 million but remained lower than Q1 2022 by 45% as a
result of the sharp decline in crypto asset prices during Q2
2022.
74% gross margins for the three months ended
March 31, 2023 compared to 75% and 59% for Q1 2021 and Q4 2021
respectively.
Our net loss for the three months ended March
31, 2023 decreased to $1.3 million ($0.10 per share) compared to
$5.7 million ($0.47 per share) net loss for Q1 2022 and $1.4
million ($0.11 per share) net loss for Q4 2022.
As of March 31, 2023, the Company had $1.4
million in cash.
The fair value of our crypto assets increased
53% during Q1 2023 to $19.2 million.
The fair value of our crypto assets together
with our cash equates to approximately $1.50 per share as of March
31, 2023.
Management Commentary
Business UpdateBTCS has continued to make
strides in the first quarter of 2023 by building on the momentum of
its StakeSeeker platform's successful beta launch in January. The
Company’s innovative StakeSeeker platform, a comprehensive crypto
dashboard and education center for crypto asset holders, allows
users 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. BTCS has
continued to expand the platform’s features and functionality, with
a particular focus on integrating new blockchain networks and
improving user experience. We remain committed to growing
StakeSeeker users and building a strong delegator base on our
validator nodes, providing an attractive non-custodial staking
option for crypto asset holders.
Impact of Shanghai Upgrade
The recent successful Shanghai upgrade to the
Ethereum blockchain in April has unlocked over 840 ETH rewards
earned on our Ethereum validator nodes and will cause all our
staked ETH to be reclassified as a current asset going forward.
This newly unlocked ETH, worth approximately $1.5m as of March 31,
2023, provides additional liquidity, flexibility to manage our
assets, and opportunities for growth as we move forward in
2023.
The Shanghai upgrade also introduced significant
improvements to the Ethereum blockchain, such as reducing gas fees
and improving network performance. As a result, the upgrade has
made it easier for BTCS to operate validator nodes on Ethereum’s
blockchain, increasing the efficiency and profitability of its
staking operations.
Industry Commentary
As we reflect on the first quarter of 2023,
there are many indicators that support a positive outlook on the
crypto market and our business model. The crypto industry has
witnessed remarkable price increases since the lows experienced in
2022, with Ethereum standing out as one of the most notable success
stories, having increased as much as 132% during April 2023 from
its June 2022 low. This surge in value demonstrates the resilience
and potential of cryptocurrencies, and we are optimistic about the
continued growth of the market.
BTCS acknowledges the recent challenges faced by
some financial institutions catering to the crypto space, such as
the failures of Silicon Valley Bank, Silvergate, and Signature
Bank. These events have triggered a shift in capital flows, as
individuals seek alternative avenues to preserve and grow their
wealth. We believe that ETH has emerged as a bright spot in this
evolving market environment, providing further signs of optimism in
the sector for investors and enthusiasts alike.
Furthermore, recent incidents such as the
collapse of FTX and regulatory actions against Kraken by the SEC
underscore the importance of regulatory clarity and transparency in
the crypto market. BTCS firmly supports the need for a robust
regulatory framework that fosters innovation while protecting
investors. Our business model, focused on non-custodial staking, is
uniquely positioned with high-margin operations, and we adhere to
industry best practices to ensure compliance and transparency.
Our flagship StakeSeeker platform sets us apart
from others in the staking market. Unlike custodial staking models
employed by crypto exchanges, our non-custodial
staking-as-a-service solution enables users to maintain control
over their crypto assets while directly participating in the
network's consensus mechanism. This approach ensures greater
security and eliminates the need to entrust third parties with
valuable crypto assets. We believe that non-custodial staking is
the future of the industry, and we are proud to offer this
innovative solution to the crypto community.
BTCS understands that blockchain technologies
are still in the early stages of their evolution, and we are
committed to being at the forefront of this ongoing transformation.
We invest significant time and resources in educating the public
about emerging blockchain technologies, the benefits of
self-custody of crypto assets, and the importance of secure staking
practices. Our goal is to drive awareness and adoption of
blockchains across various sectors, both public and private.
As we look ahead, BTCS remains optimistic about
the future of the crypto industry. We are excited to continue
driving new innovations that strengthen long-term shareholder value
while contributing to the broader adoption and acceptance of
blockchain technologies. We firmly believe in the transformative
potential of cryptocurrencies and are dedicated to 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 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
Financials
The tables below are derived from the Company’s
financial statements included in its Form 10-Q filed on May 12,
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 March 31,
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
|
March 31, |
|
December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
|
Assets: |
|
|
|
Current assets: |
|
|
|
Cash |
|
1,443,058 |
|
|
$ |
2,146,783 |
|
Crypto assets/currencies |
|
1,066 |
|
|
|
982 |
|
Investments, at value (Cost
$100,000) |
|
100,000 |
|
|
|
100,000 |
|
Staked crypto
assets/currencies |
|
7,854,755 |
|
|
|
1,826,307 |
|
Prepaid expense |
|
93,449 |
|
|
|
123,727 |
|
Total current assets |
|
9,492,328 |
|
|
|
4,197,799 |
|
|
|
|
|
Other assets: |
|
|
|
Property and equipment,
net |
|
9,999 |
|
|
|
11,152 |
|
Staked crypto
assets/currencies - long term |
|
- |
|
|
|
5,708,624 |
|
Total other assets |
|
9,999 |
|
|
|
5,719,776 |
|
|
|
|
|
Total
Assets |
$ |
9,502,327 |
|
|
$ |
9,917,575 |
|
|
|
|
|
Liabilities and
Stockholders' Equity: |
|
|
|
Accounts payable and accrued
expense |
$ |
41,954 |
|
|
$ |
76,727 |
|
Accrued compensation |
|
3,429 |
|
|
|
295,935 |
|
Warrant liabilities |
|
498,750 |
|
|
|
213,750 |
|
Total current liabilities |
|
544,133 |
|
|
|
586,412 |
|
|
|
|
|
Stockholders' equity: |
|
|
|
Common stock, 97,500,000
shares authorized at $0.001 par value, 13,799,745 and 13,107,149
shares issued and outstanding at March 31, 2023 and December 31,
2022, respectively |
|
13,800 |
|
|
|
13,108 |
|
Additional paid in
capital |
|
161,839,971 |
|
|
|
160,800,263 |
|
Accumulated deficit |
|
(152,895,577 |
) |
|
|
(151,482,208 |
) |
Total stockholders'
equity |
|
8,958,194 |
|
|
|
9,331,163 |
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
$ |
9,502,327 |
|
|
$ |
9,917,575 |
|
BTCS Inc.Statements of
Operations(Unaudited)
|
For the Three Months Ended |
|
March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Revenues |
|
|
|
Validator revenue (net of fees) |
$ |
311,508 |
|
|
$ |
563,015 |
|
Total revenues |
|
311,508 |
|
|
|
563,015 |
|
|
|
|
|
Cost of revenues |
|
|
|
Validator expense |
|
82,014 |
|
|
|
137,869 |
|
Gross profit |
|
229,494 |
|
|
|
425,146 |
|
|
|
|
|
Operating expenses: |
|
|
|
General and administrative |
$ |
609,829 |
|
|
$ |
650,289 |
|
Research and development |
|
201,625 |
|
|
|
136,718 |
|
Compensation and related expenses |
|
462,090 |
|
|
|
1,423,896 |
|
Marketing |
|
6,243 |
|
|
|
41,793 |
|
Impairment loss on crypto assets/currencies |
|
94,907 |
|
|
|
3,307,428 |
|
Realized gains on crypto asset/currency transactions |
|
(16,831 |
) |
|
|
(71,110 |
) |
Total operating expenses |
|
1,357,863 |
|
|
|
5,489,014 |
|
|
|
|
|
Other income (expenses): |
|
|
|
Change in fair value of warrant liabilities |
|
(285,000 |
) |
|
|
(641,250 |
) |
Distributions to warrant holders |
|
- |
|
|
|
(35,625 |
) |
Total other income (expenses) |
|
(285,000 |
) |
|
|
(676,875 |
) |
|
|
|
|
Net loss |
$ |
(1,413,369 |
) |
|
$ |
(5,740,743 |
) |
|
|
|
|
|
|
|
|
Net loss per share
attributable to common stockholders, basic and
diluted |
$ |
(0.10 |
) |
|
$ |
(0.47 |
) |
|
|
|
|
Weighted average
number of common shares outstanding,
basic and diluted |
|
13,673,126 |
|
|
|
12,245,278 |
|
BTCS Inc.Statements of
Cash Flows(Unaudited)
|
For the Three Months Ended |
|
March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Net Cash flows used
from operating activities: |
|
|
|
Net loss |
$ |
(1,413,369 |
) |
|
$ |
(5,740,743 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
Depreciation expense |
|
1,153 |
|
|
|
797 |
|
Stock-based compensation |
|
531,617 |
|
|
|
1,289,274 |
|
Validator revenue |
|
(311,508 |
) |
|
|
(563,015 |
) |
Blockchain network fees (non-cash) |
|
- |
|
|
|
1,321 |
|
Change in fair value of warrant liabilities |
|
285,000 |
|
|
|
641,250 |
|
Realized gain on crypto assets/currencies transactions |
|
(16,831 |
) |
|
|
(71,110 |
) |
Impairment loss on crypto assets/currencies |
|
94,907 |
|
|
|
3,307,428 |
|
Changes in operating assets
and liabilities: |
|
|
|
- |
|
Prepaid expenses and other current assets |
|
30,278 |
|
|
|
9,382 |
|
Accounts payable and accrued expenses |
|
(34,773 |
) |
|
|
(36,329 |
) |
Accrued compensation |
|
(292,506 |
) |
|
|
(4,125 |
) |
Capital shares payable |
|
- |
|
|
|
75,002 |
|
Dividends payable - distributions to warrant holders |
|
- |
|
|
|
35,625 |
|
Net cash used in operating
activities |
|
(1,126,032 |
) |
|
|
(1,055,243 |
) |
|
|
|
|
Net cash used in
investing activities: |
|
|
|
Purchase of productive crypto assets/currencies for validating |
|
(134,019 |
) |
|
|
(8,521,726 |
) |
Sale of productive crypto assets/currencies |
|
47,543 |
|
|
|
310,149 |
|
Purchase of investments |
|
- |
|
|
|
- |
|
Purchase of property and equipment |
|
- |
|
|
|
(2,558 |
) |
Net cash used in investing
activities |
|
(86,476 |
) |
|
|
(8,214,135 |
) |
|
|
|
|
Net cash provided by
financing activities: |
|
|
|
Dividend distributions |
|
- |
|
|
|
(400,194 |
) |
Net proceeds from issuance common stock/ At-the-market
offering |
|
508,783 |
|
|
|
10,513,767 |
|
Net cash provided by financing
activities |
|
508,783 |
|
|
|
10,113,573 |
|
|
|
|
|
Net increase in cash |
|
(703,725 |
) |
|
|
844,195 |
|
Cash, beginning of period |
|
2,146,783 |
|
|
|
1,400,867 |
|
Cash, end of period |
$ |
1,443,058 |
|
|
$ |
2,245,062 |
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash financing and investing
activities: |
|
|
|
Dividends payable |
$ |
- |
|
|
$ |
230,606 |
|
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