BTCS - BTCS Reports Q3 2023 Results
Silver Spring, MD, Nov. 10, 2023 (GLOBE NEWSWIRE) -- BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain technology-focused company, announced its results for the third quarter ending September 30, 2023 (“Q3 2023”).
Third Quarter 2023 Financial Highlights
Q3 2023 revenue decreased 18% from Q2 2023 and 8% from Q3 2022 as a result of depressed crypto asset prices, particularly impacting Ethereum (ETH) and Cosmos (ATOM), our two highest earning staked tokens.
Gross margins improved slightly to 74% for Q3 2023 compared to 71% for Q2 2023, with gross margins of 72% for the first nine months of 2023.
Net loss for Q3 2023 decreased to $0.6 million ($0.04 per share) compared to $1.0 million ($0.07 per share) for Q2 2023 and $1.0 million ($0.08 per share) for Q3 2022.
Net loss for the nine months ended September 30, 2023 (“2023 Period”) decreased 79% to $3.1 million ($0.22 per share) compared to $14.5 million ($1.15 per share) for the nine months ended September 30, 2022 (“2022 Period”). Net losses during the 2022 Period were largely driven by $12.3 million non-cash crypto asset impairment losses, compared to only $1.3 million impairment charges in the 2023 Period.
As of September 30, 2023, the Company had $0.8 million in cash and cash equivalents.
The fair market value of our crypto assets increased 11% YoY to $16.5 million in Q3 2023.
Management Commentary
Business Update
Strengthening Our Staking Infrastructure
During Q3 2023, one of our primary areas of focus continued to be the enhancement of our staking infrastructure operations. We are pleased to report significant progress in this regard as we took a strategic step in transitioning all node maintenance, including monitoring, upgrades, and support, in-house. This transition marks a pivotal milestone in our journey, as it empowers us to have greater control and agility in managing our staking infrastructure.
Our in-house staking infrastructure operations provide us with increased flexibility to address technical needs, swiftly adapt to evolving blockchain network requirements, and potentially generate additional revenue streams. This transition has solidified our commitment to achieving operational excellence and sustainability in the dynamic blockchain industry. Further, as a result, we have reduced our reliance on third-party partners and associated fees, resulting in cost savings.
Advancements in our Development Efforts:
We have continued to dedicate resources to the development and improvement of StakeSeeker, our proprietary crypto asset platform. In response to valuable feedback from our users, we continued to make improvements to StakeSeeker which were geared towards providing users with more accurate and insightful dashboards and reporting, ensuring that our platform remains a trusted resource for stakers seeking comprehensive analytics and support.
In addition to our core staking infrastructure operations and StakeSeeker, we are actively diversifying our development efforts. Leveraging our deep-rooted expertise in blockchain technology, we have begun exploring new opportunities and initiatives aimed at meeting the rapidly expanding technical and information needs within blockchain networks. These new initiatives reflect our commitment to staying at the forefront of blockchain innovation and look to develop and contribute to emerging technologies that align with our core competencies and industry trends.
As we look forward to the remainder of the year and beyond, we are excited about the prospects future developments hold for BTCS. The continued evolution of StakeSeeker, and our diversification efforts underscore our dedication to growth, innovation, and value creation for our stakeholders.
We appreciate your ongoing support and trust in our vision as we navigate the dynamic landscape of the blockchain industry.
Industry Commentary
The recent actions taken by the SEC against Coinbase and Binance have had a significant impact on our industry. While the SEC has classified several alt tokens as securities, it is essential to note that Ethereum and Bitcoin were not included in this list, and it is crucial to remember that the SEC’s classification may not necessarily align with court decisions.
With regard to accounting practices, the upcoming FASB guidelines on fair market value accounting promise to bring greater transparency to our financial statements. This change will offer our shareholders and the investing public a clear understanding of our financial position representative of the economic reality of our business, particularly concerning our crypto assets which are carried on our balance sheet at the lowest market price since acquisition (i.e. impaired cost), regardless of what current market prices are.
Finally, we wish to highlight the current uptrend in the crypto market, with Bitcoin and Ethereum recently reaching 52-week highs. This positive sentiment bodes well for our sector, and we remain optimistic about the potential for this trend to continue, which should beneficially impact our revenue.
Moving forward, we maintain a positive outlook on both the future of the crypto industry and BTCS. We are highly motivated to spearhead innovations that foster the wider adoption and acceptance of blockchain technologies, bringing value to our shareholders. With our unwavering commitment and focused approach, we aspire to uphold our position as industry leaders in this ever-evolving 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, the potential and opportunities within the cryptocurrency market, our growth, developing new inns built on our core expertise, leveraging our knowledge and expertise, 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, unexpected issues with our Staking-as-a-Service Platform 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 November 9, 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 September 30, 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
| September 30, 2023 |
| December 31, 2022 |
| (Unaudited) |
| Assets: |
| Current assets: |
| Cash and cash equivalents |
| $ |
| 753,233 |
| $ |
| 2,146,783 |
| Stablecoins |
| 29,794 |
| - |
| Crypto assets |
| 101,387 |
| 982 |
| Staked crypto assets |
| 7,811,809 |
| 1,826,307 |
| Investments, at value (Cost $100,000) |
| 100,000 |
| 100,000 |
| Prepaid expense |
| 107,429 |
| 123,727 |
| Total current assets |
| 8,903,652 |
| 4,197,799 |
| Other assets: |
| Property and equipment, net |
| 12,001 |
| 11,152 |
| Staked crypto assets - long term |
| - |
| 5,708,624 |
| Total other assets |
| 12,001 |
| 5,719,776 |
| Total Assets |
| $ |
| 8,915,653 |
| $ |
| 9,917,575 |
| Liabilities and Stockholders’ Equity: |
| Accounts payable and accrued expense |
| $ |
| 92,659 |
| $ |
| 76,727 |
| Accrued compensation |
| 321,144 |
| 295,935 |
| Warrant liabilities |
| 71,250 |
| 213,750 |
| Total current liabilities |
| 485,053 |
| 586,412 |
| Stockholders’ equity: |
| Preferred stock: 20,000,000 shares authorized at $0.001 par value: |
| - |
| - |
| Series V Preferred stock: 14,542,803 and 0 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively |
| 2,559,533 |
| - |
| Common stock, 97,500,000 shares authorized at $0.001 par value, 14,373,186 and 13,107,149 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively |
| 14,374 |
| 13,108 |
| Additional paid in capital |
| 160,410,794 |
| 160,800,263 |
| Accumulated deficit |
| (154,554,101 |
| ) |
| (151,482,208 |
| ) |
| Total stockholders’ equity |
| 8,430,600 |
| 9,331,163 |
| Total Liabilities and Stockholders’ Equity |
| $ |
| 8,915,653 |
| $ |
| 9,917,575 |
BTCS Inc.
Statements of Operations
(Unaudited)
| For the Three Months Ended |
| For the Nine Months Ended |
| September 30, |
| September 30, |
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| Revenues |
| Validator revenue (net of fees) |
| $ |
| 316,242 |
| $ |
| 344,196 |
| $ |
| 1,013,503 |
| $ |
| 1,421,560 |
| Total revenues |
| 316,242 |
| 344,196 |
| 1,013,503 |
| 1,421,560 |
| Cost of revenues |
| Validator expenses |
| 83,100 |
| 82,203 |
| 278,726 |
| 313,972 |
| Gross profit |
| 233,142 |
| 261,993 |
| 734,777 |
| 1,107,588 |
| Operating expenses: |
| General and administrative |
| $ |
| 283,239 |
| $ |
| 432,956 |
| $ |
| 1,510,637 |
| $ |
| 1,595,296 |
| Research and development |
| 148,525 |
| 126,857 |
| 531,053 |
| 448,579 |
| Compensation and related expenses |
| 409,960 |
| 669,792 |
| 1,450,546 |
| 2,731,713 |
| Marketing |
| 2,155 |
| 8,765 |
| 11,121 |
| 74,249 |
| Impairment loss on crypto assets |
| 372,441 |
| 145,247 |
| 1,251,950 |
| 12,347,472 |
| Realized gains on crypto asset transactions |
| (58,107 |
| ) |
| (20,126 |
| ) |
| (806,137 |
| ) |
| (489,682 |
| ) |
| Total operating expenses |
| 1,158,213 |
| 1,363,491 |
| 3,949,170 |
| 16,707,627 |
| Other income (expenses): |
| Change in fair value of warrant liabilities |
| 285,000 |
| 71,250 |
| 142,500 |
| 1,140,000 |
| Distributions to warrant holders |
| - |
| - |
| - |
| (35,625 |
| ) |
| Total other income (expenses) |
| 285,000 |
| 71,250 |
| 142,500 |
| 1,104,375 |
| Net loss |
| $ |
| (640,071 |
| ) |
| $ |
| (1,030,248 |
| ) |
| $ |
| (3,071,893 |
| ) |
| $ |
| (14,495,664 |
| ) |
| Net loss per share attributable to common stockholders, basic and diluted |
| $ |
| (0.04 |
| ) |
| $ |
| (0.08 |
| ) |
| $ |
| (0.22 |
| ) |
| $ |
| (1.15 |
| ) |
| Weighted average number of common shares outstanding, basic and diluted |
| 14,317,750 |
| 12,952,645 |
| 13,957,097 |
| 12,616,805 |
BTCS Inc.
Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended |
| September 30, |
| 2023 |
| 2022 |
| Net Cash flows used from operating activities: |
| Net loss |
| $ |
| (3,071,893 |
| ) |
| $ |
| (14,495,664 |
| ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
| Depreciation expense |
| 3,521 |
| 2,862 |
| Stock-based compensation |
| 1,057,512 |
| 2,233,608 |
| Validator revenue |
| (1,013,503 |
| ) |
| (1,421,560 |
| ) |
| Blockchain network fees (non-cash) |
| - |
| 1,321 |
| Change in fair value of warrant liabilities |
| (142,500 |
| ) |
| (1,140,000 |
| ) |
| Sale of non-productive crypto assets |
| - |
| 2,547,322 |
| Realized gain on crypto assets transactions |
| (806,137 |
| ) |
| (489,682 |
| ) |
| Impairment loss on crypto assets |
| 1,251,950 |
| 12,347,472 |
| Changes in operating assets and liabilities: |
| Stablecoins |
| (29,794 |
| ) |
| - |
| Prepaid expenses and other current assets |
| 16,298 |
| 117,473 |
| Accounts payable and accrued expenses |
| 15,932 |
| (37,842 |
| ) |
| Accrued compensation |
| 25,209 |
| 205,237 |
| Net cash used in operating activities |
| (2,693,405 |
| ) |
| (129,453 |
| ) |
| Cash flows from investing activities: |
| Purchase of productive crypto assets for validating |
| (1,804,482 |
| ) |
| (9,274,055 |
| ) |
| Sale of productive crypto assets |
| 1,994,890 |
| 432,716 |
| Purchase of property and equipment |
| (5,276 |
| ) |
| (5,408 |
| ) |
| Sale of property and equipment |
| 905 |
| - |
| Net cash provided by (used in) investing activities |
| 186,037 |
| (8,846,747 |
| ) |
| Cash flows from financing activities: |
| Dividend distributions |
| - |
| (630,801 |
| ) |
| Net proceeds from issuance common stock/ At-the-market offering |
| 1,113,818 |
| 11,095,132 |
| Net cash provided by financing activities |
| 1,113,818 |
| 10,464,331 |
| Net (decrease)/increase in cash |
| (1,393,550 |
| ) |
| 1,488,131 |
| Cash, beginning of period |
| 2,146,783 |
| 1,400,867 |
| Cash, end of period |
| $ |
| 753,233 |
| $ |
| 2,888,998 |
| Supplemental disclosure of non-cash financing and investing activities: |
| Series V Preferred Stock Distribution |
| $ |
| 2,559,533 |
| $ |
| - |