BTCS Reports Q4 2021 Results

78% gross margins for the year ended December 31, 2021

Silver Spring, MD, March 14, 2022 (GLOBE NEWSWIRE) — BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain technology-focused company, today announced its results for the fourth quarter and year ended December 31, 2021.

Q4 and Full Year 2021 Highlights 

  • Expanding blockchain infrastructure operations drove Q4 revenue up 35% over Q3 2021 to $0.4 million and full year revenue to $1.2 million
  • Generated 78% gross margins for the full year 2021
  • $16 million full-year GAAP net loss primarily because of non-cash charges
  • Adjusted EBITDA loss of $2.5 million, a non-GAAP financial measure for the year ended December 31, 2021 (reconciliation table available below)
  • Stockholders’ equity up 1,160% year-over-year to $12.1 million as of December 31, 2021
  • Fair market value of digital assets increased to approximately $36.5 million as of December 31, 2021, up 21% compared to September 30, 2021, and up 830% versus December 31, 2020
  • Eliminated all outstanding debt with repayment of $2.0 million in convertible notes, eliminating potential equity dilution
  • Launched public Beta of proprietary digital asset analytics platform

Exceeded 2021 Revenue Guidance

BTCS exceeded its March 2021 revenue guidance for the year, generating revenue of $1.2 million with 78% gross margin for the year ended December 31, 2021. The Company’s blockchain infrastructure operations are a high profit margin component of its business model, and margins are expected to improve as operations scale.

Management Commentary

“Increasing revenue in the fourth quarter from our growing blockchain infrastructure segment enabled us to exceed our revenue guidance for the year,” stated Charles Allen, Chief Executive Officer of BTCS. “Our blockchain infrastructure operations provides a solid foundation that supports multiple exciting initiatives that could accelerate growth and value creation moving forward. One such initiative, our digital asset analytics platform, which is currently in Beta release, should be moving to commercial launch in 2022.”

“With so many fantastic initiatives underway and the unprecedented scale of the blockchain opportunity, we launched an enhanced website last year to better communicate our business plan and growth trajectory with stakeholders,” added Michal Handerhan, COO of BTCS. “As large shareholders of BTCS, Charles and I are extremely vested in the success of our shareholders, and we remain committed to continuing our history of pioneering firsts as we capitalize on the tremendous opportunities ahead.”

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 Data Analytics Dashboard, now in beta release. BTCS’ proprietary digital asset data analytics 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 stake pool monitoring. For more information visit: www.btcs.com.

Investor Relations:
Dave Gentry
RedChip Companies, Inc.
Phone: (407) 491-4498
BTCS@redchip.com

Public Relations:
Mercy Chikowore
m.chikowore@btcs.com 

GAAP Financials

The tables below (preceding the section titled “Non-GAAP – Financial Measure”) are derived from the Company’s financial statements included in its Form 10-K filed on March 11, 2022 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, 2021 and 2020. 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,  
    2021     2020  
             
Assets:                
Current assets:                
Cash   $ 1,400,867     $ 524,135  
Digital Assets/currencies     3,117,360       995,652  
Staked Digital Assets/currencies     623,754        
Prepaid expense     324,551       31,875  
Total current assets     5,466,532       1,551,662  
                 
Other assets:                
Property and equipment, net     9,783       230  
Staked Digital Assets/currencies – long term     8,625,678        
Total other assets     8,635,461       230  
                 
Total Assets   $ 14,101,993     $ 1,551,892  
                 
Liabilities and Stockholders’ Equity:                
Accounts payable and accrued expense   $ 138,716     $ 26,288  
Accrued compensation     7,334       350,376  
Convertible notes payable, net           131,941  
Warrant liabilities     1,852,500        
Total current liabilities     1,998,550       508,605  
                 
Stockholders’ equity:                
Preferred stock; 20,000,000 shares authorized at $0.001 par value:                
Series C-1 Convertible Preferred stock: 0 and 29,414 shares issued and outstanding at December 31, 2021 and 2020, respectively; Liquidation preference $0.001 per share           29  
Series C-2 Convertible Preferred stock: 0 shares issued and outstanding at December 31, 2021 and 2020; Liquidation preference $0.001 per share            
                 
Common Stock, 97,500,000 shares authorized at $0.001 par value, 10,528,212 and 4,201,035 shares issued and outstanding at December 31, 2021 and 2020, respectively     10,529       4,201  
Additional paid in capital     147,682,384       120,578,944  
Accumulated deficit     (135,589,470 )     (119,539,887 )
Total stockholders’ equity     12,103,443       1,043,287  
                 
Total Liabilities and stockholders’ equity   $ 14,101,993     $ 1,551,892  


BTCS Inc.
Statements of Operations

    For the years ended  
    December 31,  
    2021     2020  
             
Revenues                
Validator revenue   $ 1,213,284     $  
Total revenues     1,213,284        
                 
Cost of revenues                
Validator expense     268,346        
Gross profit     944,938        
                 
Operating expenses:                
General and administrative   $ 1,590,707     $ 421,434  
Research and development     712,736       45,450  
Compensation and related expenses     15,583,258       1,513,015  
Marketing     180,290       6,350  
Total operating expenses     18,066,991       1,986,249  
                 
Other (expenses) income:                
Interest expense     (186,740 )     (48,231 )
Amortization on debt discount     (1,868,059 )     (354,432 )
Change in fair value of warrant liabilities     3,918,750        
Impairment loss on Digital Assets/currencies     (3,845,899 )     (165,331 )
Realized gains (loss) on Digital Asset/currency transactions     3,054,418       (1,851 )
Total other income (expenses)     1,072,470       (569,845 )
                 
Net loss   $ (16,049,583 )   $ (2,556,094 )
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   $ (21,116,007 )   $ (2,556,094 )
                 
Net loss per share attributable to Common Stockholders, basic and diluted   $ (3.09 )   $ (0.86 )
                 
Weighted average number of common shares outstanding, basic and diluted     6,840,665       2,983,425  


BTCS Inc.
Statements of Cash Flows

    For the years ended  
    December 31,  
    2021     2020  
             
Net Cash flows used from operating activities:                
Net loss   $ (16,049,583 )   $ (2,556,094 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation expense     939       1,114  
Amortization on debt discount     1,868,059       354,432  
Stock-based compensation     15,490,555        
Stock-based compensation in connection with issuance of Series C-2 convertible preferred stock     179,277        
Validator revenue     (1,213,284 )      
Change in fair value of warrant liabilities     (3,918,750 )        
Purchase of non-productive Digital Assets/currencies     (5,761,550 )     (908,079 )
Sale of non-productive Digital Assets/currencies     4,274,491        
Realized gain on Digital Assets/currencies transactions     (3,054,418 )      
Impairment loss on Digital Assets/currencies     3,845,899       165,331  
Changes in operating assets and liabilities:                
Prepaid expenses and other current assets     (292,676 )     (7,867 )
Accounts payable and accrued expenses     112,428       44,719  
Accrued compensation     (343,042 )     (66,559 )
Net cash used in operating activities     (4,861,655 )     (2,973,003 )
                 
Net cash used in investing activities:                
Purchase of productive Digital Assets/currencies for validating     (9,462,279 )      
Purchase of property and equipment     (10,491 )      
Net cash used in investing activities     (9,472,770 )      
                 
Net cash provided by financing activities:                
Proceeds from short term loan           1,500,000  
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       1,854,040  
Net proceeds from issuance Common Stock/ At-the-market offering     2,832,152        
Payment to convertible notes principle     (2,000,000 )      
Net cash provided by financing activities     15,211,157       3,354,040  
                 
Net increase in cash     876,732       381,037  
Cash, beginning of period     524,135       143,098  
Cash, end of period   $ 1,400,867     $ 524,135  
                 
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-1 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     $ 1,182,345  
Conversion of convertible note to Common Stock   $     $ 746,756  

Non-GAAP – Financial Measure 

In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA, a non-GAAP measure, is useful in evaluating our operating performance. We believe that Adjusted EBITDA may be helpful to investors because it provides consistency and comparability with past financial performance and the economic realities of our business. However, Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Among other non-cash and non-recurring items, Adjusted EBITDA excludes stock-based compensation expense (including stock-based compensation issued to service providers), which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

We calculate Adjusted EBITDA as net income (loss), adjusted to exclude, depreciation and amortization, interest expense, change in fair value of warrant liabilities, stock-based compensation expense (including stock-based compensation issued to service providers). Adjusted EBITDA presented does not include adjustments for impairment of intangible digital assets. Note: In previous disclosures of Adjusted EBTIDA impairment of intangible assets had been included as an adjustment added back.

The table below presents our Adjusted EBITDA reconciled to our net loss, the closest GAAP measure, for the period indicated:

    For the years ended  
    December 31,  
    2021     2020  
             
Net income (loss)   $ (16,049,583 )   $ (2,556,094 )
Adjusted to exclude the following:                
Depreciation and amortization     1,868,997       355,546  
Interest expense     186,740       48,231  
Change in fair value of warrant liabilities     (3,918,750 )      
Stock-based compensation     15,457,473        
Adjusted EBITDA   $ (2,455,123 )   $ (2,152,317 )

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