Revenue for the first six months of 2022 rose to $1.1 million

Silver Spring, MD, Aug. 12, 2022 (GLOBE NEWSWIRE) -- 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 Highlights

Revenue 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 Highlights

Throughout 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 Carey

VP, Investor Relations

ir@btcs.com

Public Relations:

Mercy Chikowore

m.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 Reports Q2 2022 Results