BTCS Inc (OTCMKTS:BTCS) Gets Dumped To The Ground
The stock of BTCS Inc (OTCMKTS:BTCS) opened the June 6 session at 11 cents per share. Since then however its performance has been nothing short of a total nightmare and seven trading days of losses later it had already fallen down to $0.057. For a while it seemed that the ticker will finally manage to stop its free fall during yesterday’s session but just two hours before the closing bell it lost its footing and began plummeting towards the bottom once more. As a result by the end of the session BTCS had slashed another 29.8% of their value closing at exactly 4 cents per share.
So, in just 8 sessions the stock is down by more than 63%. The picture gets even more depressing when you add the fact that yesterday’s crash took place on a record for the company traded volume of nearly 5.3 million shares. What could explain the panic selling that has been displayed by investors?
Quite a lot of things actually. Let’s start with the quarterly report covering the first three months of the year. According to it as of March 31, 2016, BTCS had:
• $63 thousand cash
• $127 thousand total current assets
• $5.4 million total current liabilities
• $199 thousand revenues
• $2 million net loss
The staggering working capital deficit and massive net loss are already enough to shake the confidence of even the most firm believers in the potential of BTCS but, unfortunately, they are just the start of the red flags surrounding the company. The quarterly report also revealed that the company considers its $2.25 million investment in Spondoolies Tech Ltd. as not recoverable and as such it was fully impaired due to the appointment of a temporary liquidator for Spondoolies on May 4.
On June 10, however, even more troubling news came from the company. In an 8-K filing investors learned that they may be in for a severe dilution of the common stock. After accepting the terms of a warrant exercise agreement BTCS became obligated to issue a total of 37,879,853 shares. This is just the first of the extremely troubling obligations, though, with the company having to also adjust the exercise price of warrants for the purchase of 10.2 million shares and 17.5 million shares to $0.055 and $0.069, respectively. The conversion price of all outstanding junior and senior convertible notes was also adjusted to $0.055.
With the stock of the company now trading below those prices maybe it could at least manage to slow down its downfall. Even if that is the case, though, the problems standing before BTCS will remain as serious as ever and any trades involving the ticker should be attempted only after doing extensive due diligence.
