Exclusive: BTCS Eyeing Nasdaq Listing As Part of Financing Push

BTCS (OTCMKTS:BTCS) is aiming to upgrade its public listing to the Nasdaq as part of efforts to secure another critical

BTCS (OTCMKTS: BTCS), formerly Bitcoin Shop, is aiming to upgrade its public listing to the Nasdaq as part of efforts to secure another critical round of financing.

Speaking to Finance Magnates, CEO Charles Allen explained that an underwritten offering on the Nasdaq may offer a much larger investor universe than the OTC Markets, where the shares are currently listed. Such an upgrade may open the door to more financing and reap the benefits of greater liquidity.

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If the feat is pulled off, BTCS would be the first crypto industry company to be traded on the Nasdaq, or indeed any North American securities exchange with higher listing standards than the OTC Markets and their equivalents.

The company has engaged Chardan Capital Markets, a New York-based investment bank with a focus on micro, small, and mid-cap markets, to facilitate an underwritten offering in support of a plan to list the company’s shares on the Nasdaq in early 2016.

BTCS, previously engaged in bitcoin-based e-commerce, has shifted focus to other areas of the Bitcoin economy. Currently its primary focus is bitcoin mining. It procures its hardware from Israel-based Spondoolies-Tech, with whom it recently entered into a merger agreement.

For several quarters, BTCS has reported recurring operating losses, net operating cash flow deficits, and an accumulated deficit. In its required disclosure in its SEC filings, it stated that its financial position leaves “substantial doubt about the company’s ability to continue as a going concern.”

Spondoolies CEO Guy Corem told Finance Magnates that once the merger is finalized and the company is financed, substantial cash flows will likely make for a more stable combined entity. He expects regulatory proceedings for the merger to take about another two months.

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High hopes for 2016

Allen is no stranger to the ropes of going public, telling Finance Magnates that he worked in public company merger-related matters for almost 10 years.

BTCS is working through a number of steps to ensure compliance with Nasdaq listing requirements, said Allen. For example, as the Nasdaq requires a minimum share price of $4, BTCS would have to do a reverse split on its shares, currently worth $0.11 apiece. The company would also have to hire an independent board of directors.

The market value of BTCS’s publicly held securities needs to be at least $15 million, which would likely be satisfied through an underwritten offering. BTCS also refiled a third amendment to its S1 with the SEC on December 7, and is hoping that the refiling will expedite the review process for an underwritten offering. “We’ve got a number of boxes checked, but we’re not there yet,” said Allen.

He confirmed that BTCS’s primary revenues in the near future will be driven by its mining activities. He attributed the struggles of the company’s bitcoin-based e-commerce operation to general weakness in this segment of the industry, as evidenced by Overstock’s declining bitcoin-based sales.

He further noted how the bulk of BTCS’s reported $3.8 million loss in the most recent quarter arose from one-time items such as the cancelling of options. The net cash used in operating activities for the nine months ended September 30, 2015 was only $514,612, which included expenses associated with the buildout of the 3 MW North Carolina mining facility.

Even if the company were to secure additional financing, said Allen, it is likely that the “going concern” language would not be removed from the filings.

While all efforts to secure financing and upgrade its listing are being exerted, Allen emphasized that there are no guarantees, and that the company may require a short term financing solution to provide the needed time to launch an underwritten offering. He is optimistic, however, that “something will materialize shortly.”

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