BTCS is exploring "other potential directions" for the firm's future after executives threatened to resign over a planned merger with Blockchain Global Ltd which has been fraught with delays and problems.
In a letter to shareholders on Monday, BTCS CEO and Chairman Charles Allen said that the intended merger is not going as smoothly as it may be wished for, due to auditing issues and due diligence failures by Blockchain Global.
Maryland-based BTCS is a US publicly-trading company which focuses on blockchain technologies and Bitcoin.
The company is focused on expanding its digital technologies portfolio and as part of this push, published a letter of intent in August 2017 to merge with Blockchain Global, an Australian blockchain company.
Blockchain Global is involved in mining, exchanges, a blockchain startup accelerator program and also operates a blockchain technology consultancy. The company held roughly $3.5 million in Bitcoin and cash as of July 2017 and generated roughly $4.4 million in revenue in FY 2016.
At the time of the announcement, Allen said that the blockchain space is suffering a "talent void," but the proposed merger would allow BTCS and Blockchain Global to "fill this talent void, ultimately capitalizing on the immense opportunity in blockchain technologies and leveraging our early-mover advantage."
The deal, agreed for an undisclosed amount, required the approval of shareholders from both boards, the settlement of BTCS debt before closing, and the existing holders of BTCS securities with anti-dilution protection to be bought out.
However, the challenges of completing the merger are causing internal problems.
BTCS has managed to restructure convertible debt, raise $2.1 million in equity financing, appointed new board directors and expand the firm's portfolio; reducing its debt in 2017 to zero and raising asset worth to $924k, in comparison to beginning 2017 with $45.3 million in debt and $98k in assets.
Despite the improved financial position, the merger is in jeopardy. According to Allen, "due to delays in receiving their [Blockchain Global] audited financials and other due diligence items, the board unanimously decided to evaluate other potential merger targets."
In addition, recent SEC filings noted "the intention of management and current employees to resign" should the merger "fail to materialize." However, the management team has decided to "remain onboard," at least, for a time in the hopes of potentially finding a solution.
In light of this and the problems the acquisition has thrown up, BTCS plans to delay any irrevocable actions to "evaluate other potential directions for the company."
"While it is still possible we may complete the merger with the Australian company, we are actively focused on other opportunities and in preliminary discussions with other potential targets that may drive shareholder value," the executive added. "We cannot assure you we will complete any acquisition."
ZDNet has reached out to Blockchain Global and will update if we hear back.
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