BTCS Signs Non-Binding Letter of Intent to Merge with Blockchain
Global
SILVER SPRING, MD--(Marketwired - Aug 21, 2017) - BTCS Inc.
(OTCQB: BTCS) ("BTCS" or the "Company"), a blockchain technology
focused company, announced today that it signed a non-binding
Letter of Intent ("LOI") to merge with Blockchain Global Limited
("BCG"), an Australian blockchain company, which will be subject to
a number of conditions detailed at the end of this press
release.
BCG operates four distinct business lines, an institutional
exchange platform, transaction verification services (bitcoin
mining), a blockchain start-up accelerator, and a blockchain
technology consultancy. BCG generated AU$5.9 million (approximately
US$4.4 million) revenue in FY16, a 300% increase over FY2015
revenue. BCG has approximately US$3.5 million in assets comprised
of bitcoin and cash as of July 1, 2017, and is currently supporting
its business through profit from operations. The reported revenues
are audited in accordance with International Financial Reporting
Standards and are financial measures not calculated in accordance
with U.S. Generally Accepted Accounting Principles ("GAAP"). See
the section below under "Non-GAAP Financial Measures".
BCG's ACX.io Exchange: BCG wholly owns and operates
ACX.io, an Australian Bitcoin Exchange and liquidity provider.
Leveraging BCG's asset security, exchange IP, and a proprietary
liquidity engine, ACX provides a process to buy and sell bitcoin.
Further, through ACX, BCG operates a proprietary arbitrage engine
which captures a spread across multiple liquidity pools.
BCG Transaction Verification Services (bitcoin mining):
BCG currently owns approximately 6 petahash ("PH") of mining
capacity in a purpose-built outsourced facility in China. BCG's
China operation has access to electricity at approximately
US$0.04/kwh.
BCG's Start-up Accelerator: BCG complements its core
business operations with a novel start-up accelerator program
targeted at companies that are developing innovative blockchain
technologies and applications. Through BCG's Melbourne Blockchain
Center, a 6,000 square-foot leased facility launched in late 2014
and located in the heart of Melbourne, BCG has played a role in
accelerating the development of a number of companies. BCG
typically retains an equity stake in the companies it incubates
and/or receives a licensing agreement or other economic
incentive.
BCG's Technology Consultancy: BCG also provides
blockchain technology advisory services including the preparation
and support of crowd-sourced Blockchain token sales and Initial
Coin Offerings.
"As early movers in a rapidly developing industry, we've
assembled a talented team with the necessary expertise to excel,"
stated Sam Lee, CEO of BCG. "In addition to our work with
innovative companies through the Melbourne Blockchain Center, we've
also positioned ourselves to be a leading consultant in the space,
servicing companies that recognize the importance of incorporating
blockchain technology into their organizational strategies. By
teaming up with BTCS, we're deepening our pool of talent."
"The blockchain space continues to suffer from a talent void,"
commented Charles Allen, CEO of BTCS. "Together with BCG, and their
track record of success, we're positioning ourselves to fill this
talent void, ultimately capitalizing on the immense opportunity in
blockchain technologies and leveraging our early-mover
advantage."
The LOI is subject to a number of conditions including the
approval of BCG's shareholders and board and the approval of BTCS's
board, and the settlement of all of BTCS' debt prior to closing.
The LOI is also subject to the execution of a definitive agreement
which the parties agreed to execute within 30 days following the
Company receiving the audited financial statements of BCG, audited
in accordance with GAAP by an auditor registered with the Public
Company Accounting Oversight Board. Under the terms of the LOI, BCG
shareholders shall receive a combination of common stock,
convertible preferred stock and warrants equal to 75% of the
fully-diluted equity securities of the Company post-closing (the
"Fully Diluted Equity"). The warrants will be a series of warrants
drafted to reflect the differing outstanding warrants of the
Company as of the closing date and contain similar terms including
exercise prices, terms, and anti-dilution protection.
The LOI also provides that the two current executive officers of
the Company will receive 12% of the Fully Diluted Equity in the
form of common stock, preferred stock or restricted stock units in
a manner to be determined by the Company.
Another key condition of the LOI is that the existing holders of
BTCS securities which have anti-dilution protection, redemption
features and similar protections must be eliminated as determined
solely by BCG. The LOI requires the Company to establish an Equity
Incentive Plan to acquire 20% of the Fully Diluted Equity which
will be administered by an independent compensation committee. The
binding agreement will provide that the Company shall have five
directors of which, two shall be appointed by the Company prior to
closing and three appointed by BCG. Three of the directors shall be
independent, with one appointed by the Company and two by BCG, and
two may be non-independent, one appointed by the Company and one by
BCG. The Company's Chief Executive Officer, Charles Allen, shall be
deemed an acceptable non-independent director.
All insiders of the combined company would agree to a one-year
lock-up on any equity issued in connection with the proposed
transaction. There can be no assurance that the conditions to
closing will be satisfied or the merger will be completed.
Non-GAAP Financial Measures The financial results of BCG
disclosed in this press release are not calculated in accordance
with GAAP. The Company is unable to provide a reconciliation of the
differences between the reported financial measure and GAAP without
unreasonable efforts.
About BCG: Blockchain Global (formally Bitcoin Group) is a
leading global pure-play Blockchain Technology company operating
across four business segments, including transaction verification
services, an institutional exchange platform, a blockchain start-up
accelerator, and a blockchain technology consultancy.
About BTCS: BTCS is an early entrant in the Digital Asset market
and one of the first U.S. publicly traded companies to be involved
with Digital Assets and blockchain technologies. Subject to
additional financing, BTCS plans to create a portfolio of digital
assets including bitcoin and other "protocol tokens" to provide
investors a diversified pure-play exposure to the bitcoin and
blockchain industries. BTCS intends to acquire digital assets
through: open market purchases, participating in initial digital
asset offerings (often referred to as initial coin offerings).
Additionally, BTCS may acquire digital assets by resuming our
transaction verification services business (often referred to as
mining) through outsourced data centers and earning rewards in
digital assets by securing their respective blockchains. BTCS is
also keenly focused on growth through acquisition. The blockchain
is a decentralized public ledger and has the ability to
fundamentally impact all industries on a global basis that rely on
or utilize record keeping and require trust. For more information
visit: www.btcs.com
Forward-Looking Statements: Certain statements in this press
release, including those related to an anticipated merger and plans
for the combined company, constitute "forward-looking statements"
within the meaning of the federal securities laws. 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 those set forth in the Company's
filings with the Securities and Exchange Commission, not limited to
Risk Factors relating to its digital currency business contained
therein, failure of the companies to execute a definitive merger
agreement and close the transaction, and integration issues with
the combined company. 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.
BTCS Investor Relations: Michal Handerhan BTCS Inc. (202)
430-6576 IR@btcs.com
BCG Media Contact: Samantha Yap media@blockchainglobal.com