MGT NEWSROOM

MGT Capital Reports Financial Results for the First Quarter ending March 31, 2016

May 23, 2016, 08:30 ET



HARRISON, N.Y., May 23, 2016 /PRNewswire/ -- MGT Capital Investments, Inc. (NYSE MKT: MGT) reported financial results and operational developments for the fiscal first quarter ended March 31, 2016. Developments during the quarter and recent weeks subsequent to quarter end are as follows:

  • MGT entered into a definitive asset purchase agreement to acquire certain technology and assets from D-Vasive Inc., a provider of leading edge anti-spy software.  MGT also entered into a consulting agreement with Future Tense Secure Systems Inc., a technology incubator.
  • In conjunction with the acquisition, MGT announced the proposed appointment of John McAfee as Executive Chairman and Chief Executive Officer.  Mr. McAfee is the visionary pioneer of internet security whose anti-virus company was acquired by Intel for $7.7 billion.  He is actively involved in the development of new measures to protect individual freedoms and privacy.
  • Closing of the acquisition is contingent on customary conditions including approval by MGT's stockholders. The Company plans to issue a Preliminary Proxy Statement shortly.
  • Adjusted for recent warrant exercises, MGT currently has 23.8 million common shares outstanding, and has cash of $2.0 million plus marketable securities of approximately $500,000. Moreover, MGT carries zero debt or preferred stock.
  • In addition, the Company expects to continue to monetize certain securities it owns issued by DraftDay Fantasy Sports. Inc., and expects further warrant exercises. These potential sources of cash would add about $1.5 million to the Company's cash reserves. Pro–forma, following the closing of the D-Vasive acquisition, the company will have approximately 50 million shares outstanding, about half of which would be subject to resale restrictions.
  • Cash used in operations was $376,000 in the first quarter of 2016, down 49% sequentially from the December 2015 quarter, and down 41% from the first quarter of 2015. Having significantly streamlined MGT's operational structure and minimized corporate overhead, the Company continues to exercise discipline with respect to its burn rate.

Financial Results follow; per GAAP requirements, the operations of DraftDay.com are treated as discontinued operations.  For further information, please refer to MGT's Form 10-Q filed this morning with the SEC, and available at the Company's corporate website or at www.sec.gov.

About MGT Capital Investments, Inc.
MGT and its subsidiaries are principally engaged in the business of acquiring, developing and monetizing intellectual property assets. MGT's portfolio currently includes social casino and gaming platforms, and ownership stakes in DraftDay.com, a top daily fantasy sports wagering platform and DraftDay Fantasy Sports, Inc. operator of an online entertainment marketing and rewards platform.

MGT also recently announced the acquisition of certain technology and assets from D-Vasive Inc., a provider of leading edge anti-spy software.  In conjunction with the acquisition, The Company also announced the proposed appointment of John McAfee as Executive Chairman and Chief Executive Officer.  Further, MGT Capital also intends to change its corporate name to John McAfee Global Technologies, Inc. Closing of the acquisition is contingent on customary conditions including approval by MGT's stockholders. 

Forward–looking Statements

This press release contains forward–looking statements. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward–looking statements." MGT's financial and operational results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this news release, except historical and factual information, represents forward–looking statements. This includes all statements about the Company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward–looking statements. These risks and uncertainties include issues related to: rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward–looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward–looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.

 


MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per–share amounts, unaudited)




March 31,

2016



December 31, 2015









Assets









Current assets









Cash and cash equivalents


$

189



$

359


Prepaid expenses and other current assets



3




61


Investments available for sale



880




444


Notes receivable



640




1,575


Total current assets



1,712




2,439











Non–current assets









Restricted cash






39


Property and equipment, at cost, net



30




35


Intangible assets, net



673




730


Goodwill



1,496




1,496


Note receivable, net



30





Investments, at cost



1,380




1,380


Total assets


$

5,321



$

6,119











Liabilities and equity









Current liabilities









Accounts payable


$

122



$

63


Accrued expenses



37




15


Other payables



12




1


Total current liabilities



171




79











Total liabilities



171




79











Commitments and contingencies









Redeemable convertible preferred stock– Temporary equity









Preferred stock, Series A convertible preferred, $0.001 par value, 1,500,000 shares authorized at March 31, 2016 and December 31, 2015; 10,768 and 10,608 shares outstanding at March 31, 2016 and December 31, 2015, respectively







Stockholders' equity









Undesignated preferred stock, $0.001 par value, 8,583,840 shares authorized at March 31, 2016 and December 31, 2015. No shares issued and outstanding at March 31, 2016 and December 31, 2015







Common Stock, $0.001 par value; 75,000,000 shares authorized; 18,088,221 and 17,928,221 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively



18




18


Additional paid–in capital



311,207




311,167


Accumulated other comprehensive loss



(776)




(1,206)


Accumulated deficit



(305,281)




(303,944)


Total stockholders' equity



5,168




6,035


Non–controlling interests



(18)




5


Total equity



5,150




6,040











Total equity, liabilities, redeemable convertible preferred stock and non–controlling interest


$

5,321



$

6,119


 


MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per–share amounts, unaudited)




Three months ended March 31,




2016



2015


Operating expenses









General and administrative



654




1,065











Operating loss



(654)




(1,065)











Other non–operating income / (expense)









Interest and other income / (expense)



25




(41)


Loss on sale of investments



(731)








(706)




(41)











Net loss from continuing operations



(1,360)




(1,106)











Net loss from discontinued operations – DraftDay.com






(275)











Net loss



(1,360)




(1,381)











Net loss attributable to non–controlling interest



23




87











Net loss attributable to common stockholders


$

(1,337)



$

(1,294)











Other comprehensive loss









Reclassification adjustment for loss included in net income



678





Unrealized holding loss



(248)





Comprehensive loss


$

(907)



$

(1,294)











Per–share data









Basic and diluted loss per share – continuing operations


$

(0.07)



$

(0.09)


Basic and diluted loss per share – discontinued operations






(0.02)


Basic and diluted loss per share


$

(0.07)



$

(0.11)











Weighted average number of common shares outstanding



18,002,617




11,260,174


 

MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands, unaudited)




Three months ended March 31,




2016



2015


Cash flows from operating activities









Net loss


$

(1,360)



$

(1,381)


Net loss from discontinued operations






275





(1,360)




(1,106)


Adjustments to reconcile net loss to net cash used in operating activities









Depreciation



6




4


Amortization of intangible assets



57




57


Stock–based expense



40




94


Loss on sale of investments



731





Change in operating assets and liabilities









Prepaid expenses and other current assets



58




12


Accounts payable



59




168


Accrued expenses



22




132


Other payables



11




1


Net cash used in operating activities



(376)




(638)











Cash flows from investing activities









Release of restricted cash and security deposit



39




101


Purchase of note receivable



(30)





Proceeds from sale of investments



197





Issuance of note receivable






(251)


Net cash provided by / (used in) investing activities



206




(150)











Cash flows from financing activities









Proceeds from At–The–Market sales of common stock, net of fees






1,072











Cash flows from discontinued operations – DraftDay.com









Net cash used in operating activities






(360)











Net change in cash and cash equivalents









Continuing operations



(170)




284


Discontinued operations






(360)





(170)




(76)


Cash and cash equivalents, beginning of period









Continuing operations



359




648


Discontinued operations






807





359




1,455


Cash and cash equivalents, end of period









Continuing operations



189




932


Discontinued operations






447




$

189



$

1,379


Non–cash supplementary disclosure of non–cash investing activities









Settlement of note receivable for DDAY common stock


$

825



$


Settlement of note receivable for DDAY preferred Series D stock



110





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SOURCE MGT Capital Investments, Inc.

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