HARRISON, N.Y., Aug. 14, 2014 /PRNewswire/ -- MGT Capital
Investments, Inc. (NYSE MKT: MGT) today reported financial results
and operational developments for the fiscal second quarter ended
June 30, 2014. Developments during
the quarter and recent weeks subsequent to quarter end are as
follows:
- Acquired www.DraftDay.com and MGT has become the number 3
participant (based on player activity, guaranteed contest sizes,
and similar metrics) in the rapidly growing daily fantasy sports
industry.
- Officially launched www.mgtplay.com, a proprietary real money
skill-based gaming website.
- Strategically decided to focus resources and litigation efforts
against Aruze Gaming in patent assertion efforts and have dismissed
lawsuits against WMS Gaming Inc. In addition, MGT and WMS
filed a joint motion to terminate the Inter Partes Review
(IPR) with the United States Patent Trial and Appeal Board.
- MGT Sports formally launched the white label version of its
daily fantasy sports platform with www.VegasInsider.com.
- MGT Sports launched the online informational portal,
www.FantasySportsLive.com, which provides leading news, podcasts,
video, strategy and commentary for the daily fantasy sports
industry.
Robert Ladd, MGT's Chief
Executive Officer commented, "Through careful acquisitions and
development, we have transformed MGT into a leading skill based
gaming company; as we continue to execute, we are confident that
shareholders will benefit greatly."
"Q2 was highlighted by our acquisition of DraftDay.com. We
anticipate major increases in user growth and player activity on
our websites fueled by the upcoming professional football season,
mobile app launch and our white–label partnerships," Ladd
stated.
Financial Results
For the second quarter ended June 30,
2014, total revenue was $320,000, as compared to $67,000 for the same period last year. Gross
margin totaled $153,000 (48% of
revenue) up from $47,000 in the
second quarter of 2013. Operating expenses decreased by
approximately 47% to $1.7 million
from $3.1 million for the same period
in 2013. The decrease is primarily due to lower stock–based
compensation expense, professional fees and corporate governance
related costs. Operating loss was $1.5
million during the second quarter, compared to a loss of
$3.1 million in the same period of
2013.
For the six months ended June 30,
2014, total revenue was $405,000, as compared with $153,000 for the same period in 2013. Gross
margin totaled $189,000 up from
$70,000 in the second quarter of
2013. Operating expenses decreased by approximately 30% to
$3 million from $4.3 million for the first half of 2013. The
operating loss for the first six months of 2014 was $2.8 million as compared with $4.2 million loss for the same period last
year.
Cash and cash equivalents as of June 30,
2014 were $2.4 million. During
the quarter, net cash used in operating activities was $1.0 million (exclusive of changes in player
funds), as compared to $1.1 million
in the comparable period of 2013. The company expects cash
utilization to be significantly lower for the remainder of 2014,
due to the positive contribution from gross margin of MGT
Sports.
About MGT Capital Investments, Inc.
MGT Capital and its subsidiaries operate social and real money
gaming sites online and in the mobile space, including ownership of
the 3rd largest daily fantasy sports wagering platform,
www.DraftDay.com. The Company also offers games of skill
through www.MGTplay.com and social casino games with
SlotChamp™, and has created an online portal for fantasy
sports news and commentary, www.FantasySportsLive.com. In
addition, the Company owns intellectual property relating to slot
machines and has asserted its claims via patent infringement
lawsuits.
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)
|
|
|
June
30,
|
|
December
31,
|
|
2014
|
|
|
|
(Unaudited)
|
|
2013
|
Assets:
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,425
|
|
$
|
4,642
|
Accounts
receivable
|
|
46
|
|
|
43
|
Prepaid expenses and
other current assets
|
|
182
|
|
|
132
|
Total current
assets
|
|
2,653
|
|
|
4,817
|
|
|
|
|
|
|
Non–current
assets:
|
|
|
|
|
|
Restricted
cash
|
|
138
|
|
|
140
|
Property and
equipment, at cost, net
|
|
48
|
|
|
45
|
Intangible assets,
net
|
|
2,913
|
|
|
2,423
|
Goodwill
|
|
6,444
|
|
|
6,444
|
Other non–current
assets
|
|
4
|
|
|
4
|
Total
assets
|
$
|
12,200
|
|
$
|
13,873
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
435
|
|
$
|
228
|
Accrued
expenses
|
|
86
|
|
|
94
|
Player deposit
liability
|
|
788
|
|
|
647
|
Other
payables
|
|
36
|
|
|
16
|
Total current
liabilities
|
|
1,345
|
|
|
985
|
|
|
|
|
|
|
Total
liabilities
|
|
1,345
|
|
|
985
|
|
|
|
|
|
|
Commitments and
contingencies:
|
|
|
|
|
|
Redeemable
convertible preferred stock – Temporary equity:
|
|
|
|
|
|
Preferred stock,
series A convertible preferred, $0.001 par value; 1,416,160 and
1,416,160 shares authorized at June 30, 2014 and December 31, 2013,
respectively; 9,699 and 9,413 shares issued and outstanding at June
30, 2014 and December 31, 2013, respectively
|
|
–
|
|
|
–
|
Stockholders'
equity/(deficit):
|
|
|
|
|
|
Undesignated preferred
stock, $0.001 par value; 8,583,840 and 8,583,840 shares authorized
at June 30, 2014 and December 31, 2013, respectively. No shares
authorized, issued and outstanding at June 30, 2014 and December
31, 2013 respectively
|
|
–
|
|
|
–
|
Common Stock, $0.001
par value; 75,000,000 shares authorized; 9,361,453 and 8,848,686
shares issued and outstanding at June 30, 2014 and December 31,
2013, respectively
|
|
9
|
|
|
9
|
Additional paid–in
capital
|
|
305,935
|
|
|
304,886
|
Accumulated other
comprehensive loss
|
|
(281)
|
|
|
(281)
|
Accumulated
deficit
|
|
(296,346)
|
|
|
(293,833)
|
Total stockholders'
equity
|
|
9,317
|
|
|
10,781
|
Non–controlling
interests
|
|
1,538
|
|
|
2,107
|
Total
equity
|
|
10,855
|
|
|
12,888
|
|
|
|
|
|
|
Total stockholders'
equity, liabilities and non–controlling interest
|
$
|
12,200
|
|
$
|
13,873
|
MGT CAPITAL
INVESTMENTS, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In
thousands, except share and per–share amounts)
|
(Unaudited)
|
|
|
Three months ended
June 30,
|
|
2014
|
|
2013
|
Revenues:
|
|
|
|
|
|
Software and
devices
|
$
|
37
|
|
$
|
27
|
Services –
Consulting
|
|
–
|
|
|
22
|
Gaming
|
|
276
|
|
|
18
|
Other
|
|
7
|
|
|
–
|
|
|
320
|
|
|
67
|
Cost of
revenues:
|
|
|
|
|
|
Gaming
|
|
167
|
|
|
20
|
|
|
167
|
|
|
20
|
|
|
|
|
|
|
Gross
margin
|
|
153
|
|
|
47
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
General and
administrative
|
|
1,536
|
|
|
3,078
|
Sales and
marketing
|
|
91
|
|
|
66
|
Research and
development
|
|
53
|
|
|
–
|
|
|
1,680
|
|
|
3,144
|
|
|
|
|
|
|
Operating
loss
|
|
(1,527)
|
|
|
(3,097)
|
|
|
|
|
|
|
Other
non–operating income:
|
|
|
|
|
|
Interest and other
income
|
|
2
|
|
|
3
|
Gain on sale of
medical imagine patents
|
|
–
|
|
|
750
|
Change in fair value
of warrants
|
|
–
|
|
|
(4,326)
|
|
|
2
|
|
|
(3,573)
|
|
|
|
|
|
|
Net loss before
income taxes and non–controlling interest
|
|
(1,525)
|
|
|
(6,670)
|
|
|
|
|
|
|
Income tax (expense)
/ benefit
|
|
1
|
|
|
–
|
|
|
|
|
|
|
Net loss before
non–controlling interest
|
|
(1,524)
|
|
|
(6,670)
|
|
|
|
|
|
|
Net loss attributable
to non–controlling interest
|
|
133
|
|
|
91
|
|
|
|
|
|
|
Net loss
attributable to MGT Capital Investments, Inc.
|
$
|
(1,391)
|
|
$
|
(6,579)
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
Quarterly dividend on
Preferred Series A Stock
|
|
–
|
|
|
(7)
|
Net loss applicable to
Common shareholders
|
$
|
(1,391)
|
|
$
|
(6,586)
|
|
|
|
|
|
|
Per–share
data:
|
|
|
|
|
|
Basic and diluted
loss per share
|
$
|
(0.15)
|
|
$
|
(1.38)
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
9,057,867
|
|
|
4,766,904
|
MGT CAPITAL
INVESTMENTS, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except share and per–share amounts)
|
(Unaudited)
|
|
|
Six months ended
June 30,
|
|
2014
|
|
2013
|
Revenues:
|
|
|
|
|
|
Software and
devices
|
$
|
80
|
|
$
|
38
|
Services –
Consulting
|
|
–
|
|
|
97
|
Gaming
|
|
318
|
|
|
18
|
Other
|
|
7
|
|
|
–
|
|
|
405
|
|
|
153
|
Cost of
revenues:
|
|
|
|
|
|
Services –
Consulting
|
|
–
|
|
|
63
|
Gaming
|
|
216
|
|
|
20
|
|
|
216
|
|
|
83
|
|
|
|
|
|
|
Gross
margin
|
|
189
|
|
|
70
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
General and
administrative
|
|
2,800
|
|
|
4,239
|
Sales and
marketing
|
|
108
|
|
|
66
|
Research and
development
|
|
113
|
|
|
–
|
|
|
3,021
|
|
|
4,305
|
|
|
|
|
|
|
Operating
loss
|
|
(2,832)
|
|
|
(4,235)
|
|
|
|
|
|
|
Other
non–operating income:
|
|
|
|
|
|
Interest and other
income
|
|
5
|
|
|
27
|
Gain on sale of
medical imagine patents
|
|
–
|
|
|
750
|
Change in fair value
of warrants
|
|
–
|
|
|
(2,204)
|
|
|
5
|
|
|
(1,427)
|
|
|
|
|
|
|
Net loss before
income taxes and non–controlling interest
|
|
(2,827)
|
|
|
(5,662)
|
|
|
|
|
|
|
Income tax benefit /
(expense)
|
|
11
|
|
|
(3)
|
|
|
|
|
|
|
Net loss before
non–controlling interest
|
|
(2,816)
|
|
|
(5,665)
|
|
|
|
|
|
|
Net loss attributable
to non–controlling interest
|
|
303
|
|
|
147
|
|
|
|
|
|
|
Net loss income
attributable to MGT
|
$
|
(2,513)
|
|
$
|
(5,518)
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
Quarterly dividend on
Series A Preferred Stock
|
|
–
|
|
|
(68)
|
Net loss applicable to
Common shareholders
|
$
|
(2,513)
|
|
$
|
(5,586)
|
|
|
|
|
|
|
Per–share
data:
|
|
|
|
|
|
Basic and diluted
loss per share
|
$
|
(0.28)
|
|
$
|
(1.02)
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
8,921,935
|
|
|
5,472,423
|
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SOURCE MGT Capital Investments, Inc.