MGTI MGT Capital Investments Inc (PK)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) August 19, 2014

 

MGT Capital Investments, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware	0-26886	13-4148725
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

500 Mamaroneck Avenue, Suite 204, Harrison, NY 10528

(Address of principal executive offices, including zip code)

 

(914) 630-7431

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On August 14, 2014, MGT Capital Investments, Inc. (the “Company”) issued a press release relating to its financial results and operational developments for the fiscal second quarter ended June 30, 2014, including information about the Company’s on-going patent lawsuits, the Company’s acquisition of www.DraftDay.com and the launch of the Company’s websites www.mgtplay.com, www.VegasInsider.com and www.FantasySportsLive.com. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

 

The information contained in this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The furnishing of the information in this Current Report on Form 8-K is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information contained in this Current Report on Form 8-K constitutes material investor information that is not otherwise publicly available.

 

The Securities and Exchange Commission encourages registrants to disclose forward-looking information so that investors can better understand the future prospects of a registrant and make informed investment decisions. This Current Report on Form 8-K and exhibits may contain these types of statements, which are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and which involve risks, uncertainties and reflect the Registrant’s judgment as of the date of this Current Report on Form 8-K. Forward-looking statements may relate to, among other things, operating results and are indicated by words or phrases such as “expects,” “should,” “will,” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those anticipated at the date of this Current Report on Form 8-K. The Company disclaims any obligation to, and will not, update any forward-looking statements to reflect events or circumstances after the date hereof. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented within.

 

Item 9.01

Financial Statements and Exhibits

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press Release dated August 14, 2014

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: August 19, 2014

 

	MGT Capital Investments, Inc.
	By:	/s/ Robert B. Ladd
	Name: Title:	Robert B. Ladd President and Chief Executive Officer

 

 

 

Exhibit 99.1

 

MGT Reports 2014 Second Quarter Results

DraftDay.com Powers Sequential Gross Margin Growth of 430% on Record Revenues

 

Harrison, NY (August 14, 2014) – 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.

 

 

Company Contact

 

MGT Capital Investments, Inc.

Robert Traversa, Chief Financial Officer

914-630-7431

rtraversa@mgtci.com

 

 

MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

		June 30,				December 31,
		2014				2013
		(Unaudited)
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