HARRISON, N.Y., July 11, 2016 /PRNewswire/ -- MGT Capital
Investments, Inc. (NYSE MKT: MGT), as reported this past Friday,
has announced the filing of the Preliminary Proxy Statement for its
upcoming meeting of shareholders. The document can be
accessed via the Company's website or at www.sec.gov.
We have received many thoughtful questions from investors and
prospective investors about the process and proposals contained in
the Proxy Statement. As a public company, we take very seriously
our responsibility for accurate and full disclosure. This press
release will address several of the most frequently asked
questions.
DILUTION
Since May, the market has known about the proposed issuances of
23.8 million shares to acquire D-Vasive, Inc. and 20.0 million
shares to acquire Demonsaw LLC. Moreover, the stock has traded
nearly a billion shares at these higher levels. Several biased
investor websites and postings have attempted create the appearance
that these proposed issuances were somehow never disclosed,
resulting in potential confusion; this is simply not true.
The negative economic impact of dilution comes from issuing
shares for no or little value. However, the issuance of shares can
increase the per share value of all shares if done wisely. MGT is
issuing its shares for the two identified businesses, plus to
incentivize the focused energy of a technology pioneer,
John McAfee. In May, the board of
directors of MGT determined that issuing 43.8 million shares (on an
existing base of about 26 million) was a fair price for these
transactions and, based on investor response, the stock market
appeared to enthusiastically agree. Real world outcomes have
confirmed this shared belief.
MGT stock traded for about $0.25
prior to the public disclosure of the D-Vasive acquisition and the
new relationship with John McAfee.
Following the market's re-valuation to reflect that deal, the
Company announced the terms of the Demonsaw deal, and the stock
continued to trade at similar levels. The point here is that MGT's
board didn't just wake up to a higher stock price and then decide
to issue shares; the very transactions that improved its outlook
require this issuance of stock; and the transactions were entirely
and fully disclosed at that time.
The fact that naysayers now say that this issuance was not
expected is plain wrong and self-serving. Potential investors have
had two months to raise this question -- and many rightfully did --
but the market has thus far valued the shares based on the fully
disseminated information. Mr. McAfee, MGT's proposed Executive
Chairman and Chief Executive Officer, stated, "Clearly the market
has expectations for my success, but my job and goal is to exceed
the current hopes by executing on a sound business plan using
leading edge technologies. We will provide much more granular
detail after the deal closes, but suffice to say that we will focus
on profitable opportunities in the enterprise and government
sectors of the cyber security industry."
INCREASE IN AUTHORIZED SHARES
The shares to be issued for the acquisitions, combined with
shares needed for reserve under a newly proposed stock compensation
plan will slightly exceed the 75 million currently authorized. That
the Company is therefore asking for a larger number of authorized
shares is a highly normal development. The Company believes this
new number provides ample headroom for the next several years.
First and foremost, all future share issuances are subject to
board and stock exchange approval, and stockholder approval if
greater than 20% of the outstanding shares.
To clarify, MGT Capital Investments, Inc. as a company presently
listed on NYSE MKT (or NYSE or NASDAQ if we up-list) cannot issue
any shares without board or stock exchange approval. Further, with
limited exceptions (relating to publicly offered sales of stock at
a price higher than market price and stock splits), if the issuance
exceeds 20% of the outstanding stock at the time, stockholder
approval is required. Moreover, stock and stock options issued to
executives must be part of an incentive plan having received prior
stockholder approval. Please do not confuse a nationally listed
security like MGT with "over-the-counter" or "bulletin board"
stocks. Corporate governance standards are very strict for
listed companies.
It is standard practice for companies to use stock to acquire
companies and technologies, for compensation, and to raise capital,
in order to pursue the best interests of both the company and its
shareholders. Also noteworthy is that if a company is very
successful, it will often split its stock in order to make the
share price more attractive to average investors. Some famous
example of companies that waited a very long time for splits
include Apple and Berkshire Hathaway. This type of stock split
similarly requires that the company issues stock, and increasing
the authorized shares in such cases is, again, a usual corporate
governance activity. Clearly the market differentiates over time
those companies that successfully pursue a capital strategy to
enhance stockholder value versus those companies that fail. We hope
that our shareholders will find MGT to be prudent in seeking to
issue its shares only in transactions that create short term and
long term value.
Lastly, the shares being issued for the proposed transaction are
unregistered shares, which means they cannot be sold on the open
market for between six and twelve months after issuance, and then
only pursuant to an approved legal exemption from registration.
REVERSE SPLIT
On the other hand, a reverse stock split is a process by which
shares of corporate stock are effectively consolidated to form a
smaller number of proportionally more valuable shares. Despite
contrary notions, a reverse stock split has zero economic impact as
an independent action. For example, under a reverse stock split,
rather than 70 million shares at $4,
MGT would have 35 million shares at $8. In each case, the market value is the same
before and after.
We expect to utilize a reverse split only if required to meet
initial listing requirements of the New York Stock Exchange (NYSE)
or NASDAQ. The NYSE (not the NYSE MKT, where MGT is currently
traded) has a minimum share price standard of $5.00 for a new listing. (Already listed stocks
need to maintain a per share value $1.00 to avoid de-listing).
CONCLUSION
"There is an expression 'the market has spoken.' But it will be
up to me and my team at MGT to create not only the value accorded
to us already, but to vastly exceed this number," stated proposed
Executive Chairman and CEO John
McAfee. "In my opinion, for the naysayers to promote
disinformation that we have disclosed any unexpectedly new or
unfavorable information in last week's proxy, is very disingenuous
to say the least. They start with the specific argument that the
to-be acquired assets and John
McAfee have no value. That is not an argument, it is merely
their opinion, and one that has cost them money. That in turn makes
them angry, spicing up their valuation opinion with personal
attacks. Notwithstanding our stockholders' desire to expose illegal
shorting activity and the brokerage firms behind illegal stock
lending, we plan to stay above the dirt. There's another old market
saw, 'He who sells was isn't his'n buys it back or goes to
prison.'"
About MGT Capital Investments, Inc.
MGT Capital
Investments, Inc. (NYSE MKT: MGT) is in the process of acquiring a
diverse portfolio of cyber security technologies. With cyber
security industry pioneer, John
McAfee, at its helm, MGT Capital is positioned to address
various cyber threats through advanced protection technologies for
mobile and personal tech devices, including tablets and smart
phones. The Company is currently in the process of acquiring
D-Vasive, a provider of leading edge anti-spy software, and
Demonsaw, a provider of a secure and anonymous file sharing
software platform.
MGT Capital intends to change its corporate name to "John McAfee
Global Technologies, Inc." upon closing of the D-Vasive
transaction.
For more information on the Company, please
visit http://ir.stockpr.com/mgtci.
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.
Investor Contact
Garth
Russell
Managing Director
KCSA Strategic Communications
grussell@kcsa.com
212.896.1250
Media Contact
Tiffany
Madison
Director of Corporate Communications
MGT Capital Investments, Inc.
tmadison@mgtci.com
469.236.9569
Logo
- http://photos.prnewswire.com/prnh/20130409/NY91046LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mgt-answers-stockholder-questions-on-proxy-statement-300296711.html
SOURCE MGT Capital Investments, Inc.