Item
1.01 Entry into Material Definitive Agreements.
On August 22, 2017, MGT Capital Investments,
Inc. (the “Company”), a Delaware corporation, MGT Mining Two, Inc. (the “Mining Sub”), a Delaware corporation
and subsidiary of the Company, and UAHC Ventures LLC (“UAHC”), a Nevada limited liability company, entered into a
securities purchase agreement (the “Securities Purchase Agreement”), pursuant to which the Company issued and sold
to UAHC a secured convertible promissory note (the “Note”) in the original principal amount (the “Original Principal
Amount”) of $2,410,000, with an original issuance discount (the “OID”) of $400,000 and legal and accounting
expenses of $10,000 (the “Transaction Expense Amount”), and a warrant (the “Warrant”) to purchase shares
of common stock of the Company, par value $0.001 per share. In accordance with the Securities Purchase Agreement, UAHC shall fund
the Company and Mining Sub (together the “Borrowers”) the purchase price (the “Purchase Price”) in an
amount of $2,000,000, which equals deducting the OID and Transaction Expense Amount from the Original Principal Amount.
A copy of the Securities Purchase Agreement is attached herein as Exhibit 10.1.
On
August 18, 2017, in connection with the Securities Purchase Agreement, the Borrowers executed the Note, promising to pay
UAHC the Original Principal Amount and all amounts of accrued and unpaid interest on the outstanding balance on the date that
is twenty-four (24) months from when UAHC transfers the Purchase Price to the Borrowers (the “Purchase Price Date”).
The Note is secured with all assets of the Mining Sub, currently owned and later acquired, and the Company’s three thousand
(3,000) shares of common stock of the Mining Sub. The Note bears an interest rate of ten per cent (10%) per annum, beginning to
accrue from the Purchase Price Date, provided that at any time on or after the occurrence of an Event of Default, the interest
rate shall be adjusted to twenty-two per cent (22%) per annum.
Subject to the terms and conditions set forth
in the Note, the Borrowers may prepay all or any portion of the outstanding balance of the Note in cash of an amount equal to
125% multiplied by the elected prepayment amount of the Note. At any time beginning on the Purchase Price Date until the outstanding
balance of the Note has been paid in full, UAHC may, at its option, convert all or any portion of the outstanding balance of the
Note into shares of common stock of the Company on a cashless basis at a price of $1.05 per share (the “Lender Conversion
Price”), as adjusted from time to time depending on the circumstances as defined in the Note. In addition, beginning
from three (3) months after the Purchase Price Date, UAHC has the right to redeem a portion of the outstanding balance of the
Note in any amount that is less than $160,000 (the “Maximum Monthly Redemption Amount”), in cash or with
consent of the Borrower, by converting such Redemption Amount into shares of the Company’s common stock at a per share
price that is the lower of the Lender Conversion Price and the price that is sixty-five percent (65%) of the average of the
lowest intra-day trade price of the common stock during the thirty (30) Trading Days immediately preceding the applicable conversion.
A copy of the Note is attached herein as Exhibit 10.2.
In
connection with the issuance of the Note, on August 18, 2017 (the “Issue Date”), the Company also issued to
UAHC the Warrant to purchase up to 861,905 shares of common stock of the Company (the “Warrant Shares”) as the number
of Warrant Shares may be adjusted in accordance with the terms of the Warrant (the “Warrant”). The Warrant shall be
exercisable at a price of $1.05 per share payable in cash from the Issue Date until the five-year anniversary; provided that UAHC
may elect to exercise the Warrant on a cashless basis. UAHC may only exercise the Warrant on a cashless basis if the underlying
Warrant Shares have not been registered with the Securities and Exchange Commission under any registration statement on or before
the date that is six (6) months from the Issue Date. A copy of the Warrant is attached herein as Exhibit 10.3.
On
August 22, 2017, the Borrowers and UAHC closed the transactions as described above and UAHC transferred the Purchase Price to
the Company.
Unless
specifically defined herein, the capitalized terms shall have the meanings as defined in the respective documents attached herein.
The forgoing terms are qualified in their entirety by the actual Securities Purchase Agreement, the Note and the Warrant attached
herein as Exhibits 10.1, 10.2 and 10.3.