Item
1.01 Entry into Material Definitive Agreements.
On
April 12, 2019, MGT Capital Investments, Inc., a Delaware corporation (the “Company”), and Iliad Research and Trading,
L.P. (“Iliad”), a Utah limited partnership entered into a common stock purchase agreement (the Common Stock SPA”),
pursuant to which Iliad purchased 17,500,000 shares of the Company’s common stock (the “Common Stock”) for an
aggregate purchase price of five hundred and twenty-five thousand dollars ($525,000) (the “Purchase Price for the Common
Stock”), at a per share price of $0.03. In accordance with the Common Stock SPA, the transaction was completed on
April 15, 2019, as the Depository Trust Company credited the 17,500,000 shares of the Common Stock to the account of Iliad
and the Company received the total Purchase Price for the Common Stock.
The
Company and Chicago Venture Partners, L.P. (“Chicago Venture”), a Utah limited partnership and an affiliate of Iliad,
entered into a preferred stock purchase agreement (the “CV Preferred Stock SPA”) dated April 12, 2019, pursuant to
which Chicago Venture purchased 150 shares of the Series C Convertible Preferred Stock, $0.001 par value per share (the “Preferred
Stock”), which are convertible into shares of the Company’s Common Stock, $0.001 par value per share, for a total
purchase price of one million five hundred thousand dollars ($1,500,000) (the “CV Purchase Price”) at a price
of $10,000 per share (the “Stated Value”). The Preferred Stock is convertible into the common stock of the
Company at a price equal to the lesser of i) $0.05 per share or ii) 70% multiplied by the lowest closing trade price during the
ten (10) trading days immediately preceding a conversion.
The Company has the right to redeem all or any portion
of the outstanding Preferred Stock in cash equal to 140% of Stated Value in the first year of issuance, and at 120% of Stated
Value thereafter. The Company shall not effect any conversions of the Preferred Stock, to the extent that after giving effect
to such conversion Chicago Venture (together with its affiliates) would beneficially own a number of shares exceeding 9.99% of
the number of shares of the common stock outstanding on such date (including for such purpose the shares of common stock issuable
upon such issuance).
In accordance with the CV Preferred Stock
SPA, on April 15, 2019, the Company completed the transaction by issuing 150 shares of the Series C Preferred Stock to Chicago
Venture by book entry and receiving the CV Purchase Price net of certain expenses.
In
accordance with the terms of the CV Preferred Stock SPA, if at any time and for any reason, Chicago Venture is not able to receive
and deposit free trading Common Stock of the Company pursuant to conversions of the Series C Preferred Stock it then owns or the
Company fails to deliver conversion shares pursuant to a valid conversion notice from Chicago Venture as provided in the CV Preferred
Stock SPA, Chicago Venture will have the right to exchange any or all of the Series C Preferred Stock it then owns for
a convertible promissory note (the “Note”) pursuant to the Loan Documents (as defined in the CV Preferred Stock
SPA). The Note, if issued, will have an initial outstanding balance equal to the Stated Value, with a term of twelve (12)
months from the original issue date of April 15, 2019, and shall have the same conversion and redemption rights and privileges
as the Series C Preferred Stock in all material respects.
On
April 15, 2019, the Company and two unrelated accredited individual investors (“Individual Investors”) entered into
two separate securities purchase agreements (the “Preferred Stock SPA”), pursuant to which the two Individual
Investors purchased a total of 40 shares of the Series C Preferred Stock for an aggregate purchase price of four hundred thousand
dollars ($400,000) (the “Individual Investor Purchase Price”) at the Stated Value per share. As of April 16, 2019,
the Company has received the Individual Investor Purchase Price from the two Individual Investors separately and recorded in book
entry the issuance of a total of 40 shares of the Series C Preferred Stock in the respective amounts to each Individual Investor.
Accordingly, the Company closed the transaction contemplated under the two Preferred Stock SPAs on April 16, 2019.
The
Common Stock SPA, CV Preferred Stock SPA and two Preferred Stock SPAs described above may hereinafter be referred to as the “S-3
SPAs” from time to time. The offering of the securities pursuant to the S-3 SPAs was made pursuant to the Company’s
registration statement on Form S-3 (SEC file No. 333- 225589) (the “Registration Statement”), which was declared effective
by the Securities and Exchange Commission on August 10, 2018, and pursuant to a prospectus supplement dated April 15, 2019 (the
“Prospectus Supplement”). The four S-3 SPAs contain the customary representations and warranties from the parties.
The Company currently intends to use the net proceeds from the sale of the securities offered hereby for working capital, capital
expenditures and general corporate purposes.
The
foregoing description of the Common Stock SPA, CV Preferred Stock SPA and Preferred Stock SPAs does not purport to be complete
and is qualified in its entirety by reference to the full text of the Common Stock SPA, CV Preferred Stock SPA and form of the
Preferred Stock SPA, copies of which are attached as Exhibits 10.1, 10.2 and 10.3 and are incorporated herein by reference.
Copies of the opinions of Sichenzia Ross Ference LLP relating to the legality of the issuance and sale of the shares of
common stock and Series C Preferred Stock pursuant to the four S-3 SPAs are filed as Exhibits 5.1 and 5.2 hereto and are
incorporated herein and into the Registration Statement by reference.
Unless
specifically defined herein, the capitalized terms shall have the meanings as defined in the respective documents attached herein.