Filed
pursuant to Rule 424(b)(2)
Registration
Statement No. 333- 225589
PROSPECTUS
SUPPLEMENT
To
Prospectus dated July 23, 2018
$35,000,000
Common
Stock
We
have entered into an equity purchase agreement(referred to as the “EPA”), dated August 30, 2018 with L2 Capital,
LLC (“L2 Capital”) for the offer and sale of up to $35,000,000 of shares of our common stock, offered by this prospectus
supplement. In accordance with the terms of the EPA, we may from time to time and at our sole discretion, during the next thirty-six
months, issue all or a portion of these shares to L2 Capital at 93.5% of the market price determined at the time as defined in
the EPA, and in accordance with the terms of the EPA.
This
prospectus supplement and the accompanying prospectus, dated July 23, 2018, also cover the sale of these shares by L2 Capital
to the public, with respect to which L2 Capital may be deemed an “underwriter” within the meaning of Section 2(a)(11)
of the Securities Act of 1933, as amended, or the Securities Act. Any profits on the sales of shares of our common stock by L2
Capital and any discounts, commissions or concessions received by L2 Capital may be deemed to be underwriting discounts and commissions
under the Securities Act. For additional information on the methods of sale that may be used by L2 Capital, see the section entitled
“Plan of Distribution” on page S-10.
Our
common stock is listed on the OTCQB marketplace under the symbol “MGTI.” On August 28, 2018, the last reported sale
price of our common stock was $0.68 per share. We have made an application to The Nasdaq Stock Market LLC to list our common stock
on The Nasdaq Capital Market, although there can be no assurance that our application will be approved and that our common stock
will trade on Nasdaq.
Our
business and an investment in our common stock involve significant risks. These risks are described under the caption “Risk
Factors” beginning on page S-3 of this prospectus supplement and in the documents incorporated by reference into this prospectus
supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
L2
CAPITAL, LLC
The date on this
prospectus supplement is
August 30, 2018
TABLE
OF CONTENTS
Prospectus
Supplement
Prospectus
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus are part of a registration statement on Form S-3 (File No. 333-225589) that
we filed with the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration process. Under this
shelf registration process, we may offer shares of our common stock and preferred stock, various series of debt securities, rights
and/or warrants to purchase any of such securities, either individually or in units, in one or more offerings, up to a total dollar
amount of $150,000,000. We have not yet sold any securities under the foregoing shelf registration.
This
document consists of two parts. The first part is the prospectus supplement, which describes the specific terms of this offering
of common stock and also adds to and updates information contained in the documents incorporated by reference into this prospectus.
The second part, the accompanying prospectus, gives more general information about securities that MGT may offer from time to
time. Generally, references to the prospectus or the prospectus supplement mean this prospectus supplement and the accompanying
prospectus combined. Before buying any of the common stock that we are offering, we urge you to carefully read this prospectus,
together with the information incorporated by reference as described under the headings “Where You Can Find More Information”
and “Incorporation of Certain Information by Reference” in this prospectus. These documents contain important information
that you should consider when making your investment decision.
This
prospectus supplement provides specific details regarding the issuance of up to $35,000,000 of shares of our common stock pursuant
to the EPA. The registration statement included a prospectus supplement for an “at-the-market” offering of common
stock with an aggregate offering price of up to $150,000,000. Any securities sold pursuant to this prospectus supplement will
reduce the amount of securities that may be offered and sold in accordance with that prospectus supplement.
To
the extent there is a conflict between the information contained in this prospectus supplement, on the one hand, and the information
contained in any document incorporated by reference into this prospectus supplement that was filed with the SEC, before the date
of this prospectus supplement, on the other hand, you should rely on the information in this prospectus supplement. If any statement
in one of these documents is inconsistent with a statement in another document having a later date (for example, a document incorporated
by reference into this prospectus supplement) the statement in the document having the later date modifies or supersedes the earlier
statement.
You
should rely only on the information contained in or incorporated by reference in this prospectus supplement and in any free writing
prospectus that we have authorized for use in connection with this offering. We have not, and the sales agent has not, authorized
anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should
not rely on it. We are not, and L2 Capital is not, making an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the documents incorporated
by reference in this prospectus supplement, and in any free writing prospectus that we have authorized for use in connection with
this offering, are accurate only as of the date of those respective documents. Our business, financial condition, results of operations
and prospects may have changed since those dates. You should read this prospectus supplement, the documents incorporated by reference
in this prospectus, and any free writing prospectus that we have authorized for use in connection with this offering, in their
entirety before making an investment decision.
Unless
the context indicates otherwise, as used in this prospectus supplement, the terms “MGT,” “the Company,”
“we,” “us” and “our” refer to MGT Capital Investments, Inc. and, where appropriate, our subsidiary.
SUMMARY
This
summary highlights certain information about us, this offering and selected information contained elsewhere in or incorporated
by reference into this prospectus supplement. This summary is not complete and does not contain all of the information that you
should consider before deciding whether to invest in our common stock. For a more complete understanding of our company and this
offering, we encourage you to read and consider carefully the more detailed information in this prospectus supplement and the
accompanying prospectus which is appended to this prospectus supplement, including the information incorporated by reference in
this prospectus supplement, and the information included in any free writing prospectus that we have authorized for use in connection
with this offering, including the information under the heading “Risk Factors” in this prospectus supplement beginning
on page S-3 and in the documents incorporated by reference into this prospectus.
Company
Overview
We
are engaged primarily in Bitcoin mining operations.
Bitcoin
is a world–recognized cryptocurrency, which can be traded and converted into major fiat currencies on cryptocurrency exchanges.
Cryptocurrencies are a medium of exchange that are transacted through and recorded on a decentralized distributed ledger system,
called “blockchain.” The blockchain is built by a chronological addition of transactions, which are grouped into blocks.
Each new block requires a mathematical problem to be solved before it can be confirmed and added to the blockchain.
Additional
information about Bitcoin, blockchain and cryptocurrencies can be found on publicly available educational sources such as
www.bitcoin.org
.
At
August 28, 2018, MGT owned and operated approximately 500 bitcoin mining machines or miners located in a leased facility in Quincy,
WA and 4,200 miners located in a leased facility in Sweden. In addition, the Company operates about 2,100 miners in the Sweden
location pursuant to management agreements.
In
the twelve months ended December 31, 2017, the Company mined approximately 856 coins and recorded $3,134,000 in revenue. In the
six months ended June 30, 2018, the Company mined 145.8 coins and recorded $1,355,000 in revenue.
MGT’s
strategy is to continue to expand its cryptocurrency mining operations and reduce costs by utilizing more efficient service providers,
and to achieve operational economies of scale by increasing the number of Bitcoin machines maintained by the Company, either owned
or managed.
Our
longer–term objective is focused towards vertical integration of our cryptocurrency mining business as well as diversification
into other areas of the rapidly emerging blockchain and cryptocurrency industry.
Our
principal executive offices are located at 512 S. Mangum Street, Suite 408, Durham, NC 27701, our telephone number is (914) 630–7430
and we maintain a website at
www.mgtci.com
. We do not incorporate the information on, or accessible through, our website
into this prospectus, and you should not consider any information on, or accessible through, our website as part of this prospectus.
THE
OFFERING
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Securities
Offered By Us
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Shares
of our common stock with aggregate gross sale proceeds of up to $35,000,000.
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Manner
of Offering
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Put
Shares via “equity line of credit” arrangement involving “puts” of shares of common stock from
time-to-time to L2 Capital pursuant to the terms of the EPA and the subsequent resale of such shares by L2 Capital.
The
number of shares of common stock offered to L2 Capital under the EPA, and consequently the number of such shares that
may be offered by L2 Capital pursuant to this prospectus supplement will depend upon our decision to sell shares to L2
Capital.
The
aggregate gross proceeds to us of shares offered and sold to L2 Capital pursuant to this prospectus supplement and the EPA shall
not exceed $35,000,000.
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Use
of Proceeds
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The
proceeds from this offering will vary depending on the number and price of shares of common stock ultimately offered to
L2 Capital under the EPA.
We
currently intend to use the net proceeds from the sale of the securities offered hereby for working capital, capital expenditures
and general corporate purposes. We may also use a portion of the net proceeds to invest in or acquire businesses or technologies
that we believe are complementary to our own, although we have no current plans, commitments or agreements with respect
to any acquisitions as of the date of this prospectus supplement. See “Use of Proceeds” on page S-9 of this
prospectus supplement.
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Risk
Factors
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Investing
in our common stock involves significant risks. See “Risk Factors” below, and under similar headings in other
documents incorporated by reference into this prospectus.
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OTCQB
Symbol
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“MGTI”
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RISK
FACTORS
Investing
in our securities involves a high degree of risk. You should carefully review the risks and uncertainties described below and
under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, as
updated by our annual, quarterly and other reports and documents that are incorporated by reference into this prospectus, before
deciding whether to purchase any of the securities being registered pursuant to the registration statement of which this prospectus
is a part. Each of the risk factors could adversely affect our business, operating results and financial condition, as well as
adversely affect the value of an investment in our securities, and the occurrence of any of these risks might cause you to lose
all or part of your investment. Additional risks not presently known to us or that we currently believe are immaterial may also
significantly impair our business operations. Please also read carefully the section below titled “Special Note Regarding
Forward-Looking Statements.”
Additional
Risks Related to Our Common Stock
The
price of our common stock has fluctuated considerably and is likely to remain volatile, in part due to the limited market for
our common stock, and you could lose all or part of your investment.
As
discussed further below, there is a limited public market for our common stock, and we cannot provide assurances that a more active
trading market will develop or continue. As a result of low trading volume in our common stock, the purchase or sale of a relatively
small number of shares could result in significant share price fluctuations. Additionally, the market price of our common stock
may continue to fluctuate significantly in response to a number of factors, some of which are beyond our control.
For
these reasons and others, an investment in our securities is risky and you should invest only if you can withstand a significant
loss and wide fluctuations in the value of your investment.
The
price of our common stock will be influenced by the price of cryptocurrency, among other factors, and may be susceptible to wide
swings in value.
Our
common stock is subject to arbitrary pricing factors that are not necessarily associated with traditional factors that influence
stock prices or the value of non-cryptocurrency assets such as revenue, cashflows, profitability, growth prospects or business
activity levels. This is because the value and price of our shares, as determined by the investing public, may be influenced by
future anticipated adoption or appreciation in value of cryptocurrencies or blockchain generally, factors over which the Company
has little or no influence or control. The Company’s share price may also be subject to pricing volatility due to supply
and demand factors associated with few or limited public company options for investment in the cryptocurreny industry.
Cryptocurrency
market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms.
Furthermore, such prices may be subject to factors such as those that impact commodities, more so than business activities, which
could be subject to additional influence from fraudulent or illegitimate actors, real or perceived scarcity, and political, economic,
regulatory or other conditions. Pricing may be the result of, and may continue to result in, speculation regarding future appreciation
in the value of cryptocurrencies, or the Company or its share price, inflating and making their market prices more volatile or
creating “bubble” type risks.
In
addition, as a result of the Company being an early participant in the blockchain and cryptocurrency ecosystem, the Company’s
shares may be perceived as a way of maintaining investment exposure to the blockchain and cryptocurrency markets without exposing
the investor to the risk of a particular cryptocurrency. Cryptocurrency holders have realized exponential value due to large increases
in the prices of cryptocurrencies and may seek to lock in cryptocurrency appreciation, and investing in the Company’s shares
may be perceived as a way to achieve that result, but this may not continue in the future. As a result, the value of the Company’s
shares, and the value of cryptocurrencies generally may be more likely to fluctuate due to changing investor confidence in future
appreciation (or depreciation) in market prices, profits from related or unrelated investments or holdings of cryptocurrency.
Such factors or events would have a material adverse effect on the ability of the Company to continue as a going concern or to
pursue this segment at all, or on the price of the Company’s shares, which would have a material adverse effect on the business,
prospects or operations of the Company and potentially the value of any cryptocurrencies the Company holds or expects to acquire
for its own account.
A
significant number of additional shares of our common stock may be issued at a later date, and their sale could depress the market
price of our common stock.
As
of August 28, 2018 we had outstanding warrants exercisable for 7,335,000 shares of our common stock and options exercisable for
6,000,000 shares of our common stock. The possibility of the issuance of these shares, as well as the actual sale of such shares,
could substantially reduce the market price for our common stock and impede our ability to obtain future financing.
Future
sales and issuances of our equity securities or rights to purchase our equity securities, including pursuant to equity incentive
plans, would result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to
fall.
To
the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. We
may, as we have in the past, sell common stock, rights, warrants, options or convertible securities or other equity securities
in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, rights, warrants,
options or convertible securities or other equity securities in more than one transaction, investors may be further diluted by
subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights
superior to existing stockholders.
Because
we are quoted on the OTCQB instead of a national securities exchange or quotation system, our investors may experience significant
volatility in the market price of our stock and have difficulty selling their shares.
Our
common stock is currently quoted on the OTC Market Group’s OTCQB market quotation system under the ticker symbol “MGTI.”
The OTCQB is a regulated quotation services that displays real-time quotes and last sale prices in over-the-counter securities.
Trading in shares quoted on the OTCQB is often thin and characterized by volatility in trading prices. This volatility may be
caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative
supervision of bid and ask quotations, lower trading volume and market conditions. As a result, there may be wide fluctuations
in the market price of the shares of our common stock for reasons unrelated to operating performance, and this volatility, when
it occurs, may have a negative effect on the market price for our securities. Moreover, the OTCQB is not a stock exchange, and
trading of securities on this platform is more sporadic than the trading of securities listed on a national quotation system or
stock exchange. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to
sell them or may have to hold them for a substantial period of time until the market for our common stock improves.
We
have recently applied for listing on The Nasdaq Capital Market, but there is no assurance that our application will be approved.
The
Company has recently applied for listing on The Nasdaq Capital Market tier of The Nasdaq Stock Market LLC. We are currently in
discussions with The Nasdaq Stock Market regarding our application, and we are hopeful that the Company can satisfy the applicable
listing standards and otherwise meet the criteria of The Nasdaq Stock Market for admission to its Capital Market tier. We note
that we do not currently satisfy the relevant listing standards, particularly the minimum bid price of $4.00, and that we will
be required to provide The Nasdaq Stock Market with a plan for coming into compliance with the minimum bid price requirement.
We
cannot assure you that we will be able to satisfy the necessary criteria for listing on The Nasdaq Capital Market, or any other
national securities exchange, or, if the Company is approved for listing, that we will be able to obtain such approval during
any particular time frame.
Even
if our common stock were traded on a national securities exchange such as The Nasdaq Stock Market, there is no assurance that
the trading volume of our common stock would significantly increase, that investors would experience a more liquid market for
their shares or that volatility would decrease.
We
may not be able to attract the attention of research analysts at major brokerage firms.
Because
we are not listed on a national securities exchange, security analysts of brokerage firms may not provide coverage of our company.
In addition, investment banks may be less likely to agree to underwrite secondary offerings on our behalf or recommend the purchase
of our common stock because they may be less familiar with our company as a result of more limited coverage by analysts and the
media. The failure to receive research coverage or support in the market for our shares will likely have an adverse effect on
our ability to develop a liquid market for our common stock.
Penny
stock regulations may impose certain restrictions on marketability of our securities.
The
SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price
of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. A security listed
on a national securities exchange is exempt from the definition of a penny stock. Our common stock is not currently listed on
a national security exchange. Our common stock is therefore subject to rules that impose additional sales practice requirements
on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those
with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions
covered by such rules, the broker-dealer must make a special suitability determination for the purchase of such securities and
have received the purchaser’s written consent to the transaction prior to the purchase.
Additionally,
for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk
disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer must also disclose the commission
payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer
is the sole market maker, the broker dealer must disclose this fact and the broker-dealer’s presumed control over the market.
Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information
on the limited market in penny stocks. Broker-dealers must wait two business days after providing buyers with disclosure materials
regarding a security before effecting a transaction in such security. Consequently, the “penny stock” rules restrict
the ability of broker-dealers to sell our securities and affect the ability of investors to sell our securities in the secondary
market and the price at which such purchasers can sell any such securities, thereby affecting the liquidity of the market for
our common stock.
Stockholders
should also be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud
and abuse. Such patterns include:
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control
of the market for the security by one or more broker-dealers that are often related to the promoter or issuer ;
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manipulation
of prices through prearranged matching of purchases and sales and false and misleading press releases ;
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“boiler
room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons
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excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers ; and
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the
wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
along with the inevitable collapse of those prices with consequent investor losses.
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FINRA
sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
The
Financial Industry Regulatory Authority (referred to as FINRA) has adopted rules requiring that, in recommending an investment
to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior
to recommending speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information.
Under interpretations of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced
securities will not be suitable for at least some customers. If these FINRA requirements are applicable to us or our securities,
they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which
may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for
and price of our common stock.
We
do not intend to pay dividends on our common stock in the foreseeable future so any returns on our common stock will be limited
to the price of our common stock.
We
have never declared dividends on our common stock, and currently do not plan to declare dividends on shares of our common stock
in the foreseeable future. We currently expect to retain future earnings, if any, for use in the operation and expansion of our
business. The payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend
upon such factors as earnings levels, capital requirements, our overall financial condition and any other factors.
Accordingly,
investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize
any return on their investment. Also , investors seeking cash dividends should not purchase our common stock.
The
price of our common stock could be affected by subpoenas issued to us in an ongoing investigation.
As
previously disclosed, in September 2016 and December 2017, respectively, the Company and its CEO and President received subpoenas
from the SEC in connection with an ongoing investigation. Both the Company and its CEO and President have complied with those
subpoenas and otherwise cooperated with the investigation. The ultimate outcome of the investigation and its potential impact
on the Company cannot be ascertained at this time. Regardless of the ultimate outcome, response to the subpoena has entailed,
and may continue to entail, legal costs and the diversion of management’s attention, and could impact the trading prices
of our common stock.
Additional
Risks Related to this Offering
Our
management will have broad discretion as to the use of the proceeds from this offering, and may not use the proceeds effectively.
Because
we have not designated the amount of net proceeds from this offering to be used for any particular purpose, our management will
have broad discretion as to the application of the net proceeds from this offering and could use them for purposes other than
those contemplated at the time of the offering. Accordingly, you will be relying on the judgment of our management with regard
to the use of any proceeds from the sale of common stock in this offering, and you will not have the opportunity, as part of your
investment decision, to assess whether the proceeds are being used appropriately.
Our
management may use the net proceeds for corporate purposes that may not improve our financial condition or market value.
You
may experience immediate and substantial dilution.
The
offering price per share in this offering may exceed the net tangible book value per share of our common stock outstanding prior
to this offering. Assuming that an aggregate of 50,000,000 shares of our common stock are sold at a price of $0.68 per share pursuant
to this prospectus supplement, which was the last reported sale price of our common stock on the OTCQB on August 28, 2018, for
aggregate gross proceeds of $34.0 million, you would experience immediate dilution of $0.37 per share, representing the difference
between our as adjusted net tangible book value per share as of June 30, 2018, after giving effect to this offering and the assumed
offering price. The exercise of outstanding share options may result in further dilution of your investment. See the section entitled
“Dilution” below for a more detailed illustration of the dilution you would incur if you participate in this offering.
There
is no assurance that we will receive $35 million in gross proceeds under the EPA
Under
the terms of the EPA, we have the right, but not the obligation, to sell shares to L2 Capital in an amount up to $35,000,000 over
the three-year term of the EPA. Future drawdowns are subject to the limitations and conditions set forth in the EPA, including,
among others, a beneficial ownership limitation, pursuant to which L2 Capital is not obligated to purchase shares if L2 Capital
would own more than 9.99% of the Company’s common stock outstanding immediately after giving effect to the issuance of shares
pursuant to a put notice and is conditioned on the effectiveness of this registration statement for the resale of the shares issuable
under the EPA.
The
common stock offered hereby may be sold at different prices.
Investors
who purchase shares in this offering at different times will likely pay different prices, and so may experience different outcomes
in their investment results. We and L2 Capital will have discretion, subject to market demand, to vary the timing, prices, and
numbers of shares sold, and there is no minimum or maximum sales price. Investors may experience a decline in the value of their
shares as a result of share sales made at prices lower than the prices they paid.
The
sale and issuance of our common stock to L2 Capital may cause substantial dilution to our existing stockholders, and the sale
of the shares of common stock acquired by or issued to L2 Capital could cause the price of our common stock to decline
.
L2
Capital may ultimately purchase under the EPA all, some or none of the common stock that is the subject of this prospectus supplement.
The prices at which we sell or issue shares to L2 Capital will be at a discount to the market price of our common stock. Accordingly,
the issuance of shares to L2 Capital will have a dilutive effect on the interests of other holders of our common stock. Moreover,
the sale of a substantial number of shares of our common stock by L2 Capital, or the anticipation of such sales, could cause the
trading price of our common stock to decline or make it more difficult for us to sell equity or equity-related securities in the
future at a time and at a price that we might otherwise desire.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein contain forward-looking statements. These are based on our management’s
current beliefs, expectations and assumptions about future events, conditions and results and on information currently available
to us. Discussions containing these forward-looking statements may be found, among other places, in the sections entitled “Business,”
“Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
contained in the documents incorporated by reference herein.
Any
statements in this prospectus, or incorporated herein, about our expectations, beliefs, plans, objectives, assumptions or future
events or performance are not historical facts and are forward-looking statements. Within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934, as amended (referred to as the Exchange Act), these forward-looking
statements include, without limitation, statements regarding: projections, predictions, expectations, estimates or forecasts for
our business, financial and operating results and future economic performance; statements of management’s goals and objectives;
trends affecting our financial condition, results of operations or future prospects; our financing plans or growth strategies;
and other similar expressions concerning matters that are not historical facts.
Forward-looking
statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications
of the times at , or by which that performance or those results will be achieved. Forward-looking statements are based on information
available at the time they are made and/or management’s good faith belief as of that time with respect to future events,
and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed
in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited
to:
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our
need for additional funding to support our operations and capital expenditures;
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our
working capital deficit;
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our
history of operating losses;
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our
limited revenue;
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our
uncertain prospects for profitability;
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fluctuations
in our operating results;
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our
inability to obtain the necessary computer hardware and electricity to sustain our Bitcoin mining operations;
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our
inability to grow our workforce and attract sophisticated talent necessary for our operations;
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our
inability to manage and maintain the growth of our business;
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any
losses we may incur as a result of litigation or government investigations;
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regulations
to which our business may become subject and which may increase our compliance costs;
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our
inability to protect our intellectual property rights;
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possible
security or cybersecurity breaches; and
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any
negative or unfavorable media coverage.
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In
some cases, you can identify forward-looking statements by the words “may,” “might,” “can,”
“will,” “to be,” “could,” “would,” “should,” “expect,”
“intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,”
“predict,” “project,” “potential,” “likely,” “continue” and “ongoing,”
or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not
all forward-looking statements contain these words. These statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the
information expressed or implied by these forward-looking statements.
You
should refer to the “Risk Factors” section contained in this prospectus supplement and any related free writing prospectus,
and under similar headings in the other documents that are incorporated by reference into this prospectus, for a discussion of
important factors other than those noted above that may cause our actual results to differ materially from those expressed or
implied by our forward-looking statements. Given these risks, uncertainties and other factors, many of which are beyond our control,
we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate, and you should not place
undue reliance on these forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the
inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard
these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any
specified time frame, or at all.
Except
as required by law, we assume no obligation to update these forward-looking statements publicly, or to revise any forward-looking
statements to reflect events or developments occurring after the date of this prospectus, even if new information becomes available
in the future.
USE
OF PROCEEDS
We
will retain broad discretion over the use of the net proceeds from the sale of the securities offered hereby. We currently intend
to use the net proceeds from the sale of the securities offered hereby for working capital, capital expenditures and general corporate
purposes. We may also use a portion of the net proceeds to invest in or acquire businesses or technologies that we believe are
complementary to our own, although we have no current plans, commitments or agreements with respect to any acquisitions as of
the date of this prospectus supplement. Pending these uses, we intend to invest the net proceeds in investment-grade, interest-bearing
securities or deposit accounts with reputable banking institutions.
DILUTION
Our
net tangible book value as of June 30, 2018 was approximately $5.9 million, or $0.08 per share. Net tangible book value per share
is determined by dividing our total tangible assets, less total liabilities, by the number of shares of our common stock outstanding
as of June 30, 2018. Dilution with respect to net tangible book value per share represents the difference between the amount per
share paid by purchasers of shares of common stock in this offering and the net tangible book value per share of our common stock
immediately after this offering.
Assuming
the sale of 50,000,000 shares of our common stock in this offering at an assumed offering price of $0.68 per share, the last reported
sale price of our common stock on the OTCQB marketplace on August 28, 2018, and after deducting estimated offering commissions
or discounts and offering expenses payable by us, our as adjusted net tangible book value as of June 30, 2018 would have been
approximately $37.7 million, or $0.31 per share. This represents an immediate increase in net tangible book value of $0.23 per
share to existing stockholders and immediate dilution of $0.37 per share to investors purchasing our common stock in this offering
at the assumed offering price. The following table illustrates this dilution on a per share basis:
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Assumed public offering price per share
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$
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0.68
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Net tangible book value per share as of June 30, 2018
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$
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0.08
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Increase in net tangible book value per share attributable to this offering
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$
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0.23
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As adjusted net tangible book value per share as of June 30, 2018, after giving effect to this offering
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$
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0.31
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Dilution per share to investors purchasing our common stock in this offering
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$
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0.37
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The
above discussion and table are based on 71,757,626 shares of our common stock outstanding as of June 30, 2018, and excludes:
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3,902,000
shares issued by the Company subsequent to June 30, 2018 through August 28, 2018;
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6,000,000
shares of our common stock issuable upon the exercise of stock options outstanding as of August 28, 2018, at a weighted-average
exercise price of $0.71 per share;
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7,335,000
shares of common stock issuable upon the exercise of warrants outstanding as of August 28, 2018, at a weighted-average exercise
price of $ 0.76 per share; and
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5,914,808
shares of common stock reserved for future issuance under our 2016 Stock Option Plan as of August 28, 2018.
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To
the extent that outstanding stock options or warrants outstanding have been or may be exercised or other shares issued, investors
purchasing our common stock in this offering may experience further dilution. In addition, we may choose to raise additional capital
due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating
plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance
of these securities could result in further dilution to our stockholders.
DESCRIPTION
OF CAPITAL STOCK
We
have authorized capital stock consisting of 125,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares
of preferred stock. As of August 29, 2018, there were 75,659,626 shares of our common stock, and no shares of preferred stock,
outstanding.
Additional
information related to our capital stock is contained in the accompanying prospectus which is appended to this prospectus supplement.
You
should also refer to our restated certificate of incorporation, as amended, and our amended and restated bylaws, which are filed
as exhibits to the registration statement of which this prospectus supplement is part.
PLAN
OF DISTRIBUTION
We
have entered into an equity purchase agreement, dated August 30, 2018, with L2 Capital, LLC, a Kansas limited liability company.
Under the EPA, the Company agreed to issue, and L2 Capital agreed to purchase, up to $35,000,000 of the Company’s common
stock. L2 Capital has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance
with the EPA, as follows. Pursuant to the EPA, the Company may by notice delivered to L2 Capital, referred to as a put notice,
require L2 Capital to purchase a number of shares of common stock that is equal to the lesser of $500,000 and 200% of the average
trading volume of the Company’s common stock in the 10 trading days immediately preceding the date of the put notice.
The Company must deliver the shares to a brokerage account designated by L2 Capital through the DWAC facility of the Depository
Trust Company within two trading days of delivery of the put notice. The purchase price for the shares will be the lowest volume-weighted
average traded price of any day during the five trading days either following or beginning on the date on which L2 Capital receives
delivery of the shares into its brokerage account, which period is referred to as the valuation period, multiplied by 93.5%. The
Company may generally deliver a put notice to L2 Capital at any time during the term of the EPA.
The
obligation of L2 Capital to purchase shares of common stock under the equity line is subject to a beneficial ownership limitation,
pursuant to which L2 Capital is not obligated to purchase shares if L2 Capital would own more than 9.99% of the Company’s
common stock outstanding immediately after giving effect to the issuance of shares pursuant to a put notice and is conditioned
on the effectiveness of this registration statement.
There
are no limitations on the use of proceeds of the EPA.
Under
the EPA, as long as the EPA is in effect, the Company may not enter into any equity line of credit agreement with any other party,
or issue securities of the Company in an amount greater than $100,000 that are convertible into an amount of shares that varies
based on the market price of the Company’s common stock, without L2 Capital’s prior written consent.
The
EPA commences on August 30, 2018 and will end on the earlier of (i) the date on which L2 Capital shall have purchased the Put
Shares equal to an aggregate of $35,000,000, (ii) August 28, 2021, or (iii) written notice of termination by the Company to L2
Capital provided that L2 Capital does not hold any of the Put Shares. We have agreed in the EPA to provide customary indemnification
to L2 Capital.
In
addition, the equity purchase agreement will automatically terminate on the earlier of: (i) August 28, 2021; (ii) the date that
L2 Capital purchases $35,000,000 of common stock pursuant to the EPA; (iii) the date on which the registration statement, of which
this prospectus supplement and the accompanying prospectus form a part, is no longer effective, or (iv) the date that the Company
commences, or is the subject of a bankruptcy proceeding or that a custodian is appointed for the Company or for all or substantially
all of its property or the Company makes a general assignment for the benefit of its creditors.
L2
Capital has agreed that neither it, nor any of its affiliates acting on its behalf or pursuant to any understanding with it, will
engage in any direct or indirect short-selling of the Company’s common stock during the term of the EPA.
In
addition to our issuance of common stock to L2 Capital pursuant to the EPA, this prospectus supplement also covers the resale
of those shares from time to time by L2 Capital to the public. In connection with L2 Capital’s sale of our common stock,
L2 Capital may be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation paid
to L2 Capital may be deemed to be underwriting commissions or discounts.
L2
Capital has informed us that it will use an unaffiliated broker-dealer to effectuate any sales of common stock that it may purchase
from us pursuant to the EPA. Such sales will be made on the OTCQB or otherwise at prices and at terms then prevailing or at prices
related to the then current market price. Each such unaffiliated broker-dealer may be an underwriter within the meaning of Section
2(a)(11) of the Securities Act. L2 Capital has informed us that such broker-dealers will receive commissions which will not exceed
customary brokerage commissions.
The
common stock offered pursuant to this prospectus may be sold or distributed from time to time directly to one or more purchasers
or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at
prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of the
common stock offered by this prospectus may be effected in one or more of the following methods:
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ordinary brokers’ transactions;
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transactions
involving block trades;
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through
brokers, dealers, or underwriters who may act solely as agents;
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in
other ways not involving market makers or established business markets, including direct
sales to purchasers or sales effected through agents;
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in
privately negotiated transactions; or
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any
combination of the foregoing.
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In
order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for
sale in the state or an exemption from the registration or qualification requirement is available and complied with.
L2
Capital may also sell shares of common stock pursuant to Rule 144 under the Securities Act, if available, rather than under this
prospectus. In addition, L2 Capital may transfer the shares of common stock by other means not described in this prospectus.
Brokers,
dealers, underwriters, or agents participating in the distribution of the shares as agents may receive compensation in the form
of commissions, discounts, or concessions from us and/or L2 Capital and/or purchasers of the common stock for whom the broker-dealers
may act as agent. L2 Capital has informed us that such broker-dealer will receive commissions which will not exceed customary
brokerage commissions.
L2
Capital and any unaffiliated broker-dealer will be subject to liability under the federal securities laws and must comply with
the requirements of the Securities Act and the Exchange Act, including without limitation, Rule 10b-5 and Regulation M under the
Exchange Act. These rules and regulations may limit the timing of purchases and sales of common stock by L2 Capital or any unaffiliated
broker-dealer. Under these rules and regulations, L2 Capital and any unaffiliated broker-dealer:
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may
not engage in any stabilization activity in connection with our securities;
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must
furnish each broker which offers shares of our common stock covered by the prospectus
supplement and accompanying prospectus with the number of copies of such prospectus supplement
and accompanying prospectus which are required by each broker; and
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may
not bid for or purchase any of our securities or attempt to induce any person to purchase
any of our securities other than as permitted under the Exchange Act.
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These
restrictions may affect the marketability of the common shares by L2 Capital and any unaffiliated broker-dealer.
LEGAL
MATTERS
The
validity of the common stock offered by this prospectus will be passed upon by Sichenzia Ross Ference Kesner LLP, New York, New
York.
EXPERTS
RBSM
LLP, independent registered public accounting firm, has audited our consolidated financial statements included in our Annual Report
on Form 10-K for the year ended December 31, 2017, as set forth in their report (which contains an explanatory paragraph describing
conditions that raise substantial doubt about the Company’s ability to continue as a going concern as described in Note
2 to the consolidated financial statements), which is incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements are incorporated by reference in reliance on RBSM LLP’s report, given on their authority
as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus is part of a registration statement we filed with the SEC. This prospectus does not contain all of the information
set forth in the registration statement and the exhibits to the registration statement. For further information with respect to
us and the securities we are offering under this prospectus, we refer you to the registration statement and the exhibits and schedules
filed as a part of the registration statement. You should rely only on the information contained in this prospectus or incorporated
by reference in this prospectus. We have not authorized anyone else to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front page of this prospectus, regardless of the time of delivery
of this prospectus or any sale of the securities offered by this prospectus.
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy the registration
statement, as well as any other document filed by us with the SEC, at the SEC’s Public Reference Room at 100 F Street NE,
Washington, D.C. 20549. You can also request copies of these documents by writing to the SEC and paying a fee for the copying
cost. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. The SEC maintains
a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC,
including MGT Capital Investments, Inc. The address of the SEC website is www.sec.gov.
We
maintain a website at www.mgtci.com. Information contained in or accessible through our website does not constitute a part of
this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with the SEC. The SEC file number for the documents incorporated
by reference in this prospectus is 001-32698. The documents incorporated by reference into this prospectus contain important information
that you should read about us.
The
following documents are incorporated by reference into this document:
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our
Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on April 2, 2018 ;
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our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018, filed with the SEC on May 10, 2018
and August 14, 2018, respectively;
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our
Current Reports on Form 8-K filed with the SEC on February 9, 2018, February 28, 2018, March 9, 2018, March 19, 2018, March
23, 2018 (as amended by Amendment No. 1, filed on April 2, 2018), April 3, 2018, April 12, 2018, May 25, 2018, May 31, 2018,
June 7, 2018, July 17, 2018 and August 15, 2018, to the extent the information in such reports is filed and not furnished;
and
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the
description of our common stock contained on Amendment No. 2 to the Company’s Registration Statement on Form S-1 filed
on January 13, 2016.
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We
also incorporate by reference into this prospectus all documents (other than current reports furnished under Item 2.02 or Item
7.01 of Form 8-K and exhibits filed on such form that are related to such items) that are filed by us with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date of the initial filing of the registration statement
of which this prospectus forms a part and prior to effectiveness of the registration statement, or (ii) after the date of this
prospectus but prior to the termination of the offering. These documents include periodic reports, such as Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Documents
incorporated by reference are available from us, without charge. You may obtain documents incorporated by reference in this prospectus
by requesting them in writing or by telephone at the following address and telephone number, as applicable:
MGT
Capital Investments, Inc.
512
S. Mangum Street, Suite 408
Durham,
NC 27701
(914)
630-7430
You
also may access these filings on our Internet site at
www.mgtci.com
. Our web site and the information contained on that
site, or connected to that site, are not incorporated into this prospectus or the registration statement of which this prospectus
is a part.
Any
statement contained in this prospectus or contained in a document incorporated or deemed to be incorporated by reference into
this prospectus will be deemed to be modified or superseded to the extent that a statement contained in this prospectus or any
subsequently filed supplement to this prospectus, or document deemed to be incorporated by reference into this prospectus, modifies
or supersedes such statement.
PROSPECTUS
$150,000,000
Common
Stock
Preferred
Stock
Debt
Securities
Rights
Warrants
Units
From
time to time, we may offer up to $150,000,000 of any combination of the securities described in this prospectus in one or more
offerings. We may also offer securities as may be issuable upon conversion, redemption, repurchase, exchange or exercise of any
securities registered hereunder, including any applicable anti-dilution provisions.
This
prospectus provides a general description of the securities we may offer. Each time we offer securities, we will provide specific
terms of the securities offered in a supplement to this prospectus. We may also authorize one or more free writing prospectuses
to be provided to you in connection with these offerings. The prospectus supplement and any related free writing prospectus may
also add, update or change information contained in this prospectus. You should carefully read this prospectus, the applicable
prospectus supplement and any related free writing prospectus, as well as any documents incorporated by reference, before you
invest in any of the securities being offered.
This
prospectus may not be used to consummate a sale of any securities unless accompanied by a prospectus supplement.
Our
common stock is quoted on the OTCQB marketplace under the ticker symbol “MGTI.” On July 19, 2018, the last reported
sale price of our common stock was $0.90 per share. We have made an application to The Nasdaq Stock Market to list our common
stock on The Nasdaq Capital Market, although there can be no assurance that our application will be approved.
We
may sell the securities offered through this prospectus directly to investors, through agents designated from time to time or
to or through underwriters or dealers, on a continuous or delayed basis. For additional information on the methods of sale, you
should refer to the section entitled “Plan of Distribution” in this prospectus. If any agents or underwriters are
involved in the sale of any securities with respect to which this prospectus is being delivered, the names of such agents or underwriters
and any applicable fees, commissions, discounts or over-allotment options will be set forth in a prospectus supplement. The price
to the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in a prospectus
supplement.
Investing
in our securities involves a high degree of risk. You should review carefully the risks and uncertainties referred to under the
heading “Risk Factors” contained in the applicable prospectus supplement and any related free writing prospectus,
and under similar headings in the documents that are incorporated by reference into this prospectus as described on page 25 of
this prospectus.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
date of this prospectus is July [ ], 2018.
TABLE
OF CONTENTS
ABOUT
THE PROSPECTUS
This
prospectus is a part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or SEC,
utilizing a “shelf” registration process. Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings up to a total aggregate offering price of $150,000,000. This
prospectus provides you with a general description of the securities we may offer.
Each
time we sell securities under this prospectus, we will provide a prospectus supplement that will contain specific information
about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain
material information relating to these offerings. The prospectus supplement and any related free writing prospectus that we may
authorize may also add, update or change information contained in this prospectus or in any documents that we have incorporated
by reference into this prospectus. You should read this prospectus, any applicable prospectus supplement and any related free
writing prospectus, together with the information incorporated herein by reference as described under the heading “Incorporation
of Certain Information by Reference,” before investing in any of the securities offered.
THIS
PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
Neither
we, nor any agent, underwriter or dealer has authorized any person to give any information or to make any representation other
than those contained or incorporated by reference in this prospectus, any applicable prospectus supplement or any related free
writing prospectus prepared by us or on our behalf or to which we have referred you. This prospectus, any applicable supplement
to this prospectus or any related free writing prospectus do not constitute an offer to sell or the solicitation of an offer to
buy any securities other than the registered securities to which they relate, nor do this prospectus, any applicable supplement
to this prospectus or any related free writing prospectus constitute an offer to sell or the solicitation of an offer to buy securities
in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
You
should not assume that the information contained in this prospectus, any applicable prospectus supplement or any related free
writing prospectus is accurate on any date subsequent to the date set forth on the front of the document. You should also not
assume that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated
by reference, even though this prospectus, any applicable prospectus supplement or any related free writing prospectus is delivered,
or securities are sold, on a later date.
This
prospectus, and the information incorporated by reference in this prospectus, contain summaries of provisions of certain other
documents, but reference is made to the actual documents for complete information. All of the summaries are qualified in their
entirety by the actual documents. Copies of some of the documents referred to in this prospectus have been filed, will be filed
or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may
obtain copies of those documents as described below under the heading “Where You Can Find More Information.”
SUMMARY
This
summary highlights selected information from this prospectus and does not contain all of the information that you need to consider
in making your investment decision. You should carefully read the entire prospectus, the applicable prospectus supplement and
any related free writing prospectus, including the risks of investing in our securities discussed under the heading “Risk
Factors” contained in the applicable prospectus supplement and any related free writing prospectus, and under similar headings
in the documents that are incorporated by reference into this prospectus. You should also carefully read the information incorporated
by reference into this prospectus, including our financial statements, and the exhibits to the registration statement of which
this prospectus is a part.
Unless
the context indicates otherwise, as used in this prospectus, the terms “MGT,” “the Company,” “we,”
“us” and “our” refer to MGT Capital Investments, Inc.
Company
Overview
MGT
Capital Investments, Inc. is a Delaware corporation, incorporated in 2000. The predecessor of the Company was originally incorporated
in Utah in 1977. MGT is comprised of the parent company and certain, wholly-owned subsidiaries.
Cryptocurrency
Mining Business
We
are engaged in Bitcoin mining operations.
Bitcoin
is a world–recognized cryptocurrency, which can be traded and converted into major fiat currencies on cryptocurrency exchanges.
Cryptocurrencies are a medium of exchange that are transacted through and recorded on a decentralized distributed ledger system,
called “blockchain.” The blockchain is built by a chronological addition of transactions, which are grouped into blocks.
Each new block requires a mathematical problem to be solved before it can be confirmed and added to the blockchain.
Bitcoin
mining entails solving these complex mathematical problems using custom designed and programmed application-specific integrated
circuit computers (referred to as miners). Bitcoin miners perform a vital function on the Bitcoin blockchain network, by performing
so-called hash calculations and adding transaction blocks to the blockchain ledger. When a miner is successful in adding a block
to the blockchain, it is rewarded with a fixed number of Bitcoin; a miner can also be compensated by network transaction fees.
Bitcoin capacity is measured by computational hashing rate, which is a measure of computations per second performed.
Additional
information about Bitcoin, blockchain and cryptocurrencies can be found on publicly available educational sources such as
www.bitcoin.org
.
Our
Operations
In
September 2016, MGT commenced its Bitcoin mining operations in the Wenatchee Valley area of central Washington. Throughout 2017
and 2018 we expanded our mining capacity with the purchase of additional miners and entering into hosting and power agreements
with Washington facilities owners. We also entered into management agreements with third party investors whereby the investors
purchase the mining hardware, and the Company receives both a fee to manage the mining operations plus one-half of the net operating
profit. In the twelve months ended December 31, 2017, the Company mined approximately 856 coins and recorded $3,134,000 in revenue.
In the three months ended March 31, 2018, the Company mined 91.5 coins and recorded $956,000 in revenue.
Due
to the lack of availability of adequate electric power in Washington to support our growth, the Company moved operations to northern
Sweden at the end of 2017. During the first quarter of 2018, we took delivery of additional Bitcoin mining machines in Sweden
and moved or sold most of our Bitcoin mining machines from Washington. We plan to continue growing our mining capacity in Sweden
during 2018.
At
July 19, 2018, MGT owned and operated approximately 500 miners located in a leased facility in Quincy, WA and 4,200 miners located
in a leased facility in Sweden.
In
addition, the Company operates about 2,100 miners in the Sweden location pursuant to management agreements. Under the management
arrangements the Company provides for installation, hosting, maintenance and repair of the managed Bitcoin miners. The Company
charges the owners an operating fee of 10% of the amount of Bitcoin mined. The owners receive 50% of the Bitcoin mined net of
the operating fee and electricity costs. The management agreements generally have a 24 month term.
When
running at full capacity, the Company’s owned and managed miners are anticipated to have an aggregate computational hashing
rate at 90 petahash per second.
Our
Strategy
MGT’s
strategy is to continue to expand its cryptocurrency mining operations and reduce costs by utilizing more efficient service providers,
and to achieve operational economies of scale by increasing the number of Bitcoin machines maintained by the Company, either owned
or managed.
Our
longer–term objective is focused towards vertical integration of our cryptocurrency mining business as well as diversification
into other areas of the rapidly emerging blockchain and cryptocurrency industry.
Legacy
Businesses
Cybersecurity
Previously,
it was the Company’s intention to develop a cybersecurity business, and position itself to address various cyber threats
through advanced protection technologies for mobile devices and corporate networks. Legendary computer security pioneer John McAfee
agreed to join MGT in November 2016 and served as Chairman and CEO until August 2017, at which time he was appointed Chief Cybersecurity
Visionary, a position he held until his relationship with the Company ended in January 2018.
In
May 2016, MGT entered into an agreement to acquire certain assets owned by D–Vasive, Inc., a company in the business of
developing and marketing certain privacy and anti–spy applications. Also in May 2016, the Company agreed to acquire certain
technology and assets of Demonsaw LLC, a company in the business of developing and marketing secure and anonymous information
sharing applications. In July 2016, the Company and Demonsaw terminated their agreement, and simultaneously, D–Vasive entered
into an agreement to purchase Demonsaw. The D-Vasive acquisition was terminated when the Company could not obtain listing approval
of the New York Stock Exchange, on which its common stock was then traded, for the shares issuable in the transaction.
In
August 2017, we commenced commercial development of our cybersecurity business, including Sentinel, a network intrusion detector
released in October 2017. We realized only nominal revenue from our cybersecurity business.
On
March 19, 2018, we announced the end of our cybersecurity operations by selling the Sentinel product line to a new entity formed
by our cybersecurity unit’s management team and stopping development of a secure mobile phone. The Sentinel assets were
sold for consideration of $60,000 in cash and a $1,000,000 promissory note, convertible into a 20% equity interest of the buyer.
Online
and Mobile Gaming
Prior
to engaging in the cybersecurity business, the Company and its subsidiaries were principally engaged in the business of acquiring,
developing and monetizing assets in the online and mobile gaming space as well as the social casino industry. The Company’s
principal asset was DraftDay.com, at the time the third largest operator of online daily fantasy sports gaming, which the Company
sold in September 2015. In partial consideration for the sale, MGT received a minority interest in the purchaser, renamed Function(x)
Inc., and its subsidiary.
In
a series of subsequent transactions, the Company acquired certain additional shares of Function(x). The Company sold all of its
shares in Function(x) prior to March 31, 2017.
Corporate
Information
Our
principal executive offices are located at 512 S. Mangum Street, Suite 408, Durham, NC 27701, our telephone number is (914) 630–7430
and we maintain a website at
www.mgtci.com
. We do not incorporate the information on, or accessible through, our website
into this prospectus, and you should not consider any information on, or accessible through, our website as part of this prospectus.
The
Securities We May Offer
We
may offer shares of our common stock and preferred stock, various series of debt securities, rights to purchase our common stock
or preferred stock, warrants to purchase any of such securities and units consisting of any combination of such securities, up
to a total aggregate offering price of $150,000,000. These securities may be offered by us from time to time in one or more offerings
under this prospectus, together with any applicable prospectus supplement and any related free writing prospectus, at prices and
on terms to be determined by market conditions at the time of the relevant offering. This prospectus provides you with a general
description of the securities we may offer.
Each
time we offer a type or series of securities under this prospectus, we will provide a prospectus supplement that will describe
the specific amounts, prices and other important terms of the securities, including, to the extent applicable:
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designation
or classification;
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aggregate
principal amount or aggregate offering price;
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maturity;
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original
issue discount, if any;
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rates
and times of payment of interest or dividends, if any;
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redemption,
conversion, exchange or sinking fund terms, if any;
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conversion
or exchange prices or rates, if any, and, if applicable, any provisions for changes to or adjustments in the conversion or
exchange prices or rates and in the securities or other property receivable upon conversion or exchange;
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ranking;
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restrictive
covenants, if any;
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voting
or other rights, if any; and
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important
U.S. federal income tax considerations, if applicable.
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The
prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update
or change information contained in this prospectus or in documents we have incorporated by reference. However, no prospectus supplement
or free writing prospectus will offer a security that is not registered and described in this prospectus at the time of the effectiveness
of the registration statement of which this prospectus is a part.
This
prospectus may not be used to consummate a sale of securities unless it is accompanied by a prospectus supplement.
We
may sell the securities directly to investors or through underwriters, dealers or agents. We, and our underwriters or agents,
reserve the right to accept or reject all or part of any proposed purchase of securities. If we do offer securities through underwriters
or agents, we will include in the applicable prospectus supplement:
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the
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applicable
fees, discounts and commissions to be paid to them;
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details
regarding over-allotment options, if any; and
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the
estimated net proceeds to us.
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Common
Stock
We
may issue shares of our common stock from time to time.
The
holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders
and do not have cumulative voting rights. Subject to preferences that may be applicable to any outstanding shares of preferred
stock, the holders of our common stock are entitled to receive ratably such dividends as may be declared by our board of directors
out of legally available funds. Upon our liquidation, dissolution or winding up, holders of our common stock are entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation preferences of any then outstanding shares of
preferred stock. Our common stock does not carry any preemptive rights enabling a holder to subscribe for, or receive shares of,
any class of our common stock or any other securities convertible into shares of any class of our common stock, or any redemption
rights.
Preferred
Stock
We
may issue shares of our preferred stock from time to time, in one or more series.
Under
our certificate of incorporation, our board of directors has the authority, without further action by the stockholders (unless
such stockholder action is required by applicable law or the rules of any stock exchange or market on which our securities are
then traded), to designate up to 10,000,000 shares of preferred stock in one or more series and to determine the designations,
voting powers, preferences and rights of each series of the preferred stock, as well as the qualifications, limitations or restrictions
thereof, including dividend rights, conversion rights, preemptive rights, terms of redemption or repurchase, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the designation of any series, any or all of which may
be greater than the rights of the common stock. Any convertible preferred stock we may issue will be convertible into our common
stock or exchangeable for our other securities. Conversion may be mandatory or at the holder’s option and would be at prescribed
conversion rates.
If
we sell any series of preferred stock under this prospectus, we will fix the designations, voting powers, preferences and rights
of such series of preferred stock, as well as the qualifications, limitations or restrictions thereof, in the certificate of designation
relating to that series. We will file as an exhibit to the registration statement of which this prospectus is a part, or will
incorporate by reference from reports that we file with the SEC, the form of any certificate of designation that describes the
terms of the series of preferred stock that we are offering before the issuance of the related series of preferred stock. We urge
you to read the applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you)
related to the series of preferred stock being offered, as well as the complete certificate of designation that contains the terms
of the applicable series of preferred stock.
The
Company has authorized for issuance 1,380,362 shares of preferred stock, par value $0.01 per share that are designated as Series
A Preferred Stock. No shares of preferred stock of the Company are currently issued or outstanding.
Debt
Securities
We
may issue debt securities from time to time, in one or more series, as either senior or subordinated debt or as senior or subordinated
convertible debt.
The
senior debt securities will rank equally with any other unsecured and unsubordinated debt. The subordinated debt securities will
be subordinate and junior in right of payment, to the extent and in the manner described in the instrument governing the debt,
to all of our senior indebtedness. Convertible debt securities will be convertible into or exchangeable for our common stock or
preferred stock. Conversion may be mandatory or at the holder’s option and would be at prescribed conversion rates.
The
debt securities will be issued under an indenture, which is a contract between us and a national banking association or other
eligible party, as trustee. In this prospectus, we have summarized certain general features of the debt securities. We urge you,
however, to read the applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to
you) related to the series of debt securities if and when they are offered, as well as the complete indentures and any supplemental
indentures that contain the terms of the debt securities.
A
form of base indenture has been filed with the registration statement of which this prospectus forms a part. If we offer debt
securities, the applicable supplemental indentures and forms of debt securities containing the actual terms of the debt securities
being offered will be filed as exhibits to the registration statement of which this prospectus is a part or incorporated by reference
from reports we file with the SEC.
Rights
We
may issue rights for the purchase of common stock, preferred stock or debt securities in one or more series.
In
this prospectus, we have summarized certain general features of the rights. We urge you, however, to read the applicable prospectus
supplement (and any free writing prospectus that we may authorize to be provided to you) related to the particular series of rights
being offered, as well as the complete rights agreements, any supplemental rights agreements and rights certificates that contain
the terms of the rights.
We
will evidence each series of rights by rights certificates that we will issue. Rights may be issued under an applicable rights
agreement that we enter into with a rights agent. We will indicate the name and address of the rights agent, if applicable, in
the prospectus supplement relating to the particular series of rights being offered. A form of rights agreement has been filed
as an exhibit to the registration statement of which this prospectus is a part, although any actual rights agreement may differ
from the form.
If
we offer rights, forms of the applicable rights agreements, any supplemental rights agreements and forms of the applicable rights
certificates containing the terms of the rights being offered will be filed, or incorporated by reference from reports we file
with the SEC, as exhibits to the registration statement of which this prospectus is a part.
Warrants
We
may issue warrants for the purchase of common stock, preferred stock or debt securities in one or more series.
In
this prospectus, we have summarized certain general features of the warrants. We urge you, however, to read the applicable prospectus
supplement (and any free writing prospectus that we may authorize to be provided to you) related to the particular series of warrants
being offered, as well as the complete warrant agreements, any supplemental warrant agreements and warrant certificates that contain
the terms of the warrants.
We
will evidence each series of warrants by warrant certificates that we will issue. Warrants may be issued under an applicable warrant
agreement that we enter into with a warrant agent. We will indicate the name and address of the warrant agent, if applicable,
in the prospectus supplement relating to the particular series of warrants being offered. A form of warrant agreement has been
filed as an exhibit to the registration statement of which this prospectus is a part, although any actual warrant agreement may
differ from the form.
If
we offer warrants, forms of the applicable warrant agreements, any supplemental warrants agreements and forms of the applicable
warrant certificates containing the terms of the warrants being offered will be filed, or incorporated by reference from reports
we file with the SEC, as exhibits to the registration statement of which this prospectus is a part.
Units
We
may issue units for the purchase of common stock, preferred stock, debt securities, rights or warrants, or any combination of
such securities, in or more series.
In
this prospectus, we have summarized certain general features of the units. We urge you, however, to read the applicable prospectus
supplement (and any free writing prospectus that we may authorize to be provided to you) related to the particular series of units
being offered, as well as the complete unit agreements, any supplemental unit agreements and unit certificates that contain the
terms of the units.
We
will evidence each series of units by unit certificates that we will issue. A form of unit agreement has been filed as an exhibit
to the registration statement of which this prospectus is a part, although any actual unit agreement may differ from the form.
If
we offer units, forms of the applicable unit agreements, any supplemental unit agreements and forms of the applicable unit certificates
containing the terms of the units being offered will be filed as exhibits to the registration statement of which this prospectus
is a part, or incorporated by reference from reports we file with the SEC.
RISK
FACTORS
Investing
in our securities involves a high degree of risk. You should carefully review the risks and uncertainties described under the
heading “Risk Factors” contained in the applicable prospectus supplement and any related free writing prospectus,
and under similar headings in our Annual Report on Form 10-K for the year ended December 31, 2017, as updated by any subsequently
filed periodic reports and other documents that are incorporated by reference into this prospectus, before deciding whether to
purchase any of the securities being registered pursuant to the registration statement of which this prospectus is a part. Each
of the risk factors described in the documents referenced above could adversely affect our business, operating results and financial
condition, as well as adversely affect the value of an investment in our securities, and the occurrence of any of these risks
might cause you to lose all or part of your investment. Additional risks not presently known to us or that we currently believe
are immaterial may also significantly impair our business operations.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein contain forward-looking statements. These are based on our management’s
current beliefs, expectations and assumptions about future events, conditions and results and on information currently available
to us. Discussions containing these forward-looking statements may be found, among other places, in the sections entitled “Business,”
“Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
contained in the documents incorporated by reference in this prospectus.
Any
statements in this prospectus, or incorporated in this prospectus, about our expectations, beliefs, plans, objectives, assumptions
or future events or performance are not historical facts and are forward-looking statements. Within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (referred to as the Exchange Act), these
forward-looking statements include, without limitation, statements regarding: projections, predictions, expectations, estimates
or forecasts for our business, financial and operating results and future economic performance; statements of management’s
goals and objectives; trends affecting our financial condition, results of operations or future prospects; our financing plans
or growth strategies; and other similar expressions concerning matters that are not historical facts.
Forward-looking
statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications
of the times at or by which that performance or those results will be achieved. Forward-looking statements are based on information
available at the time they are made and/or management’s good faith belief as of that time with respect to future events,
and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed
in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited
to:
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need for additional funding to support our operations and capital expenditures;
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working capital deficit;
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our
history of operating losses;
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our
limited revenue;
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our
uncertain prospects for profitability;
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fluctuations
in our operating results;
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our
inability to obtain the necessary computer hardware and electricity to sustain our Bitcoin mining operations;
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our
inability to grow our workforce and attract sophisticated talent necessary for our operations;
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our
inability to manage and maintain the growth of our business;
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any
losses we may incur as a result of litigation or government investigations;
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regulations
to which our business may become subject and which may increase our compliance costs;
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our
inability to protect our intellectual property rights;
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possible
security breaches; and
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any
negative or unfavorable media coverage.
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In
some cases, you can identify forward-looking statements by the words “may,” “might,” “can,”
“will,” “to be,” “could,” “would,” “should,” “expect,”
“intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,”
“predict,” “project,” “potential,” “likely,” “continue” and “ongoing,”
or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not
all forward-looking statements contain these words. These statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the
information expressed or implied by these forward-looking statements.
You
should refer to the “Risk Factors” section contained in the applicable prospectus supplement and any related free
writing prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus,
for a discussion of important factors other than those noted above that may cause our actual results to differ materially from
those expressed or implied by our forward-looking statements. Given these risks, uncertainties and other factors, many of which
are beyond our control, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate,
and you should not place undue reliance on these forward-looking statements. Furthermore, if our forward-looking statements prove
to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements,
you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives
and plans in any specified time frame, or at all.
Except
as required by law, we assume no obligation to update these forward-looking statements publicly, or to revise any forward-looking
statements to reflect events or developments occurring after the date of this prospectus, even if new information becomes available
in the future.
RATIO
OF EARNINGS TO FIXED CHARGES
If
we offer debt securities and/or preference equity securities under this prospectus, we will, if required at that time, provide
a ratio of earnings to fixed charges and/or ratio of earnings to combined fixed charges and preference dividends to earnings,
respectively, in the applicable prospectus supplement for such offering.
USE
OF PROCEEDS
We
will retain broad discretion over the use of the net proceeds from the sale of the securities offered hereby. Except as described
in any applicable prospectus supplement or in any free writing prospectuses that we may authorize to be provided to you in connection
with a specific offering, we currently intend to use the net proceeds from the sale of the securities offered hereby for working
capital, capital expenditures and general corporate purposes. We may also use a portion of the net proceeds to invest in or acquire
businesses or technologies that we believe are complementary to our own, although we have no current plans, commitments or agreements
with respect to any acquisitions as of the date of this prospectus. We will set forth in the applicable prospectus supplement
or free writing prospectus our intended use for the net proceeds received from the sale of any securities sold pursuant to the
prospectus supplement or free writing prospectus. Pending these uses, we intend to invest the net proceeds in investment-grade,
interest-bearing securities or deposit accounts with reputable banking institutions.
DESCRIPTION
OF CAPITAL STOCK
The
following description of our capital stock and provisions of our restated certificate of incorporation, as amended, and amended
and restated bylaws are summaries. You should also refer to our restated certificate of incorporation, as amended, and our amended
and restated bylaws, which are incorporated by reference as exhibits to the registration statement of which this prospectus is
part.
We
have authorized capital stock consisting of 125,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares
of preferred stock. As of July 19, 2018, there were 73,939,250 shares of our common stock, and no shares of preferred stock, outstanding.
Common
Stock
The
holders of common stock are entitled to one vote per share. Our certificate of incorporation does not provide for cumulative voting.
The holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors
out of legally available funds. Upon liquidation, dissolution or winding-up, the holders of our common stock are entitled to share
ratably in all assets that are legally available for distribution, after distributions to the holders of our preferred stock,
if any. The holders of our common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences
and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of any
series of preferred stock, which may be designated solely by action of the Board of Directors and issued in the future.
Our
common stock is quoted on the OTCQB marketplace under the ticker symbol “MGTI.” We have made an application to The
Nasdaq Stock Market LLC to list our common stock on The Nasdaq Capital Market, although there can be no assurance that our application
will be approved. On March 23, 2018, our stockholders approved the authorization of our Board of Directors to implement a reverse
split of the Company’s Common Stock at a ratio of 1–for–2 at any time before the 2018 annual meeting of stockholders.
The Board of Directors currently intends to implement the reverse stock split only if the Company is required to increase its
stock price to meet the listing standards of The Nasdaq Stock Market, but may determine to implement the reverse stock split for
other reasons.
Outstanding
options and warrants to acquire common stock; restricted stock
In
2016, our Board of Directors adopted, and our stockholders approved, the Company’s 2016 Stock Option Plan. Pursuant to this
plan, the Company may issue to employees and directors of and consultants to the Company and its subsidiaries up to 18,000,000
shares of common stock. There are currently outstanding under the 2016 Stock Option Plan options to acquire 6,000,000 shares of
common stock, at exercise prices of between $0.25 and $1.00 and with a weighted average exercise price of $0.71.
The
Company has also issued from time to time warrants to acquire common stock in private transactions. There are currently outstanding
warrants to acquire 7,460,000 shares of common stock, at exercise prices of between $0.40 and $2.00 and with a weighted average
exercise price of $0.85.
The
Company has from time to time issued restricted shares of common stock to directors, officers and employees of the Company under
the 2016 Stock Option Plan, subject to prescribed vesting schedules. There are currently outstanding 4,116,667 shares of restricted
stock.
Preferred
Stock
The
shares of preferred stock may be divided and issued from time to time in one or more classes and/or series within any class or
classes as may be determined by our Board of Directors, each such class or series to be distinctly designated and to consist of
the number of shares determined by the Board of Directors. The Board of Directors has the authority to adopt resolutions with
respect to any unissued and/or treasury shares of preferred stock to issue the shares, to fix the number of shares constituting
any class or series, and to provide for the voting powers, designations, preferences and relative, participating, optional or
other special rights, qualifications, limitations or restrictions, if any, of preferred stock, and each class or series thereof,
in each case without approval of the stockholders. The authority of the Board of Directors with respect to each class or series
of preferred stock includes, without limiting the generality of the foregoing, the determination of the following:
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number of shares constituting that class or series and the distinctive designation of that class or series;
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The
dividend rate on the shares of that class or series, whether dividends shall be cumulative, and, if so, from which date or
dates;
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Whether
that class or series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of
such voting rights;
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Whether
that class or series shall have conversion privileges (including rights to convert such class or series into the capital stock
of the corporation or any other entity) and, if so, the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
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Whether
or not shares of that class or series shall be redeemable, and if so, the terms and conditions of such redemption (including
any sinking fund provisions), the date or dates upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions;
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The
rights of the shares of that class or series in the event of voluntary or involuntary liquidation, dissolution or winding
up of the corporation; and
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other relative rights, preferences and limitations of that class or series as may be permitted or required by law.
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The
number of shares, voting powers, designations, preferences and relative, participating, optional or other special rights, qualifications,
limitations or restrictions, if any, of any class or series of preferred stock which may be designated by the Board of Directors
may differ from those of any and all other class or series at any time outstanding.
The
Company has authorized for issuance 1,380,362 shares of preferred stock, par value $0.01 per share that are designated as Series
A Preferred Stock. No shares of preferred stock of the Company are currently issued or outstanding.
The
above description of our capital stock is a summary only and is subject to applicable provisions of the Delaware General Corporation
Law, and our restated certificate of incorporation, as amended, and our amended and restated bylaws, each as may be further amended
from time to time. You should refer to, and read this summary together with, our restated certificate of incorporation, as amended,
and our amended and restated bylaws, each as may be further amended from time to time, to review all of the terms of our capital
stock. Our restated certificate of incorporation, as amended, and our amended and restated bylaws are incorporated by reference
as exhibits to the registration statement of which this prospectus is a part and other reports incorporated by reference herein.
Antitakeover
Effects of Provisions of Charter Documents and Delaware Law
Charter
Documents.
Our restated certificate of incorporation, as amended, and our amended and restated bylaws, include a number of
provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management
of our company. First, our bylaws limit who may call special meetings of the stockholders. Our restated certificate does not include
a provision for cumulative voting for directors. Under cumulative voting, a minority stockholder holding a sufficient percentage
of a class of shares may be able to ensure the election of one or more directors. Our bylaws establish procedures, including advance
notice procedures, with regard to the nomination of candidates for election as directors and stockholder proposals. These and
other provisions of our restated certificate and bylaws and Delaware law could discourage potential acquisition proposals and
could delay or prevent a change in control or management of our company.
DGCL
Section 203.
The Company is not subject to Section 203 of the Delaware General Corporation Law,
which imposes certain restrictions on transactions with interested stockholders, as defined.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is VStock Transfer, LLC. The transfer agent’s address is 18 Lafayette
Place, Woodmere, NY 11598. The transfer agent for any series of preferred stock that we may offer under this prospectus will be
named and described in the prospectus supplement for that series.
DESCRIPTION
OF DEBT SECURITIES
We
may issue debt securities from time to time, in one or more series, as either senior or subordinated debt or as senior or subordinated
convertible debt. While the terms we have summarized below will apply generally to any debt securities that we may offer under
this prospectus, we will describe the particular terms of any debt securities that we may offer in more detail in the applicable
prospectus supplement. The terms of any debt securities offered under a prospectus supplement may differ from the terms described
below.
We
will issue the debt securities pursuant to an indenture that we will enter into with the trustee named in any such indenture and
which will be qualified under the Trust Indenture Act of 1939, as amended.
A
form of base indenture has been filed with the registration statement of which this prospectus forms a part. If we offer debt
securities, the applicable supplemental indentures and forms of debt securities containing the actual terms of the debt securities
being offered will be filed as exhibits to the registration statement of which this prospectus is a part or incorporated by reference
from reports we file with the SEC. References to the indenture include the base indenture, and any applicable supplemental indenture
as the context requires.
The
following summary of material provisions of the debt securities is subject to, and qualified in its entirety by reference to,
all of the provisions of the base indenture and the supplemental indenture applicable to a particular series of debt securities.
We urge you to read the applicable prospectus supplements and any related free writing prospectuses related to the debt securities
that we may offer under this prospectus, as well as the complete indenture that contains the terms of the debt securities.
General
The
base indenture will not limit the amount of debt securities that we may issue. We may issue debt securities up to the principal
amount that we may authorize and may be in any currency or currency unit that we may designate.
We
may issue the debt securities as “discount securities,” which means they may be sold at a discount below their stated
principal amount. These debt securities, as well as other debt securities that are not issued at a discount, may be issued with
“original issue discount,” or OID, for U.S. federal income tax purposes because of interest payment and other characteristics
or terms of the debt securities. Material U.S. federal income tax considerations applicable to debt securities issued with OID
will be described in more detail in any applicable prospectus supplement.
We
will describe in the applicable prospectus supplement the terms of the series of debt securities being offered, including:
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any
limit upon the aggregate principal amount that may be issued;
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the
maturity date or dates;
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the
form of the debt securities of the series;
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the
applicability of any guarantees;
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whether
or not the debt securities will be secured or unsecured, and the terms of any secured debt;
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whether
the debt securities rank as senior debt, senior subordinated debt, subordinated debt or any combination thereof, and the terms
of any subordination;
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if
the price (expressed as a percentage of the aggregate principal amount thereof) at which such debt securities will be issued
is a price other than the principal amount thereof, the portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof, or if applicable, the portion of the principal amount of such debt securities that is
convertible into another security or the method by which any such portion shall be determined;
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the
interest rate or rates, which may be fixed or variable, or the method for determining the rate and the date interest will
begin to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method
for determining such dates;
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our
right, if any, to defer payment of interest and the maximum length of any such deferral period;
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if
applicable, the date or dates after which, or the period or periods during which, and the price or prices at which, we may,
at our option, redeem the series of debt securities pursuant to any optional or provisional redemption provisions and the
terms of those redemption provisions;
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the
date or dates, if any, on which, and the price or prices at which we are obligated, pursuant to any mandatory sinking fund
or analogous fund provisions or otherwise, to redeem, or at the holder’s option to purchase, the series of debt securities
and the currency or currency unit in which the debt securities are payable;
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the
denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral
multiple thereof;
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any
and all terms, if applicable, relating to any auction or remarketing of the debt securities of that series and any security
for our obligations with respect to such debt securities and any other terms which may be advisable in connection with the
marketing of debt securities of that series;
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whether
the debt securities of the series shall be issued in whole or in part in the form of a global security or securities; the
terms and conditions, if any, upon which such global security or securities may be exchanged in whole or in part for other
individual securities; and the depositary for such global security or securities;
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if
applicable, the provisions relating to conversion or exchange of any debt securities of the series and the terms and conditions
upon which such debt securities will be so convertible or exchangeable, including the conversion or exchange price, as applicable,
or how it will be calculated and may be adjusted, any mandatory or optional (at our option or the holders’ option) conversion
or exchange features, the applicable conversion or exchange period and the manner of settlement for any conversion or exchange;
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if
other than the full principal amount thereof, the portion of the principal amount of debt securities of the series which shall
be payable upon declaration of acceleration of the maturity thereof;
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additions
to or changes in the covenants applicable to the particular debt securities being issued, including, among others, the consolidation,
merger or sale covenant;
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additions
to or changes in the events of default with respect to the securities and any change in the right of the trustee or the holders
to declare the principal, premium, if any, and interest, if any, with respect to such securities to be due and payable;
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additions
to or changes in or deletions of the provisions relating to covenant defeasance and legal defeasance;
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additions
to or changes in the provisions relating to satisfaction and discharge of the indenture;
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additions
to or changes in the provisions relating to the modification of the indenture both with and without the consent of holders
of debt securities issued under the indenture;
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the
currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S.
dollars;
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whether
interest will be payable in cash or additional debt securities at our or the holders’ option and the terms and conditions
upon which the election may be made;
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the
terms and conditions, if any, upon which we will pay amounts in addition to the stated interest, premium, if any, and principal
amounts of the debt securities of the series to any holder that is not a “United States person” for federal tax
purposes;
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any
restrictions on transfer, sale or assignment of the debt securities of the series; and
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any
other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, any other additions
or changes in the provisions of the indenture, and any terms that may be required by us or advisable under applicable laws
or regulations.
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Conversion
or Exchange Rights
We
will set forth in the applicable prospectus supplement the terms on which a series of debt securities may be convertible into
or exchangeable for our common stock or our other securities. We will include provisions as to settlement upon conversion or exchange
and whether conversion or exchange is mandatory, at the option of the holder or at our option. We may include provisions pursuant
to which the number of shares of our common stock or our other securities that the holders of the series of debt securities receive
would be subject to adjustment.
Consolidation,
Merger or Sale
Unless
we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the indenture will not
contain any covenant that restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of our
assets as an entirety or substantially as an entirety. However, any successor to or acquirer of such assets (other than a subsidiary
of ours) must assume all of our obligations under the indenture or the debt securities, as appropriate.
Covenants
In
addition to any covenant that may be provided in the supplemental indenture, and described in the prospectus supplement, applicable
to a particular series, the following are the covenants under the indenture with respect to any series of debt securities that
we may issue:
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the
Company will cause to be punctually paid principal, premium, if any, and interest on the debt securities;
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the
Company will maintain an office or agency where the debt securities may be presented for payment, the debt securities may
be presented for exchange or transfer, and notices and demands upon the Company may be served;
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if
the Company appoints one or more paying agents, it will cause such paying agents to execute an instrument providing for their
responsibilities; and
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whenever
necessary to avoid or fill a vacancy in the office of the trustee, the Company will take action so that at all times there
will be a trustee under the indenture.
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Events
of Default under the Indenture
Unless
we provide otherwise in the supplemental indenture, and so describe in the prospectus supplement, applicable to a particular series
of debt securities, the following are events of default under the indenture with respect to any series of debt securities that
we may issue:
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if
we fail to pay any installment of interest on any series of debt securities, as and when the same shall become due and payable,
and such default continues for a period of five business days;
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if
we fail to pay the principal of, or premium, if any, on any series of debt securities as and when the same shall become due
and payable, whether at maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking
or analogous fund established with respect to such series;
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if
we fail to observe or perform any other covenant or agreement contained in the debt securities or the indenture, other than
a covenant specifically relating to another series of debt securities, and our failure continues for 90 days after we receive
written notice of such failure, requiring the same to be remedied and stating that such is a notice of default thereunder,
from the trustee or holders of at least 25% in aggregate principal amount of the outstanding debt securities of the applicable
series; and
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if
specified events of bankruptcy, insolvency or reorganization occur.
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If
an event of default with respect to debt securities of any series occurs and is continuing, other than an event of default specified
in the last bullet point above, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series, by notice to us in writing, and to the trustee if notice is given by such holders, may declare the
unpaid principal of, premium, if any, and accrued interest, if any, of such series of debt securities due and payable immediately.
If an event of default specified in the last bullet point above occurs with respect to us, the principal amount of and accrued
interest, if any, of each issue of debt securities then outstanding shall be due and payable without any notice or other action
on the part of the trustee or any holder.
The
holders of a majority in principal amount of the outstanding debt securities of an affected series may waive any default or event
of default with respect to the series and its consequences, except defaults or events of default regarding payment of principal,
premium, if any, or interest, unless we have cured the default or event of default in accordance with the indenture. Any waiver
shall cure the default or event of default.
Subject
to the terms of the indenture, if an event of default under the indenture shall occur and be continuing, the trustee will be under
no obligation to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of
the applicable series of debt securities, unless such holders have offered the trustee reasonable indemnity. The holders of a
majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the
trustee, with respect to the debt securities of that series, provided that:
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the
direction so given by the holder is not in conflict with any law or the applicable indenture; and
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subject
to its duties under the Trust Indenture Act, if applicable, the trustee need not take any action that might involve it in
personal liability or might be unduly prejudicial to the holders not involved in the proceeding.
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A
holder of the debt securities of any series will have the right to institute a proceeding under the indenture or to appoint a
receiver or trustee, or to seek other remedies only if:
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the
holder has given written notice to the trustee of a continuing event of default with respect to that series;
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the
holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written
request;
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such
holders have offered to the trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred
by the trustee in compliance with the request; and
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the
trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount
of the outstanding debt securities of that series other conflicting directions within 90 days after the notice, request and
offer.
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These
limitations do not apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium,
if any, or interest on, the debt securities.
We
will periodically file statements with the trustee regarding our compliance with specified covenants in the indenture.
Modification
of Indenture; Waiver
Unless
we provide otherwise in the supplemental indenture, and so describe in the prospectus supplement, applicable to a particular series
of debt securities, we and the trustee may change the indenture without the consent of any holders with respect to specific matters:
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to
cure any ambiguity, defect or inconsistency in the indenture or in the debt securities of any series;
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to
comply with the provisions described above under “Description of Debt Securities—Consolidation, Merger or Sale”;
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to
provide for uncertificated debt securities in addition to or in place of certificated debt securities;
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to
add to our covenants, restrictions, conditions or provisions such new covenants, restrictions, conditions or provisions for
the benefit of the holders of all or any series of debt securities, to make the occurrence, or the occurrence and the continuance,
of a default in any such additional covenants, restrictions, conditions or provisions an event of default or to surrender
any right or power conferred upon us in the indenture;
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to
make any change that does not adversely affect the interests of any holder of debt securities of any series in any material
respect;
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to
provide for the issuance of and establish the form and terms and conditions of the debt securities of any series as provided
above under “Description of Debt Securities—General,” to establish the form of any certifications required
to be furnished pursuant to the terms of the indenture or any series of debt securities, or to add to the rights of the holders
of any series of debt securities;
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to
evidence and provide for the acceptance of appointment under any indenture by a successor trustee; or
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to
comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act.
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In
addition, under the indenture, the rights of holders of a series of debt securities may be changed by us and the trustee with
the written consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of
each series that is affected. However, unless we provide otherwise in the supplemental indenture, and so describe in the prospectus
supplement, applicable to a particular series of debt securities, we and the trustee may make the following changes only with
the consent of each holder of any outstanding debt securities affected:
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extending
the fixed maturity of any debt securities of any series;
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reducing
the principal amount, reducing the rate of or extending the time of payment of interest, or reducing any premium payable upon
the redemption of any series of any debt securities; or
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reducing
the percentage of debt securities, the holders of which are required to consent to any amendment, supplement, modification
or waiver.
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Discharge
The
indenture provides that we can elect to be discharged from our obligations with respect to one or more series of debt securities,
except for specified obligations, including obligations to:
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provide
for payment;
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register
the transfer or exchange of debt securities of the series;
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replace
stolen, lost or mutilated debt securities of the series;
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pay
principal of and premium and interest on any debt securities of the series;
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maintain
paying agencies;
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hold
monies for payment in trust;
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recover
excess money held by the trustee;
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compensate
and indemnify the trustee; and
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appoint
any successor trustee.
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In
order to exercise our rights to be discharged, we must deposit with the trustee money or government obligations sufficient to
pay all the principal of, any premium, if any, and interest on, the debt securities of the series on the dates payments are due.
Form,
Exchange and Transfer
We
will issue the debt securities of each series only in fully registered form without coupons and, unless we indicate otherwise
in the applicable prospectus supplement, in denominations of $1,000 and any integral multiple thereof. The indenture provides
that we may issue debt securities of a series in temporary or permanent global form and as book-entry securities that will be
deposited with, or on behalf of, The Depository Trust Company (referred to as DTC), or another depositary named by us and identified
in the applicable prospectus supplement with respect to that series. To the extent the debt securities of a series are issued
in global form and as book-entry, a description of terms relating to any book-entry securities will be set forth in the applicable
prospectus supplement.
At
the option of the holder, subject to the terms of the applicable indenture and the limitations applicable to global securities
described in the applicable prospectus supplement, the holder of the debt securities of any series can exchange the debt securities
for other debt securities of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject
to the terms of the applicable supplemental indenture, and the limitations applicable to global securities set forth in the applicable
prospectus supplement, holders of the debt securities may present the debt securities for exchange or for registration of transfer,
duly endorsed or with the form of transfer endorsed thereon duly executed if so required by us or the security registrar, at the
office of the security registrar or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided
in the debt securities that the holder presents for transfer or exchange, we will impose no service charge for any registration
of transfer or exchange, but we may require payment of any taxes or other governmental charges.
We
will name in the applicable prospectus supplement the security registrar, and any transfer agent in addition to the security registrar,
that we initially designate for any debt securities. We may at any time designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required
to maintain a transfer agent in each place of payment for the debt securities of each series.
If
we elect to redeem the debt securities of any series, we will not be required to:
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issue,
register the transfer of, or exchange any debt securities of that series during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption of any debt securities that may be selected for redemption and
ending at the close of business on the day of the mailing; or
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register
the transfer of or exchange of any debt securities so selected for redemption, in whole or in part, except the unredeemed
portion of any debt securities we are redeeming in part.
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Information
Concerning the Trustee
The
trustee, other than during the occurrence and continuance of an event of default under the indenture, will undertake to perform
only those duties as are specifically set forth in the indenture. Upon an event of default under the indenture, the trustee must
use the same degree of care as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the trustee will be under no obligation to exercise any of the powers given it by the indenture at the request of any
holder of debt securities unless it is offered reasonable security and indemnity against the costs, expenses and liabilities that
it might incur.
Payment
and Paying Agents
Unless
we otherwise indicate in the applicable prospectus supplement, we will make payment of the interest on any debt securities on
any interest payment date to the person in whose name the debt securities, or one or more predecessor securities, are registered
at the close of business on the regular record date for the interest.
We
will pay principal of and any premium and interest on the debt securities of a particular series at the office of the paying agents
designated by us, except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments
by check that we will mail to the holder or by wire transfer to certain holders. Unless we otherwise indicate in the applicable
prospectus supplement, we will designate the corporate trust office of the trustee as our sole paying agent for payments with
respect to debt securities of each series. We will name in the applicable prospectus supplement any other paying agents that we
initially designate for the debt securities of a particular series. We will maintain a paying agent in each place of payment for
the debt securities of a particular series.
All
money we pay to a paying agent or the trustee for the payment of the principal of or any premium or interest on any debt securities
that remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid
to us, and the holder of the debt security thereafter may look only to us for payment thereof.
Governing
Law
The
indenture, the applicable indenture supplements, and the debt securities, and any claim, controversy or dispute arising under
or related to the indenture or the debt securities, will be governed by and construed in accordance with the laws of the State
of New York, except to the extent that the Trust Indenture Act is applicable.
DESCRIPTION
OF RIGHTS
The
following description, together with the additional information we may include in any applicable prospectus supplements and free
writing prospectuses, summarizes the material terms and provisions of the rights that we may offer under this prospectus, which
may consist of rights to purchase common stock, preferred stock or debt securities. While the terms we have summarized below will
apply generally to any rights that we may offer under this prospectus, we will describe the particular terms of rights that we
may offer in more detail in the applicable prospectus supplement and any applicable free writing prospectus. The terms of any
rights offered under a prospectus supplement may differ from the terms described below.
If
we offer rights, forms of the applicable rights agreements, any supplemental rights agreements and forms of the applicable rights
certificates containing the terms of the rights being offered will be filed as exhibits to the registration statement of which
this prospectus is a part, or incorporated by reference from reports we file with the SEC. We will indicate the name and address
of the rights agent in the prospectus supplement relating to the particular rights being offered. A form of rights agreement has
been filed as an exhibit to the registration statement of which this prospectus is a part, although any actual rights agreement
may differ from the form.
We
urge you to read the applicable prospectus supplements related to the particular series of rights that we may offer under this
prospectus, as well as any related free writing prospectuses, and the complete rights agreement, any supplemental rights agreement
and rights certificate that contain the terms of the rights.
General
We
will describe in the applicable prospectus supplement the terms relating to rights being offered, including:
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the
holders of the class of Company securities, or other class of persons, to whom the rights will initially be issued;
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the
securities issuable upon exercise of the rights;
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the
terms of the securities issuable upon exercise of the rights;
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in
the case of rights to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one right
and the price at which, and currency in which, this principal amount of debt securities may be purchased upon such exercise;
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in
the case of rights to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as
the case may be, purchasable upon the exercise of one right and the price at which, and the currency in which, these shares
may be purchased upon such exercise;
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the
number of rights issued to each stockholder;
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the
extent to which the rights are transferable;
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any
other terms of the rights, including terms, procedures and limitations relating to the exchange and exercise of the rights;
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the
period during which the rights will be exercisable;
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the
extent to which the rights include an over-subscription privilege with respect to unsubscribed securities;
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the
material terms of any standby underwriting arrangement entered into by us in connection with the rights offering; and
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a
discussion of any material or special U.S. federal income tax consequences of holding or exercising the rights.
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Exercise
of Rights
Each
right will entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise
price that we describe in the applicable prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement,
holders of the rights may exercise the rights at any time up to the specified time on the expiration date that we set forth in
the applicable prospectus supplement. After the close of business on the expiration date, unexercised rights will become void.
Unless
we otherwise specify in the applicable prospectus supplement, holders of the rights may exercise the rights by delivering the
rights certificate representing the rights to be exercised together with specified information, and paying the required amount
to the rights agent in immediately available funds, as provided in the applicable prospectus supplement. We will set forth in
the applicable prospectus supplement the information that the holder of the rights will be required to deliver to the rights agent
in connection with the exercise of the rights.
Following
the end of the rights offering period, and subject to receipt of the required payment and the rights certificate properly completed
and duly executed at the corporate trust office of the rights agent or any other office indicated in the applicable prospectus
supplement, we will issue and deliver the securities purchasable upon such exercise.
Governing
Law
Unless
we provide otherwise in the applicable prospectus supplement, the rights, the rights agreements and any supplemental rights agreements,
and any claim, controversy or dispute arising under or related to the rights or rights agreements, will be governed by and construed
in accordance with the laws of the State of New York.
DESCRIPTION
OF WARRANTS
The
following description, together with the additional information we may include in any applicable prospectus supplements and free
writing prospectuses, summarizes the material terms and provisions of the warrants that we may offer under this prospectus, which
may consist of warrants to purchase common stock, preferred stock or debt securities and may be issued in one or more series.
While the terms we have summarized below will apply generally to any warrants that we may offer under this prospectus, we will
describe the particular terms of any series of warrants that we may offer in more detail in the applicable prospectus supplement
and any applicable free writing prospectus. The terms of any warrants offered under a prospectus supplement may differ from the
terms described below.
If
we offer warrants, forms of the applicable warrant agreements, any supplemental warrant agreements and forms of the applicable
warrant certificates containing the terms of the warrants being offered will be filed as exhibits to the registration statement
of which this prospectus is a part, or incorporated by reference from reports we file with the SEC. We will indicate the name
and address of the warrant agent, if applicable, in the prospectus supplement relating to the particular series of warrants being
offered. A form of warrant agreement has been filed as an exhibit to the registration statement of which this prospectus is a
part, although any actual agreement may differ from the form.
The
following summaries of material provisions of the warrants and the warrant agreements are subject to, and qualified in their entirety
by reference to, all the provisions of the warrant agreement, any supplemental warrant agreement and warrant certificate applicable
to the particular series of warrants that we may offer under this prospectus. We urge you to read the applicable prospectus supplements
related to the particular series of warrants that we may offer under this prospectus, as well as any related free writing prospectuses,
and the complete warrant agreement, any supplemental warrant agreement and warrant certificate that contain the terms of the warrants.
General
We
will describe in the applicable prospectus supplement the terms relating to a series of warrants being offered, including:
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the
securities issuable upon exercise of the warrants;
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the
terms of the securities issuable upon exercise of the warrants;
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the
offering price or prices and aggregate number of warrants offered;
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the
currency or currencies for which the warrants may be purchased;
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if
applicable, the minimum or maximum amount of such warrants which may be exercised at any one time;
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in
the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one
warrant and the price at which, and currency in which, this principal amount of debt securities may be purchased upon such
exercise;
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in
the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock,
as the case may be, purchasable upon the exercise of one warrant and the price at which, and the currency in which, these
shares may be purchased upon such exercise;
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the
effect of any merger, consolidation, sale or other disposition of our business on the warrant agreements and the warrants;
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the
terms of any rights to redeem or call the warrants;
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the
terms of any rights to force the exercise of the warrants;
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any
provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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the
dates on which the right to exercise the warrants will commence and expire;
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the
manner in which the warrant agreements and warrants may be modified;
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a
discussion of any material or special U.S. federal income tax consequences of holding or exercising the warrants; and
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any
other specific terms, preferences, rights or limitations of or restrictions on the warrants.
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Before
exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such
exercise, including:
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in
the case of warrants to purchase debt securities, the right to receive payments of principal of, or premium, if any, or interest
on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture; or
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in
the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or, payments upon
our liquidation, dissolution or winding up or to exercise voting rights, if any.
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Exercise
of Warrants
Each
warrant will entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise
price that we describe in the applicable prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement,
holders of the warrants may exercise the warrants at any time up to the specified time on the expiration date that we set forth
in the applicable prospectus supplement. After the close of business on the expiration date, unexercised warrants will become
void.
Unless
we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants by delivering
the warrant certificate representing the warrants to be exercised together with specified information, and paying the required
amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement. We will set forth
on the reverse side of the warrant certificate and in the applicable prospectus supplement the information that the holder of
the warrant will be required to deliver to the warrant agent in connection with the exercise of the warrant.
Upon
receipt of the required payment and the warrant certificate properly completed and duly executed at the corporate trust office
of the warrant agent or any other office indicated in the applicable prospectus supplement, we will issue and deliver the securities
purchasable upon such exercise. If fewer than all of the warrants represented by the warrant certificate are exercised, then we
will issue a new warrant certificate for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement,
holders of the warrants may surrender securities as all or part of the exercise price for warrants.
Governing
Law
Unless
we provide otherwise in the applicable prospectus supplement, the warrants, the warrant agreements and any supplemental warrant
agreements, and any claim, controversy or dispute arising under or related to the warrants or warrant agreements, will be governed
by and construed in accordance with the laws of the State of New York.
Enforceability
of Rights by Holders of Warrants
Each
warrant agent will act solely as our agent under the applicable warrant agreement and will not assume any obligation or relationship
of agency or trust with any holder of any warrant. A single bank or trust company may act as warrant agent for more than one issue
of warrants. A warrant agent will have no duty or responsibility in case of any default by us under the applicable warrant agreement
or warrant, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us.
Any holder of a warrant may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate
legal action its right to exercise, and receive the securities purchasable upon exercise of, its warrants.
DESCRIPTION
OF UNITS
The
following description, together with the additional information we may include in any applicable prospectus supplements and free
writing prospectuses, summarizes the material terms and provisions of the units that we may offer under this prospectus, which
may consist of units to purchase common stock, preferred stock, debt securities or warrants, or any combination of these securities,
and may be issued in one or more series. While the terms we have summarized below will apply generally to any units that we may
offer under this prospectus, we will describe the particular terms of any series of units that we may offer in more detail in
the applicable prospectus supplement and any applicable free writing prospectus. The terms of any units offered under a prospectus
supplement may differ from the terms described below.
If
we offer units, forms of the applicable unit agreements, any supplemental unit agreements and forms of the applicable unit certificates
containing the terms of the units being offered will be filed, or incorporated by reference from reports we file with the SEC,
as exhibits to the registration statement of which this prospectus is a part. We will indicate the name and address of the unit
agent, if applicable, in the prospectus supplement relating to the particular series of units being offered. A form of unit agreement
has been filed as an exhibit to the registration statement of which this prospectus is a part, although any actual unit agreement
may differ from the form.
We
urge you to read the applicable prospectus supplements related to the particular series of units that we may offer under this
prospectus, as well as any related free writing prospectuses, and the complete unit agreement, any supplemental unit agreement
and unit certificate that contain the terms of the units.
We
will describe in the applicable prospectus supplement the terms relating to a series of units being offered, including:
General
We
will describe in the applicable prospectus supplement the terms relating to a series of units being offered, including:
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the
title of the series of units;
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identification
and description of the separate constituent securities comprising the units;
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the
price or prices at which the units will be issued;
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the
date or dates, if any, on and after which the constituent securities comprising the units will be separately transferable;
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a
discussion of certain United States federal income tax considerations applicable to the units; and
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any
other terms of the units and their constituent securities.
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Governing
Law
Unless
we provide otherwise in the applicable prospectus supplement, the units, the unit agreements, any supplemental unit agreements
and any claim, controversy or dispute arising under or related to the units or unit agreements, will be governed by and construed
in accordance with the laws of the State of New York.
LEGAL
OWNERSHIP OF SECURITIES
We
can issue securities in registered form or in the form of one or more global securities. We describe global securities in greater
detail below. We refer to those persons who have securities registered in their own names on the books that we or any applicable
registrar, trustee or depositary maintain for this purpose as the “holders” of those securities. These persons are
the legal holders of the securities. We refer to those persons who, indirectly through others, own beneficial interests in securities
that are not registered in their own names, as “indirect holders” of those securities. As we discuss below, indirect
holders are not legal holders, and investors in securities issued in book-entry form or in street name will be indirect holders.
Book-Entry
Holders
We
may issue securities in book-entry form only, as we will specify in the applicable prospectus supplement. This means securities
may be represented by one or more global securities registered in the name of a financial institution that holds them as depositary
on behalf of other financial institutions that participate in the depositary’s book-entry system. These participating institutions,
which are referred to as participants, in turn, hold beneficial interests in the securities on behalf of themselves or their customers.
Only
the person in whose name a security is registered is recognized as the holder of that security. Global securities will be registered
in the name of the depositary or its participants. Consequently, for global securities, we will recognize only the depositary
as the holder of the securities, and we will make all payments on the securities to the depositary. The depositary passes along
the payments it receives to its participants, which in turn pass the payments along to their customers who are the beneficial
owners. The depositary and its participants do so under agreements they have made with one another or with their customers;
they are not obligated to do so under the terms of the securities.
As
a result, investors in a global security will not own securities directly. Instead, they will own beneficial interests in a global
security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system
or holds an interest through a participant. As long as the securities are issued in global form, investors will be indirect holders,
and not legal holders, of the securities.
Street
Name Holders
We
may terminate a global security or issue securities that are not issued in global form. In these cases, investors may choose to
hold their securities in their own names or in “street name.” Securities held by an investor in street name would
be registered in the name of a bank, broker or other financial institution that the investor chooses, and the investor would hold
only a beneficial interest in those securities through an account he or she maintains at that institution.
For
securities held in street name, we or any applicable registrar, trustee or depositary will recognize only the intermediary banks,
brokers and other financial institutions in whose names the securities are registered as the holders of those securities, and
we or any such registrar, trustee or depositary will make all payments on those securities to them. These institutions pass along
the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer
agreements or because they are legally required to do so. Investors who hold securities in street name will be indirect holders,
not holders, of those securities.
Legal
Holders
Our
obligations, as well as the obligations of any applicable registrar, trustee or third party employed by us, run only to the legal
holders of the securities. We do not have obligations to investors who hold beneficial interests in global securities, in street
name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a security
or has no choice because we are issuing the securities only in global form.
For
example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even
if that holder is required, under agreements with its participants or customers or by law, to pass it along to the indirect holders
but does not do so. Similarly, we may want to obtain the approval of the holders to amend the indenture, to relieve us of the
consequences of a default or of our obligation to comply with a particular provision of the indenture, or for other purposes.
In such an event, we would seek approval only from the holders, and not the indirect holders, of the securities. Whether and how
the legal holders contact the indirect holders is up to the legal holders.
Special
Considerations for Indirect Holders
If
you hold securities through a bank, broker or other financial institution, either in book-entry form because the securities are
represented by one or more global securities or in street name, you should check with your own institution to find out:
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it handles securities payments and notices;
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whether
it imposes fees or charges;
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how
it would handle a request for the holders’ consent, if ever required;
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whether
and how you can instruct it to send you securities registered in your own name so you can be a holder, if that is permitted
in the future;
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how
it would exercise rights under the securities if there were a default or other event triggering the need for holders to act
to protect their interests; and
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if
the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.
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Global
Securities
A
global security is a security that represents one or any other number of individual securities held by a depositary. Generally,
all securities represented by the same global securities will have the same terms.
Each
security issued in book-entry form will be represented by a global security that we issue to, deposit with and register in the
name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called
the depositary. Unless we specify otherwise in the applicable prospectus supplement, DTC will be the depositary for all securities
issued in book-entry form.
A
global security may not be transferred to or registered in the name of anyone other than the depositary, its nominee or a successor
depositary, unless special termination situations arise. We describe those situations below under “—Special Situations
When a Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the
sole registered owner and legal holder of all securities represented by a global security, and investors will be permitted to
own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank
or other financial institution that in turn has an account with the depositary or with another institution that does. Thus, an
investor whose security is represented by a global security will not be a legal holder of the security, but only an indirect holder
of a beneficial interest in the global security.
If
the prospectus supplement for a particular security indicates that the security will be issued as a global security, and unless
the prospectus supplement otherwise provides, then the security will be represented by a global security at all times unless and
until the global security is terminated. If termination occurs, we may issue the securities through another book-entry clearing
system or decide that the securities may no longer be held through any book-entry clearing system.
Special
Considerations for Global Securities
As
an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s
financial institution and of the depositary, as well as general laws relating to securities transfers. We will not recognize an
indirect holder as a holder of securities and instead will deal only with the depositary that holds the global security.
If
securities are issued only as global securities, an investor should be aware of the following:
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unless
otherwise provided in the applicable prospectus supplement, an investor may not cause the securities to be registered in his
or her name, and will not be able to obtain non-global certificates for his or her interest in the securities, except in the
special situations we describe below;
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an
investor will be an indirect holder and must look to his or her own bank, broker or other financial institution for payments
on the securities and protection of his or her legal rights relating to the securities, as we describe above;
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a
beneficial holder of rights or warrants will be required to observe the practice and procedures of the depositary and its
bank, broker or other financial institution that is a direct or indirect participant in the depositary in order to exercise
the rights or warrants;
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an
investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are
required by law to own their securities in non-book-entry form;
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an
investor may not be able to pledge his or her interest in the global security in circumstances where certificates representing
the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective;
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the
depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters
relating to an investor’s interest in the global security;
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we
and any applicable registrar or trustee will have no responsibility for any aspect of the depositary’s actions or for
its records of ownership interests in the global security, nor will we or any applicable trustee supervise the depositary
in any way;
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the
depositary may, and we understand that DTC will, require that those who purchase and sell interests in the global security
within its book-entry system use immediately available funds, and your broker or bank may require you to do so as well;
and
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financial
institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest
in the global security, may also have their own policies affecting payments, notices and other matters relating to the securities.
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There
may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible
for the actions of any of those intermediaries.
Special
Situations When a Global Security Will Be Terminated
In
a few special situations described below, a global security will terminate and interests in it will be exchanged for physical
certificates representing those interests or will be held in direct registration on the books and records of the Company or its
agent. After that exchange, the choice of whether to hold securities directly or in street name will be up to the investor. Investors
must consult their own bank, broker or other financial institution to find out how to have their interests in securities transferred
to their own names, so that they will be direct holders. We have described the rights of holders and street name investors above.
A
global security will terminate when the following special situations occur:
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if
the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary within 90 days; or
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if
we notify any applicable trustee that we wish to terminate that global security.
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The
applicable prospectus supplement may also list additional situations for terminating a global security that would apply only to
the particular series of securities covered by the prospectus supplement. When a global security terminates, the depositary, and
neither we nor any applicable trustee, is responsible for deciding the names of the institutions that will be the initial direct
holders.
PLAN
OF DISTRIBUTION
We
may sell or distribute the securities included in this prospectus through underwriters, through agents, to dealers, in private
transactions, at market prices prevailing at the time of sale, at prices related to the prevailing market prices, or at negotiated
prices.
In
addition, we may sell some or all of our securities included in this prospectus, through:
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a
block trade in which a broker-dealer may resell a portion of the block, as principal, in order to facilitate the transaction;
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purchases
by a broker-dealer, as principal, and resale by the broker-dealer for its account; or
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ordinary
brokerage transactions and transactions in which a broker solicits purchasers.
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We
may enter into option or other types of transactions that require us or our counter-parties or agents to deliver our securities
to a broker-dealer, who will then resell or transfer the securities under this prospectus. We may also enter into hedging transactions
with respect to our securities. For example, we may:
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enter
into transactions involving short sales of our shares of common stock by broker-dealers;
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sell
shares of common stock short themselves and deliver the shares to close out short positions;
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enter
into option or other types of transactions that require us to deliver shares of common stock to a broker-dealer, who will
then resell or transfer the shares of common stock under this prospectus; or
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loan
or pledge the shares of common stock to a broker-dealer, who may sell the loaned shares or, in the event of default, sell
the pledged shares.
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We
may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties
in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives,
the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged by us or borrowed from us to settle those sales or to close
out any related open borrowings of securities, and may use securities received from us in settlement of those derivatives to close
out any related open borrowings of securities. The third party in such sale transactions will be an underwriter and will be identified
in the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities
to a financial institution or other third party that in turn may sell the securities short using this prospectus. Such financial
institution or other third party may transfer its economic short position to investors in our securities or in connection with
a concurrent offering of other securities.
Any
broker-dealers or other persons acting on our behalf that participate with us in the distribution of the securities, may be deemed
to be underwriters, and any commissions received or profit realized by them on the resale of the securities, may be deemed to
be underwriting discounts and commissions under the Securities Act.
At
the time that any particular offering of securities is made, to the extent required by the Securities Act, a prospectus supplement
will be distributed, setting forth the terms of the offering, including the aggregate number of securities being offered, the
purchase price of the securities, the initial offering price of the securities, the names of any underwriters, dealers or agents,
any discounts, commissions and other items constituting compensation from us, and any discounts, commissions or concessions allowed
or reallowed or paid to dealers. Furthermore, we, our executive officers, our directors and major shareholders may agree, subject
to certain exemptions, that for a certain period from the date of the prospectus supplement under which the securities are offered,
we and they will not, without the prior written consent of an underwriter, offer, sell, contract to sell, pledge or otherwise
dispose of any of shares of our common stock or any securities convertible into or exchangeable for shares of our common stock.
However, an underwriter, in its sole discretion, may release any of the securities subject to these lock-up agreements at any
time without notice.
Underwriters
or agents could make sales in privately negotiated transactions and/or any other method permitted by law, including sales of common
stock deemed to be an at-the-market offering as defined in Rule 415 promulgated under the Securities Act, which includes sales
made directly on or through the OTCQB marketplace, the existing trading market for our shares of common stock, or sales made to
or through a market maker other than on an exchange, provided, however, that until our common stock is listed on a national securities
exchange, we will only sell shares in privately negotiated transactions that are eligible for exemption under applicable state
securities laws or are registered under such laws.
We
will bear costs relating to all of the securities offered and sold by us under this registration statement.
LEGAL
MATTERS
Unless
otherwise indicated in the applicable prospectus supplement, certain legal matters in connection with the offering and the validity
of the securities offered by this prospectus, and any supplement thereto, will be passed upon by Kramer Levin Naftalis & Frankel
LLP, New York, New York.
EXPERTS
RBSM
LLP, independent registered public accounting firm, has audited our consolidated financial statements included in our Annual Report
on Form 10-K for the year ended December 31, 2017, as set forth in their report (which contains an explanatory paragraph describing
conditions that raise substantial doubt about the Company’s ability to continue as a going concern as described in Note
2 to the consolidated financial statements), which is incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements are incorporated by reference in reliance on RBSM LLP’s report, given on their authority
as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus is part of a registration statement we filed with the SEC. This prospectus does not contain all of the information
set forth in the registration statement and the exhibits to the registration statement. For further information with respect to
us and the securities we are offering under this prospectus, we refer you to the registration statement and the exhibits and schedules
filed as a part of the registration statement. You should rely only on the information contained in this prospectus or incorporated
by reference in this prospectus. We have not authorized anyone else to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front page of this prospectus, regardless of the time of delivery
of this prospectus or any sale of the securities offered by this prospectus.
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy the registration
statement, as well as any other document filed by us with the SEC, at the SEC’s Public Reference Room at 100 F Street NE,
Washington, D.C. 20549. You can also request copies of these documents by writing to the SEC and paying a fee for the copying
cost. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. The SEC maintains
a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC,
including us. The address of the SEC website is
www.sec.gov.
We
maintain a website at
www.mgtci.com
. Information contained in or accessible through our website does not constitute a part
of this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with the SEC. The SEC file number for the documents incorporated
by reference in this prospectus is 001-32698. The documents incorporated by reference into this prospectus contain important information
that you should read about us.
The
following documents are incorporated by reference into this document:
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our
Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on April 2, 2018;
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our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 10, 2018;
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our
Current Reports on Form 8-K filed with the SEC on February 9, 2018, February 28, 2018, March 9, 2018, March 19, 2018, March
23, 2018 (as amended by Amendment No. 1, filed on April 2, 2018), April 3, 2018, April 12, 2018, May 25, 2018, May 31, 2018,
June 7, 2018 and July 17, 2018, to the extent the information in such reports is filed and not furnished; and
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the
description of our common stock contained on Amendment No. 2 to the Company’s Registration Statement on Form S-1 filed
on January 13, 2016.
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We
also incorporate by reference into this prospectus all documents (other than current reports furnished under Item 2.02 or Item
7.01 of Form 8-K and exhibits filed on such form that are related to such items) that are filed by us with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date of the initial filing of the registration statement
of which this prospectus forms a part and prior to effectiveness of the registration statement, or (ii) after the date of this
prospectus but prior to the termination of the offering. These documents include periodic reports, such as Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Documents
incorporated by reference are available from us, without charge. You may obtain documents incorporated by reference in this prospectus
by requesting them in writing or by telephone at the following address and telephone number, as applicable:
MGT
Capital Investments, Inc.
512
S. Mangum Street, Suite 408
Durham,
NC 27701
(914)
630-7430
You
also may access these filings on our Internet site at
www.mgtci.com
. Our web site and the information contained on that
site, or connected to that site, are not incorporated into this prospectus or the registration statement of which this prospectus
is a part.
Any
statement contained in this prospectus or contained in a document incorporated or deemed to be incorporated by reference into
this prospectus will be deemed to be modified or superseded to the extent that a statement contained in this prospectus or any
subsequently filed supplement to this prospectus, or document deemed to be incorporated by reference into this prospectus, modifies
or supersedes such statement.
Up
to $35,000,000 of Common Stock
PROSPECTUS
SUPPLEMENT
August
30, 2018
MGT Capital Investments (PK) (USOTC:MGTI)
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