HARRISON, N.Y., Nov. 17, 2014 /PRNewswire/ -- MGT Capital
Investments, Inc. (NYSE MKT: MGT) today reported financial results
and operational developments for the fiscal third quarter ended
September 30, 2014. Developments
during the quarter and recent weeks subsequent to quarter end are
as follows:
- Third quarter and nine month revenue, gross margin and other
financial metrics showed strong growth from comparable year ago
figures.
- Announced settlement agreement with Iroquois Master Fund.
- Scheduled Annual Meeting of Stockholders for December 18, 2014.
- Showcased its daily fantasy sports platform at G2E 2014 in
Las Vegas with the SHIFT
Interactive multi-touch video gaming table.
- Announced the first social daily fantasy sports platform on
Facebook with beta launch of Daily Fantasy Legend. Working with
Facebook marketers to maximize impact of commercial launch.
Financial Results
For the third quarter ended September 30,
2014, total revenue was $297,000, as compared to $40,000 for the same period last year. Gross
margin totaled $129,000 (43% of
revenue), up substantially from a loss of ($78,000) in the third quarter of 2013. Operating
expenses decreased by approximately 42% to $1.6 million from $2.8
million for the same period in 2013. The decrease is
primarily due to lower stock–based compensation expense,
professional fees and corporate governance related costs. Operating
loss was $1.5 million during the
third quarter, favorably comparing to a loss of $2.9 million in the same period of 2013.
For the nine months ended September 30,
2014, total revenue was $702,000, as compared with $193,000 for the same period in 2013. Gross
margin totaled $318,000 up from a
loss of ($8,000) in the corresponding
period in 2013. The operating loss for the first nine months of
2014 was reduced to $4.3 million as
compared with $7.1 million for the
same period last year.
Cash and cash equivalents as of September
30, 2014 were $2.2 million.
During the quarter, net cash used in operating activities was
$1.2 million, as compared to
$2.0 million in the comparable period
of 2013. The company expects cash utilization to be materially
lower for the remainder of 2014 and for 2015, due to the growing
positive contribution from gross margin of MGT Sports along with
recent cost reductions.
Management Commentary and Outlook
Robert Ladd, MGT's Chief
Executive Officer made the following comments: "The third quarter
demonstrated continued development and growth of our daily fantasy
sports platform. As we execute, we remain confident that our
shareholders will benefit greatly from the rapid expansion of this
industry. Recently, the top two sites were accorded extremely
high valuation metrics by prominent venture capitalists, and the
professional sports leagues have fully embraced the space.
The player liquidity and technology platform of DraftDay are
valuable assets that are very costly, time consuming and difficult
to replicate. We continue to be active in white label and
other partnership discussions in order to drive revenue growth.
Based on the Company's internal forecast, we expect to exit 2014
with an annualized revenue run–rate of over $2.0 million. This forecast is predicated on
contributions of several white label deals in process, and the
current strong momentum of DraftDay.
About MGT Capital Investments, Inc.
MGT Capital and its subsidiaries operate social and real money
gaming sites online and in the mobile space, including ownership of
the 3rd largest daily fantasy sports wagering
platform, DraftDay.com. MGT Sports also provides branded
white label solutions that share player liquidity and the company's
technology platform. In addition, MGT offers daily fantasy sports
contests on Facebook through Daily Fantasy Legend, games of skill
through MGTplay.com, and has created an online portal for fantasy
sports news and commentary, FantasySportsLive.com. Lastly, the
Company owns intellectual property relating to slot machines and
has asserted its claims via a patent infringement lawsuit.
Forward–looking Statements
This press release contains forward–looking statements. The
words or phrases "would be," "will allow," "intends to," "will
likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project," or similar expressions are
intended to identify "forward–looking statements." MGT's financial
and operational results reflected above should not be construed by
any means as representative of the current or future value of its
common stock. All information set forth in this news release,
except historical and factual information, represents
forward–looking statements. This includes all statements about the
Company's plans, beliefs, estimates and expectations. These
statements are based on current estimates and projections, which
involve certain risks and uncertainties that could cause actual
results to differ materially from those in the forward–looking
statements. These risks and uncertainties include issues related
to: rapidly changing technology and evolving standards in the
industries in which the Company and its subsidiaries operate; the
ability to obtain sufficient funding to continue operations,
maintain adequate cash flow, profitably exploit new business,
license and sign new agreements; the unpredictable nature of
consumer preferences; and other factors set forth in the Company's
most recently filed annual report and registration statement.
Readers are cautioned not to place undue reliance on these
forward–looking statements, which reflect management's analysis
only as of the date hereof. The Company undertakes no obligation to
publicly revise these forward–looking statements to reflect events
or circumstances that arise after the date hereof. Readers should
carefully review the risks and uncertainties described in other
documents that the Company files from time to time with the U.S.
Securities and Exchange Commission.
|
MGT CAPITAL
INVESTMENTS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In thousands,
except share and per–share amounts)
|
|
|
September
30,
|
|
December
31,
|
|
2014
|
|
2013
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,205
|
|
$
|
4,642
|
|
Accounts
receivable
|
|
10
|
|
|
43
|
|
Prepaid expenses and
other current assets
|
|
172
|
|
|
132
|
|
Total current
assets
|
|
2,387
|
|
|
4,817
|
|
|
|
|
|
|
|
Non–current
assets
|
|
|
|
|
|
|
Restricted
cash
|
|
138
|
|
|
140
|
|
Property and
equipment, at cost, net
|
|
48
|
|
|
45
|
|
Intangible assets,
net
|
|
2,736
|
|
|
2,423
|
|
Goodwill
|
|
6,444
|
|
|
6,444
|
|
Other non–current
assets
|
|
4
|
|
|
4
|
|
Total
assets
|
$
|
11,757
|
|
$
|
13,873
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
$
|
209
|
|
$
|
228
|
|
Accrued
expenses
|
|
133
|
|
|
94
|
|
Player deposit
liability
|
|
896
|
|
|
647
|
|
Other
payables
|
|
2
|
|
|
16
|
|
Total current
liabilities
|
|
1,240
|
|
|
985
|
|
|
|
|
|
|
|
Total
liabilities
|
|
1,240
|
|
|
985
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
Redeemable
convertible preferred stock – Temporary equity
|
|
|
|
|
|
|
Preferred stock,
series A convertible preferred, $0.001 par value; 1,416,160 and
1,416,160 shares authorized at September 30, 2014 and December 31,
2013, respectively; 9,845 and 9,413 shares issued and outstanding
at September 30, 2014 and December 31, 2013,
respectively
|
|
–
|
|
|
–
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Undesignated
preferred stock, $0.001 par value; 8,583,840 and 8,583,840 shares
authorized at September 30, 2014 and December 31, 2013,
respectively. No shares authorized, issued and outstanding at
September 30, 2014 and December 31, 2013 respectively
|
|
–
|
|
|
–
|
|
Common Stock,
$0.001 par value; 75,000,000 shares authorized; 10,421,523 and
8,848,686 shares issued and outstanding at September 30, 2014 and
December 31, 2013, respectively
|
|
11
|
|
|
9
|
|
Additional paid–in
capital
|
|
307,931
|
|
|
304,886
|
|
Accumulated other
comprehensive loss
|
|
(281)
|
|
|
(281)
|
|
Accumulated
deficit
|
|
(297,727)
|
|
|
(293,833)
|
|
Total stockholders'
equity
|
|
9,934
|
|
|
10,781
|
|
Non–controlling
interests
|
|
583
|
|
|
2,107
|
|
Total
equity
|
|
10,517
|
|
|
12,888
|
|
|
|
|
|
|
|
Total stockholders'
equity, liabilities and non–controlling interest
|
$
|
11,757
|
|
$
|
13,873
|
|
MGT CAPITAL
INVESTMENTS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands,
except share and per–share amounts)
|
|
(Unaudited)
|
|
|
Three months ended
September 30
|
|
2014
|
|
2013
|
|
Revenues
|
|
|
|
|
|
|
Software and
devices
|
$
|
–
|
|
$
|
4
|
|
Gaming
|
|
296
|
|
|
36
|
|
Other
|
|
1
|
|
|
–
|
|
|
297
|
|
|
40
|
|
Cost of
revenues
|
|
|
|
|
|
|
Gaming
|
|
168
|
|
|
118
|
|
|
168
|
|
|
118
|
|
|
|
|
|
|
|
Gross
margin
|
|
129
|
|
|
(78)
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
General and
administrative
|
|
1,411
|
|
|
2,798
|
|
Sales and
marketing
|
|
121
|
|
|
26
|
|
Research and
development
|
|
40
|
|
|
–
|
|
|
1,572
|
|
|
2,824
|
|
|
|
|
|
|
|
Operating
loss
|
|
(1,443)
|
|
|
(2,902)
|
|
|
|
|
|
|
|
Other
non–operating income
|
|
|
|
|
|
|
Interest and other
income
|
|
2
|
|
|
16
|
|
|
2
|
|
|
16
|
|
|
|
|
|
|
|
Net loss before
income taxes and non–controlling interest
|
|
(1,441)
|
|
|
(2,886)
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(10)
|
|
|
–
|
|
|
|
|
|
|
|
Net loss before
non–controlling interest
|
|
(1,451)
|
|
|
(2,886)
|
|
|
|
|
|
|
|
Net loss attributable
to non–controlling interest
|
|
71
|
|
|
232
|
|
|
|
|
|
|
|
Net loss
attributable to MGT Capital Investments, Inc.
|
$
|
(1,380)
|
|
$
|
(2,654)
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Quarterly dividend on
Preferred Series A Stock
|
|
–
|
|
|
(1)
|
|
Net loss applicable to
Common shareholders
|
$
|
(1,380)
|
|
$
|
(2,655)
|
|
|
|
|
|
|
|
Per–share
data:
|
|
|
|
|
|
|
Basic and diluted
loss per share
|
$
|
(0.14)
|
|
$
|
(0.41)
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
9,685,023
|
|
|
6,444,850
|
|
MGT CAPITAL
INVESTMENTS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands,
except share and per–share amounts)
|
|
(Unaudited)
|
|
|
Nine months ended
September 30,
|
|
2014
|
|
2013
|
|
Revenues
|
|
|
|
|
|
|
Software and
devices
|
$
|
80
|
|
$
|
42
|
|
Services –
Consulting
|
|
–
|
|
|
97
|
|
Gaming
|
|
614
|
|
|
54
|
|
Other
|
|
8
|
|
|
–
|
|
|
702
|
|
|
193
|
|
Cost of
revenues
|
|
|
|
|
|
|
Services –
Consulting
|
|
–
|
|
|
63
|
|
Gaming
|
|
384
|
|
|
138
|
|
|
384
|
|
|
201
|
|
|
|
|
|
|
|
Gross
margin
|
|
318
|
|
|
(8)
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
General and
administrative
|
|
4,211
|
|
|
7,037
|
|
Sales and
marketing
|
|
229
|
|
|
92
|
|
Research and
development
|
|
153
|
|
|
–
|
|
|
4,593
|
|
|
7,129
|
|
|
|
|
|
|
|
Operating
loss
|
|
(4,275)
|
|
|
(7,137)
|
|
|
|
|
|
|
|
Other
non–operating income / (expense)
|
|
|
|
|
|
|
Interest and other
income
|
|
7
|
|
|
43
|
|
Gain on sale of
medical imagine patents
|
|
–
|
|
|
750
|
|
Change in fair value
of warrants
|
|
–
|
|
|
(2,204)
|
|
|
7
|
|
|
(1,411)
|
|
|
|
|
|
|
|
Net loss before
income taxes and non–controlling interest
|
|
(4,268)
|
|
|
(8,548)
|
|
|
|
|
|
|
|
Income tax benefit /
(expense)
|
|
1
|
|
|
(3)
|
|
|
|
|
|
|
|
Net loss before
non–controlling interest
|
|
(4,267)
|
|
|
(8,551)
|
|
|
|
|
|
|
|
Net loss attributable
to non–controlling interest
|
|
373
|
|
|
379
|
|
|
|
|
|
|
|
Net loss
attributable to MGT
|
$
|
(3,894)
|
|
$
|
(8,172)
|
|
|
|
|
|
|
|
Less
|
|
|
|
|
|
|
Quarterly dividend on
Series A Preferred Stock
|
|
–
|
|
|
(69)
|
|
Net loss applicable to
Common shareholders
|
$
|
(3,894)
|
|
$
|
(8,241)
|
|
|
|
|
|
|
|
Per–share
data
|
|
|
|
|
|
|
Basic and diluted
loss per share
|
$
|
(0.42)
|
|
$
|
(1.66)
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
9,175,695
|
|
|
4,972,829
|
Logo -
http://photos.prnewswire.com/prnh/20130409/NY91046LOGO
SOURCE MGT Capital Investments, Inc.