MGTI MGT Capital Investments Inc (PK)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (date of earliest event reported): February 26, 2015

 

 

MGT CAPITAL INVESTMENTS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware	0-26886	13-4148725
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

500 Mamaroneck Avenue, Suite 204, Harrison, NY 10528

(Address of principal executive offices)

 

(914) 630-7431

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 1.01

Entry into a Material Definitive Agreement.

 

On February 26, 2015, MGT Capital Investments, Inc. (the “Company”) purchased a promissory note (the “Note”) in the principal amount of $250,000 bearing interest at the rate of five percent (5%) per annum from Tera Group, Inc. (“Tera”), owner of TeraExchange, LLC, a Swap Execution Facility regulated by the U.S. Commodity Futures Trading Commission. The aggregate unpaid principal balance and all accrued and unpaid interest are due and payable upon demand at any time after August 15, 2015.

 

Item 8.01

Other Events.

 

On February 27, 2015, the Company issued a press release (the “Release”) announcing that the Company entered into a non-binding Letter of Intent (“LOI”) with Tera Group, Inc. A copy of the Release is attached hereto and incorporated herein by reference in its entirety as Exhibit 99.01.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

10.01

5% Promissory Note dated February 26, 2015 issued by Tera Group, Inc.

 

99.01

Press Release, dated February 27, 2015 issued by MGT Capital Investments, Inc.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	MGT CAPITAL INVESTMENTS, INC.
Dated: February 27, 2015	BY:	/s/ ROBERT B. LADD
		Robert B. Ladd President and Chief Executive Officer

 

 

Exhibit 10.01

 

PROMISSORY NOTE

 

$250,000 February 26, 2015

 

FOR VALUE RECEIVED, and subject to the terms and conditions set forth herein, TERA GROUP, INC., a Delaware corporation (the “Maker”), hereby unconditionally promises to pay to the order of MGT CAPITAL INVESTMENTS, INC., a Delaware corporation or its assigns (the “Noteholder,” and together with the Maker, the “Parties”), the principal amount of $250,000 (the “Loan”), together with all accrued interest thereon, as provided in this Promissory Note (the “Note”, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms set forth herein).

 

1.      Delivery; Payment Date; Optional Prepayments; Merger and Letter of Intent.

 

1.1       Delivery. On the date of the issuance of this Note, the Noteholder shall deliver to the Maker $100,000 (the “Initial Payment”). Then on March 3, 2015, the Noteholder shall deliver to the Maker the remainder of the Loan, the amount of $150,000 (the “Remainder Payment”).

 

1.2       Payment Date. The aggregate unpaid principal balance of the Loan, all accrued and unpaid interest and all other amounts payable under this Note shall be due and payable upon demand at any time after August 15, 2015 (the “Demand Payment”).

 

1.3       Optional Prepayment. The Maker may prepay the Loan in whole or in part at any time or from time to time without penalty or premium by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. No prepaid amount may be re-borrowed.

 

1.4       No Effect on Merger. The outstanding balance will have no effect on the merger consideration as set forth in the Letter of Intent dated February 26, 2015 by and between the Parties.

 

2.      Interest.

 

2.1       Interest Rate. The outstanding principal amount of the Loan made hereunder shall bear interest at the rate of five percent (5%) per annum from the date hereof until the Loan is paid in full, whether at maturity, by prepayment or otherwise.

 

2.2       Interest Payment Dates. Interest shall be payable as set forth in Section 1.2 hereof; interest is payable at maturity which is on demand.

 

2.3       Business Day Convention. Whenever any payment to be made hereunder shall be due on a day that is not a business day, such payment shall be made on the next succeeding business day and such extension will be taken into account in calculating the amount of interest payable under this Note. “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

 

3.      Events of Default. The occurrence of any of the following shall constitute an Event of Default hereunder (“Event of Default”):

 

3.1       Failure to Pay. The Maker fails to make Demand Payment within two (2) business days of demand by Noteholder.

 

3.2       Bankruptcy. The Maker commences or there is commenced against the Maker any case, proceeding or other action (i) under any existing or future law relating to bankruptcy, insolvency, reorganization, or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Maker makes a general assignment for the benefit of its creditors.

 

4.      Miscellaneous.

 

4.1       Notices.  

 

(a)       All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing to such address as a Party may from time to time specify in writing.

(b)       Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received, (ii) sent by facsimile during the recipient’s normal business hours shall be deemed to have been given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s business on the next Business Day) and (iii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment).

 

4.2       Governing Law. This Note and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Note and the transactions contemplated hereby shall be governed by the laws of the State of New York, without giving effect to the conflicts of laws principles thereof.

 

4.3       Submission to Jurisdiction.  The Maker hereby irrevocably and unconditionally (i) agrees that any legal action, suit or proceeding arising out of or relating to this Note may be brought in the courts of the State of New York and (ii) submits to the exclusive jurisdiction of any such court in any such action, suit or proceeding. Final judgment against the Maker in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment.

 

4.4       Waiver of Notice. The Maker hereby waives presentment, demand for payment, protest, notice of dishonor, notice of protest or nonpayment, notice of acceleration of maturity and diligence in connection with the enforcement of this Note or the taking of any action to collect sums owing hereunder.

 

4.5       Amendments and Waivers. No term of this Note may be waived, modified or amended except by an instrument in writing signed by both of the parties hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.

 

4.6       Headings. The headings of the various sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof.

 

4.7       No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of the Noteholder, of any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

IN WITNESS WHEREOF, the Maker has executed this Note as of February 26, 2015.

 

 

TERA GROUP, INC.
By:	/s/ Christian Martin
Name:	Christian Martin
Title:	Chief Executive Officer

 

 

IN WITNESS WHEREOF, the Noteholder has executed this Note as of February 26, 2015.

 

 

MGT CAPITAL INVESTMENTS, INC.
By:	/s/ Robert Ladd
Name:	Robert Ladd
Title:	Chief Executive Officer

 

 

  

Exhibit 99.01

 

MGT Capital Investments to Merge with Tera Group

Transaction to Create the First Publicly Traded U.S. Bitcoin Derivatives Exchange

 

 

HARRISON, NY (February 27, 2015) MGT Capital Investments, Inc. (NYSE MKT: MGT) announced today that it has entered into a Letter of Intent (“LOI”) with Tera Group, Inc., (“Tera”) owner of TeraExchange, LLC, a Swap Execution Facility regulated by the Commodity Futures Trading Commission (“CFTC”). Pursuant to the LOI, both companies will work diligently to finalize and execute a definitive agreement by March 16, 2015.

 

MGT will then file a combination S-4 Prospectus and Proxy Statement with the Securities and Exchange Commission. Under the contemplated terms of the agreement, and subject to stockholder approval, MGT will issue shares of its common stock to the current owners of Tera, representing 70% of the pro forma equity of the combined companies at closing.

 

Tera has played a leading role in the development of bitcoin derivatives. In September 2014, Tera launched on TeraExchange the first regulated Bitcoin derivative products, and a spot Bitcoin price index. Trading of USD/Bitcoin derivatives is subject to the rules and regulations of TeraExchange and the CFTC. The Tera Bitcoin Price Index (“TeraBit”) employs a dynamic algorithm that compiles and filters data on a real-time basis from a number of widely utilized global Bitcoin spot exchanges. The TeraBit Index will be used as the settlement rate for USD/Bitcoin derivatives transactions.

 

“Growing consumer and merchant adoption of bitcoin is driving demand for regulated capital markets solutions. By combining with MGT, Tera will create a unique public offering to support the essential infrastructure needed for a vibrant global bitcoin ecosystem,” said Christian D. Martin, Chairman, Chief Executive Officer and Co-Founder of Tera.

 

“The proposed merger with Tera gives immediate and future value to our stockholders, while creating a robust platform for the growth of the industry’s first publicly listed bitcoin derivatives exchange,” said H. Robert Holmes, Chairman of MGT’s board of directors, “The Bitcoin industry attracted over $400 million of investment capital from some of the world’s most prominent investors over the past 12 months; we see our move today as further progress in the broader adoption of the industry.”

 

Tera is led by a talented management team with a combined 47 years of experience in capital markets and derivative products, 43 years in legal and regulatory, and 46 years in technology development and engineering.

 

Mr. Martin spent more than 20 years in senior trading and management positions at Merrill Lynch and Bank of America, where he was responsible for global trading desks of interest rates, credit, and financing - securities lending transactions.

 

President, COO and Co-Founder Leonard T. Nuara was formerly a shareholder in the international law firm of Greenberg Traurig LLP. Prior to that, he was Chair of the Technology and Intellectual Property Group at Thacher Proffitt & Wood LLP. He is a nationally recognized leader in the technology and intellectual property fields.

 

Chief Commercial Officer John Maguire spent 18 years at Goldman Sachs, where he held various roles, including interest rate and cross asset derivative sales, marketing, and business development. Mr. Maguire is also the former Global Head of Trading at Bridgewater Associates, the largest hedge fund in the world.

 

Source Capital Group, Inc. acted as sole financial advisor to Tera Group.

 

 

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, www.DraftDay.com.  The Company also offers games of skill through www.MGTplay.com and social casino games with SlotChamp™, and also operates an online portal for fantasy sports news and commentary, www.FantasySportsLive.com.  MGT also launched Daily Fantasy Legend in partnership with Facebook to become the First Daily Fantasy Platform on Social Media.  In addition, the Company owns intellectual property relating to slot machines and has asserted its claims via patent infringement lawsuits.

 

View photo

About Tera Group, Inc.

Tera Group owns TeraExchange LLC, a Swap Execution Facility (SEF) regulated by the Commodity Futures Trading Commission and provides market participants with access to Bitcoin derivatives, interest rate swaps, credit default swaps and non-deliverable forwards. TeraExchange is a global pioneer in the derivatives marketplace and provides a multi-asset class platform for trading of an array of financial instruments.

 

Tera and TeraExchange are registered servicemarks and TeraBit is a servicemark of Tera.

 

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.

 

 

Company Contacts

 

MGT Capital Investments, Inc.

Robert Traversa, Chief Financial Officer

rtraversa@mgtci.com

914-630-7431

 

Tera Group, Inc.

Simon Hylson-Smith

Paragon Public Relations

shs@paragonpr.com

646.558.6226

 

http://www.teraexchange.com/