HARRISON, N.Y., April 15, 2015 /PRNewswire/ -- MGT Capital
Investments, Inc. (NYSE MKT: MGT) today reported financial and
operational results for the twelve months ended December 31, 2014. Developments during the fourth
quarter and recent weeks subsequent to yearend are as follows:
- Fourth quarter and full year revenue, gross margin and other
financial metrics showed strong growth from comparable year ago
figures.
- Announced white label partnership agreement with FanWars
LLC.
- Announced white label partnership agreement with Vivid
Entertainment LLC.
- Announced white label partnership agreement with Seneca Resorts
& Casinos.
- Launched Rapid Fire mobile app on Apple's iTunes App Store.
Financial Results
For the fourth quarter ended
December 30, 2014, total revenue was
$354,000, as compared to $203,000 for the same period last year. Gross
margin totalled $128,000 (36% of
revenue), up substantially from a loss of $155,000 in the fourth quarter of 2013. Operating
expenses decreased by approximately 32% to $1.5 million from $2.2
million for the same period in 2013.The decrease was
primarily due to lower professional fees and corporate governance
related costs. Operating loss was $1.4
million during the fourth quarter, comparing favorably to a
loss of $2.4 million in the same
period of 2013.
For the twelve months ended December 31,
2014, total revenue was approximately $1.1 million as compared with $396,000 for the same period in 2013. Gross
margin totalled $446,000 up from a
loss of $163,000 in the 2013 period.
The operating loss for the year 2014 was reduced to
$5.6 million as compared with
$9.5 million for the same period last
year.
Cash and cash equivalents as of December
31, 2014 were $1.6 million.
During the quarter, net cash used in operating activities was
$900,000, as compared to $1.2 million in the third quarter of 2014. The
company expects cash utilization to continue to trend lower for
2015, due to the positive contribution from gross margin of MGT
Sports and recent cost reductions. As stated in the Company's
2014 Annual Report on Form 10-K filed with the Securities and
Exchange Commission, the Company anticipates it has sufficient cash
on hand, combined with the gross margin from DraftDay, to continue
operations at least through March 31,
2016.
Management Commentary and Outlook
In the year since
acquisition, MGT has transformed DraftDay with a series of
improvements to the platform technology and player experience. In
addition, the Company was able to significantly reduce operating
expenses and improve gross margin. DraftDay has attained enterprise
quality, with transparent audited financial reporting and internal
controls, employing highly reliable and scalable technology.
The security and regulatory compliance of the platform is confirmed
with industry leading KYC (know-your-customer) controls approved by
the major credit card processors and gaming attorneys. At the
same time, DraftDay and its white label partners maintain a user
interface that is highly rated by players.
Over this same year, the daily fantasy sports business has
catapulted into the commercial mainstream with full support of
institutional investors and the professional sports leagues.
Valuations for the top two participants now approximate
$1.0 billion each, with hundreds of
millions in funding very recently raised from leading media
companies and venture capitalists.
In recent weeks, MGT has communicated with several parties
expressing interest in a potential investment or purchase of
DraftDay. The Company is reviewing multiple indications of
interest in an effort to create maximum value from DraftDay's
position as the third largest daily fantasy site (measured by
customer accounts, player funds, number of contests, and other
metrics). Although it is MGT's current intention to retain a
significant minority stake in the future of this explosive market,
there can be no assurance that any on-going discussions will result
in a transaction.
About MGT Capital Investments, Inc.
MGT Capital and
its subsidiaries operate real money and social gaming sites online
and in the mobile space, including ownership of DraftDay.com, the
third largest daily fantasy sports wagering platform. MGTSports.com
offers a turnkey solution to allow brands the ability to join its
active Daily Fantasy Sports Network. DailyFantasyLegend.com, built
in partnership with Facebook, is the first virtual currency daily
fantasy sports platform. MGTplay.com offers competitive games
of skill playable for real money.
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
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands,
except share and per–share amounts)
|
|
|
Three months
ended
December 31,
|
|
Year
ended
December
31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Software and
devices
|
$
|
5
|
|
$
|
36
|
|
$
|
85
|
|
$
|
78
|
Services –
Consulting
|
|
–
|
|
|
–
|
|
|
–
|
|
|
97
|
Gaming
|
|
349
|
|
|
167
|
|
|
971
|
|
|
221
|
|
|
354
|
|
|
203
|
|
|
1,056
|
|
|
396
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Services –
Consulting
|
|
–
|
|
|
–
|
|
|
–
|
|
|
63
|
Gaming
|
|
226
|
|
|
358
|
|
|
610
|
|
|
496
|
|
|
226
|
|
|
358
|
|
|
610
|
|
|
559
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
128
|
|
|
(155)
|
|
|
446
|
|
|
(163)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
1,297
|
|
|
2,078
|
|
|
5,507
|
|
|
9,115
|
Sales and
marketing
|
|
151
|
|
|
69
|
|
|
380
|
|
|
161
|
Research and
development
|
|
35
|
|
|
73
|
|
|
188
|
|
|
73
|
|
|
1,483
|
|
|
2,220
|
|
|
6,075
|
|
|
9,349
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(1,355)
|
|
|
(2,375)
|
|
|
(5,629)
|
|
|
(9,512)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
non–operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income
|
|
(8)
|
|
|
(13)
|
|
|
(1)
|
|
|
30
|
Impairment of
intangible assets
|
|
(135)
|
|
|
–
|
|
|
(135)
|
|
|
–
|
Gain on sale of
patent, net
|
|
–
|
|
|
–
|
|
|
–
|
|
|
750
|
Change in fair value
of warrants
|
|
–
|
|
|
–
|
|
|
–
|
|
|
(2,204)
|
|
|
(143)
|
|
|
(13)
|
|
|
(136)
|
|
|
(1,424)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before
income taxes and non–controlling interest
|
|
(1,498)
|
|
|
(2,388)
|
|
|
(5,765)
|
|
|
(10,936)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to non–controlling interest
|
|
62
|
|
|
366
|
|
|
435
|
|
|
734
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to MGT
|
$
|
(1,436)
|
|
$
|
(2,019)
|
|
$
|
(5,330)
|
|
$
|
(10,202)
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly dividend on
Series A Preferred Stock
|
|
–
|
|
|
(1)
|
|
|
–
|
|
|
(70)
|
Net loss applicable
to Common shareholders
|
$
|
(1,436)
|
|
$
|
(2,020)
|
|
$
|
(5,330)
|
|
$
|
(10,272)
|
|
|
|
|
|
|
|
|
|
|
|
|
Per–share
data:
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per share
|
$
|
(0.14)
|
|
$
|
(2.08)
|
|
$
|
(0.56)
|
|
$
|
(1.82)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
10,432,817
|
|
|
968,372
|
|
|
9,493,057
|
|
|
5,590,620
|
MGT CAPITAL
INVESTMENTS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(In thousands,
except share and per–share amounts)
|
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
2013
|
Assets:
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,455
|
|
$
|
4,642
|
Accounts
receivable
|
|
5
|
|
|
43
|
Prepaid expenses and
other current assets
|
|
172
|
|
|
132
|
Total current
assets
|
|
1,632
|
|
|
4,817
|
|
|
|
|
|
|
Non–current
assets:
|
|
|
|
|
|
Restricted
cash
|
|
138
|
|
|
140
|
Property and
equipment, at cost, net
|
|
43
|
|
|
45
|
Intangible assets,
net
|
|
2,417
|
|
|
2,423
|
Goodwill
|
|
6,444
|
|
|
6,444
|
Other non–current
assets
|
|
2
|
|
|
4
|
Total
assets
|
$
|
10,676
|
|
$
|
13,873
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
245
|
|
$
|
228
|
Accrued
expenses
|
|
180
|
|
|
94
|
Player deposit
liability
|
|
952
|
|
|
647
|
Other
payables
|
|
2
|
|
|
16
|
Total current
liabilities
|
|
1,379
|
|
|
985
|
|
|
|
|
|
|
Non–current
liabilities:
|
|
|
|
|
|
Derivative liability
– Warrants
|
|
–
|
|
|
–
|
Total
liabilities
|
|
1,379
|
|
|
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 December 31, 2014 and December 31,
2013, respectively; 9,993 and 9,413 shares issued and outstanding
at December 31, 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 December 31, 2014 and 2013, respectively. No shares
authorized, issued and outstanding at December 31, 2014 and
December 31, 2013 respectively
|
|
–
|
|
|
–
|
Common stock, $0.001
par value; 75,000,000 shares authorized; 10,731,160 and 8,848,686
shares issued and outstanding at December 31, 2014 and December 31,
2013, respectively
|
|
11
|
|
|
9
|
Additional paid–in
capital
|
|
308,288
|
|
|
304,886
|
Accumulated other
comprehensive loss
|
|
(281)
|
|
|
(281)
|
Accumulated
deficit
|
|
(299,163)
|
|
|
(293,833)
|
Total stockholders'
equity attributable to MGT Capital Investments, Inc.
|
|
8,855
|
|
|
10,781
|
Non–controlling
interests
|
|
442
|
|
|
2,107
|
Total stockholders'
equity
|
|
9,297
|
|
|
12,888
|
|
|
|
|
|
|
Total liabilities,
redeemable convertible preferred stock and stockholders'
equity
|
$
|
10,676
|
|
$
|
13,873
|
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SOURCE MGT Capital Investments, Inc.