NEW YORK, Aug. 22, 2011 /PRNewswire/ -- MGT Capital
Investments, Inc. ("MGT", "we", or "the Company") (AMEX: MGT), a
holding company engaged in the medical imaging industry, is
providing the following update on recent developments at the
Company and its majority-owned subsidiary Medicsight PLC
("Medicsight" or "MDST"). In addition, MGT is reporting a
summary of its recently filed financial results (via SEC Form 10-Q
on August 15, 2011) for the period
ending June 30, 2011.
Highlights:
- On July 8, 2011, both the Company
and Medicsight announced the initiation of internal investigations
through Special Committees of the Boards of Directors relating to
the potential misappropriation and/or misdirection of corporate
funds. Based upon the substantially complete results of the
investigation, the Company has concluded that no adjustments or
restatement of prior issued financial statements is required.
Although the investigation remains on-going, the Board is
confident that the Company's financial statements will not require
a material restatement as a result of any additional irregularities
discovered in the future. Furthermore, the Company intends to
seek all possible methods of recovery or restitution where
appropriate and where the cost of doing so will not be greater than
the expected outcome.
- In late July 2011, Medicsight was
informed by the Japanese Ministry of Health, Labor and Welfare
("MHLW") that several statistical data errors were encountered in
their review of the application for approval of its MedicRead
software for use in CT Colonography procedures. Following
informal guidance from MHLW, the Company has decided to withdraw
the current submission and is assessing the next course of action.
In the meantime, the Board of Directors of Medicsight has
decided to close the Tokyo office
as part of an overall program of expense reduction and corporate
simplification.
- In addition to closing the Tokyo office, management of Medicsight has
decided to close several other subsidiaries in Australia, China and the UAE citing the unjustifiably
high legal, regulatory and accounting costs of maintaining such
entities. However, in order to better exploit the recent U.S. Food
and Drug Administration's approval of ColonCAD, the Company will
open a U.S. subsidiary (Medicsight, Inc.) in New York.
- The Board of Directors of Medicsight has also agreed to call a
General Meeting of stockholders on September
14, 2011 to vote on whether to cancel its Ordinary Shares
from trading on the AIM Exchange and to re-register as a private
company. Given that recent results have diminished the
ability to raise new capital, along with the relatively large
expense of maintaining a public listing, Medicsight's Board is
recommending this course of action as in the best interest of
Medicsight and all MDST stockholders.
- On August 16, 2011 Peter Venton
resigned from the Board of MGT. This action was taken to ensure
that at least one Board member of MDST is independent of MGT.
In light of the announcement of the proposal to cancel the
AIM quotation, it was considered impracticable to recruit any
further independent directors for MDST at the current time.
However, should shareholders not pass the resolutions to
effect the cancellation of the AIM quotation, the Board of
Directors of MDST will take steps to supplement its current Board
with an additional independent non-executive Director.
- NYSE Amex LLC has halted trading in the common stock of MGT
pending the restarting of trading of MDST shares on the AIM market
in London. We anticipate
that trading in MDST shares will resume as of the date of this
press release and that shares of MGT will resume trading
thereafter. There can be no guarantee that MDST stock will resume
trading in London or that the NYSE
Amex LLC will resume trading of MGT common stock upon the
resumption of trading of MDST shares.
Summary Financial Results for the period ended June 30, 2011
For the six months ended June 30,
2011 revenues from licensing and other sales were
$264,000, compared to $326,000 for the corresponding period in 2010.
Total operating expenses for the six months ended June 30, 2011 were $5.2
million, compared to total operating expenses of
$6.1 million in the comparable period
for 2010.
For the quarter ended June 30,
2011, the Company reported a net loss of $2.9 million, or $0.07 per share, compared to a net loss of
$4.0 million, or $0.12 per share, for the same period in 2010. Net
loss per share for the quarter ended June
30, 2011 was based on weighted average of 39.5 million
shares outstanding, compared to a weighted average of 32.5 million
shares outstanding for the comparable period in 2010.
As noted above, based upon the preliminary results of the
Special Committee investigations, the Company has concluded that no
adjustments or restatement of our prior issued financial statements
was required. However, based upon the preliminary results of
the investigation, an additional weakness in internal controls over
financial reporting was identified surrounding the identification
and disclosure for related party relationships and related party
transactions. We will assess the effectiveness of our
remediation efforts in connection with our management's tests of
internal control over financial reporting in conjunction with our
December 31, 2011 financial
statements.
At June 30, 2011 the Company
reported cash and cash equivalents of $5.7
million compared to $8.4
million as of December 31,
2010. The decrease is mainly attributable to cash used
in operating activities. As stated in the Company's most recent
10-Q filing, MGT had sufficient cash on hand and availability in
the line of credit facility with a related party to continue
operations through October 2011.
As a result of an action designed by the Company and MDST to
reflect accurate cost allocation due to the recent headcount
reductions at Medicsight, a majority of the compensation of the
Company's executive officers will be borne by Medicsight, effective
August 1, 2011. In addition,
the expiration of Medicsight's office lease in London on August 25,
2011 and the concomitant move of the Company's and
Medicsight's operations to less costly space will materially reduce
occupancy expenses for the Company. These actions will enable
cash on hand and availability in the line of credit facility with a
related party to allow MGT to continue operations through
March 2012, at which point the
Company may need to seek additional sources of financing.
There is no guarantee that additional sources will be
available at terms acceptable to the Company or at all.
About MGT Capital Investments, Inc.
MGT is a holding company comprised of MGT, the parent company,
and its wholly-owned subsidiaries: MGT Capital Investments
(U.K.) Limited, MGT Investments (Gibraltar) Limited, and Medicsight Nominees
Limited. In addition we also have a controlling interest in
our operating subsidiary, Medicsight PLC, including its wholly
owned subsidiaries.
Medicsight is a medical technology company focusing on medical
imaging software development and medical hardware devices.
Medicsight is listed on the AIM Market of the London Stock Exchange
under the ticker symbol "MDST." The company provides
Computer-Aided Detection ("CAD") applications to analyze Computer
Tomography ("CT") scans in order to assist radiologists with early
detection and measurement of colorectal polyps. The CAD
software received a CE Mark in 2009, which allows for sales in the
European Union; In May of 2011, MDST's software also received
clearance from the U.S. FDA. Revenue is presently limited as
MDST attempts to commercialize its recent U.S. approval. MDST
has also developed an automated carbon dioxide medical inflation
device and associated disposable tubing (MedicCO 2 LON) that is
being commercialized in partnership with a global distributor.
On June 30, 2011, MGT held 83.75
million shares (53.85%) of the 155.5 million issued share capital
of MDST.
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.
Contact:
MGT Capital Investments, Inc.
Robert Ladd, Interim Chief
Executive Officer
rladd@mgtci.com
Robert Traversa, Chief Financial
Officer
rtraversa@mgtci.com
SOURCE MGT Capital Investments, Inc.