MGT Earnings Release
Upfront disclaimer: It is not my intention to start another “crap on MGT” thread. Their problems are well documented and I feel need no further discussion. Rather, I’d like to point out a couple of nuggets from their Q1 report: http://www.sec.gov/Archives/edgar/data/1001601/000114420414031204/v378139_10q.htm
1) condia/1ucror agreement (quoted directly from the 10-Q):
On April 24, 2014, the Company, through its subsidiaries FanTD and MGT Sports, entered into a six month Amended and Restated Consulting Agreement with DFS Consultants LLC (the â€œConsultantsâ€), giving effect as of March 5, 2014.
In exchange for expert promotional and site design services, the Company agreed to provide the following compensation to the Consultant:
On the date hereof (subject to receipt of the applicable deliveries by the Consultant): MGT Capital shall issue to the Consultant a warrant to purchase 100,000 shares of common stock.
Each month, MGT Capital shall issue to the Consultant 5,000 shares of MGT Common Stock, payable monthly in arrears.
As of March 31, 2014, neither issuance has been made because the Company has not received NYSE market approval for the issuances. As of March 31, 2014, the Company has accrued $9 for the services.
Depending on the market price of the stock, that is in the neighborhood of $10k per month.
2) DFS business performance
As best I can tell, FTD had gross revenue of $42k in Q1 (note this was pre-DraftDay acquisition) and cost of that revenue of $49k. Overcoming the cost of stat feeds and datacenters is a tough burden for such a small operator. By the time they pay their people and whatnot, the DFS business lost $373k in the quarter.
3) MGT financial position
They burned through $1.4M of cash in the quarter. After completing the Draftday purchase ($600k in cash) at the onset of Q2, they are probably below $2M of cash today, give or take. At that pace, they will be out of cash by the start of football season.
So, review and discuss.