Unassociated Document

MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets as of December 31, 2010 and 2009	F-4

Consolidated Statements of Operations for the years ended December 31, 2010 and 2009	F-5

Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income/(Loss) for the years ended December 31, 2010 and 2009	F-6

Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009	F-7

Notes to the Consolidated Financial Statements	F-8 to F-35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

MGT Capital Investments, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of MGT Capital Investments, Inc. and Subsidiaries as of December 31, 2010, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We also have audited the adjustments to the 2009 financial statements to retrospectively apply the change in accounting for discontinued operations, as described in Note 3. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2009 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2009 financial statements taken as a whole.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of MGT Capital Investments, Inc. and Subsidiaries as of December 31, 2010, and the consolidated results of their operations and their cash flows for the year ended, in conformity with U.S. generally accepted accounting principles.

In connection with our audit of the consolidated financial statements referred to above, we also audited Schedule II — Valuation and Qualifying Accounts for the year ended December 31, 2010. In our opinion, this financial schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information stated therein.

/s/ EisnerAmper LLP

Edison, New Jersey

April 15, 2011

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

MGT Capital Investments, Inc. and Subsidiaries

We have audited, before the effects of the adjustments to retrospectively apply the change in accounting for discontinued operations described in Note 3, the accompanying consolidated balance sheet of MGT Capital Investments, Inc. and Subsidiaries as of December 31, 2009, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for the year then ended (the 2009 financial statements before the effects of the adjustments discussed in Note 3 are not presented herein). The 2009 consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

In our opinion the 2009 consolidated financial statements, before the effects of the adjustments to retrospectively apply the change in accounting for discontinued operations described in Note 3, presents fairly, in all material respects, the consolidated financial position of MGT Capital Investments, Inc. and Subsidiaries as of December 31, 2009, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

In connection with our audit of the consolidated financial statements referred to above, we also audited Schedule II — Valuation and Qualifying Accounts for the year ended December 31, 2009. In our opinion, this financial schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information stated therein.

We are not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting for discontinued operations described in Note 3, and accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by EisnerAmper LLP.

/s/ Amper, Politziner & Mattia, LLP

March 30, 2010

Edison, New Jersey

F-3

MGT CAPITAL INVESTMENTS, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share amounts)

	December 31,
	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	8,434		$	22,165
Accounts receivable		46			97
Other receivables — related party		45			105
Prepaid expenses and other current assets		699			620
Deferred consideration for sale of assets		370			—
Loan receivable — related party — current		1,136			398
Total current assets		10,730			23,385

Property and equipment, at cost, net		247			290
Investments at cost		—			224
Security deposits		191			219
Loan receivable — related party — long term		308			159
Total assets	$	11,476		$	24,277

Liabilities
Current liabilities:
Accounts payable		411			916
Accrued expenses		981			1,214
Other payables		158			114
Total current liabilities		1,550			2,244

Commitments and contingencies

Stockholders’ equity

Common stock, $0.001 par value: 75,000,000 shares authorized; 39,050,590 shares issued and outstanding as of December 31, 2010; and 38,900,383 and 32,550,590 shares issued and outstanding respectively as of December 31, 2009.		39			39
Additional paid-in capital		282,409			299,878
Accumulated other comprehensive loss		(5,005	)		(4,549	)
Accumulated deficit		(275,478	)		(265,827	)
		1,965			29,541
Treasury stock, at cost; nil and 6,349,793 shares of common stock as of December 31, 2010 and December 31, 2009, respectively		—			(18,912	)
Total stockholders’ equity		1,965			10,629
Non-controlling interest		7,961			11,404
Total equity		9,926			22,033

Total stockholders’ equity, liabilities and non-controlling interest	$	11,476		$	24,277

The accompanying notes are an integral part of these consolidated financial statements.

F-4

MGT CAPITAL INVESTMENTS, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

	For the Years Ended December 31,
	2010			2009

Revenues	$	540		$	180
Cost of revenue		(116	)		—
Gross profit		424			180

Operating expenses
Selling, general and administrative		10,181			13,899
Research and development cost		1,576			1,998
Impairment of goodwill		—			12,157
		11,757			28,054

Operating loss		(11,333	)		(27,874	)

Interest and other income/(expense), net		66			(3,238	)
Impairment of loan receivable – related party		(1,985	)		—
		(1,919	)		(3,238	)

Net loss from continuing operations before income tax benefit		(13,252	)		(31,112	)

Income tax benefit		336			—

Net loss from continuing operations before non-controlling interest		(12,916	)		(31,112	)

Discontinued operations
Net loss from operations of Medicexchange, net of income tax benefit		(234	)		(1,031	)
Gain on sale of Medicexchange, net of income taxes		149			—
		(85	)		(1,031	)

Net loss before non-controlling interest		(13,001	)		(32,143	)

Net loss attributable to non-controlling interest		3,350			5,766

Net loss attributable to MGT Capital Investments, Inc.	$	(9,651	)	$	(26,377	)

Per share data:

Basic and diluted loss per share from continuing operations	$	(0.29	)	$	(0.78	)
Basic and diluted loss per share from discontinued operations		—			(0.03	)
	$	(0.29	)	$	(0.81	)

Weighted average number of common shares outstanding		32,960,179			32,550,590

The accompanying notes are an integral part of these consolidated financial statements.

F-5

MGT CAPITAL INVESTMENTS, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME / (LOSS)

(In thousands)

	Common stock				Additional paid-in			Accumulated comprehensive			Accumulated			Treasury			Total stockholders’			Non- controlling			Total
	Shares		Amount		capital			income/(loss)			deficit			stock			equity			interest			equity
BALANCE, JANUARY 1, 2009		38,900	$	39	$	298,376		$	(4,959	)	$	(239,450	)	$	(18,912	)	$	35,094		$	16,017		$	51,111
Stock-based compensation				—		1,502									—			1,502			497			1,999
COMPREHENSIVE INCOME/(LOSS)
Net loss for the year		—		—		—			—			(26,377	)		—			(26,377	)		(5,766	)		(32,143	)
Translation adjustment		—		—		—			410			—			—			410			656			1,066
Total comprehensive loss																		(25,967	)		(5,110	)		(31,077	)
BALANCE, DECEMBER 31, 2009		38,900		39		299,878			(4,549	)		(265,827	)		(18,912	)		10,629			11,404			22,033
Sale of stock in treasury		—		—		(17,935	)		—			—			18,912			977			—			977
Sale of stock		151		—		23			—			—			—			23			—			23
Stock-based compensation		—		—		443			—			—			—			443			352			795
Disposal of Medicexchange		—		—		—			—			—			—			—			(233	)		(233	)
COMPREHENSIVE INCOME/(LOSS)
Net loss for the year		—		—		—			—			(9,651	)		—			(9,651	)		(3,350	)		(13,001	)
Translation adjustment		—		—		—			(456	)		—			—			(456	)		(212	)		(668	)
Total comprehensive loss																		(10,107	)		(3,562	)		(13,669	)
BALANCE, DECEMBER 31, 2010		39,051	$	39	$	282,409		$	(5,005	)	$	(275,478	)	$	—		$	1,965		$	7,961		$	9,926

The accompanying notes are an integral part of these consolidated financial statements.

F-6

MGT CAPITAL INVESTMENTS, INC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

	For the Years Ended December 31,
	2010			2009

Cash flows from operating activities:
Net loss before non-controlling interest	$	(13,001	)	$	(32,143	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss from discontinued operations		234			1,031
Stock-based compensation expense		784			1,950
Depreciation		138			310
Loss on impairment of goodwill		—			12,157
Loss on impairment of loans receivable – Related Party		1,985			—
Loss on impairment of investments at cost		—			1,514
Loss on disposal of fixed assets		7			111
Loss/(profit) on disposal of companies		(201	)		448
Accrued interest receivable		(39	)		(210	)
Impairment of XShares convertible note		—			2,210
(Increase)/decrease in assets
Accounts receivable		44			66
Other receivable — related party		57			(51	)
Prepaid expenses and other current assets		(45	)		136
Increase/(decrease) in liabilities
Accounts payable		(170	)		(1,617	)
Accrued expenses		(233	)		(89	)
Other payables		(41	)		26
Net cash used in operating activities		(10,481	)		(14,151	)

Cash flows from investing activities:
Issuance of Moneygate loans receivable		(1,756	)		(578	)
Issuance of Dunamis Capital loans receivable - related party		(1,100	)		—
Cash in Medicexchange subsidiaries disposed of		(1,101	)		—
Sale of marketable securities		—			946
Purchase of property, plant and equipment		(96	)		(16	)
Issuance of XShares convertible note		—			(2,000	)
Receipts of deferred consideration for sale of assets		766			—
Net cash used in by investing activities		(3,287	)		(1,648	)

Cash flows from financing activities:
Sale of shares of MGT Capital Investments Inc.		1,000			—
Net cash provided by financing activities		1,000			—

Cash flows of discontinued operations
Net cash provided by / (used in) Medicexchange operating activities		(226	)		280
Net cash provided by / (used in) discontinued operations		(226	)		280

Effects of exchange rates on cash and cash equivalents		(737	)		(610	)
Net change in cash and cash equivalents		(13,731	)		(16,129	)
Cash and cash equivalents, beginning of year		22,165			38,294
Cash and cash equivalents, end of year	$	8,434		$	22,165

Supplemental disclosures of cash paid
Interest paid	$	—		$	—
Taxes paid	$	—		$	—

The accompanying notes are an integral part of these consolidated statements.

F-7

MGT CAPITAL INVESTMENTS, INC AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except share and per share amounts)

1. Organization, basis of presentation and liquidity

MGT Capital Investments, Inc. (“MGT”, “the Company”, “the Group”, “we”, “us”) is a holding company. We currently have a controlling interest in our operating subsidiary, Medicsight plc (“Medicsight”) and a 49% holding in Moneygate Group Limited (“Moneygate”). On March 31, 2010 we disposed of our controlling interest in Medicexchange Limited (“Medicexchange”) and various other investments. We also have wholly owned subsidiaries MGT Capital Investments (UK) Limited, MGT Investments (Gibraltar) Limited, and Medicsight Nominees Limited.

Medicsight and its wholly owned subsidiaries is a medical technology company focusing on medical imaging software development and medical hardware devices. The Company is listed on the AIM Market of the London Stock Exchange (Ticker symbol “MDST”) and develops and commercializes enterprise-wide Computer-Aided Detection (“CAD”) applications which analyze Computer Tomography (“CT”) scans to assist radiologists in the early detection and measurement of colorectal polyps and lung lesions. The Company has also developed an automated CO2 insufflation device (MedicCO2LON) which it commercializes through a global distributor. Medicsight currently has limited revenue and is awaiting regulatory approvals in key markets. The Company holds 86 million shares (55%) of the 155 million issued share capital of Medicsight.

At December 31, 2010, the Company also had a 49% holding in Moneygate Group Limited, a United Kingdom (“UK”) based firm of Independent Financial Advisors. On January 31, 2011, the Company entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with Committed Capital Nominees Limited (“Committed”). Pursuant to the Purchase Agreement, Committed has agreed to purchase from the Company and the Company has agreed to sell to Committed (i) 9,607,843 (representing all shares held by the company) shares of Moneygate Group Limited (“Moneygate”) for total consideration of £0.096 ($0.154); and (ii) to novate the benefit of a Facility Agreement dated November 18, 2010, between the Company and Moneygate, for consideration of £250 ($387).

The Purchase Agreement is conditional upon the UK Financial Services Authority having given its written consent to the change of control of Moneygate. The change of control was approved on March 10, 2011, the £50 ($79) held in escrow was received by the Company on March 22, 2011. The remaining consideration of £200 ($308) was received by the Company on March 29, 2011.

The Company has incurred significant operating losses since inception and is generating losses from operations. As a result, the Company has generated negative cash flows from operations and has an accumulated deficit of $275,478 at December 31, 2010. The Company is operating in a developing industry based on new technology and its primary source of funds to date has been through the issuance of securities. While the Company is optimistic and believes appropriate actions are being taken, there can be no assurance that management’s efforts will be successful or that the products the Company develops and markets will be accepted by consumers.

At December 31, 2010 Medicsight’s cash and cash equivalents were $8,256. The Company is hopeful of an FDA approval being granted following review of its recently filed response to the FDA’s informal questions. Post FDA approval the Company expects sales to increase and would seek additional funding.

At December 31, 2010 MGT’s Company only cash and cash equivalents were $178. Subsequent to the year ended December 31, 2010, the Company received the outstanding funds owed from the sale of investments to Rivera and Committed Capital. On April 12, 2011 the Company entered into a Revolving Line of Credit and Security Agreement with Laddcap Value Partners, LP (“Laddcap”), a related party, for up to $500 for a fifteen month term. The Agreement encompasses a standby commitment fee of two (2%) percent of the maximum loan amount along with an eight (8%) percent interest charge on any funds drawn (see note 20).

Management believes that the current level of working capital, receipts from the sale of investments, together with the Revolving Line of Credit and Security Agreement (“Agreement”) with Laddcap Value Partners, LP will be sufficient to allow the Company to maintain its operations through December 31, 2011 and into 2012 .

F-8

2. Summary of significant accounting policies:

Principles of consolidation

The consolidated financial statements include the accounts of our Company plus wholly owned subsidiaries and our majority owned subsidiary Medicsight. The functional currency of our subsidiary is their local currency, UK sterling (£). All intercompany transactions and balances have been eliminated. All foreign currency translation gains and losses arising on consolidation were recorded in stockholders’ equity as a component of accumulated other comprehensive income (loss). Non-controlling interest represents the minority equity investment in any of the MGT Capital Investments, Inc. group of companies, plus the minorities’ share of the net operating result and other components of equity relating to the non-controlling interest.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers investments with original maturities of three months or less to be cash equivalents.

Revenue Recognition

Medicsight

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when have persuasive evidence of an arrangement, the product has been shipped or the services have been provided to the customer, the sales price is fixed or determinable and collectability is probable.

Software — License fee revenue is derived from the licensing of computer software. Maintenance revenue is derived from software maintenance. Our software licenses are generally sold as part of an arrangement that includes maintenance and support.

The Company licenses software and sell maintenance through visualization solution partners and original equipment manufacturers. The Company receives regular sales reporting detailing the number of licenses sold by original equipment manufacturers, value-added resellers and independent distributors (collectively, “Resellers”) to end users. The Company generally offers terms that require payment 30-45 days from invoicing.

Provided the Reseller i) assumes all risk of the purchase, ii) has the ability and obligation to pay regardless of receiving payment from the end user, and all other revenue recognition criteria are met, license revenue from Resellers is recognized upon shipment of its product to vendors (“sell-in basis”).

Revenue from license fees is recognized when notification of shipment to the end user has occurred, there are no significant Company obligations with regard to implementation and the Company’s services are not considered essential to the functionality of other elements of the arrangement.

Services — Revenue from maintenance and support arrangements is deferred and recognized ratably over the term of the maintenance and support arrangements.

Multiple-element arrangements — the Company enters into arrangements with resellers that include a combination of software products, maintenance and support. For such arrangements, the Company recognizes revenue using the residual method. The Company allocates the total arrangement fee among the various elements of the arrangement based on the fair value of each of the undelivered elements determined by vendor-specific objective evidence of fair value. The fair value of maintenance and support services is established based on renewal rates. In software arrangements for which the Company does not have vendor-specific objective evidence of fair value for all elements, revenue is deferred until the earlier of when vendor-specific objective evidence of fair value is determined for the undelivered elements (residual method) or when all elements for which the Company does not have vendor-specific objective evidence of fair value have been delivered.

Hardware — Revenue is derived from the sale of our MedicCO2LON product. This product is an automated CO2 insufflation device, and is generally sold as part of an arrangement that includes a one year warranty. The risk of incurring warranty related expense is mitigated by the warranty contractually agreed with the supplier. The Company reviews the risk of warranty liabilities on a regular basis, and makes any and all appropriate provisions accordingly. At the present time, the Company feels that the warranty liability is insignificant and has therefore not made any provision.

F-9

MedicCO2LON is sold exclusively through our distribution partner MEDRAD Inc. Revenue is recognized as goods and orders are satisfied and goods are delivered to our distribution partner. The Company generally offers terms which require payments with 30-45 days from invoicing.

Equity-based compensation

The Company recognizes compensation expense for all equity-based payments. Under fair value recognition provisions, the Company recognizes equity-based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk-free interest rate, the option’s expected life and the dividend yield on the underlying stock. Expected volatility is calculated based on the historical volatility of our common stock over the expected option life and other appropriate factors. Risk-free interest rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on our common stock and do not intend to pay dividends on our common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

Determining the appropriate fair value model and calculating the fair value of equity-based payment awards require the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity-based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, our equity-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the equity-based compensation expense could be significantly different from what the Company has recorded in the current period.

Research and development

The Company incurs costs in connection with the development of software products that are intended for sale. Costs incurred prior to technological feasibility being established for the product are expensed as incurred. Technological feasibility is established upon completion of a detail program design or, in its absence, completion of a working model. Thereafter, all software production costs are capitalized and subsequently reported at the lower of unamortized cost or net realizable value. Capitalized costs are amortized based on current and future revenue for each product with an annual minimum equal to the straight-line amortization over the remaining estimated economic life of the product. Amortization commences when the product is available for general release to customers.

The Company concludes that capitalizing such expenditures on completion of a working model was inappropriate because The Company did not incur any material software production costs and therefore have decided to expense all research and development costs. Our research and development costs are comprised of staff, consultancy and other costs expensed on the Medicsight products.

Fair value of financial instruments

The Company’s financial instruments include cash and cash equivalents, account receivable, accounts payable, and accrued expenses, which are short term in nature. The Company believes the carrying value of these financial instruments reasonably approximates their fair value. The Company also has receivables due from Dunamis (see note 19) that represent a concentration of credit risk.

Investments

Investments in various corporations where our investment is less than 20% of issued share capital are accounted for under the cost method. Investments where the Company holds between 20% and 50% of issued share capital and the Company has significant influence over the investee are accounted for under the equity method. Moneygate is accounted for under the equity method.

F-10

Goodwill

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. We compare the book value to the market value (market capitalization plus a control premium) for the reporting unit. If the market value exceeds the book value, goodwill is considered not impaired, and thus the second step of the impairment test is not necessary. If the book value exceeds the market value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test, used to measure the amount of impairment loss, compares the implied fair value of the goodwill with the book value of the goodwill. If the carrying value of the goodwill exceeds the implied fair value of the goodwill, an impairment loss would be recognized in an amount equal to the excess. Any loss recognized cannot exceed the carrying amount of goodwill. After a goodwill impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis. Subsequent reversal of a previously recognized goodwill impairment loss is prohibited once the measurement of that loss is completed.

As of March 31, 2009 Medicsight’s share price had fallen to a level at which book value exceeded market value. As a consequence, we carried out an impairment review at the end of the first quarter of 2009 and concluded that the goodwill was fully impaired.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight line method on the various asset classes over their estimated useful lives, which range from two to five years. Leasehold improvements are depreciated over the term of the lease.

Foreign currency translation

The accounts of the Company’s foreign subsidiaries are maintained using the local currency as the functional currency. For these subsidiaries, assets and liabilities are translated into US dollars at period-end exchange rates, and income and expense accounts are translated at average monthly exchange rates. Net gains and losses from foreign currency translation are excluded from operating results and are accumulated as a separate component of stockholders’ equity.

Gains and losses on foreign currency transactions are reflected in selling, general and administrative expenses in the income statement.

Impairment of long-lived assets and long-lived assets to be disposed of

The Company evaluates the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Our assessment for impairment of an asset involves estimating the undiscounted cash flows expected to result from use of the asset and its eventual disposition. An impairment loss recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Calculating the estimated fair value of an asset involves significant judgments and a variety of assumptions. Judgments that the Company makes concerning the value of intangible assets include assessing time and cost involved for development, time to market, and risks of regulatory failure or obsolescence (due to market, environmental or technological advances for example). For calculating fair value based on discounted cash flows, the Company forecasts future operating results and future cash flows, which include long-term forecasts of revenue growth, gross profits and capital expenditures.

Income taxes

The Company applies the elements of FASB ASC 740-10 “Income Taxes — Overall” regarding accounting for uncertainty in income taxes. This clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of December 31, 2010, the Company did not have any unrecognized tax benefits. The Company does not expect that the amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months. The Company’s policy is to recognize interest and penalties related to tax matters in the income tax provision in the Consolidated Statements of Operations. There was no interest and penalties for the year ended December 31, 2010 and 2009. Tax years beginning in 2004 are generally subject to examination by taxing authorities, although net operating losses from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used.

Deferred taxes are computed based on the tax liability or benefit in future years of the reversal of temporary differences in the recognition of income or deduction of expenses between financial and tax reporting purposes. The net difference, if any, between the provision for taxes and taxes currently payable is reflected in the balance sheet as deferred taxes. Deferred tax assets and/or liabilities, if any, are classified as current and non-current based on the classification of the related asset or liability for financial reporting purposes, or based on the expected reversal date for deferred taxes that are not related to an asset or liability. Valuation allowances are recorded to reduce deferred tax assets to that amount which is more likely than not to be realized.

F-11

Loss per share

Basic loss per share is calculated by dividing net loss attributable to the ordinary shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated by dividing the net loss attributable to the ordinary shareholders by the sum of the weighted average number of common shares outstanding and the diluted potential ordinary shares.

The computation of diluted loss per share for 2010 and 2009 excludes all options because they are anti-dilutive. For the year ended December 31, 2010 there were 13,703,334 options excluded with a weighted average exercise price of $0.20 per share. For the year ended December 31, 2009 there were 11,503,359 options excluded with a weighted average exercise price of $0.94 per share.

Comprehensive income/(loss)

Comprehensive income/(loss) includes net income/(loss) and items defined as other comprehensive income/(loss). Items defined as other comprehensive income/(loss), such as foreign currency translation adjustments and unrealized gains and losses on certain marketable securities, are separately classified in the consolidated financial statements. Such items are reported in the consolidated statements of stockholders’ equity as accumulated comprehensive/(loss).

Segment reporting

The Company reports the results of its operating segments. The Company designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments. The Company also discloses information about products and services, geographic areas and major customers. The Company operates in one main operational segment, Medicsight, a medical imaging and device hardware company, with MGT Capital Investments Inc. providing corporate management services.

F-12

3. Divestment of investments and discontinued activities

On March 31, 2010 the Company sold its stock in Medicexchange and various non-core investments to an unrelated third party in return for consideration of £750 ($1,136). This consideration was deferred and to be paid in installments through March 2011. In August 30, 2010, at the request of the third party, and in discussion and negotiation with management, it was agreed that the remaining installments would be modified. In accordance with this, as of December 31, 2010 £506 ($766) had been received. The final installment of £244 ($370) was paid on March 29, 2011.

The investments disposed of and the related consideration is as follows:

Asset	Consideration
Medicexchange Limited	$	927
Medicexchange Inc.	1
Hipcricket, Inc.	205
Eurindia Limited	1
XShares equity	1
XShares convertible notes	1
Total	$	1,136

Eurindia and the XShares convertible notes and equity investment had been fully impaired so the consideration received represents the gain on sale recorded in the Consolidated Statement of Operations. HipCricket was recorded in the financial statements at $224 meaning a loss on sales of $19 was recorded (see note 5).

Before their disposal, Medicexchange Limited and Medicexchange Inc. were consolidated into the MGT consolidated financial statements. Consideration of $928 was allocated to Medicexchange and MGT recorded a profit on disposal of $149, net of tax. This profit on disposal has been recognized in discontinued operations. The operations of Medicexchange have been presented in discontinued operations up to the date of disposal, March 31, 2010.

Medicexchange’s operating results are as follows:

	2010			2009

Revenue	$	15		$	48
Operating expenses		(249	)		(1,079	)
Net loss from operations		(234	)		(1,031	)

All prior periods were reclassified to conform to the current period presentation of discontinued operations.

F-13

4. Cash and cash equivalents

We invest our cash in short-term deposits with major banks. As of December 31, 2010 we held $8,434 of cash and cash equivalents.

Cash and cash equivalents consist of cash and temporary investments with maturities of 90 days or less when purchased.

Concentrations

The Company maintains its cash and cash equivalents at major financial institutions in Europe, United States (USA), United Arab Emirates (UAE) and Australia. Cash held in foreign institutions is not insured by the Federal Deposit Insurance Corporation and amounted to $8,433 as of December 31, 2010 and $22,138 as of December 31, 2009. The Company periodically evaluates the relative credit standing of financial institutions considered in its cash investment strategy.

F-14

5. Investments at cost

We account for investments in non-marketable securities under the cost method of accounting where we own less than a 20% interest in each of the companies and we do not have significant influence over the entity. We continually review each investment to assess for other-than-temporary decreases in value.

Eurindia Limited

In 2000 MGT invested in Eurindia Limited (“Eurindia”), a UK company that invested in IT start-up companies. MGT had a 6% holding in Eurindia and accounted for this investment on a cost basis. As of December 31, 2009 this investment had been fully impaired. On March 31, 2010 we disposed of all of our holding in Eurindia for $1 leading to a gain on sale of $1 (see notes 3and 12).

XShares Group

In 2007 and 2008 we invested $3,000 in Series C preferred shares of XShares Group, Inc. (“XShares”), an investment advisor that creates, issues and supports exchange traded funds with a particular healthcare specialty. In the year ended December 31, 2009 the Company also invested $2,000 in XShares convertible notes with a principal of $2,100 (see note 7). As of December 31, 2009 the equity investment and the convertible notes were fully impaired. On March 31, 2010 we disposed of all of our equity holdings in XShares for $1 and the convertible notes for $1, leading to a gain on sale of $2 (see notes 3 and 12).

HipCricket Inc.

In Fiscal 2007 we invested $2,000 in HipCricket Inc., a company engaged in mobile marketing. In the year ended December 31, 2009 HipCricket Inc. was delisted from the AIM Market and we accounted for it as an investment held at cost. In the year ended December 31, 2009, the investment was written down to $224. On March 31, 2010 we disposed of all of our holdings in HipCricket for $205 resulting in a loss on sale of $19 (see notes 3 and 12).

The following table presents the changes in Level 3 instruments for the year ended December 31, 2010.

	January 1, 2010		Sales			Profit / (loss) on sale included in earnings			December 31, 2010		Change in impairment losses relating to instruments still held at December 31, 2010

Eurindia Limited	$	—		(1	)		1		$	—	$	—
XShares Group, Inc.		—		(1	)		1			—		—
HipCricket Inc.		224		(205	)		(19	)		—		—
	$	224		(207	)		(17	)	$	—	$	—

F-15

6. Property and equipment

Property and equipment consist of the following as of December 31:

	2010			2009

Computer hardware and software	$	769		$	1,233
Leasehold improvements		224			197
Furniture and fixtures		213			214

		1,206			1,644
Less: Accumulated depreciation		(959	)		(1,354	)
	$	247		$	290

Depreciation of $138 was charged in 2010, compared to $310 charged in 2009. In June 2010 certain fully depreciated computer hardware items were written off. These had cost and accumulated depreciation values of approximately $533. Medicexchange’s depreciation expense amounts have been reflected in discontinued operations in the statement of cash flows.

F-16

7. Convertible notes

In the second and third quarters of Fiscal 2009 we issued convertible notes with a principal of $2,100 in XShares Group LLC (“XShares”) for $2,000. The principal included a fee of $100 payable to us which was recognized in interest and other income in the year ended December 31, 2009. The notes were unsecured and attracted interest at an annualized rate of 10%. In the third and fourth quarter of Fiscal 2009 we amended the notes, extending the conversion date to April 2010.

During Fiscal 2009 XShares had been attempting to raise equity finance. In the fourth quarter of 2009 it became clear that this fundraising was not going to be successful and, as a consequence, the convertible notes and associated accrued interest were fully impaired.

In February 2010 we amended the notes to ensure that on conversion we would receive 50% of XShares’ share capital.

On March 31, 2010 we disposed of the convertible notes for $1 resulting in a gain on sale of $1 (see notes 3 and 12).

F-17

8. Investment accounted for under the equity method

In Fiscal 2009 we purchased 49% of the share capital of Moneygate Group Limited (“Moneygate”). Moneygate is a related party as we have significant influence over it and have representation on the board of directors (see note 18). On acquisition we provided loan facilities of £250 ($387) for working capital and £2,000 ($3,094) for acquisitions and subsequently entered into various transactions with Moneygate and other non-related parties (see note 19).

As we have significant influence over Moneygate we account for it under the equity method. Since the investment was acquired at a nominal value, also its fair value, and has incurred losses since we made our investment, it is recorded in the consolidated financial statements at a value of $nil at December 31, 2010 and 2009.

F-18

9. Goodwill

At December 31, 2008 our goodwill totaled $12,157, which was entirely related to our shareholding in Medicsight plc. We assess the impairment of goodwill of our reporting units annually, or more often if events or changes in circumstances indicate that the carrying value may not be recoverable. This assessment is based upon an analysis of both the market value and discounted anticipated future cash flow of the reporting unit.

The shares of Medicsight plc are traded on the AIM Market of the London Stock Exchange. We consider this to be a Level 1 input in the fair value hierarchy as this is an unadjusted quoted price in an active market.

The estimate of future cash flow is based upon, among other things, certain assumptions about expected future operating performance and an appropriate discount rate determined by our management. Our estimates of discounted cash flows may differ from actual cash flows due to, among other things, timings of regulatory approvals, economic conditions in the healthcare IT market, changes to our business model or changes in operating performance.

In addition, estimates of discounted cash flows would involve assumptions on a business with limited revenue history and developing revenue models, which increase the risk of differences between the projected and actual performance. Significant differences between these estimates and actual cash flows could materially affect our future financial results. We consider these to be Level 3 inputs in the fair value hierarchy, as this is an unobservable input with little or no market activity that require significant management judgment.

In the three months ended March 31, 2009, the market value of Medicsight plc, as traded on the AIM Market of the London Stock Exchange, declined from $53,000 to $13,200. We concluded that this decline in value to be a triggering event with respect to the carrying value of our goodwill and we conducted an impairment test of goodwill as of March 31, 2009. Due to the uncertainties involved in using the unobservable inputs to estimate future cash flows, we used market price, Level 1 inputs, as the primary basis of our impairment review. As a result of this test we determined that the carrying amount of Medicsight plc exceeded its fair value and recorded an impairment loss of $12,157 during the quarter ended March 31, 2009.

F-19

10. Accrued expenses

	2010		2009

Professional fees	$	389	$	406
Suppliers with deferred payment terms		108		142
Rent, rates and property related		135		115
D4D severance pay		281		—
Other		68		551

Total Accruals	$	981	$	1,214

In the fourth quarter of 2010, the severance expenses relate to the service agreement between MGT Capital Investments, Inc. and D4D Limited (see note 18).

F-20

11. Stockholders’ equity and non-controlling interest

MGT Capital Investments, Inc.

Treasury stock

As of December 31, 2009 the Company held a total of 6,349,793 shares in treasury stock, at an average price of $2.98 per share, for a total of $18,912.

In December 2010 the Company sold a total of 6,500,000 shares to Laddcap Value Partners, LP (“Laddcap”) at a price of approximately $0.15 per share, for a total of $1,000. A sum of 6,349,793 treasury shares and 150,207 newly issued shares were used to account for the sale.

Medicsight plc

In March and April 2008 we purchased a total of 1,000,000 shares in Medicsight for £634 ($1,251), bringing our total holding in Medicsight to 86,000,000 (55%) of the 155,524,904 issued share capital of Medicsight. The acquisition of these shares was accounted for under the purchase method of accounting and the excess of the acquisition cost over the associated non-controlling interest of the investment was added to goodwill. On December 31, 2010 Medicsight shares closed at a price of £0.04 ($0.07), valuing MGT’s 86,000,000 shares at $5,761.

Non-controlling interest

The Company has non-controlling investors in Medicsight as follows:

	Medicsight			Medicexchange (discontinued operations)			Total

Non-controlling interest at December 31, 2008	$	15,036		$	981		$	16,017
Less non-controlling interest share of net loss		(5,225	)		(541	)		(5,766	)
Non-controlling interest share of stock-based compensation expense		484			13			497
Non-controlling interest share of other comprehensive income		855			(199	)		656
Non-controlling interest at December 31, 2009	$	11,150		$	254		$	11,404

Less non-controlling interest share of net loss		(3,336	)		(14	)		(3,350	)
Non-controlling interest share of stock-based compensation expense		349			3			352
Non-controlling interest share of other comprehensive income		(202	)		(10	)		(212	)
Disposal of Medicexchange		-			(233	)		(233	)
Non-controlling interest at December 31, 2010	$	7,961		$	-		$	7,961

On March 31, 2010 the Group disposed of all its investments in Medicexchange.

F-21

12. Interest and other income (and expense)

We had the following other income and expense amounts:

	2010			2009
Loss on sale of HipCricket		(19	)		—
Gain on sale of XShares convertible note		1			—
Gain on sale of XShares equity		1			—
Gain on sale of Eurindia		1			—
Interest Income		76			658
Foreign exchange gain / (loss)		6			(172	)
(Loss) on marketable securities		—			(738	)
Impairment of XShares convertible note		—			(2,210	)
Impairment of investments held at cost		—			(776	)
Total	$	66		$	(3,238	)

In both 2010 and 2009 Medicsight recorded foreign exchange losses and gains respectively. These realized gains/losses were made on translating U.S. dollars into sterling. As the transactions were settled, the gain/loss is recognized in the Consolidated Statement of Operations.

In 2009 Interest Income included bank interest and interest from the XShares convertible notes. These notes and the accrued interest were impaired and the impairment loss is included in interest and other expenses in the chart above.

F-22

13. Comprehensive loss

Comprehensive losses for the years ended December 31, 2010 and 2009 are as follows:

	2010			2009

Net loss as reported	$	(13,001	)	$	(32,143	)
Other comprehensive (loss)
Unrealized foreign exchange gain (loss)		(668	)		1,066
Comprehensive loss		(13,669	)		(31,077	)
Comprehensive loss attributable to non-controlling interest		3,562			5,110
Comprehensive loss attributable to MGT Capital Investments, Inc.	$	(10,107	)	$	(25,967	)

The accumulated balances related to each component of other comprehensive losses were as follows:

	Foreign currency translation			Accumulated other comprehensive loss
Balance at December 31, 2008	$	(4,959	)	$	(4,959	)
Other comprehensive gain		410			410
Balance at December 31, 2009		(4,549	)		(4,549	)
Other comprehensive (loss)		(456	)		(456	)
Balance at December 31, 2010	$	(5,005	)	$	(5,005	)

F-23

14. Stock option plans

We have a number of Stock Option Plans as follows.

MGT Stock Option Plan

On December 5, 2007 the Board of Directors approved the 2007 MGT stock option plan and granted options for 1,975,000 shares under this plan. At December 31, 2010 there were no options outstanding. Options issued under this plan vested in equal one-thirds after employees have been employed for 12, 24 and 36 months from the date of grant.

In the quarter ended December 30, 2010, it was ascertained that shareholder approval was not obtained within the 12 months following the grant of the MGT stock option plan as required by the option plan. Since shareholder approval was never obtained, a grant date was never established. As such, all options issued under this plan are, therefore, void. In recognition, no expense for the current or subsequent periods, have or will be recognized. The Company considered the impact of these findings and considers it immaterial to all prior quarters and year ends.

Medicsight Stock Option Plans

We have thirteen Stock Option Plans in Medicsight. The shares of this company were listed on the AIM Market of the London Stock Exchange on June 21, 2007.

Plan A - on February 26, 2003 we approved stock option plan “A” and in the period ended June 30, 2003 we granted options for 2,971,000 shares under this plan. At December 31, 2010 there were no options outstanding.

Plan B - on August 15, 2005 we approved stock option plan “B” and between July 1, 2003 and March 31, 2005 we granted options for 3,420,500 shares under this plan. At December 31, 2010 there were 150,000 options outstanding, all of which were exercisable.

Plan C - on August 15, 2005 we approved stock option plan “C” and between April 1, 2005 and June 30, 2006 we granted options for 515,000 shares under this plan. Options issued under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months from date of grant. At December 31, 2010 there were 85,000 options outstanding, all of which were exercisable.

Plan D - On July 13, 2006 we approved stock option plan “D” and granted options for 1,375,000 shares under this plan. Options under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months from the date of grant. At December 31, 2010 there were no options outstanding.

Plan E - on February 22, 2007 we approved and granted options for 5,900,000 shares under stock option plan “E”. Options under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months. At December 31, 2010 there were 790,000 options outstanding, all of which were exercisable.

Plan F - on May 16, 2007 we approved and subsequently granted options for 350,000 shares under stock option plan “F”. Options under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months from the grant date. At December 31, 2010 there were 50,000 options outstanding, all of which were exercisable.

Plan G - on December 18, 2007 we approved and subsequently granted options for 3,025,000 shares under stock option plan “G”. Options under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months from the grant date. At December 31, 2010 there were 150,000 options outstanding, all of which were exercisable.

Plan H - on June 2, 2008 we approved and subsequently granted options for 750,000 shares under stock option plan “H”. Options under this plan vest in equal one thirds after employees have been employed for 12, 24 and 36 months from the grant date. At December 31, 2010 there were no options outstanding.

Plan I - on December 16, 2008 we approved and subsequently granted options for 1,805,000 shares under stock option plan “I”. Options under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months from the grant date. At December 31, 2010 100,000 options were outstanding, of which 66,667 were exercisable.

Plan J — on May 14, 2009 we approved and subsequently granted options for 7,848,750 shares under stock option plan “J”. Options under this plan vest in equal one-sixths for each six months that employees have been employed for 6, 12, 18, 24, 30 and 36 months from the grant date. At December 31, 2010 there were 6,603,334 options outstanding, of which 3,319,718 were exercisable.

F-24

Plan K — on May 20, 2009 we approved and subsequently granted options for 300,000 shares under stock option plan “K”. Options under this plan vested in three tranches in the period to December 31, 2009. At December 31, 2010 there were 300,000 options outstanding, all of which were exercisable.

Plan L — on January 26, 2010 we approved and subsequently granted options for 100,000 shares under stock option plan “L”. Options under this plan vest in equal one-sixths after employees have been employed for 6, 12, 18, 24, 30 and 36 months from the grant date. At December 31, 2010 there were 100,000 options outstanding, 16,667 of which were exercisable.

Plan M — on December 13, 2010 we approved and subsequently granted options for 5,375,000 shares under stock option plan “M”. Options under this plan vest in equal one-sixths after employees have been employed for 6, 12, 18, 24, 30 and 36 months from the grant date. At December 31, 2010 there were 5,375,000 options outstanding, none of which were exercisable.

The following weighted average assumptions were used to estimate the fair value of stock options granted in the years ended December 31:

	2010		2009

Dividend yield	nil		nil
Expected volatility	87.7% - 119.5	%	105.0	%
Risk-free interest rate	3.84 - 3.96	%	3.89	%
Expected life of options	5.9 - 6.5 Years		5.0 - 6.3 Years
Weighted average fair value of options granted
Weighted-average grant-date fair value — Medicsight Plan J	—		£0.24 ($0.38	)
Weighted-average grant-date fair value — Medicsight Plan K	—		£0.07 ($0.11	)
Weighted-average grant-date fair value — Medicsight Plan L	£0.04 ($0.07	)	—
Weighted-average grant-date fair value — Medicsight Plan M	£0.03 ($0.05	)	—

The assumptions above are based on multiple factors including United Kingdom treasury bonds for the risk-free rate at the time of grant, expected future exercising patterns (we cannot base the estimate on the historical exercise patterns as no options have been exercised) and the volatility of Medicsight PLC’s own stock price.

The assumptions used in the Black-Scholes option valuation model are highly subjective, and can materially affect the resulting valuation.

The following table summarizes stock option activity for the two years ended December 31, 2010 and 2009 under all option plans:

	Outstanding				Exercisable
	Number of Shares		Weighted-Average Exercise Price		Number of Shares	Weighted-Average Exercise Price

Outstanding at January 1, 2009	16,137,500		£0.91 ($1.31	)	5,679,166	£0.98 ($1.42	)

Granted	8,148,750		£0.09 ($0.13	)
Exercised	—		—
Forfeited	(12,782,891	)	£0.64 ($1.02	)

Outstanding at December 31, 2009	11,503,359		£0.59 ($0.94	)	4,605,890	£0.96 ($1.50	)

Granted	5,475,000		£0.05 ($0.08	)
Exercised	—		—
Forfeited	(900,025	)	£0.39 ($0.60	)
Voided option plan	(1,975,000	)	£2.39 ($3.69	)
Transferred with sale of Medicexchange	(400,000	)	£0.63 ($0.97)

Outstanding at December 31, 2010	13,703,334		£0.13 ($0.20	)	4,928,052	£0.24 ($0.37	)

F-25

The following is a summary of the status of stock options outstanding at December 31, 2010:

	Outstanding Options				Exercisable Options
	Number	Remaining Contractual Life (years)	Average Exercise Price		Number	Average Exercise price
MGT 2007 Plan	—	—	—		—	—

Medicsight Plan A	—	—	—		—	—
Medicsight Plan B	150,000	3.7	£0.75 ($1.16	)	150,000	£0.75 ($1.16	)
Medicsight Plan C	85,000	5.1	£0.75 ($1.16	)	85,000	£0.75 ($1.16	)
Medicsight Plan D	—	—	—		—	—
Medicsight Plan E	790,000	6.1	£0.50 ($0.77	)	790,000	£0.50 ($0.77	)
Medicsight Plan F	50,000	6.4	£0.75 ($1.16	)	50,000	£0.75 ($1.16	)
Medicsight Plan G	150,000	7.0	£1.10 ($1.70	)	150,000	£1.10 ($1.70	)
Medicsight Plan H	—	—	—		—	—
Medicsight Plan I	100,000	8.0	£0.24 ($0.37	)	66,667	£0.24 ($0.37	)
Medicsight Plan J	6,603,334	8.4	£0.09 ($0.14	)	3,319,718	£0.09 ($0.14	)
Medicsight Plan K	300,000	8.4	£0.10 ($0.15	)	300,000	£0.10 ($0.15	)
Medicsight Plan L	100,000	9.0	£0.09 ($0.14	)	16,667	£0.09 ($0.14	)
Medicsight Plan M	5,375,000	10.0	£0.05 ($0.08	)	—	£0.05 ($0.08	)

On May 14, 2009 we approved Medicsight Plan J. Employees who were employed on May 14, 2009 were given the opportunity to forfeit all their existing options in Plans A through I and, in their place, receive in Plan J 50% of the number of forfeited options. We account for this as a modification of the existing options, specifically a cancel and reissue. Of the options issued in Plan J 3,032,500 were issued as new options and 4,816,250 were issued as replacements for options cancelled in existing plans. Forty-three employees took this opportunity and received options in Plan J. The modification charge relating to Plan J was not material.

On November 30, 2010, Mr. David Sumner, Chairman of Medicsight PLC, resigned from his position within the group. Immediately after his resignation, a two year consultancy agreement was signed whereby Mr. Sumner would continue to assist the group in its commercial needs. As part of this agreement, Mr. Sumner was to continue to vest his existing Medicsight Plan J options throughout the consultancy period. A modification of the 2,000,000 existing options has been accounted for, and is not considered to be material to the overall financial statements.

The Company has recorded the following amounts related to its share-based compensation expense in the accompanying Consolidated Statements of Operations:

	2010		2009
Selling, general and administrative	$	729	$	1,855
Research and development		55		95
Discontinued operations		11		49
Total	$	795	$	1,999

Of the $795 stock based expense for the year, $352 was allocated to non-controlling interest

The aggregate intrinsic value for options outstanding and exercisable at December 31, 2010 and 2009 was $nil .

The weighted average grant date fair value of options was $0.05 and $0.38 for options granted during the years ended December 31, 2010 and 2009 respectively.

F-26

AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

This Amended and Restated Securities Purchase Agreement (this “Agreement”) is dated as of December 9, 2010, by and between MGT Capital Investments, Inc., a Delaware corporation (the “Company”), and Laddcap Value Partners, LP, a Delaware limited partnership company, or an Affiliate (defined below) thereof (collectively, the “Purchaser”), and amends and restates in its entirety the Securities Purchase Agreement (the “Original Agreement”), dated as of November 16, 2010, by and between the Company and the Purchaser.

WHEREAS, the Company and the Purchaser entered into the Original Agreement on November 16, 2010, and subsequently agreed to amend and restate such agreement with this Agreement, and the parties desire that this Agreement supersede the Original Agreement in all respects;

WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

“Action” shall have the meaning ascribed to such term in Section 3.1(k).

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the Drop-Dead Date (defined below).

E-9

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(s).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(cc).

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

“Permits” shall have the meaning ascribed to such term in Section 3.1(n).

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened in writing.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.6.

E-10

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Closing Date, by and between the Company and the Purchaser, in the form attached hereto as Exhibit B.

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities” means the Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Shares” shall have the meaning ascribed to such term in Section 2.1.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“Subscription Amount” means One Million dollars ($1,000,000.00), in United States dollars and in immediately available funds.

“Subsidiary” means any subsidiary of the Company with respect to which the Company owns in excess of 50% of any class of such subsidiary’s outstanding securities, and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date of the Original Agreement, which in each case will be owned by the Company at the Closing.

“Trading Day” means a day on which the principal Trading Market is open for trading.

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the OTC Bulletin Board, the OTC QB, the OTC QX, NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

“Transaction Documents” means this Agreement, the Registration Rights Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

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“Transfer Agent” means Standard Registrar & Transfer, and any successor transfer agent of the Company.

ARTICLE II

PURCHASE AND SALE

Section 2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchaser agrees to purchase, Six Million Five Hundred Thousand (6,500,000) shares of Common Stock of the Company (the “Shares”) for the Subscription Amount. The Purchaser shall deliver to the Company, via wire transfer of immediately available funds, an amount equal to the Subscription Amount and the Company shall deliver to the Purchaser the Shares, and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Seward & Kissel LLP, One Battery Park Plaza, New York, NY 10004, or such other location (including remotely by exchange of electronic or .pdf documents) as the parties shall mutually agree.

Section 2.2 Deliveries.

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:

(i) this Agreement duly executed by the Company;

(ii) a legal opinion of Company Counsel, substantially in the form of Exhibit A attached hereto;

(iii) the Registration Rights Agreement, duly executed as of the Closing Date by the Company;

(iv) a certificate evidencing the Shares, which certificate shall be registered in the name of the Purchaser and shall bear the legend referenced in Section 4.10(b) of this Agreement;

(v) a copy of irrevocable instructions to the Company’s transfer agent instructing the transfer agent to deliver the Shares, registered in the name of the Purchaser;

(vi) a letter of resignation from Tim Paterson-Brown (with respect to his position as a member of a Board of Directors) effective as of on or before the Closing;

(vii) a certificate duly executed by an executive officer of the Company, dated as of the Closing Date, certifying as to the matters set forth in Sections 2.3(b)(i) – (viii).

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(b) On or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:

(i) this Agreement duly executed by such Purchaser; and

(ii) the Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company.

Section 2.3 Closing Conditions.

(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

(i) the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchaser contained herein (except for the representations and warranties that speak as of a specific date, which shall be made as of such date);

(ii) all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

(iii) the receipt by the Company of a favorable opinion from Broadmark Capital that the transactions contemplated hereby are in the best interests of the shareholders of the Company;

(iv) the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement.

(b) The obligation of the Purchaser hereunder in connection with the Closing is subject to the following conditions being met:

(i) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (except for the representations and warranties that speak as of a specific date, which shall be made as of such date);

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

(iv) Tim Paterson-Brown shall have resigned from his role as a member of the Board of Directors;

(v) the Board of Directors shall have appointed Robert B. Ladd to the Board of Directors as a replacement for Tim Patterson-Brown;

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(vi) the Board of Directors shall have elected Peter Venton as Chairman of the Board of Directors;

(vii) there shall have been no Material Adverse Effect with respect to the Company since the date of the Original Agreement; and

(viii) from the date of the Original Agreement to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities which, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules or otherwise referenced in the Disclosure Schedules in such a manner that it is reasonably identifiable to which section such disclosure corresponds, the Company hereby represents and warrants as of the date of the Original Agreement and as of the Closing Date (except for the representations and warranties that speak as of a specific date, which shall be made as of such date) to the Purchaser as follows:

(a) Subsidiaries. All of the direct and indirect Subsidiaries of the Company, or entities of which the Company owns greater than 50% of the outstanding equity, are as set forth in Section 3.1(a) of the Disclosure Schedule. The Company owns, directly or indirectly, the amount(s) set forth in Section 3.1(a) of the Disclosure Schedule of capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all such issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, and non-assessable.

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(b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder including, without limitation, the issuance of the Shares. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d) No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not reasonably be expected to result in a Material Adverse Effect.

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(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.3 of this Agreement, (ii) the filing with the Commission of a registration statement in accordance with the Registration Rights Agreement, (iii) application(s) to each applicable Trading Market for the listing of the Securities for trading thereon in the time and manner required thereby and (iv) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

(f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.

(g) Capitalization. The capitalization of the Company is as set forth in Section 3.1(g) of the Disclosure Schedule. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. There are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

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(h) SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date of the Original Agreement (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Except as contemplated by the Transaction Documents, since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date of the Original Agreement, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and except for this agreement (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective business, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

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(j) No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of the Subsidiaries or their respective business, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced or (ii) could have a Material Adverse Effect.

(k) Litigation. There is no action, suit, notice of inquiry, violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) would, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. To the knowledge of the Company, there has not been, and there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(l) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. Except as contemplated in Section 2.3(b) of this Agreement, no executive officer (as defined in Rule 501(f) promulgated under the Securities Act) or other key employee of the Company or any of the Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No executive officer or other key employee, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer or key employee, to the knowledge of the Company, does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in material compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours.

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(m) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters.

(n) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses (“Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Permit.

(o) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are to their knowledge held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

(p) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as described in the SEC Reports (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person. All such Intellectual Property Rights are enforceable and to the knowledge of the Company there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties.

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(q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

(r) Transactions With Affiliates and Employees. None of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee of the Company has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

(s) Sarbanes-Oxley; Internal Accounting Controls. Except as described in the SEC Reports, the Company is in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date of the Original Agreement, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date of the Original Agreement and as of the Closing Date. Except as described in the SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed Quarterly Report on Form 10-Q under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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(t) Subsidiary Rights. The Company or one of the Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of the Subsidiaries as owned by the Company or such Subsidiary.

(u) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of the Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect. Confirm.

(v) Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

(w) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(x) Registration Rights. Other than the rights of the Purchaser under the Registration Rights Agreement, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

(y) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to terminate, or which to its knowledge is likely to have the effect of terminating, the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Company has not received any notice of deficiency from the exchange on which its Common Stock is listed, nor is it aware of any violations of any listing requirements in respect of the rules of such exchange.

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(z) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

(aa) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including this Agreement, the Disclosure Schedules to this Agreement and any certificate furnished in connection herewith, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(bb) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

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(cc) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, and (ii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within 6 months from the Closing Date. Section 3.1(cc) of the Disclosure Schedule sets forth as of the date of the Original Agreement all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $75,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $75,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

(dd) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary (i) has made or filed all United States federal and state income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction.

(ee) Foreign Corrupt Practices. To the knowledge of the Company, neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(ff) Accountants. The Company’s accounting firm is EisnerAmper LLP. To the knowledge and belief of the Company, such accounting firm is a registered public accounting firm as required by the Exchange Act.

(gg) Purchasers’ Purchase of Securities. The Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Purchaser is not acting as a financial advisor to the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or any of its respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

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(hh) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.

(ii) Office of Foreign Assets Control. Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

(jj) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.

(kk) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

(ll) Money Laundering. The operations of the Company are in material compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

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(mm) Environmental Matters. Except as disclosed in the SEC Reports, to the knowledge of the Company, neither the Company nor any of its Subsidiaries (i) is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), (ii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or (iii) is subject to any claim relating to any Environmental Laws; in each case, which violation, contamination, liability or claim has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and, to the Company’s Knowledge, there is no pending or threatened investigation that might lead to such a claim.

(nn) Application of Anti-Takeover Provisions. There is no control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar charter documents) or applicable law that would become applicable to the Purchaser as a result of the issuance of the Securities.

(oo) Shell Company. The Company is not now and has not been, at any time during the past three (3) years, a shell company as defined by Rule 405 of the Securities Act and has never been an issuer subject to Rule 144(i) under the Securities Act.

Section 3.2 Representations and Warranties of the Purchasers. The Purchaser hereby represents and warrants as of the date of the Original Agreement and as of the Closing Date (except for the representations and warranties that speak as of a specific date, which shall be made as of such date) to the Company as follows:

(a) Organization; Authority. The Purchaser is either an individual or an entity which one? duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate, partnership or limited liability company power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

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(b) Understandings or Arrangements. The Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting the Purchaser’s right to sell the Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

(c) Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date of this Agreement it is, either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. The Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

(d) Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. The Company has provided the Purchaser with access to the Company and its books and records, and the Purchaser has had the opportunity to ask questions of the Company and, as of the date of the Original Agreement, has received any information that it has requested from the Company.

(e) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, and otherwise disclosed in its SEC filings, the Purchaser or any of Affiliate, has not, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing August 1, 2010 and ending the latter of (i) immediately prior to the execution hereof or the (ii) the date on which the Company publicly announces the transactions contemplated by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

(f) Certain Fees. To the knowledge of the Purchaser, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.

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The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby. The Purchaser hereby further represents and warrants that, as of the date of the Original Agreement, it does not have any actual knowledge of any inaccuracy of the representations and warranties of the Company set forth in Section 3.1.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

Section 4.1 Furnishing of Information. Until the time that the Purchaser no longer owns any of the Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date of the Original Agreement pursuant to the Exchange Act so long as the Company is then subject to the reporting requirements of the Exchange Act. As long as the Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities, including without limitation, under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule 144.

Section 4.2 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

Section 4.3 Securities Laws Disclosure; Publicity. The Company shall, during or prior to the Trading Day immediately following the second business day following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and issue a Current Report on Form 8-K (which shall include this Agreement as an exhibit thereto) disclosing the material terms of the transactions contemplated hereby, and including the Transaction Documents as exhibits thereto within the time required by the Exchange Act. From and after the issuance of such press release, the Company shall have publicly disclosed all material, non-public information delivered to the Purchaser by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company and the Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.

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Section 4.4 Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities for general working capital purposes, and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents or (c) the settlement of any outstanding litigation or (d) in violation of the FCPA or OFAC regulations.

Section 4.5 Indemnification of Purchasers. Subject to the provisions of this Section 4.6, the Company will indemnify and hold the Purchaser and its shareholders, members, partners, directors, managers, officers, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the shareholders, members, partners, directors, managers, officers, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of the Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party (in this regard, Gersten Savage shall be deemed to be reasonably acceptable to Purchaser). Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent, that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received. The indemnity agreements contained herein shall not be an exclusive remedy but shall be in addition to any cause of action or similar right in law or in equity of any Purchaser Party against the Company or others, and (y) any liabilities the Company may be subject to pursuant to law.

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Section 4.6 Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Shares on such Trading Market and promptly secure the listing of all of the Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares, and will take such other action as is reasonably necessary to cause all of the Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

Section 4.7 Certain Transactions and Confidentiality. The Purchaser covenants that neither it nor any Affiliate or any other Person acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of the Original Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.3. The Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.3, the Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company has been informed that (i) the Purchaser does not make any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the Closing Date, (ii) the Purchaser shall not be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the Closing Date, and (iii) Purchaser shall not have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.3.

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Section 4.8 Transfers; Legend.

(a) Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of the Securities other than pursuant to an effective registration statement, to the Company, to an Affiliate of an Purchaser or in connection with a pledge as contemplated in Section 4.08(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act

(b) Certificates evidencing the Shares will contain the following legend, until such time as they are not required under Section 4.08(c):

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES IN ACCORDANCE WITH APPLICABLE LAW.

The Company has been informed that the Purchaser may from time to time pledge, and/or grant a security interest in some or all of the Securities pursuant to a bona fide margin agreement in connection with a bona fide margin account and, if required under the terms of such agreement or account, the Purchaser may transfer pledged or secured Securities to the pledgees or secured parties in accordance with applicable law. Such a pledge or transfer would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Purchaser transferee of the pledge. No notice shall be required of such pledge. At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities. Except as otherwise provided in Section 4.10(c), any Securities subject to a pledge or security interest as contemplated by this Section 4.10(b) shall continue to bear the legend set forth in Section 4.1(b) and be subject to the restrictions on transfer set forth in Section 4.10(a).

(c) Certificates evidencing Securities shall not contain any legend (including the legend set forth in Section 4.1(b)): (i) following a sale or transfer of such Securities pursuant to an effective registration statement (including a Registration Statement), or (ii) following a sale or transfer of such Shares pursuant to Rule 144 (assuming the transferee is not an Affiliate of the Company), or (iii) while such Securities are eligible for sale without volume limitations pursuant to Rule 144. If the Purchaser shall make a sale or transfer of Securities either (x) pursuant to Rule 144 or (y) pursuant to a registration statement and in each case shall have delivered to the Company or the Company’s transfer agent the certificate representing Securities containing a restrictive legend which are the subject of such sale or transfer and a representation letter in customary form.

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Section 4.9 Restriction on trading in the Company’s Securities

For the period from the date of the Original Agreement to the Closing Date, it is understood and acknowledged by the Purchaser that: (i) each of the Purchaser and its Affiliates has been asked by the Company to agree, and the Purchaser (on behalf of its self and its Affiliates) has agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company; (ii) the Purchaser has agreed to desist from future open market or other transactions by the Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this private placement transactions; (iii) the Purchaser, and counter-parties in “derivative” transactions to which the Purchaser is a party, directly or indirectly, presently may not have a “short” position in the Common Stock, and (iv) the Purchaser shall not have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction.

Section 4.10 Cooperation of the Parties.

Each of the Company (subject to its exercise of the fiduciary duties owned to its shareholders) and the Purchaser agree that they will use their commercially reasonable efforts to close the transaction contemplated hereby by the Closing Date. The Company and the Purchaser further agree that they shall each provide reasonable cooperation to the other party for all necessary filings made by the Company and/or the Purchaser incident to the transactions contemplated hereby, whether before or after the Closing Date.

ARTICLE V

MISCELLANEOUS

Section 5.1 Termination. This Agreement may be terminated by either the Company or the Purchaser by written notice to the other party if the Closing has not been consummated on or before December 31, 2010 (the “Drop-Dead Date”); provided, however, that no such termination will affect the right of any party to sue for any breach by the other party. Subject to Section 4.11, the Company may terminate this Agreement prior to the Drop-Dead Date if (and only if) the Company receives a bonafide, written offer for a transaction at least as favorable to the Company, and on terms more favorable to the Company, as the transaction contemplated hereby (collectively, the “Company Termination Option”). In the event that the Company Termination Option has not be exercised by the Drop-Dead Date, the Company’s right to exercise the Company Termination Option shall expire in its entirety, without regard to whether the Closing has (or has not) occurred by such date.

Section 5.2 Fees and Expenses. Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, provided, however, that, in the event that the Closing has not occurred on or before the Drop-Dead Date, unless such Closing has not occurred because of a breach by the Purchaser of its obligations under this Agreement, the Company shall reimburse the Purchaser for all of their reasonable out-of-pocket expenses (including reasonable legal fees) up to a maximum of $35,000. The Company shall pay all Transfer Agent fees and stamp taxes levied in connection with the delivery of any Securities to the Purchasers.

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Section 5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

Section 5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

Section 5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

Section 5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

Section 5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser. The Purchaser may assign any or all of its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Securities.

Section 5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.6.

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Section 5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.6, the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

Section 5.10 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

Section 5.11 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

Section 5.12 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

Section 5.13 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

E-33

Section 5.14 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, in the event that the Company or the Purchaser has materially breached any of its representations or warranties contained herein, then the Purchaser or the Company, as the case may be, may rescind or withdraw, in its sole discretion upon written notice to the other party, the transactions contemplated by this Agreement.

Section 5.15 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

Section 5.16 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

Section 5.17 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

Section 5.18 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

(Signature Pages Follow)

E-34

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

	MGT CAPITAL INVESTMENTS, INC.

	By:
	Name:
	Title:

	By:
	Name:
	Title:

	LADDCAP VALUE PARTNERS, LP

	By:
	Name:
	Title:

E-35

Exhibit A

Form of Opinion

E-36

Exhibit B

Form of Registration Rights Agreement

E-37

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

Large Accelerated Filer ¨		Accelerated filer ¨

Non-accelerated Filer ¨		Smaller reporting company x
(Do not check if smaller reporting company)

	PART I	4
Item 1	Business	4
Item 1A	Risk Factors	9
Item 1B	Unresolved Staff Comments	12
Item 2	Properties	13
Item 3	Legal Proceedings	14
Item 4	(Removed and Reserved)	15

	PART II	16
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16

Item 6	Selected Financial Data	17
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	33
Item 8	Financial Statements and Supplementary Data	34
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	35
Item 9A	Controls and Procedures	36
Item 9B	Other Information	38

	PART III	39
Item 10	Directors, Executive Officers and Corporate Governance	39
Item 11	Executive Compensation	42
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	46
Item 13	Certain Relationships and Related Transactions, and Director Independence	48
Item 14	Principal Accountant Fees and Services	51

	PART IV	52
Item 15	Exhibits and Financial Statement Schedules	52

Signatures		54

	High		Low

2010
Fourth Quarter	$	0.29	$	0.20
Third Quarter		0.33		0.15
Second Quarter		0.44		0.21
First Quarter		0.37		0.23

2009
Fourth Quarter		0.54		0.30
Third Quarter		0.76		0.27
Second Quarter		0.52		0.28
First Quarter		1.11		0.20

	2010		2009

Salaries and related costs	$	4,088	$	5,560
Commercial and marketing		274		617
Travel and accommodation		568		771
Professional fees		779		760

	2010			2009
Working capital summary
Cash, cash equivalents and marketable securities	$	8,434			22,165
Current assets		10,730			23,385
Current liabilities		(1,550	)		(2,244	)
Working capital surplus	$	9,180			21,141

	2010			2009
Cash flow summary
Cash (used for) provided by
Operating activities	$	(10,481	)		(14,151	)
Investing activities		(3,287	)		(1,648	)
Financing activities		1,000			—
Discontinued operations		(226	)		280
Effects of exchange rates on cash and cash equivalents		(737	)		(610	)
Net decrease in cash and cash equivalents	$	(13,731	)		(16,129	)

	Payments due by period
Contractual obligations	Total		Less than 1 year		1-3 years		3-5 years
Operating lease obligations	$	352	$	324	$	28	$	—
Purchase obligations		796		796		—		—

Total	$	1,148	$	1,120	$	28	$	—

Name	Age	Position

Richard Taney	54	Chairman, Independent Director, Audit and Nomination and Compensation Committee Member
Peter Venton	67	Independent Director, Audit Committee Chairman and Nomination and Compensation Committee Member
Richard W. Cohen	56	Independent Director, Audit and Nomination and Compensation Committee Member
Neal Wyman	58	Independent Director, Audit Committee Member and Nomination and Compensation Committee Chairman
Robert Ladd	52	Director, Interim Chief Executive Officer

Name Principal Position	Year	Salary		Bonus		Option awards (5)		All other compensation		Total compensation

Tim Paterson-Brown (1)	2010	$	397	$	—	$	130	$	—	$	527
Chairman and CEO	2009	$	376	$	—	$	7	$	—	$	383

Allan Rowley (2)	2010	$	309	$	—	$	61	$	—	$	370
CFO and CEO, Medicsight plc	2009	$	292	$	—	$	176	$	—	$	468

Troy Robinson (3)	2010	$	185	$	—	$	74	$	—	$	259
CFO and CFO, Medicsight plc	2009	$	141	$	—	$	19	$	—	$	160

David Sumner (4)	2010	$	283	$	—	$	—	$	—	$	283
Executive Chairman, Medicsight plc	2009	$	313	$	—	$	150	$	—	$	463

Kenichi Nakagawa	2010	$	239	$	—	$	9	$	—	$	248
Managing Director, Medicsight Japan	2009	$	232	$	—	$	—	$	—	$	232

Name		Number of securities underlying unexercised options exercisable		Number of securities underlying unexercised unearned options		Option exercise price		Option expiry dates

Tim Paterson-Brown

Medicsight plc	Plan J		437,500		437,500	£0.09 ($0.13	)	May 14, 2019
Medicsight plc	Plan M		—		2,125,000	£0.05 ($0.08	)	December 13, 2020

Allan Rowley

Medicsight plc	Plan J		1,000,000		1,000,000	£0.09 ($0.13	)	May 14, 2019
Medicsight plc	Plan M		—		1,000,000	£0.05 ($0.08	)	December 13, 2020

Troy Robinson

Medicsight plc	Plan J		150,000		150,000	£0.09 ($0.13	)	May 14, 2019
Medicsight plc	Plan M		—		1,200,000	£0.05 ($0.08	)	December 13, 2020

David Sumner

Medicsight plc	Plan J		1,000,000		1,000,000	£0.09 ($0.13	)	May 14, 2019

Kenichi Nakagawa

Medicsight plc	Plan J		100,000		100,000	£0.09 ($0.13	)	May 14, 2019
Medicsight plc	Plan M		—		150,000	£0.05 ($0.08	)	December 13, 2020

Name	Option grant dates	Number of options		Option exercise price		Grant date fair value (2)

Tim Paterson-Brown

Medicsight plc	May 14, 2009 (1)		875,000	£0.09 ($0.13	)	$	468
Medicsight plc	December 13, 2010 (1)		2,125,000	£0.05 ($0.08	)	$	130

Allan Rowley

Medicsight plc	May 14, 2009 (1)		2,000,000	£0.09 ($0.13	)	$	475
Medicsight plc	December 13, 2010 (1)		1,000,000	£0.05 ($0.08	)	$	61

Troy Robinson

Medicsight plc	May 14, 2009 (1)		300,000	£0.09 ($0.13	)	$	123
Medicsight plc	December 13, 2010 (1)		1,200,000	£0.05 ($0.08	)	$	63

David Sumner

Medicsight plc	May 14, 2009 (1)		2,000,000	£0.09 ($0.13	)	$	534


Kenichi Nakagawa

Medicsight plc	May 14, 2009 (1)		200,000	£0.09 ($0.13	)	$	79
Medicsight plc	December 13, 2010 (1)		150,000	£0.05 ($0.08	)	$	80

Name	Fees Earned or Paid in Cash (1)		Option Awards		All Other Compensation		Total

Neal Wyman	$	65	$	—	$	—	$	65
Dr L. Peter Fielding	$	8	$	—	$	—	$	8
Peter Venton (2)	$	111	$	—	$	—	$	111
Sir Christopher Paine	$	20	$	—	$	—	$	20
Dr Allan Miller	$	5	$	—	$	—	$	5

Name and address of Beneficial Owner	Number of Shares Beneficially Owned			Percentage of Common Equity Beneficially Owned

5% Beneficial Owners

Directors and Officers
Robert Ladd		8,484,012	(1)		21.7	%
Neal Wyman		100,000	**		—	*
Peter Venton		116,666	**			*
Richard Taney		100,000	**		—	*
Richard W. Cohen		100,000	**		—	*
Tim Paterson-Brown (2)		2,000,000			5.1	%
Allan Rowley (3)		—			—
Troy Robinson (4)		—			—

Total Officers and Directors as a Group (8 persons)		10,900,678			26.8	%

	2010		2009

Audit fees	$	175	$	240

Audit-related fees		-		-

Total Audit & Audit-related fees	$	175	$	240

Tax fees	$	42	$	80

All other fees		-		-

Total fees	$	217	$	320

Exhibit No.		Description

2.1		Articles of Merger of Medicsight, Inc., a Utah corporation (1)
2.2		Certificate of Merger of Medicsight, Inc., a Delaware corporation (1)
2.3		Offering Document to acquire shares of Radical Technology plc. (2)
3.1		Certificate of Incorporation of Medicsight, Inc. and amendments thereto (1)
3.2		By-Laws of Medicsight, Inc. (1)
4.1		Loan Note issued by HTTP Insights, Ltd. to Nightingale Technologies Ltd. (5)
10.1		Share Sale Agreement between Nightingale Technologies Limited and Medicsight, Inc. (3)
10.2		Letter Agreement between Asia IT Capital Investments, Ltd. and Medicsight, Inc. (4)
10.2		Letter Agreement between Asia IT Capital Investments, Ltd. and Medicsight plc (5)
10.3		Securities Purchase Agreement with XShares Group, Inc. (6)
10.4		Second Amended and Restated Certificate of Incorporation of XShares Group, Inc. (6)
10.5		Convertible Promissory Note between XShares Group, Inc. and MGT Capital Investments, Inc. (6)
10.6		First Amendment to Securities Purchase Agreement with XShares Group, Inc. (7)
10.7		Second Amendment to Securities Purchase Agreement with XShares Group, Inc. (7)
10.8		Convertible Promissory Note between XShares Group, Inc. and MGT Capital Investments, Inc. dated August 10, 2009. (7)
10.9		Subscription agreement between Moneygate Group Limited and MGT Capital Investments Limited (8)
10.10		Working capital facility agreement between MGT Capital Investments Limited and Moneygate Group Limited (8)
10.11		Facility agreement between MGT Capital Investments Limited and Moneygate Group Limited (8)
10.12		Agreement for the Purchase of Assets dated March 31, 2010 between MGT Capital Investments, Inc. and MGT Investments Limited and Rivera Capital Management Limited (filed herewith at page E-1).
10.13		Amended and Restated Securities Purchase Agreement dated December 9, 2010 between MGT Capital Investments, Inc. and Laddcap Value Partners, LP (filed herewith at page E-9).
10.14		Registration Rights Agreement dated December 9, 2010 between MGT Capital Investments, Inc. and Laddcap Value Partners, LP (filed herewith at page E-38).
10.15		Sale and Purchase Agreement dated January 31, 2011 between MGT Investments Limited and Committed Capital Nominees Limited (filed herewith at page E-58).
10.16		Form of Revolving Line of Credit and Security Agreement dated April , 2011 between MGT Capital Investments, Inc. and Laddcap Value Partners, LP (filed herewith at page E-67).
10.17		Form of Revolving Credit Note dated April , 2011 for the benefit of Laddcap Value Partners, LP (filed herewith at page E-74).
21.1		Subsidiaries (filed herewith at page E-76).
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Interim Chief Executive Officer (filed herewith at page E-77).
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer (filed herewith at page E-78).
32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Interim Chief Executive Officer (filed herewith at page E-79).
32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer (filed herewith at page E-80).

	MGT CAPITAL INVESTMENTS, INC
April 15, 2011

	By:	/s/ ROBERT LADD
		Robert Ladd
		Interim Chief Executive Officer (Principal Executive Officer)
April 15, 2011

	By:	/s/ ROBERT LADD
		Robert Ladd
		Interim Chief Executive Officer (Principal Financial Officer)

Signature	Title	Date

/s/ RICHARD TANEY	Director	April 15, 2011
Richard Taney

/s/ PETER VENTON	Director	April 15, 2011
Peter Venton

/s/ RICHARD COHEN	Director	April 15, 2011
Richard Cohen

/s/ NEAL WYMAN	Director	April 15, 2011
Neal Wyman

/s/ ROBERT LADD	Director	April 15, 2011
Robert Ladd

	Options			Weighted Average Grant Date Fair Value
Nonvested options at January 1, 2009		10,458,334		£	0.35	($0.56	)
Granted		8,148,750		£	0.24	($0.38	)
Vested		(4,432,527	)	£	0.35	($0.56	)
Forfeited		(7,277,088	)	£	0.30	($0.48	)
Nonvested options at December 31, 2009		6,897,469		£	0.31	($0.49	)
Granted		5,475,000		£	0.03	($0.05	)
Vested		(2,637,618	)	£	0.23	($0.35	)
Forfeited		(959,569	)	£	0.82	($1.26	)
Nonvested options at December 31, 2010		8,775,282		£	0.10	($0.16	)

Deferred Tax Assets	2010			2009
Tax loss carry-forward	$	20,293		$	23,074
Fixed asset depreciation methods and other		3,295			5,434
Total		23,588			28,508
Valuation Allowance		(23,588	)		(28,508	)
Net deferred tax asset	$	—		$	—

	2010			2009
Income taxes at the federal statutory rates		(35	)%		(35	)%
Foreign rate differential		6			3
Change in valuation allowance		26			32
Effective rate of income tax		(3	)%		0	%

	Medicsight			Corporate and other			Total

2010
Revenue from external customers	$	540		$	—		$	540
Cost of revenue		(116	)		—			(116	)
Gross margin		424			—			424
Operating expenses		8,285			3,472			11,757
Operating loss		(7,861	)		(3,472	)		(11,333	)
Depreciation		71			67			138
Stock-based compensation		784			—			784
Assets		10,995			481			11,476
Expenditure for property plant and equipment		82			14			96

2009
Revenue from external customers	$	180		$	—		$	180
Cost of revenue		—			—			—
Gross margin		180			—			180
Operating expenses (includes goodwill impairment in corporate and other)		12,592			15,462			28,054
Operating loss		(12,412	)		(15,462	)		(27,874	)
Depreciation		205			105			310
Stock-based compensation		1,082			868			1,950
Assets (1)		17,713			6,564			24,277
Expenditure for property plant and equipment		14			2			16

	Medicsight plc			Medicsight plc			Medicsight plc			Medicexchange Discontinued Operations		Corporate and Other			Total
	(IFRS)			GAAP			(US GAAP)			(US GAAP)		(US GAAP)			(US GAAP)
				Adjustments

Twelve months ended December 31, 2010
Net revenue from external customers		540			—			540			—		—			540
Operating loss		(7,372	)		(489	)		(7,861	)		—		(3,472	)		(11,333	)
Assets		10,995			—			10,995			—		481			11,476

Twelve months ended December 31, 2009
Net revenue from external customers		180			—			180			—		—			180
Operating loss		(12,260	)		(152	)		(12,412	)		—		(15,462	)		(27,874	)
Assets		17,713			—			17,713			1,097		5,467			24,277

	Balance at
	Beginning						Balance at
Deferred Tax Valuation Allowance	of year		Additions		Write-offs		end of year

2009		21,771		6,737		—		28,508
2010		28,508	3,231			8,151	23,588

Asset	Amount (£,)		Amount ($)*

Medicexchange Limited	£	500	$	757.50

Medicexchange Inc	£	500	$	757.50

Hipcricket, inc	£	135,516	$	205,306

Eurindia Limited	£	500	$	757.50

XShares (equity)	£	500	$	757.50

XShares (debt)	£	612,484	$	927,913

TOTAL	£	750,000	$	1,136,250

1. Name.

	(a)	Full Legal Name of Selling Securityholder


	(b)	Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held:


	(c)	Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire):


2. Address for Notices to Selling Securityholder:


Telephone:
Fax:
Contact Person:

3. Beneficial Ownership of Registrable Securities:

	Type and Principal Amount of Registrable Securities beneficially owned:

	Type and Amount of Other Securities beneficially owned by the Selling Securityholder:

EXECUTED as a DEED by	)
on behalf of	)
MGT CAPITAL INVESTMENTS LIMITED	)
in the presence of:		Director

Witness signature:

Witness name:

Witness address:

Occupation:

EXECUTED as a DEED by	)
on behalf of	)
COMMITTED CAPITAL NOMINEES LIMITED	)
		Director

Witness signature:	/s/ Andrew Bloram

Witness name:	ANDREW BLORAM

Witness address:	FLAT 5 NORTHFIELD HOUSE
	142 – 144 NORTHGATE ROAD
	LONDON 5WII BRO

Occupation:	CORPORATE FINANCE DIRECTOR

BORROWER:		LENDER:

MGT Capital Investments, Inc.		Laddcap Value Partners, LP

By:		By:
	Name:		Robert Ladd
	Title:		Managing Member of the general partner

Name of Subsidiary		Jurisdiction of Organization

MGT Capital Investments (UK) Limited		England and Wales
MGT Investments (Gibraltar) Limited		Gibraltar
Medicsight plc		England and Wales
Medicsight Nominees Limited		England and Wales


Subsidiaries of Medicsight plc

Medicsight KK		Japan
Medicsight Pty Limited		Australia
Medicsight FZE		UAE
MedicEndo Limited		UAE
MedicCO2lon Limited		UAE
Medicsight UK Limited		UK

Subsidiaries of MGT Capital Investments (UK) Limited

MGT Capital Investments Limited		England and Wales

	By:	/s/ ROBERT LADD
	Robert Ladd
	Interim Chief Executive Officer

April 15, 2011

	By:	/s/ ROBERT LADD
	Robert Ladd
	Principal Financial Officer

April 15, 2011