Organization basis of presentation and liquidity

6 Months Ended

Jun. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

1.      Organization, basis of presentation and liquidity

The accompanying unaudited condensed consolidated financial statements of MGT Capital Investments, Inc. (“MGT”, “the Company”, “the Group”, “we”, “us”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, have been included. Operating results for the six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for any subsequent quarter or for the year ending December 31, 2011.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. The condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany accounts and transactions have been eliminated.

MGT is a holding company.  We currently have a controlling interest in our operating subsidiary, Medicsight plc (“Medicsight”). We also have wholly owned subsidiaries MGT Capital Investments (U.K.) 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 (MedicCO2 LON) which it commercializes through a global distributor. On May 19, 2011, Medicsight’s software received clearance from the U.S. Food and Drug Administration ("FDA"). The Company currently has limited revenue as it attempts to commercialize its recent U.S. approval and has responded to a request in Japan from the Ministry of Health, Labor and Welfare (“MHLW”) regulatory authorities for additional information relating to the reliability audit phase of their review. As a result of a settlement agreement entered into with D4D (a related party) on April 12, 2011, 1.25 million shares of MDST common stock held by the Company were assigned to D4D on April 28, 2011. The Company also sold 1.0 million shares of Medicsight via open market sales on London’s AIM exchange.  As of June 30, 2011 the Company’s overall holding in Medicsight was reduced to 83.75 million shares (53.85%) of the 155.5 million issued share capital of Medicsight.

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 $278,420 at June 30, 2011. 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 June 30, 2011 Medicsight’s cash and cash equivalents were $5,446.

At June 30, 2011 MGT’s cash and cash equivalents were $258. On April 12, 2011 the Company entered into a Revolving Line of Credit and Security Agreement (“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 14).

Currently the Company has sufficient cash on hand and availability in the line of credit facility with Laddcap to continue operations through October 2011, at which point the Company may need to seek additional sources of financing. There is no guarantee that additional sources will be available at terms acceptable to the Company or at all.