Restatement of previously issued financial statements

12 Months Ended

Dec. 31, 2012

Statement Of Financial Position [Abstract]

Condensed Financial Statements [Text Block]

Note 1: Restatement of previously issued financial statements

On May 15, 2013, after consulting with the Company’s Audit Committee, management concluded that certain of the Company’s warrants (“J&S Warrants”) and its Series A Convertible Preferred Stock (“Preferred Stock”) received improper accounting treatment. The warrants should have been reflected as liabilities and the Preferred Stock should have been reflected as temporary equity on the balance sheet included in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2012 (the “Annual Report”), as opposed to a component of equity.

Specifically, due to certain anti-dilution provisions contained in the J&S Warrants (as discussed further in Note 9), they are being reclassified to liabilities and will be marked-to-market each reporting period. The change in treatment of the warrants will result in a change to the equity and liability portions of the balance sheet at the aforementioned reporting date and will result in a loss on the revaluation of the warrants which impacts results of operations and loss per share as reported in our statement of operations for the period. In addition, the Company previously determined the fair value using the Black Scholes Model; however, due to the anti-dilution provisions, the Company determined the Binomial Lattice Practice Model was more appropriate. The use of the Binomial Lattice Practice Model caused an increase in the fair value of the J&S Warrants issued as consideration for the acquisition of the Patent which increased the amount recorded for the intangible asset and non-controlling interest. Such restatements for the correction of an error, however, will not impact cash flow or cash balances. In addition, as a result of Waiver Agreements obtained on May 20, 2013 from warrant holders, which removed the anti-dilution provision in exchange for $25; the affected warrants will be treated as equity at June 30, 2013. Investors should be aware that the classification of the warrants as a liability will revert back to the originally reported equity treatment during the quarter ending June 30, 2013.

The Preferred Stock Certificate of Designation and Warrant agreement (as discussed further in Note 12) each contain a fundamental transactions clause that provides for the conditional redemption of these instruments under certain circumstances that are not within the Company’s sole control. Management has therefore concluded that the preferred stock requires temporary equity classification at its allocated values and the warrants require classification as a liability at fair value. When the Preferred stock and Warrants were issued, the fair value of the warrants exceeded the proceeds received from the sale and issuance of the Preferred Stock and Warrants. The Warrants were recorded at their fair value and the excess over the proceeds received was recorded as a deemed dividend. Changes in the fair value of the Warrants at each reporting date are included in the statement of operations. Lastly, as of the date of this Form 10-K/A, substantially all of the Preferred Stock has converted into Common Stock of the Company pursuant to its terms; and therefore the conversion of the Preferred Stock eliminates the classification of these shares as temporary equity as well. In addition, as a result of Waiver Agreements obtained on May 20, 2013 from warrant holders, which removed a fundamental transactions clause that provides for the conditional redemption of these instruments under certain circumstances that are not within the Company’s sole control, in exchange for the issuance of 100,000 shares of the Company’s Common Stock; the affected warrants will be treated as equity at June 30, 2013. Investors should be aware that the classification of the warrants as a liability will revert back to the originally reported equity treatment during the quarter ending June 30, 2013.

As part of the restatement process, the Company recorded adjustments for items that were previously considered insignificant and were not recorded in the reporting period.

The following tables summarize the effects of the restatements on the specific items presented in the Company’s historical consolidated financial statements previously included in the Annual Report:

Consolidated Balance Sheets

	December 31, 2012
	As previously reported			As restated
Intangible assets, net of accumulated amortization of $118	$	1,704		$	1,795
Total assets	$	7,560		$	7,651
Accrued expenses	$	196		$	272
Derivative liability - warrants		–			7,166
Total liabilities	$	505		$	7,747
Preferred Stock, Series A Convertible Preferred, $0.001 par value; 1,394,766 shares authorized, issued and outstanding at December 31, 2012	$	–		$	47
Stockholders' equity/(deficit):
Preferred Stock, Convertible Preferred Series A , $0.001 par value; 1,394,766 shares authorized, issued and outstanding at December 31, 2012		1			–
Additional paid in capital	$	295,050		$	282,998
Accumulated deficit		(282,447	)		(283,631	)
Total stockholders' deficit	$	6,326		$	(911	)
Non-controlling interests	$	729		$	768
Total equity	$	7,055		$	(143	)
Total stockholders' equity, liabilities and non-controlling interest	$	7,560		$	7,651

Consolidated Statement of Operations

	Year ended December 31, 2012
	As previously reported			As restated
Selling, general and administrative	$	4,251		$	4,551
Operating loss		(4,190	)		(4,490	)
Fair value of warrant liability		–			557
Net loss		(4,982	)		(4,725	)
Net loss attributable to non-controlling interest		(1,117	)		(1,121	)
Net loss attributable to MGT Capital Investments, Inc.		(3,865	)		(3,604	)
Total Comprehensive loss		(4,933	)		(4,676	)
Comprehensive loss attributable to non-controlling interest		(1,091	)		(1,095	)
Comprehensive loss attributable to MGT Capital Investments, Inc.		(3,842	)		(3,581	)
Net loss applicable to Common shareholders		(8,420	)		(5,882	)
Basic and diluted loss per share	$	(3.75	)	$	(2.62	)

Consolidated Statement of Cash Flows

	Year ended December 31, 2012
	As previously reported			As restated
Net loss	$	(4,982	)	$	(4,725	)
Warrant expense		8			141
Fair value of warrant liability		–			(557	)
Accrued expenses		(306	)		(230	)
Net cash used in operating activities		(3,379	)		(3,467	)
Proceeds from issuance of preferred stock, net		4,412			4,500
Net cash provided by financing activities	$	3,351		$	3,439