Restatement of previously issued financial statement

3 Months Ended

Mar. 31, 2013

Statement Of Financial Position [Abstract]

Condensed Financial Statements [Text Block]

Note 2: Restatement of previously issued financial statements

Subsequent to the issuance of its annual report on Form 10-K for the year ended December 31, 2012 as filed on March 29, 2013, management determined that certain of the Company’s warrants and its Series A Convertible Preferred Stock (“Preferred Stock”) have 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 sheets included in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2012 (the “Annual Report”) and the Quarterly Reports on Form 10-Q for the periods ended June 30, 2012 and September 30, 2012 (the “Quarterly Reports”), as opposed to a component of equity. As a result of this improper accounting treatment, the financial statements in the Annual Report and the Quarterly Reports should no longer be relied upon. The Company intends to file amendments to the Annual Report and the Quarterly Reports as soon as possible.

Specifically, the change in treatment of the warrants and the Preferred Stock will result in a change to the equity, temporary equity, and liability portions of the balance sheets as of the close of the aforementioned periods and will result in a gain or loss on the fair market carrying value of the warrants and Preferred Stock which will impact our results of operations and earnings (loss) per share as reported in our statement of operations for such periods. Such restatements for correction of error, however, will not impact cash flow or cash balances. In addition, as a result of recently obtained Waiver Agreements from warrant holders, the affected warrants will be treated as equity in the quarter ending June 30, 2013. Lastly, as of the date of this Quarterly Report (“Quarterly Report”) on Form 10-Q, substantially all of the Preferred Stock has converted into Common Stock of the Company pursuant to its terms; the accounting treatment of the conversion eliminates temporary equity classification of these shares as well. In summary, while the Annual Report and Quarterly Reports should not be relied upon, investors should be aware that the classification of the warrants as a liability will revert back to the originally reported equity treatment in the quarter ending June 30, 2013.

The effects of the revision on the unaudited financial statements are summarized below:

Condensed Consolidated Balance Sheets

	December 31, 2012
	As previously reported			Adjustments			As restated
Assets:
Current assets:
Cash and cash equivalents	$	3,443		$	–		$	3,443
Accounts receivable		9			–			9
Prepaid expenses and other current assets		340			–			340
Total current assets		3,792			–			3,792
Non-current assets:
Restricted cash		2,039			–			2,039
Property and equipment, at cost, net		25			–			25
Intangible assets, net of accumulated amortization of $118 (as revised)		1,704			91			1,795
Total assets	$	7,560		$	91		$	7,651
Liabilities:
Current liabilities:
Accounts payable	$	242		$	–		$	242
Accrued expenses		196			76			272
Other payables		67			–			67
Total current liabilities		505			76			581
Non-current liabilities:
Derivative liability - warrants		–			7,166			7,166
Total liabilities		505			7,242			7,747
Redeemable convertible preferred stock – temporary equity
Preferred Stock, Series A Convertible Preferred, $0.001 par value; 1,394,766 shares authorized; 1,394,766 shares issued and outstanding at December 31, 2012 ($4,547 Liquidation preference)		–			47			47
Stockholders' equity/(deficit):
Preferred Stock, Series A Convertible Preferred, $0.001 par value; 1,394,766 shares authorized; 1,394,766 shares issued and outstanding at December 31, 2012 ($4,547 Liquidation preference)		1			(1	)		–
Common stock, $0.001 par value; 75,000,000 shares authorized; 3,251,187 and 2,108,732 shares issued and outstanding at December 31, 2012, and 2011, respectively		3			–			3
Additional paid in capital		295,050			(12,052	)		282,998
Accumulated other comprehensive loss		(281	)		–			(281	)
Accumulated deficit		(288,447	)		4,816			(283,631	)
Total stockholders’ equity/(deficit)		6,326			(7,237	)		(911	)
Non-controlling interests		729			39			768
Total equity		7,055			(7,198	)		(143	)
Total stockholders' equity/(deficit), liabilities and non-controlling interest	$	7,560		$	91		$	7,651

Condensed Consolidated Statement of Stockholders' Equity

	Preferred stock						Common stock				Additional			Accumulated						Total
	Shares			Amounts			Shares		Amounts		paid-in capital			comprehensive income / (loss)			Accumulated deficit			shareholders' equity			Non-controlling interests			Total equity
At December 31, 2012 (as previously reported)		1,395		$	1			3,251	$	3	$	295,050		$	(281	)	$	(288,447	)	$	6,326		$	729		$	7,055
Reversal of Warrants issued in connection with acquisition of intangible assets												(808	)								(808	)					(808	)
Reversal of non-controlling share of MGT Gaming, Inc.																					–			42			42
Restatement of Intangible Amortization Expense and Derivative Gain/Loss Expense																		59			59			(3	)		56
Reversal of issuance of Preferred stock & warrants, net of issuance costs of $87		(1,380	)		(1	)						(4,411	)					(87	)		(4,499	)					(4,499	)
Preferred Stock Dividend - accretion of warrants												(2,478	)					2,478			–						–
Reversal of deemed dividend of beneficial conversion feature of Preferred Convertible Series A stock to common stock												(2,021	)					2,021			–						–
Reversal of quarterly dividend on Preferred stock		(15	)									(56	)					56			–						–
Warrant - Deemed Dividend (in excess of proceeds received)												(2,231	)								(2,231	)					(2,231	)
Revaluation of Warrant Derivative																		365			365						365
Preferred Stock Dividend												(47	)								(47	)					(47	)
Adjustment to accrued expenses																		(76	)		(76	)					(76	)
At December 31, 2012 (restated)		–		$	–			3,251	$	3	$	282,998		$	(281	)	$	(283,631	)	$	(911	)	$	768		$	(143	)