Common Stock, Preferred Stock and Warrants

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Common Stock, Preferred Stock and Warrants

Note 9. Common Stock, Preferred Stock and Warrants

Common stock

Common Stock Issuances

On August 5, 2022, the Company issued 22,800,000 shares of common stock and 22,800,000 warrants to purchase common stock for consideration of $228.

During the year ended December 31, 2022, 18,380,379 warrants with an embedded conversion feature were exercised on a cashless basis for the issuance of 74,000,000 shares of common stock.

On July 21, 2023, 22,800,000 warrants were settled with the issuance of 11,400,000 shares of common stock.

On July 25, 2023, 20,000,000 shares of common stock were issued for the partial conversion of the September 2022 Note (see Note 6).

During the year ended December 31, 2023, 8,868,360 warrants with an embedded conversion feature were exercised on a cashless basis for the issuance of 80,000,000 shares of common stock.

During the year ended December 31, 2023, 34,000,000 shares of common stock were issued in respect of the Lease Agreement (see Note 8).

Preferred Stock

In January 2019, the Company’s Board of Directors approved the authorization of 10,000 shares of Series B Preferred Stock with a par value of $0.001 and a Stated Value of $100 each (“Series B Preferred Shares”). The holders of the Series B Preferred Shares shall be entitled to receive, when, as, and if declared by the Board, out of funds legally available for such purpose, dividends in cash at the rate of 12% of the Stated Value per annum on each Series B Preferred Share. Such dividends shall be cumulative and shall accrue without interest from the date of issuance of the respective share of the Series B Preferred Shares. Each holder shall also be entitled to vote on all matters submitted to stockholders of the Company and shall be entitled to 55,000 votes for each Series B Preferred Share owned at the record date for the determination of stockholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. In the event of a liquidation event, any holders of the Series B Preferred Shares shall be entitled to receive, for each Series B Preferred Shares, the Stated Value in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders. The Series B Preferred Shares are not convertible into shares of the Company’s common stock. No shares of Series B Preferred Shares have been issued or are outstanding.

MGT CAPITAL INVESTMENTS, INC.

NOTES TO THE FINANCIAL STATEMENTS

(Dollars in thousands, except share and per–share amounts)

In April 2019, the Company’s Board of Directors approved the authorization of 200 Series C Preferred Shares with a par value of $0.001 (“Series C Preferred Shares”). The holders of the Series C Preferred Shares have no voting rights, receive no dividends, and are entitled to a liquidation preference equal to the stated value. At any time, the Company may redeem the Series C Preferred Shares at 1.2 times the stated value. Given the right of redemption is solely at the option of the Company, the Series C Preferred Shares are not considered mandatorily redeemable, and as such are classified in shareholders’ equity on the Company’s balance sheet.

Each Series C Preferred Share is convertible into shares of the Company’s common stock in an amount equal to the greater of: (a) 200,000 shares of common stock or (b) the amount derived by dividing the stated value by the product of 0.7 times the market price of the Company’s common stock, defined as the lowest trading price of the Company’s common stock during the ten-day period preceding the conversion date. The holder may not convert any Series C Preferred Shares if the total amount of shares held, together with holdings of its affiliates, following a conversion exceeds 9.99% of the Company’s common stock.

The common shares issued upon conversion of the Series C Preferred Shares were registered under the Company’s then-effective registration statement on Form S-3. In April and July 2019, the Company sold 200 Series C Preferred Shares for $1,990, net of issuance costs. During the second and third quarters of 2019, holders converted 50 Series C Preferred Shares into 14,077,092 shares of common stock and 35 Series C Preferred Shares into 13,528,575 shares of common stock, respectively. 115 shares of Series C Preferred Stock were issued and outstanding as of December 31, 2021. The remaining 115 shares of Series C Preferred Stock were converted into 29,870,130 shares of common stock during the year ended December 31, 2021.

Warrants

On August 5, 2022, the Company sold 22,800,000 shares of common stock and issued three warrants, each to purchase 76,000,000 shares of common stock for consideration of $228,000. Subject to the terms and adjustments in the Warrants, the Warrants are exercisable at initial prices of $0.03, $0.06, and $0.12 per share, for three years from August 5, 2022.

During the year ended December 31, 2022, 18,380,379 warrants were exercised on a cashless basis for the issuance of 74,000,000 shares of common stock. Upon cashless exercise, the Company calculated the fair value of derivative liability on warrants of $231, compared it to the fair value of 74,000,000 shares of $988 and recorded a loss on extinguishment of $757. The Company valued the warrant derivative liability using the Black-Scholes option pricing model using the following assumptions on the date of each exercise: 1) stock prices of $0.007 - $0.019, 2) exercise prices of $0.05, 3) remaining lives of 3.5 – 4.2 years, 4) dividend yields of 0%, 5) risk free rates of 1.53% -3.79%, and 6) volatility of 169.28% - 175.6%.

During the year ended December 31, 8,868,360 warrants were exercised on a cashless basis for the issuance of 80,000,000 shares of common stock. Upon cashless exercise, the Company calculated the fair value of derivative liability on warrants of $44, compared it to the fair value of 80,000,000 shares of $346 and recorded a loss on extinguishment of $302. The Company valued the warrant derivative liability using the Black-Scholes option pricing model using the following assumptions on the date of exercise: 1) stock price of $0.0023-0.01, 2) exercise price of $0.05, 3) remaining life of 2.2-3.1 years, 4) dividend yield of 0%, 5) risk free rate of 3.76-4.37%, and 6) volatility of 171.4-309.3%.

MGT CAPITAL INVESTMENTS, INC.

NOTES TO THE FINANCIAL STATEMENTS

(Dollars in thousands, except share and per–share amounts)

The following table summarizes information about shares issuable under warrants outstanding during the year ended December 31, 2023:

	Warrant shares outstanding			Weighted average exercise price		Weighted average remaining life		Intrinsic value
Outstanding at January 1, 2022		74,614,871		$	0.05		4.47	$	-
Issued		626,329,010			0.07		3.00		-
Exercised		(18,380,379	)		0.05				-
Expired or cancelled		-					-		-
Outstanding and exercisable at December 31, 2022		682,563,502			0.06		3.18		-
Issued		551,515,432			-		-		-
Exercised		(31,668,360	)		0.05		-		-
Outstanding and exercisable at December 31, 2023		1,202,410,574		$	0.03		2.75	$	-

(*) Of the 551,515,432 warrants issued during the year ended December 31, 2023 and 1,202,410,574 warrants outstanding and exercisable at December 31, 2023, the weighted average exercise price and weighted average remaining life was not included for 551,515,432 and 1,119,044,442 warrants, respectively, because their exercise price is variable. Of the 626,329,010 shares issued during the year ended December 31, 2022 and 682,563,502 shares outstanding and exercisable at December 31, 2022, the weighted average exercise price and weighted average remaining life was not included for 603,529,010 warrants because their exercise price is variable. See Note 7 for the exercise prices of Series X, Y, and Z warrants. Series X, Y, and Z warrants expire on September 11, 2025.