October 25, 2016
MGT Answers Shareholder Questions About NYSE Delisting
Company Communications
Why was MGT delisted from the NYSE MKT?
On October 19, 2016 the NYSE took the very unusual step of suspending trading of our stock on its exchange, effective immediately and without recourse. The Exchange also began proceedings to delist MGT, although the Company will now be afforded an opportunity to appeal that decision, if desired.
Our directors and officers have more than a combined century of Wall Street experience, and cannot find another similar case where such unilateral and extreme action was taken against a company. Such activity is ordinarily reserved for clear-cut cases of illegal activity, bankruptcy, or a stock hitting the price level of six cents, none of which apply to MGT.
The negative impact of the precipitous action to suspend trading was immediate. The potential consequences of a sudden relocation from a listed Exchange to over the counter (OTC) trading are well known and understood. The most obvious and immediate effect is caused by the fact that many retail-oriented brokerage firms do not allow opening positions on OTC stocks. This limitation precipitates selling and also prevents the ability to average down, if an investor wants.
Despite our requests, the NYSE staff would not provide any underlying support or documentation for its decision. Further they would not supply the metrics used to determine the status as an “operating company.” Unfortunately, damage to MGT and our shareholders has already been done.
Did MGT know in advance about the delisting? / When did MGT management know about the delisting?
At 4:03 pm ET on October 19, MGT received a press release prepared by NYSE and was notified of its impending dissemination. The NYSE stated it made repeated attempts to contact MGT earlier, however none of our official points of contact reflect theses attempts via voicemails, missed calls or emails. NYSE halted, and subsequently suspended, trading and issued the news. At 4:23pm ET, the Company received the actual delisting letter via email.
Is MGT an operating company?
The NYSE asserts that MGT was suspended from the exchange because it is does not meet the criteria of an operating company. MGT maintains that using any reasonable definition of the term, we are very obviously an operating company.
The determination of NYSE Staff is contradicted by objective factual realities, and we can find no evidence that any first-hand research into the matter was conducted done prior to this action. No one from NYSE visited our Company offices in Durham, NC or asked to see our Bitcoin facility, which is among the top bitcoin mining operations in the U.S. and is already generating regular, recurring income for MGT.
It is also difficult to believe that the NYSE Staff was unaware of other very tangible and public evidence of Company operations. These include:
The offering for sale of our first cyber security hardware product, Sentinel
The continued expenditure of legitimate operating costs in pursuit of Company objectives
Consistent and transparent communication with shareholders and the public, including clear descriptions of our progress, when appropriate
Consistent and accurate regulatory compliance and financial reporting
The coherent and consistent vision and roadmap, outlined repeatedly by Mr. McAfee, Eijah and others, to transform MGT into a leading provider of cybersecurity solutions
Will financial reporting and disclosures still continue?
Our reporting compliance has been maintained at the highest level while we have transitioned our focus to a cybersecurity company. We remain committed to reporting as if we were a NYSE or NASDAQ-listed company, well exceeding the minimum reporting required by the OTC. Shareholders and potential investors can expect to enjoy the same amount of information with which to make an informed assessment of the performance of the Company.
What happens to my stock?
In a word, nothing. All shareholders retain their ownership of the Company. You also retain the right to vote at shareholders meetings.
How can I buy, trade and track MGT stock?
Until further notice, MGT Capital Investments will be traded on the Pink Sheets platform of OTC Markets under the ticker MGTI. We have applied for registration on OTCQX, however this process takes several business days. We will alert shareholders immediately once we have confirmed any change in status.
Where can I monitor MGTI’s trading volume and price?
Because MGT will be trading OTC, not all pricing platforms will have real time pricing. As of this writing, Bloomberg is confirmed to be carrying it, as are larger retail brokers such as TD Ameritrade and eTrade.
What regulations protect shareholders?
We are still obligated to follow all SEC regulations as well as Delaware Corporate Law, and have committed to following our current corporate governance practices. We did not choose to delist in order to dodge these responsibilities or because we are hiding something. This situation was thrust upon us unfairly, and we have no intention of altering any of our business practices as a result.
Has MGT submitted an application to NASDAQ?
MGT filed a new listing application with NASDAQ in August 2016, with the expectation that NASDAQ is a more hospitable exchange for an early stage technology company.
What are the next steps for MGT?
We are evaluating and considering all options available to us and are making the determination on how we can best act to protect MGT and our shareholders.
MGT strives to provide a high level of transparency to our shareholders and the public, and that commitment will continue. As more information becomes available, we will provide timely updates along with our perspective.
