MGT Capital Investments, Inc.: Form 10-Q for the period ended Mar 31, 2025

This Quarterly Report on Form 10–Q (this “Report”) contains forward–looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward–looking statements. The statements contained herein that are not purely historical are forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward–looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “estimates,” “should,” “expect,” “guidance,” “project,” “intend,” “plan,” “believe” and similar expressions or variations intended to identify forward–looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward–looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward–looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10–K for the fiscal year ended December 31, 2024 as filed with the Securities and Exchange Commission (“SEC”) on November 10, 2025, in addition to other public reports we filed with the SEC. The forward–looking statements set forth herein speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward–looking statements to reflect events or circumstances after the date of such statements.

Executive summary

All dollar figures set forth in this Quarterly Report on Form 10-Q are in thousands, except per-share amounts.

Current Operations

MGT Capital Investments, Inc. (“MGT” or the “Company”) has historically operated in the Bitcoin mining and hosting industry. During the three months ended March 31, 2025, the Company’s operations consisted of both hosting services for third-party miners and self-mining activities at its facility in LaFayette, Georgia. Revenue was generated from (i) fixed-fee hosting contracts with customers and (ii) the mining of Bitcoin using Company-owned machines, the proceeds of which were converted to U.S. dollars shortly after receipt.

During the period, the Company’s mining activity also included the use of approximately 115 third party-owned miners that management considered abandoned. The Company offered third-party owners of miners a hosting service whereby MGT operated and maintained miners for a fixed monthly fee. All miners, both Company-owned and hosted, were housed in a modified shipping container on property owned by the Company in Georgia. On March 15, 2025, the company’s lease with its primary hosting customer expired and the company discontinued its own self-mining activities. As of March 31, 2025, and December 3, 2025, the Company continued to own 35 Antminer S19 Pro miners providing approximately 3 PH/s of hash power for self-mining. These miners were placed in storage pending evaluation of redeployment alternatives.

The Company’s business model has historically been dependent on the economics of digital asset mining, including the price of Bitcoin, network difficulty, electricity costs, and access to competitively priced power. Following the cessation of mining operations, management’s focus has shifted to preserving liquidity and evaluating strategic alternatives to monetize or repurpose its existing assets and to identify new business opportunities.

In March 2025, the Company began evaluating alternatives for its LaFayette, Georgia hosting facility following the expiration of its primary hosting agreement. A plan to dispose of the facility was not approved until April 1, 2025, and the disposal occurred in May 2025. As such, the Company’s analysis and presentation as of March 31, 2025 reflect continued operations.

Subsequent to March 31, 2025, the Company has experienced significant changes in its operations and leadership, including the sale of its Georgia facility, and changes in executive management. As a result, the Company currently does not have active revenue-generating operations and is engaged in a strategic review of its business direction. See Note 11 – Subsequent Events to our financial statements for additional detail.

Critical accounting policies and estimates

Our discussion and analysis of financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The notes to the unaudited condensed financial statements contained in this Quarterly Report describe our significant accounting policies used in the preparation of the unaudited condensed financial statements. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We continually evaluate our critical accounting policies and estimates.

We believe the critical accounting policies listed below reflect significant judgments, estimates and assumptions used in the preparation of our unaudited condensed financial statements.

Revenue recognition

Crypto asset mining

The Company recognizes revenue under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

• Step 1: Identify the contract with the customer
• Step 2: Identify the performance obligations in the contract
• Step 3: Determine the transaction price
• Step 4: Allocate the transaction price to the performance obligations in the contract
• Step 5: Recognize revenue when the Company satisfies a performance obligation

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following:

• Variable consideration
• Constraining estimates of variable consideration
• The existence of a significant financing component in the contract
• Noncash consideration
• Consideration payable to a customer

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

The Company earned Bitcoin mining revenue from two primary sources: the operation of its owned miners and the operation of third-party owned miners that the Company concluded were subject to abandonment. The Company entered into digital asset mining pools by executing contracts, as amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts were terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company was entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are recorded as a component of cost of revenues), for successfully adding a block to the Blockchain. The terms of the agreement provided that neither party can dispute settlement terms after thirty-five days following settlement. The Company’s fractional share was based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.

Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin Blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of providing such computing power was the only performance obligation in the Company’s agreements with mining pool operators. The transaction consideration the Company received, if any, was noncash consideration, which the Company measured at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company earned the award from the pools. The consideration was all variable. Because it is not probable that a significant reversal of cumulative revenue would not occur, the consideration was constrained until the mining pool operator successfully placed a block (by being the first to solve an algorithm) and the Company received confirmation of the consideration it received, at which time revenue was recognized. There was no significant financing component in these transactions.

Hosting Revenues

We received revenues from third parties renting capacity at our facility and from hosting miners owned by others. The Company recognized $58 and $85 from these sources during the three months ended March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025 and 2024, one customer accounted for 100% of hosting revenue, respectively. After a hosting agreement expired, the Company no longer recognized hosting revenue for the related miners.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight–line method on the various asset classes over their estimated useful lives, which range from one to ten years when placed in service. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Deposits on property and equipment are initially classified as Other Assets and upon delivery, installation and full payment, the assets are classified as property and equipment on the balance sheet.

Recent accounting pronouncements

See Note 3 to our unaudited condensed financial statements appearing in Part I, Item 1 of this Report for Recent Accounting Pronouncements.

Results of operations

Three months ended March 31, 2025 and 2024

Revenues

Our revenues for the three months ended March 31, 2025 decreased by $15, or 15%, to $87, as compared to $102 for the three months ended March 31, 2024. Our revenue is partly derived from cryptocurrency mining, which totaled $29 for the three months ended March 31, 2025 and $17 during the three months ended March 31, 2024. The increase in revenues compared to the prior year reflects higher Bitcoin production, including the use of additional equipment owned by third parties that the company considers abandoned.

We also receive revenues from third parties renting capacity at our facility and from hosting miners owned by others. The Company recognized $58 and $85 during the months ended March 31, 2025 and 2024, respectively. The decrease in revenues for this period is due to the reduced number of miners for third parties from the previous year and the expiration of our hosting agreement with our primary tenant in early March 2025.

Operating Expenses

Operating expenses for the three months ended March 31, 2025 decreased by $78 or 24%, to $251, as compared to $329 for the three months ended March 31, 2024. The decrease in operating expenses was primarily due to a decrease in cost of revenue of $17 and a decrease in general and administrative expenses of $61.

The decrease in cost of revenue of $17 or 18% to $78 for the three months ended March 31, 2025, as compared to $95 for the three months ended March 31, 2024 was primarily due to decreased depreciation costs. The decrease in general and administrative expenses of $61 or 26%, to $173 for the three months ended March 31, 2025, as compared to $234 for the three months ended March 31, 2024, was primarily due to a decrease in legal and professional fees of $7, decrease in payroll-related expenses of $70, a decrease in investor relations, offset by an increase in consulting fees of $19.

Other Income and Expense

For the three months ended March 31, 2025, non–operating expense of $50 consisted primarily of interest expense. During the comparable period ended March 31, 2024, non–operating income of $523 consisted primarily of gain on the change in fair value of warrant derivative liabilities of $106, gain on the change in fair value of derivative liability of $384, gain on settlement of debt of $106, other income of $5, accretion of debt discount of $54 and interest expense of $24.

Liquidity and capital resources

Sources of Liquidity

We have historically financed our business through the sale of debt and equity interests.

On November 1, 2024, the Company completed a comprehensive debt restructuring (the “Project Nickel Transaction”) that consolidated prior convertible instruments and short-term loans into new notes with fixed conversion terms. As part of this transaction, the Company issued (i) a new convertible promissory note with a principal balance of $1,620, bearing interest at 8% per annum and maturing December 31, 2025, and (ii) a new non-convertible promissory note with a principal balance of $242, bearing interest at 8% per annum and maturing December 31, 2025. The restructuring also eliminated all previously outstanding derivative liabilities and preferred stock, simplifying the Company’s capital structure.

On March 15, 2025, the Company’s lease with its primary hosting customer expired, and the Company discontinued its own self-mining operations at the LaFayette, Georgia facility. The related lease and partnership arrangements ceased, and the Company’s remaining mining equipment was placed in storage pending evaluation of redeployment alternatives. The sale of the LaFayette facility, which occurred after March 31, 2025, was executed primarily to reduce debt and improve liquidity. Management does not consider this transaction to represent a strategic shift in the Company’s business under ASC 205-20.

We have incurred significant operating losses since inception and continue to generate losses from operations and as of March 31, 2025 have an accumulated deficit of $426,732. At March 31, 2025, our cash and cash equivalents were $1, and our working capital deficit was $3,386.

The Company will need to raise additional capital to pay the outstanding convertible note, fund operating losses, and maintain and grow its operations as intended over the next 12 months. There can be no assurance however that the Company will be able to raise additional capital when needed, or at terms deemed acceptable, if at all. The issuance of any additional shares of common stock, preferred stock or convertible securities could be substantially dilutive to our shareholders. Such factors raise substantial doubt about the Company’s ability to sustain operations for at least one year from the issuance of these unaudited condensed financial statements. The accompanying unaudited condensed financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The price of Bitcoin is volatile, and fluctuations are expected. Declines in the price of Bitcoin have had a negative impact on our operating results and liquidity and could harm the price of our common stock. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world. Since we record revenues partly based on the price of earned Bitcoin and we may retain such Bitcoin as an asset or as payment for future expenses, the relative value of such revenues may fluctuate, as will the value of any Bitcoin we retain.

The high and low exchange rates per Bitcoin for the quarter ended March 31, 2025, as reported by Coindesk.com, were approximately $106 and $77 respectively. The high and low exchange rates per Bitcoin for the year ended December 31, 2024, as reported by Coindesk.com, were approximately $106 and $39 respectively.

Impact of Inflation

Beginning in 2023, there has been a sharp rise in inflation in the U.S. and globally. The impact on Bitcoin mining is an increase in electricity and mining equipment costs.

Strategic Outlook

Following the sale of its mining facility and cessation of mining operations, the Company is focused on restructuring its balance sheet, evaluating new business opportunities that leverage its public-company platform, and SEC reporting compliance. Potential areas under evaluation include financial technology, blockchain infrastructure services, and digital-asset management. Management expects to announce a defined strategic direction in future filings.

Cash Flows

Operating activities

Net cash used by operating activities was $131 for the three months ended March 31, 2025 as compared to net cash used in operating activities of $177 for the three months ended March 31, 2024. Cash used by operating activities for the three months ended March 31, 2025 primarily consisted of a net loss of $214 offset by non-cash gain of $29 which includes depreciation and cash provided by working capital of $54.

Cash used in operating activities for the three months ended March 31, 2024 primarily consisted of a net income of $296 offset by non-cash gain of $487 which includes depreciation of $55, gain on the change in fair value of derivative liability of $384, gain on the change in fair value of warrant derivative liability of $106, amortization of note discount of $54, gain on settlement of debt of $106, and cash provided by working capital of $14.

Investing activities

Net cash used in investing activities was $0 and $0 for the three months ended March 31, 2025 and 2024 respectively.

Financing activities

During the three months ended March 31, 2025, cash used by financing activities was $126 which consisted of proceeds from common stock to be issued under lease agreement and proceeds from loans payable.

During the three months ended March 31, 2024, cash used in financing activities was $195 which consisted of proceeds from issuance of stock under lease agreement and proceeds from loans payable.

Off–balance sheet arrangements

As of March 31, 2025, we had no obligations, assets or liabilities which would be considered off–balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off–balance sheet arrangements.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosures. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our principal executive officer and principal financial officer) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025. Based on this evaluation, our Interim Chief Executive Officer concluded that our disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) were not effective as March 31, 2025 due to the following material weakness in our internal control over financial reporting: Our small number of employees does not allow for sufficient segregation of duties and independent review of duties performed.

Limitations on Internal Control over Financial Reporting

An internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design safeguards into the process to reduce, though not eliminate, this risk.

Management’s Quarterly Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer and principal financial officer), we performed a complete documentation of the Company’s significant processes and key controls, and conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of March 31, 2025.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2025, there were no changes to internal control over financial reporting.

There are no additional risk factors other than those discussed in our Annual Report on Form 10–K, as filed with the SEC on November 10, 2025.