MGTI 10-K & 10-Q changes, risk factors and insider trading
Mgt Capital Investments, Inc. · OTC · Finance Services · CIK 1001601 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “II. Risks Related to Digital Assets and Remaining Mining Equipment”
New heading “The value of our remaining assets and the feasibility of future mining are tied to the volatile price of Bitcoin.”
New heading “Bitcoin mining is subject to risks associated with our need for significant electrical power.”
New heading “III. Risks Related to Our Financial Condition and Capital Structure”
New heading “We will require significant additional capital to fund our transition which will cause substantial dilution.”
New heading “There are substantial risks related to ownership of our common stock.”
New heading “IV. General Risk Factors”
New heading “Our director and officer liability insurance may not be sufficient to cover all potential liabilities and we may be required to incur substantial costs to maintain or renew such coverage.”
Removed heading “We have a history of operating losses, and we may not be able to achieve or sustain profitability.”
Removed heading “Our mining operating costs have historically outpaced our mining revenues, which has put a strain on our business or increase our losses.”
Removed heading “The cost of obtaining new and replacement miners and parts had historically been highly capital intensive and had an adverse effect on our business and results of operations.”
Removed heading “The Company’s directors’ and officers’ insurance policies have been exhausted and will cause the Company to increase spending on legal expenses.”
Removed heading “There are several new and existing competitors in our industry that are purchasing mining equipment at scale, which may cause delays or difficulty in us obtaining new miners, which could materially and adversely affect our business and results of operations.”
Removed heading “To the extent that the profit margins of Bitcoin mining operations are not high, operators of Bitcoin mining operations or other participants in the Bitcoin industry are more likely to immediately sell Bitcoins in the market, thereby constraining growth of the price of Bitcoin that could adversely impact us.”
Removed heading “We may be unable to raise additional capital needed to grow our business.”
Removed heading “Because our miners were designed specifically to mine Bitcoin, our success during 2024 depended in large part upon the value of Bitcoin, and any sustained decline in its value adversely affected our business and results of operations.”
Removed heading “We were subject to risks associated with our need for significant electrical power and our current Electricity Agreement.”
Removed heading “Interruptions to internet access could have disrupted our operations, which would adversely affect our business and results of operations.”
Removed heading “Bitcoin has forked multiple times and additional forks may occur in the future which may affect the value of Bitcoin held or mined by the Company.”
Removed heading “Our mining operations, including the miners, containers, land, and facility in which our equipment was operated, were subject to real estate risks and potential damage for which we were not fully insured.”
Removed heading “Our operations and revenue from the operation of third-party equipment may subject us to legal disputes and liabilities.”
Removed heading “The Company’s reliance on a third-party mining pool service provider for our mining revenue payouts may have a negative impact on the Company’s operations.”
Removed heading “There is a possibility of cryptocurrency mining algorithms transitioning to proof of stake validation and other mining related risks, which could make us less competitive and ultimately adversely affect our business and the value of our stock.”
Removed heading “We may be accused of infringing intellectual property rights of third parties.”
Removed heading “Risks Related to Our Dependence on Bitcoin”
Removed heading “The trading price of shares of our common stock may increase or decrease as does the trading price of Bitcoin, which subject investors to pricing risks, including “bubble” type risks, and volatility.”
Removed heading “The markets for Bitcoin and other cryptocurrencies and the existing markets may be under regulated and, as a result, the market price of Bitcoin may be subject to significant volatility or manipulation, which could decrease consumer confidence in cryptocurrencies and have a materially adverse effect on our business and results of operations.”
Removed heading “The development and acceptance of cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies is subject to a variety of factors that are difficult to evaluate.”
Removed heading “Currently, there is relatively small use of Bitcoins in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in us.”
Removed heading “Banks and financial institutions may not provide banking services, or may cut off services, to businesses that engage in cryptocurrency-related activities.”
Removed heading “Political or economic crises may motivate large-scale sales of cryptocurrencies, which could result in a reduction in values of cryptocurrencies such as Bitcoin and adversely affect an investment in us.”
Removed heading “The decentralized nature of cryptocurrency systems may lead to slow or inadequate responses to crises, which may negatively affect our business.”
Removed heading “It may be illegal now, or in the future, to acquire, own, hold, sell or use digital assets in one or more countries, and ownership of, holding or trading in our securities may also be considered illegal and subject to sanction.”
Removed heading “The emergence of competing Blockchain platforms or technologies may harm our business as presently conducted.”
Removed heading “Cryptocurrencies face significant scaling obstacles that can lead to high fees or slow transaction settlement times.”
Removed heading “The price of cryptocurrencies may be affected by the sale of such cryptocurrencies by other vehicles investing in cryptocurrencies or tracking cryptocurrency markets.”
Removed heading “If a malicious actor or botnet obtains control of more than 50% of the processing power on a cryptocurrency network, such actor or botnet could manipulate Blockchains to adversely affect us, which would adversely affect an investment in us or our ability to operate.”
Removed heading “If the Bitcoin rewards for solving blocks are not sufficiently high, miners may not have adequate incentive to continue mining and may cease mining operations, which may make the Blockchains they support with their mining activity less stable.”
Removed heading “Cryptocurrencies, including those maintained by or for us, may be exposed to cybersecurity threats and hacks.”
Removed heading “We have an evolving business model which is subject to various uncertainties.”
Removed heading “Risks Related to Governmental Regulation and Enforcement”
Removed heading “Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects or operations.”
Removed heading “Because cryptocurrencies may be determined to be securities, we may become subject to the Investment Company Act of 1940 and be subject to comprehensive regulatory requirements that we would likely be unable to afford.”
Removed heading “Current interpretations require the regulation of Bitcoin under the CEA by the CFTC, and we may be required to register and comply with such regulations. Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.”
Removed heading “Our interactions with a Blockchain may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology.”
Removed heading “Governmental action against the Blockchain and Bitcoin mining may have a materially adverse effect on the industry, and could affect us if widely adopted.”
Removed heading “Risks Related to Ownership of Our Common Stock”
Removed heading “Our stock price may be volatile.”
Largest changes
“The Office of Financial Assets Control (“OFAC”) of the U.S. Department of Treasury requires us to comply with its sanction program and not conduct business with persons named on its specially designated nationals (“SDN”) list. However, because of the pseudonymous nature of Blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list. …”see in full comparison
“We will need to raise additional capital to fund our working capital needs and business plan. Our ability to obtain financing, if and when necessary, may be impaired by such factors as the capital markets (both in general and in the particular industry in which we operate), the national and global economies and the condition of the market for microcap securities. …”see in full comparison
“We will need to raise additional capital to fund our working capital needs and business plan. Our ability to obtain financing, if and when necessary, may be impaired by such factors as the capital markets (both in general and in the particular industry in which we operate), the national and global economies and the condition of the market for microcap securities. …”see in full comparison
“Current interpretations require the regulation of Bitcoin under the CEA by the CFTC, and we may be required to register and comply with such regulations. Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.”see in full comparison
“As an example of adverse events affecting the crypto landscape, in November 2023 Binance, the world’s largest crypto exchange, undertook to exit the U.S. and paid a $4.4 billion fine to settle charges by the U.S. Department of Justice, Treasury and the Commodity Futures Trading Commission that the exchange violated sanctions and facilitated human and narcotics trafficking. …”see in full comparison
“Similarly, in March 2023 the New York Attorney General became the first U.S. regulator to claim in court that Ethereum, one of the major cryptocurrencies, is a security in its lawsuit against KuCoin, a crypto asset exchange. …”see in full comparison
Full comparison: every changed paragraph (138)
The Company generates limited
revenue from operations upon which an evaluation of our prospects can be made. The Company’s prospects must be considered keeping
in mind the risks, expenses and difficulties frequently encountered in the establishment of a new business in a constantly changing industry.
There can be no assurance that the Company will be able to achieve profitable operations in the foreseeable future, if at all.
Investing in our common stock involves a high degree of risk. You should carefully consider the risks summarized below, which are explained in detail in the following pages:
Our business and an investment
in our common stock is subject to numerous risks and uncertainties, including those highlighted in the section immediately following
this summary. Some of these risks include:
I.
Risks Related to Our CryptocurrencyCurrent Mining
BusinessOperational Status and Strategic Transition
We have a history
of operating losses, and we may not be able to achieve or sustain profitability.
Our primary focus was on
our Bitcoin mining operation located at our Lafayette, Georgia facility where, as of December 31, 2024, we operated a total of 35
Antminer S19 Pro miners. We continue to own this mining equipment and are looking for economic opportunities to redeploy these
assets and continue Bitcoin mining. The Company’s strategy at that time exposed us to the numerous risks and volatility associated
within this sector, including due to the high costs of purchasing miners and sourcing power for them, while monitoring the price of
Bitcoin, which has historically been volatile. Further, we have experienced recurring losses and negative cash flows from
operations. Our net income (loss) for the years ended December 31, 2024 and 2023 were $5,521 and $(6,133), respectively.
To
date, we have relied on debt or equity financings to fund our operations, and if the price of Bitcoin is not sufficiently high to enable
us to sell the Bitcoin we mine at prices above our cost to mine it, then we are likely to continue to be unable to fund our operations
without raising additional capital. Further, even if prices are sufficiently high for our mining activities, we are likely to need to
raise additional capital to fund the acquisition of new miners to repair or replace our existing miners and expand our number of miners
to be competitive.
We
expect to incur additional net losses over the next several years as we seek to redeploy our assets and expand operations. The
amount of future losses and when, if ever, we will achieve profitability are uncertain. If we are unsuccessful at executing on our
business plan, our business, prospects, and results of operations may be materially adversely affected.
WeOur
currently have no active revenue-generating operations, and our future depends on redeploying our existing assets and identifying and executing new business opportunities.
As
of March 2025, we ceased all self-mining operations and the lease with our largest hosting customer expired. In May 2025, we sold our
hosting facility; as a result, we currently have no active revenue-generating operations, and our ability to create shareholder value
depends on successfully identifying, acquiring, or developing new business opportunities. See Note 14 – Subsequent Events –
of the Financial Statements for additional details. The Company is actively pursuing new opportunities opportunities,
including economicaleconomic deployment
of the Bitcoin Mining equipment that it continue to own, but there can be no assurance that we will be
able to successfully identify
or consummate any such opportunities on acceptable terms, or at all. Until such time, we will rely on our
available resources to fund
corporate expenses, and we may need to raise additional capital. Failure to secure new operations or additional
financing would materially
and adversely affect our business, financial condition, and results of operations.operations
Our
independent auditors have indicated in their report on our December 31, 20242025 and 20232024 financial statements that there is substantial
doubt about our ability to continue as a going concern. A “going concern” opinion indicates that the financial statements
incorporated in this Annual Report have been prepared assuming that we will continue as a going concern for one year from the date the
financial statements are issued and do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets, or the amounts and classification of liabilities that may result if we do not continue as a going concern. Therefore, you
should not rely on our balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors,
and potentially be available for distribution to shareholders, in the event of liquidation. As of December 31, 2025, we had an accumulated
deficit of $426.7 million and a history of recurring losses. This “going concern” doubt may make it more difficult for us
to raise capital or enter into strategic transactions. If we are unable to continue as a going concern, you could lose your entire investment.
Our mining operating
costs have historically outpaced our mining revenues, which has put a strain on our business or increase our losses.
During 2024, our mining operations were costly, and expenses often exceeded
revenues. These conditions negatively affected our financial performance for the year ended December 31, 2024.
The cost of
obtaining new and replacement miners and parts had historically been highly capital intensive and had an adverse effect on our
business and results of operations.
Our
mining operations were only successful when the costs associated with mining Bitcoin, including hardware and electricity, were lower
than the price of Bitcoin at the time of sale. Our miners were subject to wear and tear from operation and occasional malfunctions, which
required additional capital expenditures to maintain performance.
As
mining technology evolved, we periodically evaluated the need to acquire newer models of miners to remain competitive. The price of new
miners was often correlated to the market price of Bitcoin, resulting in higher costs during periods of price appreciation. These conditions
negatively affected our profitability and cash flow during the year ended December 31, 2024. Following the sale of our mining facility
in May 2025, the Company ceased mining operations, and the risks described above no longer apply to current conditions.
Any upgrading
we chose to undertake required substantial capital investment, and we often faced challenges in obtaining the necessary funding on favorable
or non-dilutive terms. As of December 31, 2024, our ability to acquire new or replacement miners in sufficient quantities and without
delay affected our competitiveness within the rapidly evolving Bitcoin mining industry. If we had been unable to secure adequate mining
equipment, we could have been less efficient than our competitors or unable to mine Bitcoin profitably, which negatively affected our
financial performance during the reporting period.
OnEffective
August 29, 2024, our former Chief Executive Officer and acting Chief Financial Officer, Mr. Robert B. Ladd, resigned from all his positions
with the Company. Effective as of July 1, 2024,2025, Jonathan Pfohl became the Company’s Chief Financial Officer and Interim Chief Executive
Officer. Mr. Pfohl
is currently the only officer of the Company. Our success is highly dependent on the continued services of Mr. Pfohl.
The loss of his
services, or the diversion of his attention from his management duties for any reason, would leave us without executive
leadership, which
could significantly disrupt our business and growth opportunities. We do not have key man insurance on his life. The
market for highly
qualified personnel in this industry is very competitive, and we may be unable to attract a suitable replacement in
a timely manner,
on favorable terms, or at all.
II. Risks Related to Digital Assets and Remaining Mining Equipment
The value of our remaining assets and the feasibility of future mining are tied to the volatile price of Bitcoin.
We continue to own 35 Antminer S19 Pro mining units currently held in storage. The economic viability of redeploying these assets is directly impacted by the market price of Bitcoin, which has experienced extreme volatility in 2025 and we expect it to continue to do so. Any sustained decline in Bitcoin prices may render our equipment obsolete or prevent us from restarting profitable operations.
Bitcoin is subject to Halving, which is the process by which the Bitcoin reward for solving a block is reduced by 50% every 210,000 blocks that are solved. This means that the amount of Bitcoin we (or any other miner) are rewarded for solving a block in the Blockchain is permanently cut in half. For example, the last Halving occurred in April 2024, resulting in a revised payout of 3.125 Bitcoin per block solved, down from the previous reward rate of 6.25 Bitcoin per block solved. There can be no assurance that the price of Bitcoin will sufficiently increase to justify the increasingly high costs of mining for Bitcoin given the Halving feature. If a corresponding and proportionate increase in the trading price of these cryptocurrencies does not follow these anticipated Halving events, the revenue we earn from our mining operations will see a corresponding decrease, which would have a material adverse effect on our business and operations. To illustrate, even if the price of Bitcoin remains at its price as of today, all other factors being equal (including the same number of miners and a stable hash rate) our revenue would decrease substantially upon the next Halving.
Bitcoin mining is subject to risks associated with our need for significant electrical power.
Our historical Bitcoin mining operations required significant amounts of electrical power and increases in energy usage or rates directly affected our operating costs. If we are successful in re-establishing our Bitcoin mining operations, we must have access to economical electrical power. Any interruption or loss of access to electricity, or any significant increase in rates, could have materially and adversely affected our mining operations and results of operations during the reporting period. Prolonged power outages or unavailability of electrical power also has the potential to disrupt operations, reduce mining efficiency, or result in the temporary cessation of mining activity, which would adversely affect our financial performance.
III. Risks Related to Our Financial Condition and Capital Structure
We will require significant additional capital to fund our transition which will cause substantial dilution.
We will likely continue to operate at a loss, and we expect to need to raise additional capital to expand our operations and pursue our growth strategies, including potentially the acquisition of new or additional miners, and to respond to competitive pressures or unanticipated working capital requirements. We may not be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely affect our existing operations. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per-share value of our common stock could decline. Furthermore, if we engage in additional debt financing, the holders of such debt would have priority over the holders of common stock on order of liquidation preference. We may be required to accept terms that restrict our ability to incur additional indebtedness or take other actions including terms that require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our stockholders.
Our common stock is subject to the “penny stock” rules adopted under Section 15(g) of the Securities Exchange Act of 1934 (the “Exchange Act”). The penny stock rules generally apply to companies whose common stock trades at less than $5.00 per share, subject to specific exceptions. Such exceptions include among others any equity security listed on a national securities exchange and any equity security issued by an issuer that has (i) net tangible assets of at least $2,000, if such issuer has been in continuous operation for three years, (ii) net tangible assets of at least $5,000, if such issuer has been in continuous operation for less than three years, or (iii) average annual revenue of at least $6,000 for the last three years. The “penny stock” designation requires any broker-dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker dealers to solicit purchases of our common stock and therefore reduce its liquidity.
Additional equity financings or other share issuances by us, including shares issued in connection with strategic alliances and corporate partnering transactions, and shares issued on the conversion of outstanding notes could adversely affect the market price of our common stock. Sales by existing shareholders of a large number of shares of our common stock in the public market or the perception that additional sales could occur could cause the market price of our common stock to drop.
There are substantial risks related to ownership of our common stock.
The market price of our common stock is highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
IV. General Risk Factors
The Company’s
directors’ and officers’ insurance policies have been exhausted and will cause the Company to increase spending on legal
expenses.
The
Company has obligations to indemnify current and former directors and employees. We have fully exhausted our directors’ and officers’
insurance coverage, and additional expenses, including in connection with the recent SEC Action against our former Chief Executive Officer,
will be funded by the Company with existing cash resources.
There are several
new and existing competitors in our industry that are purchasing mining equipment at scale, which may cause delays or difficulty in us
obtaining new miners, which could materially and adversely affect our business and results of operations.
Many
of the competitors in our industry have also been purchasing mining equipment at scale, which has caused a world-wide shortage of mining
equipment and extended the corresponding delivery schedules for new miner purchases. There can be no assurances the mining equipment
manufacturers on which we rely such as Bitmain will be able to keep pace with the surge in demand for mining equipment if and when we
decide to upgrade and/or expand upon our current miners. Additionally, the supply of the materials used to produce miners, such as the
ASIC computer chips that are the primary feature in their computing power, may become subject to shortages, which could also either increase
the cost beyond what we can reasonably afford or reduce their availability without unreasonable delay or at all. It is uncertain how
manufacturers will respond to these trends and whether they can deliver on the schedules promised to any or all of their customers in
the future. In the event Bitmain or other manufacturers are not able to keep pace with demand or avoid supply shortages, we may not be
able to purchase miners from Bitmain or other manufacturers in sufficient quantities, at reasonable prices or on the delivery schedules
that meet our business needs, which could have a material adverse effect on our business and results of operations.
To the extent
that the profit margins of Bitcoin mining operations are not high, operators of Bitcoin mining operations or other participants in the
Bitcoin industry are more likely to immediately sell Bitcoins in the market, thereby constraining growth of the price of Bitcoin that
could adversely impact us.
Over
the years, Bitcoin mining operations have shifted from individual users mining with computer processors, graphics processing units and
first-generation ASIC servers to larger enterprises with newer, more “professionalized” sources of processing power which
has been predominantly added by “professionalized” mining operations and resulting demand for more professionalized and powerful
miners having faster hash rates. These professionalized mining operations may use proprietary hardware or sophisticated ASIC machines
acquired from ASIC manufacturers. Acquiring this specialized hardware at scale requires the investment of significant up-front capital,
and mine operators incur significant expenses related to the operation of this hardware at scale, such as the leasing of operating space,
which is often done in data centers or warehousing facilities, obtaining and paying for an electricity supply to run the miners and employing
technicians to operate the mining facilities.
As
a result, these professionalized mining operations are of a greater scale than prior miners and have more defined and regular expenses
and liabilities. Because these regular expenses and liabilities require professionalized mining operations to maintain profit margins
on the sale of Bitcoin, to the extent the price of Bitcoin declines and such profit margin is constrained, such miners are incentivized
to sell Bitcoin earned from mining operations more rapidly than individual miners who in past years were more likely to hold newly mined
Bitcoin for longer periods. The immediate selling of newly mined Bitcoin greatly increases the trading volume of Bitcoin, creating downward
pressure on the market price of Bitcoin rewards.
The
extent to which the value of Bitcoin mined by a professionalized mining operation exceeds the allocable capital and operating costs determines
the profit margin of such an operation. A professionalized mining operation may be more likely to sell a higher percentage of its newly
mined Bitcoin rapidly if it is operating at a low profit margin and it may partially or completely cease operations if its profit margin
is negative. In a low profit margin environment, a higher percentage could be sold more rapidly, thereby potentially depressing Bitcoin
prices. Lower Bitcoin prices could result in further tightening of profit margins for professionalized mining operations creating a network
effect that may further reduce the price of Bitcoin until mining operations with higher operating costs become unprofitable forcing them
to reduce mining power or cease mining operations temporarily.
We may be unable to raise additional
capital needed to grow our business.
We
will likely continue to operate at a loss, at least until our business strategy is implemented, or if Bitcoin or other cryptocurrency
prices decline, and we expect to need to raise additional capital to expand our operations and pursue our growth strategies, including
potentially the acquisition of new or additional miners, and to respond to competitive pressures or unanticipated working capital requirements.
We may not be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely
affect our existing operations. If we raise additional equity financing, our stockholders may experience significant dilution of their
ownership interests, and the per-share value of our common stock could decline. Furthermore, if we engage in additional debt financing,
the holders of such debt would have priority over the holders of common stock on order of liquidation preference. We may be required
to accept terms that restrict our ability to incur additional indebtedness or take other actions including terms that require us to maintain
specified liquidity or other ratios that could otherwise not be in the interests of our stockholders.
Because our miners
were designed specifically to mine Bitcoin, our success during 2024 depended in large part upon the value of Bitcoin, and any sustained
decline in its value adversely affected our business and results of operations.
Our operating
results for the year ended December 31, 2024 were primarily dependent upon the value of Bitcoin, which was the main cryptocurrency we
mined. Our revenues were driven by two key factors: (1) the number of Bitcoin rewards successfully mined and (2) the market value of Bitcoin.
As a result, our financial performance was subject to fluctuations in Bitcoin’s price. Our mining strategy during that period focused
solely on producing Bitcoin using ASIC miners that utilized the SHA-256 algorithm. Because these miners could not be repurposed for other
cryptocurrencies, such as Ethereum, a significant decline in the value or acceptance of Bitcoin would have had a negative impact on our
operations and financial condition.
Bitcoin
is subject to Halving, which is the process by which the Bitcoin reward for solving a block is reduced by 50% every 210,000 blocks that
are solved. This means that the amount of Bitcoin we (or any other miner) are rewarded for solving a block in the Blockchain is permanently
cut in half. For example, the last Halving occurred in April 2024, resulting in a revised payout of 3.125 Bitcoin per block solved, down
from the previous reward rate of 6.25 Bitcoin per block solved. There can be no assurance that the price of Bitcoin will sufficiently
increase to justify the increasingly high costs of mining for Bitcoin given the Halving feature. If a corresponding and proportionate
increase in the trading price of these cryptocurrencies does not follow these anticipated Halving events, the revenue we earn from our
mining operations would see a corresponding decrease, which would have a material adverse effect on our business and operations. To illustrate,
even if the price of Bitcoin remains at its price as of today, all other factors being equal (including the same number of miners and
a stable hash rate) our revenue would decrease substantially upon the next Halving.
We were subject
to risks associated with our need for significant electrical power and our current Electricity Agreement.
Our
Bitcoin mining operations required significant amounts of electrical power and increases in energy usage or rates directly affected our
operating costs. As of December 31, 2024, we operated under a month-to-month electricity arrangement with the City, which created uncertainty
regarding future pricing and availability. Any interruption or loss of access to electricity, or any significant increase in rates, could
have materially and adversely affected our mining operations and results of operations during the reporting period.
Prolonged power outages or unavailability of electrical power also had
the potential to disrupt operations, reduce mining efficiency, or result in the temporary cessation of mining activity, which could have
adversely affected our financial performance for the year ended December 31, 2024. Any future redeployment of our Bitcoin Mining assets and operations will be subject to similar risks.
Interruptions to internet access could have disrupted our
operations, which would adversely affect our business and results of operations.
Our
cryptocurrency mining operations required access to high-speed internet to be successful. If we had lost internet access for a prolonged
period, we might have been required to reduce our operations or cease them altogether. A disruption of the Internet would also have affected
the use of cryptocurrencies and subsequently the value of our securities. Because our mining activities depended heavily on reliable
internet access, any significant disruption could have interrupted network operations and adversely affected the price of Bitcoin and
our ability to mine it. Such events could have negatively impacted our business and financial performance during the reporting period.
Any future redeployment of our Bitcoin Mining assets and operations will be subject to similar risks.
Bitcoin has forked
multiple times and additional forks may occur in the future which may affect the value of Bitcoin held or mined by the Company.
To
the extent that a significant majority of users and miners on a cryptocurrency network install software that changes the cryptocurrency
network or properties of a cryptocurrency, including the irreversibility of transactions and limitations on the mining of new cryptocurrency,
the cryptocurrency network would be subject to new protocols and software. However, if less than a significant majority of users and
miners on the cryptocurrency network consent to the proposed modification, and the modification is not compatible with the software prior
to its modification, the consequence would be what is known as a “fork” of the network, with one prong running the pre-modified
software and the other running the modified software. The effect of such a fork would be the existence of two versions of the cryptocurrency
running in parallel, yet lacking interchangeability and necessitating exchange-type transaction to convert currencies between the two
forks. Additionally, it may be unclear following a fork which fork represents the original asset and which is the new asset. Different
metrics adopted by industry participants to determine which is the original asset include: referring to the wishes of the core developers
of a cryptocurrency, Blockchains with the greatest amount of hashing power contributed by miners or validators; or Blockchains with the
longest chain. A fork in the network of a particular cryptocurrency could adversely affect an investment in our securities or our ability
to operate.
Since
August 1, 2017, Bitcoin’s Blockchain was forked multiple times creating new types of Bitcoin cryptocurrencies. Each fork has resulted
in a new Blockchain being created with a shared history, and a new path forward. The value of the newly created Bitcoin cryptocurrencies
that have or may result may or may not have value in the long run and may affect the price of Bitcoin if interest is shifted away from
Bitcoin to the newly created digital assets. The value of Bitcoin after the creation of a fork is subject to many factors including the
value of the fork product, market reaction to the creation of the fork product, and the occurrence of forks in the future. As such, the
value of Bitcoin could be materially reduced if existing and future forks have a negative effect on Bitcoin’s value.
Our mining operations, including the miners, containers, land, and facility in which our equipment was operated,
were subject to real estate risks and potential damage for which we were not fully insured.
As of
December 31, 2024, our mining activities were conducted exclusively at our Lafayette, Georgia facility, which housed all of our operations
and equipment at a single location. Concentrating operations at one site exposed us to risks inherent in real estate ownership, including
potential losses from natural disasters, accidents, or other events that could have caused damage to our facility or equipment.
While
we maintained general liability and property insurance, we may have been underinsured for certain risks related to the ownership and operation
of this facility. A significant uninsured loss, or damage beyond insured limits, could have negatively affected our financial results
during the reporting period.
Our operations and revenue from the operation of third-party
equipment may subject us to legal disputes and liabilities.
The Company generated revenue from the operation
of abandoned third-party miners after the related hosting agreements expired. The legal status of such equipment as abandoned property
is subject to interpretation and may not be enforceable if challenged. The operation of this equipment for our own account could expose
us to legal claims from the original owners of the equipment. Any such claim or dispute could result in significant legal costs, divert
management’s attention, and could have a material adverse effect on our business, financial condition, and results of operations.
The Company’s
reliance on a third-party mining pool service provider for our mining revenue payouts may have a negative impact on the Company’s
operations.
Historically,
we received Bitcoin mining rewards from our mining activity through a third-party mining pool operator. Mining pools allow miners to
combine their processing power, increasing their chances of solving a block and getting paid by the network. The rewards are
distributed by the pool operator, proportionally to our contribution to the pool’s overall mining power, used to generate each
block. Should the pool operator’s system suffer downtime due to a cyber-attack, software malfunction or other similar issues,
it will negatively impact our ability to mine and receive revenue. Furthermore, we were dependent on the accuracy of the mining pool
operator’s record keeping to accurately record the total processing power provided to the pool for a given Bitcoin mining
application in order to assess the proportion of that total processing power we provided. We had limited means of recourse against
the mining pool operator if we determined the proportion of the reward paid out to us by the mining pool operator was incorrect,
other than leaving the pool. If we were unable to consistently obtain accurate proportionate rewards from our mining pool operators,
we may have experienced reduced reward for our efforts, which would have had an adverse effect on our business and operations. With any future redeployment of our Bitcoin Mining assets and operations
we anticipate continuing to rely on these mining pools and will be subject to similar risks.
Management's Discussion & Analysis (MD&A)
New heading “Crypto asset mining (Historical and Comparative)”
Removed heading “Recent Developments”
Removed heading “Cryptocurrency mining”
Largest changes
“The price of Bitcoin is volatile, and fluctuations are expected. Declines in the price of Bitcoin have had a negative impact in 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. …”see in full comparison
“On September 12, 2022, the Company entered into a securities purchase agreement, pursuant to which the Company received $1,335 in exchange for the issuance of a secured convertible promissory note (the “September 2022 Note”) in the principal amount of $1,500 with an original issue discount of $165. Any time prior to a change of control transaction, the September 2022 Note is convertible into 30% of the outstanding shares of the Company’s common stock on the conversion date on a post-conversion basis (the “Conversion Shares”). …”see in full comparison
“These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least one year from the date of the issuance of the financial statements included in this report. Management’s plans to mitigate these conditions include continuing to raise capital through debt and equity issuances and pursuing strategic initiatives, including potential business combinations or partnerships. However, there can be no assurance that the Company will be able to raise additional capital or execute these plans on acceptable terms, if at all. …”see in full comparison
“The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred operating losses since inception and continues to generate losses from operations. For the year ended December 31, 2025, the Company had a net loss of $219 and cash used in operating activities of $991. …”see in full comparison
“The Company will need to raise additional capital to fund operating losses. 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 audited financial statements. …”see in full comparison
“The financial statements do not include any adjustments that might result from the outcome of this uncertainty. For further information regarding the Company’s ability to continue as a going concern and management’s plans, see Note 2, “Summary of Significant Accounting Policies – Going Concern and Management’s Plans,” in the Notes to the Financial Statements.”see in full comparison
Full comparison: every changed paragraph (72)
MGT historically operated in the Bitcoin mining and hosting industry. Our previous business model was dependent on the economics of digital asset mining, including the price of Bitcoin, electricity costs, and access to competitive hosting capacity. During the fiscal year ended December 31, 2025, our operations underwent a significant strategic transition resulting from the cessation of active mining operations and the sale of our primary operating facility.
Following the expiration of our primary hosting customer lease in March 2025, the Company discontinued all self-mining activities. On May 13, 2025, the Company completed the sale of its LaFayette, Georgia facility for $1.35 million. This sale included land, containers, and electrical infrastructure associated with our former hosting and mining operations. As a result of these developments, the Company currently does not have active revenue-generating operations. We continue to own approximately 35 Antminer S19 Pro miners, which have been relocated to storage pending management’s determination of their future use or redeployment.
Management is currently engaged in an active strategic review process to determine the Company’s future direction. Our near-term priorities focus on the following core objectives:
While we continue to evaluate various strategic options, including potential partnerships and business combinations, these discussions are exploratory and have not resulted in any binding agreements as of the date of this report. Management does not view MGT as a passive holding or investment entity, but rather as an operating public company in a strategic transition phase.
MGT
has historically operated in the Bitcoin mining and hosting industry. During the year ended December 31, 2024, our operations consisted
primarily of hosting services for third-party miners and self-mining activities at our facility in Georgia. Revenue was derived from
hosting fees paid by customers under lease arrangements and from the mining of Bitcoin using the Company’s own machines.
As
of December 31, 2024, the Company owned 35 Antminer S19 Pro miners providing about 3 Ph/s in hash power for self-mining. At December
31, 2024, the Company’s mining activity also included the use of approximately 115 third-party owned miners that the Company considered
abandoned. We also offered third-party owners of miners a hosting service whereby MGT operated and maintained the miners for a fixed monthly
fee. MGT’s miners and those hosted for others were housed in a modified shipping container on the Company’s owned property
in Georgia.
The
Company’s business model was dependent upon the economics of digital asset mining, including the price of Bitcoin, electricity
costs, and access to competitive hosting arrangements. As of December 31, 2024, we remained focused on optimizing our hosting capacity
and managing liquidity while evaluating potential opportunities to expand or reposition our operations.
Since
year-end, however, there have been significant changes in our operations and strategic direction. The following “Recent Developments”
section summarizes these changes.
Recent
Developments
Subsequent
to December 31, 2024, the Company experienced material changes in its operations and leadership:
As
a result of these developments, the Company does not currently have active revenue-generating operations. Management is engaged in a
strategic review process to determine the Company’s future business direction and opportunities. In addition, the Company is delayed
in its SEC periodic reporting. Management’s current priority is to complete and file all outstanding reports to regain reporting
compliance.
The
preparation of the financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements,
statements and also affect the
amounts of revenues and expenses reported for each period. Actual results could differ from those which
result from using such estimates.
Management utilizes various other estimates, including but not limited to determining the estimated
lives of long-lived assets, determining
the potential impairment of long-lived assets, the fair value of conversion features, valuation
of derivative liabilities and the valuation
allowance for deferred tax assets. The results of any changes in accounting estimates are
reflected in the financial statements in the
period in which the changes become evident. Estimates and assumptions are reviewed periodically,
and the effects of revisions are reflected
in the period that they are determined to be necessary.
General
Cryptocurrency mining
The
Company recognizes revenue underin accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers,Customers (“ASC
606”). TheASC core606 principleestablishes ofa theprinciples-based framework for recognizing revenue standard is that a company should recognize revenue to depictdepicts the transfer of promised goods
goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those
those goods or services. TheAs of March 2025, the Company ceased all active revenue-generating operations related to cryptocurrency mining and
hosting activities. Accordingly, the following fivepolicies stepsprimarily are appliedrelate to achievehistorical thatand corecomparative principle:periods presented in these financial
statements and any limited residual activities during the fiscal year ended December 31, 2025.
Crypto asset mining (Historical and Comparative)
The Company recognizes revenue under 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:
The
Company earns Bitcoin mining revenue from two primary sources: the operation of its owned miners and the operation of third-party owned
miners that the Company has concluded are subject to abandonment. Historically, the Company participated in third-party operated digital
asset mining pools in which it contributed computing power in exchange for a proportional share of cryptocurrency rewards generated by
the pool. The Company has 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
are 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. The Company’s
performance obligation under these arrangements was the continuous provision of computing power to the mining pool operator. In exchange for providing computing power, exchange,
the Company isreceived entitlednon-cash toconsideration ain fractionalthe form of Bitcoin representing its proportional share
of the fixedtotal cryptocurrency awardrewards
earned by the mining pool operator receives (less digital asset transaction fees toduring the miningapplicable 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
provide that neither party can dispute settlement terms after thirty-five days following settlement.period. The Company’s fractionalshare share
iswas generally based on the proportion of computing
power the Company contributed to the mining pool operatorrelative to the total computing power contributed
by all mining pool participants in solving the current algorithm.participants.
In exchange for providing computing power, the Company is 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 provide that neither party can dispute settlement terms after thirty-five days following settlement. The Company’s fractional share is 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 is the only
performance obligation in the Company’s agreements with mining pool operators. The transaction consideration the Company
receives, receives,
if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially
different than
the fair value at contract inception or the time the Company has earned the award from the pools.pool the cs. The consideration
is all variable.
Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is
constrained until the
mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company
receives confirmation of
the consideration it will receive, at which time revenue is recognized. There is no significant financing
component in these transactions.
Fair
value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of
receipt. receipt.
In 2023, the FASB issued ASU 2023-08, which addresses the accounting and disclosure requirements for certain crypto assets.
The new guidance
requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded
in net income in each
reporting period. In addition, entities are required to provide additional disclosures about the holdings of
certain crypto assets. The
ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including
interim periods within those years.
There was no specific definitive guidance under GAAP or alternative accounting framework for the
accounting for cryptocurrencies recognized
as revenue or held, prior to the issuance of ASU 2023-08 and management has exercised
significant judgment in determining the appropriate
accounting treatment for the current year. The Company hasevaluated completedthe its evaluationimpact of
ASU 2023-08 and determined
that the standard isdid not expected to have a material impact on its financial statements.
Hosting
Revenues Revenues(Historical and Comparative)
We
received revenues from third parties renting capacity at our facility and from hosting miners owned by others. Under these
arrangements, the Company provided hosting services that included supplying electrical power, infrastructure support, monitoring,
and operational maintenance for third-party mining equipment located within the Company’s facilities. The Company recognized
$179$58 and $324$179 from these sources during the years ended December 31, 20242025 and 2023,2024, respectively. During the years ended December 31,
20242025 and 2023,2024, one customer accounted for 100% of hosting revenue in 2025, and two customers accounted for 91% and 99%, respectively of hosting revenue.revenue in
2024. After a hosting agreement expires, the Company
no longer recognizes hosting revenue for the related miners.
The Company reviewed the 2025 Note restructuring transaction under ASC 470-50 and concluded that the revised terms do not constitute a substantial modification. Accordingly, the transaction is accounted for as a modification of the existing November 2024 Note. The value of the equity in the transaction was $50 and recorded as a debt discount in accordance with ASC 470. The conversion feature added by the modification was determined to be non-substantive under ASC 470. No gain or loss was recognized as a result of the modification. The note continues to be carried at its previous amortized cost basis, adjusted for the $50 debt discount, which will be amortized over the remaining term of the note. For the year ended December 31, 2025, the Company recorded $6 in accretion of debt discount.
The Company had no Level 3 financial instruments outstanding at December 31, 2025 or 2024.
As of December 31, 2023,
the Company had a Level 3 financial instrument related to the derivative liability related to the conversion feature of convertible debt
and the issuance of warrants. This Level 3 financial instrument terminated and expired on November 1, 2024, when the company restructured
its outstanding notes and warrants and the Company had no Level 3 financial instruments outstanding at December 31, 2024.
Our
revenue iswas derived from
cryptocurrency mining which totaled $143$29 during 2024.2025. The increasedecrease in revenuesrevenue compared to the prior year reflects higher
lower Bitcoin production,
driven byresulting anfrom overalla increasereduction in mining capacityactivity deployedfor duringa significant portion of the year, including the use of additional equipment owned by third-parties
that the company considers abandoned.year. For the year ended December
31, 2024, approximately 62% of our mining revenue was from abandoned
equipment. We also receive revenues from third parties renting capacity
at our facility and from hosting miners owned by others. The
Company recognized $179$58 and $324$179 from these sources during the years ended
December 31, 20242025 and 2023,2024, respectively. The decrease in
Hosting services revenues is due to $480 of hosting services revenuesrevenue classifiedreflects asthe issuance of equity in respectexpiration of the sharesCompany’s issuedonly
ascustomer perlease thein contractMarch 2025, as well as a reduction in hosting customers and billings compared to the prior year.
For
the year ended December
31, 2024,2025, non–operating income of $6,645$578 primarily consisted of a gain fromon the settlementsale of debt, derivativeproperty and warrantequipment
of liabilities
is $7,141,$676, and other income of $6,$51, partially offset by interest expense of $303 and accretion of debt discount of $199.$149.
For the year ended December 31, 2024, non–operating income of $6,645 primarily consisted of a gain from the settlement of debt, derivative and warrant liabilities of $7,141, and other income of $6, partially offset by interest expense of $303 and accretion of debt discount of $199.
For the year ended December
31, 2023, non–operating expense of $4,700 primarily consisted of accretion of debt discount of $1,269, a loss on the change in
fair value of warrant derivative liabilities of $2,685, a loss on the change in fair value of derivative liability of $249, a loss on
settlement of derivative of $302, interest expense of $91, and a loss on lease incentive of $184, partially offset by a gain on sale
of property and equipment of $70 and a gain on settlement of debt of $10.
The change from non-operating
expense in 2023 to non-operating income in 2024 was primarily due to gains recognized on the change in fair value of warrant and derivative
liabilities.
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 non-convertible notes. As part of this transaction, the Company issued (i) a new 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 $240, 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 self-mining equipment was placed in storage pending evaluation of redeployment alternatives.
On May 13, 2025, the Company completed the sale of its cryptocurrency mining and hosting facility located in LaFayette, Georgia to CSRE Properties LLC for $1,350. The sale included all structures, containers, and electrical infrastructure associated with prior hosting and mining operations. The Company used $662 of the proceeds to repay principal and accrued interest on its outstanding debt. The transaction generated a $676 gain on sale. The sale of the LaFayette facility provided critical liquidity used primarily to reduce outstanding indebtedness and stabilize the Company’s financial position. Management determined that the disposal was a liquidity-driven event and not indicative of a strategic change in business direction as contemplated by ASC 205-20.
On September 22, 2025, the Company entered into a note exchange transaction with our secured lender. As part of the transaction, we issued a new secured convertible promissory note in the principal amount of $1,220 with a maturity date of December 31, 2027, in exchange for the surrender and cancellation of our prior secured note that was originally scheduled to mature on December 31, 2025. We also issued 500,000,000 shares of common stock as additional consideration to the lender. The Company accounted for this transaction as a modification of the existing secured note rather than an extinguishment under ASC 470-50; no gain or loss was recognized. This transaction extended our secured debt maturity by approximately two years, providing additional time to execute our operational plans and reducing short-term liquidity pressure. No cash was used to complete the transaction.
On September 23, 2025, we issued shares of our common stock to a director, our Interim CEO & CFO, and an employee. These issuances reduced accrued liabilities and resulted in non-cash compensation expense where applicable. Because our common stock carries a par value of $0.001, the par-value requirement resulted in corresponding adjustments to additional paid-in capital. These equity issuances did not require the use of cash and increased total stockholders’ equity. These equity grants did not impact our cash position, as the obligations were satisfied through the issuance of common stock. The settlement of the director’s accrued fees reduced current liabilities, and the compensation-related grants resulted in non-cash expenses recorded during the period. We continue to evaluate the use of equity-based arrangements, where appropriate, to conserve cash while aligning compensation with Company performance and service requirements.
On December 23, 2025, we initiated a common stock offering to raise up to $1,000 at $0.001 per share from accredited investors. The offering is exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder. At December 31, 2025, we had raised $300 and issued 300,000,000 shares of common stock. The offering closed on January 29, 2026 with the company raising $675 and issuing a total of 675,000,000 common shares.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred operating losses since inception and continues to generate losses from operations. For the year ended December 31, 2025, the Company had a net loss of $219 and cash used in operating activities of $991. As of December 31, 2025, the Company had an accumulated deficit of $426,737, cash and cash equivalents of $103, and our working capital deficit was $1,105. Following the cessation of digital-asset mining operations in March 2025 and the sale of the LaFayette, Georgia facility in May 2025, the Company currently does not have active revenue-generating operations.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least one year from the date of the issuance of the financial statements included in this report. Management’s plans to mitigate these conditions include continuing to raise capital through debt and equity issuances and pursuing strategic initiatives, including potential business combinations or partnerships. However, there can be no assurance that the Company will be able to raise additional capital or execute these plans on acceptable terms, if at all. Since January 2023, we have raised approximately $2,675 through convertible notes, the sale of equity and warrants, proceeds from asset sales, and related-party financing. Management also implemented certain modifications to simplify our capital structure and extend debt maturities to provide additional near-term financial and strategic flexibility.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty. For further information regarding the Company’s ability to continue as a going concern and management’s plans, see Note 2, “Summary of Significant Accounting Policies – Going Concern and Management’s Plans,” in the Notes to the Financial Statements.
We have historically financed
our business through the sale of debt and equity interests. In September 2022, we raised $1,335 from the sale of a $1,500 Original Issue
Discount Secured Convertible Promissory Note (the “Note”). As amended in December 2023, the Note: (i) is convertible into
40% of the Company’s outstanding shares of the Company’s common stock on the conversion date of the Note on a post-conversion
basis, (ii) matures December 31, 2024 and (iii) bears an interest rate of 6% per annum. In addition, upon conversion, the Company issued
to the investor three series of warrants of which each of the warrants is exercisable into 60% of the Conversion Shares.
The borrowings under the
Note as amended in December 2023, were restructured under an exchange agreement on November 1, 2024 for (i) a new, nonconvertible Secured
Exchange Note, in the principal amount of $1,620 with an interest rate of 8% per annum and a maturity date of December 31, 2025 and (ii)
750,000,000 duly authorized, non-assessable unregistered shares of common stock of the Company. Additionally, all of the Company’s
outstanding the warrants previously issued were exchanged for 600,000,000 common shares and 650,000 shares of the Company’s Series
D Preferred Stock.
On November 20, 2023, the
lender of the Note provided the Company with a non-convertible loan in the amount of $25. The loan bears interest at an annual rate of
12% and the maturity date was November 19, 2024. On March 6, 2024, the lender of the Note provided the Company with a non-convertible
loan in the amount of $125. The loan bears interest at an annual rate of 12% and the maturity date is March 5, 2025. On April
30, 2024, the lender of the Note provided the company with a non-convertible loan in the amount of $50. The loan bears interest at an
annual rate of 12% and the maturity date is April 30, 2025. On November 1, 2024, the lender consolidated and exchanged such
notes, including interest owed for an aggregate outstanding balance of $242. This new promissory note bears interest at an annual rate
of 12% and matures on December 31, 2025.
On March 16, 2023, the Company
entered into a partnership agreement and a property lease agreement with another cryptocurrency mining company (See Note 10 to the financial
statements). Pursuant to this lease agreement (the “Lease Agreement”), the Company agreed to lease Spaces of the Company’s
six-acre mining facility for rental payments of $5 per Space per month and payment of the electricity costs and deposit requirements
arising from the Spaces. In connection with the Lease Agreement, tenant agreed to make an initial deposit of $229 for the initial electricity
deployment for five MW. In December 2023, the tenant added an additional space to the total amount of Spaces leased.
Pursuant to the partnership
agreement, the Company agreed to issue 500,000 shares of its common stock per month for each rented Space, and to also issue an additional
number of shares of common stock annually equal to shares issued during the year under the agreement. During the year ended December
31, 2023, the Company received $345, issued 34 million shares of common stock and reduced the lease liability by $68. During the year
ended December 31, 2024, the Company received $400, issued 62 million shares of common stock and reduced the lease liability by $96.
Lease payments received under these agreements are treated as sales of equity in the Company’s financial statements.
We have incurred significant
operating losses since inception and continue to generate losses from operations and as of December 31, 2024 have an accumulated deficit
of $426,518. At December 31, 2024, our cash and cash equivalents were $6, and we had a working capital deficit of $3,201.
The Company will need to
raise additional capital to fund operating losses. 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 audited financial statements. The accompanying audited
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 in 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
rate per Bitcoin for the year ending December 31, 2024, as reported by Coindesk.com, were approximately $106 and $39 respectively.
On July 14, 2025, the Company filed a Preliminary Information Statement on Schedule 14C to increase its authorized common stock and authorize a reverse stock split within a range of ratios to be determined by the Board. The Definitive Information Statement was filed on July 25, 2025, and mailed to shareholders of record on August 7, 2025. The amendment to the Certificate of Incorporation increasing authorized common stock to 10 billion shares became effective in Delaware on August 25, 2025.
On September 22, 2025, the Company issued 500,000,000 shares of common stock as part of restructuring its 2024 Notes. The issuance was exempt from registration under Section 3(a)(9) of the Securities Act of 1933, as amended. (See Note 6- Notes Payable for accounting treatment under ASC 470-50.)
During the year ended December
31, 2024, the Company issued 126,000,000 shares of common stock in respect of the partial conversion of the December 2023 Note.
During the year ended December
31, 2024, the Company issued 62,000,000 shares of common stock in respect of the Lease Agreement. On June 21, 2024, 3,346,420 warrants
with an embedded conversion feature were exercised on a cashless basis for the issuance of 103,500,000 shares of common stock.
OnAdditionally,
on NovemberSeptember 1,22, 2024,2025, the
company exchangedCompany 600,000,000issued 650,000,000 shares of common stock andupon conversion of 650,000 shares of Series D Preferred
Stock. StockThe forconverted shares represented all outstanding Series D Preferred Stock. The issuance was exempt from registration under Section
3(a)(9) of the outstandingSecurities warrants
of the Company to purchase up to 2,043,808,450 sharesAct of common1933, stockas held by a lender.amended.
On September 23, 2025, the Company issued (i) 100,000,000 shares of common stock valued at $10 to its Interim CEO and CFO, Jonathan M. Pfohl, (ii) 100,000,000 shares of common stock valued at $10 to another employee, and (iii) 500,000,000 shares of common stock to Director Michael Onghai in exchange for or waiver of $56 in outstanding director fees. The issuance was exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
In December 2025, the company issued 300,000,000 shares of common stock to accredited investors that participated in a private placement for an aggregate of $300. The issuance was exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder.
On November 1, 2024, the
company issued 750,000,000 shares of common stock in connection with restructuring its convertible note.
On September 12, 2022, the
Company entered into a securities purchase agreement, pursuant to which the Company received $1,335 in exchange for the issuance of a
secured convertible promissory note (the “September 2022 Note”) in the principal amount of $1,500 with an original issue
discount of $165. Any time prior to a change of control transaction, the September 2022 Note is convertible into 30% of the outstanding
shares of the Company’s common stock on the conversion date on a post-conversion basis (the “Conversion Shares”). The
September 2022 Note matures December 31, 2024 and bears interest at a rate of 6% per annum. The September 2022 Note provides for customary
events of default, the occurrence of which would result in 110% the principal and other accrued amounts outstanding under the September
2022 Note to become immediately due and payable, with the interest rate increasing to 12%. At inception the Company recorded a debt discount
of $1,500 and non-cash interest as accretion of debt discount of $5,324. During the year ended December 31, 2023, the Company recorded
accretion of debt discount of $1,269. During the year ended December 31, 2024, the Company recorded accretion of debt discount of $199.
What changed in the latest 10-Q
Risk Factors
There are no additional risk factors other than those discussed in our Annual Report on Form 10–K, as filed with the SEC on March 17, 2026.
No wording changes found in this section (only numbers or dates changed in 1 paragraph).
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Operating Expenses”
New heading “Other Income and Expense”
New heading “Six months ended June 30, 2026 and 2025”
Largest changes
“General and administrative expenses for the three months ended June 30, 2026, decreased by $27, or 15%, to $149, as compared to $176 for the three months ended June 30, 2025. The overall decrease primarily reflected lower audit fees of $23, legal fees of $3, closing-related costs of $6, telephone and utilities expense of $3, and a substantial reduction in external consulting services of $53 following the stabilization of corporate restructuring efforts. …”see in full comparison
“On February 10, 2026, we initiated a common stock offering to raise up to $500 at $0.001 per share from accredited investors. The offering is exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder. Through June 30, 2026, the Company has raised $250 and issued a total of 250,000,000 common shares. The offering was ongoing at June 30,2026 and is set to expire July 31, 2026 unless extended by management 30 days. The funds are being used as general working capital for the Company.”see in full comparison
“On June 30, 2026, the Company entered into an exchange agreement, whereby, it issued 750,131,126 shares of common stock and 3,250,000 shares of a newly designated series of preferred stock, designated as Series E Convertible Preferred Stock, par value $0.001 per share that are convertible into 3,250,000,000 common shares in consideration for $1,220 in outstanding Secured Convertible Promissory Notes. …”see in full comparison
Full comparison: every changed paragraph (30)
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:
We
receive revenues from third parties renting capacity at our facility and from hosting miners owned by others. Under these
agreements, agreements,
the Company provided hosting services that included supplying electrical power, infrastructure support, monitoring, and
operational maintenance
for third-party mining equipment located within the Company’s facilities. The Company recognized $0
and $58 from these sources
during the three months ended MarchJune 31,30, 2026 and 2025, respectively. During the threesix months ended
June March 31,30, 2025, one customer accounted for 100% of hosting revenue. After a hosting agreement expires, the Company no longer
recognizes hosting revenue for the related miners.
Three
months ended MarchJune 31,30, 2026 and 2025
Our
revenues for the three months ended MarchJune 31,30, 2026 decreased by $87, or 100%, towere $0, which remained unchanged compared to $87$0 for the three months ended MarchJune 30,
31, 2025. Our historical revenue is partly derived from cryptocurrency mining,mining and third-party hosting activities, both of which totaled generated
$0 for the three months ended March 31, 2026 and $29
during the three months ended MarchJune 31,30, 2026 and 2025. The decreaseabsence of revenue in revenuesboth from mining activities for this periodperiods is due to the cessation
of all self-mining
activities activitiesand the expiration of our primary hosting agreement in March 2025.
The Company’s historical revenues have been derived from Bitcoin mining and hosting activities. The future revenue potential of these activities is inherently uncertain and is influenced by factors outside the Company’s control, including: (i) the market price and volatility of Bitcoin; (ii) network difficulty and global hash-rate changes; (iii) the availability and cost of energy; (iv) regulatory developments affecting digital asset markets, mining activities, or the classification and custody of digital assets; and (v) general macroeconomic conditions.
Following the expiration of our primary hosting agreement and the cessation of self-mining activities in March 2025, the Company has not generated revenue from digital currency operations. As of the date of this Report, the Company has not resumed mining or hosting activities, and future revenue will depend on the Company’s ability to identify, pursue, and execute new business opportunities or re-establish operations in the digital asset sector or other industries. Given these factors, management is unable to reasonably estimate future revenue trends. The Company will continue to evaluate available strategic and operational opportunities as it progresses with its regulatory compliance efforts and capital planning initiatives.
Operating Expenses
Cost of revenue for the three months ended June 30, 2026, decreased by $11, or 100%, to $0, as compared to $11 for the three months ended June 30, 2025. This decrease is entirely attributable to the complete cessation of all self-mining and third-party hosting activities at our LaFayette facility, which occurred in March 2025. The Company did not incur any direct operational costs related to digital asset infrastructure during the three months ended June 30, 2026.
General and administrative expenses for the three months ended June 30, 2026, decreased by $27, or 15%, to $149, as compared to $176 for the three months ended June 30, 2025. The overall decrease primarily reflected lower audit fees of $23, legal fees of $3, closing-related costs of $6, telephone and utilities expense of $3, and a substantial reduction in external consulting services of $53 following the stabilization of corporate restructuring efforts. These decreases were partially offset by higher compliance-related costs, including increased insurance premiums of $35, tax review fees of $6, investor relations expense of $4, and payroll fees of $16.
Other Income and Expense
For the three months ended June 30, 2026, non–operating income (expense) of $2,624 consisted of interest expense of $24, accretion of debt discount of $5 and loss on debt extinguishment of $2,814, offset by gain on the settlement of debt of $161 and gain on settlement of payables of $58. During the comparable period ended June 30, 2025, non–operating income of $633 consisted of interest expense of $43 offset by gain on sale of property of $676.
Six months ended June 30, 2026 and 2025
Revenues
Our revenues for the six months ended June 30, 2026, decreased by $87, or 100%, to $0, as compared to $87 for the six months ended June 30, 2025. Our revenue was historically derived in part from cryptocurrency mining, which totaled $0 for the six months ended June 30, 2026, compared to $29 during the six months ended June 30, 2025. The decrease in revenues from mining activities for this period is due to the cessation of self-mining activities in March 2025.
We
also receivehistorically received revenues from third parties renting capacity at our facility and from hosting miners owned by others. The
Company recognized
$0 and $58 in hosting and rental revenues during the threesix months ended MarchJune 31,30, 20262026, and 2025, respectively. The decrease
in revenues for this period is due to the expiration
of our lease agreement with our primary hosting customer in March 2025.
OperatingCost
expensesof revenue for the threesix months ended MarchJune 31,30, 20262026, decreased by $99$89, or 39%,100%, to $152,$0, as compared to $251$89 for the three six
months ended March
31,June 30, 2025. TheThis decrease inis operating expenses was primarilyentirely due to the cessation of cryptocurrency self-mining activities and third-party hosting
operations activitiesat the LaFayette facility in March 20252025, resultingwhich eliminated all associated direct data center utility infrastructure, electricity,
in a decrease in in cost of revenue of $78 and aoperational decreasedepreciation incosts generalfor andthe administrativecurrent expenses of $21.period.
General and administrative expenses for the six months ended June 30, 2026, decreased by $48, or 14%, to $301, as compared to $349 for the six months ended June 30, 2025. The overall decrease primarily reflected lower audit fees of $24, closing-related costs of $6, telephone and utilities expense of $6, and a substantial reduction in external consulting services of $119. These decreases were partially offset by higher compliance-related costs, including increased insurance premiums of $52, tax review fees of $6, legal fees of $4, investor relations expense of $6, administrative fees of $3, and payroll fees of $36.
The
decrease in cost of revenue of $78 or 100% to $0 for the three months ended March 31, 2026, as compared to $78 for the three months ended
March 31, 2025 was primarily due to the cessation of mining and hosting activities at the LaFayette facility in March 2025. The decrease
in general and administrative expenses of $21 or 12%, to $152 for the three months ended March 31, 2026, as compared to $173 for the
three months ended March 31, 2025, was primarily due to decreases in consulting services of $66, offset by increases in legal fees
of $8, payroll expenses of $18, investor relations of $1, administrative fees of $2 and insurance of $16.
For
the threesix months ended MarchJune 31,30, 2026, non–operating income (expense) of $30$2,654 consisted of interest expense of $25 and$49, accretion of debt discount
discountof $10 and loss on debt extinguishment of $5.$2,814, offset by gain on the settlement of debt of $161 and gain on settlement of payables
of $58. During the comparable period ended MarchJune 31,30, 2025, non–operating income of $583 consisted of interest expense of $50$93, consistedoffset
by primarilygain on sale of interest
expense.property of $676.
On February 10, 2026, we initiated a common stock offering to raise up to $500 at $0.001 per share from accredited investors. The offering is exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder. Through June 30, 2026, the Company has raised $250 and issued a total of 250,000,000 common shares. The offering was ongoing at June 30,2026 and is set to expire July 31, 2026 unless extended by management 30 days. The funds are being used as general working capital for the Company.
On May 14, 2026, the company settled $262 of outstanding payables through the issuance of 100,000,000 shares of common stock to an accredited investor. The issuance was exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
On June 30, 2026, the Company issued 150,000,000 shares of common stock to an accredited investor that participated in a private placement for $50. The issuance was exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
On June 30, 2026, the Company entered into an exchange agreement, whereby, it issued 750,131,126 shares of common stock and 3,250,000 shares of a newly designated series of preferred stock, designated as Series E Convertible Preferred Stock, par value $0.001 per share that are convertible into 3,250,000,000 common shares in consideration for $1,220 in outstanding Secured Convertible Promissory Notes. The issuance of 3,250,000 shares of Series E Preferred Stock and 750,131,126 shares of Common Stock to Project Nickel LLC was not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act, as an exchange of securities by an issuer with an existing security holder exclusively where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.
The
accompanying unaudited condensed financial statements have been prepared assuming that the Company will continue as a going concern,
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred
incurred operating losses since inception and continues to generate losses from operations. For the quartersix months ended MarchJune 31,30, 2026,
the Company
had a net loss of $182$2,955 and cash used in operating activities of $260.$531. As of MarchJune 31,30, 2026, the Company had an
accumulated deficit of $426,919,
$429,692, cash and cash equivalents of $218,$232, and our working capital deficit was $907.$461. Following the
cessation of digital-asset mining
operations in March 2025 and the sale of the LaFayette, Georgia facility in May 2025, the Company
currently does not have active revenue-generating
operations.
Cash
used in operating activities for the threesix months ended MarchJune 31,30, 2026 primarily consisted of a net loss of $(1822,955) offset by non-cash
accretion of debt discount of $5,$10, loss on debt extinguishment of $2,814, gain on equity settlement of accounts payable $(219) and increased
by cash used by working capital of $(83181).
Net
cash used by operating activities was $260$531 for the threesix months ended MarchJune 31,30, 2026 as compared to net cash used in operating activities
of $131$540 for the threesix months ended MarchJune 31, 30,
2025. Cash used by operating activities for the threesix months ended MarchJune 31,30, 2025 primarily
consisted of net income of $232 increased by
a cash net lossgain of $214$39 offsetfrom depreciation, reduced by depreciationgain on sale of $29property and equipment of $676 and cash providedused by working capital
of $54.$135.
Net
cash usedprovided inby investing activities was $0 and $0$1,350 for the threesix months ended MarchJune 31,30, 2026 and 2025 respectively. The cash generated
during the six months ended June 30, 2025 consisted of the proceeds from the sale of our LaFayette, GA property.
During
the threesix months ended MarchJune 31,30, 2026, cash provided by financing activities was $375$660 which consisted of proceeds from the sale of common
stock under equity purchase agreements.agreements and repayment of notes payable of $15, related party.
During
the threesix months ended MarchJune 31,30, 2025, cash providedused by financing activities was $126$562 which consisted of proceeds from common stock to
be issued
under lease agreement and proceeds from loans payable.
As
of MarchJune 31,30, 2026, 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.
MGTI insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 3,250,000 shares, about $0) and open-market sales in 1 filing (1 insider, 1 trade date, 3,250,000 shares, about $325.0K). Net open-market shares: 0 (purchases minus sales); net value about -$325.0K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-31 | Daxvest Llc |
Open-market sale | 3,250,000 | $0.10 | $325.0K |
| 2026-06-30 | Project Nickel Llc |
Conversion | 750,131,126 | — | — |
| 2026-06-30 | Project Nickel Llc |
Open-market purchase | 3,250,000 | — | — |
Well-known investors holding MGTI (13F)
None of the 59 investors we track reported a position in their latest 13F.