MGT Capital Investments, Inc. Annual Report 2011

← All annual reports

FY2011 Annual Report · MGT Capital Investments, Inc.

Loading PDF…

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

xx ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2011.

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

MGT CAPITAL INVESTMENTS, INC.
(Exact Name of Registrant as Specified in its Charter)
(formerly Medicsight Inc.)

Delaware
(State or Other Jurisdiction
of Incorporation or Organization)

0-26886
(Commission
File Number)

13-4148725
(I.R.S. Employer
Identification No.)

500 Mamaroneck Avenue, Suite 204, Harrison, NY 10528, USA
(Address of principal executive offices, including zip code)

914-630-7431
(Registrant’s Telephone Number, Including Area Code)

Securities registered under section 12(b) of the Exchange Act: Common stock, par value $0.001 per share

Securities registered under section 12(g) of the Exchange Act: Not applicable

Name of each exchange on which registered: NYSE AMEX

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No x

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12

months (or for such shorter period that the registrant was required to file), and (2) has been subject to such filing requirements for the past 90
days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers is not contained herein, and will not be contained, to the best of registrant’s

knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):

Large Accelerated Filer ¨

Non-accelerated Filer ¨
(Do not check if smaller reporting company)

Accelerated filer ¨

Smaller reporting company x

Indicate by check mark whether the Registrant is a shell Company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

As of June 30, 2011, the last day of the registrant’s most recently completed second fiscal quarter; the aggregate market value of the

registrant’s common stock held by non-affiliates of the registrant was approximately $7,119,106

The common stock is the registrant’s only class of stock.

As of February 29, 2012 the registrant had outstanding 70,291,062 shares of common stock, $0.001 par value

Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4

Item 5

Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B

Item 10
Item 11
Item 12
Item 13
Item 14

Item 15

Signatures

MGT Capital Investments, Inc.
Form 10-K

Table of Contents

PART I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
(Removed and Reserved)

PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

PART IV
Exhibits and Financial Statement Schedules

All financial amounts are in thousands except share and per share data.

4
4
8
12
12
12
12

13
13

13
14
25
25

26
27

28
28
21
33
34
36

37
37

NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K, including the section entitled “Management’s Discussion and Analysis of Financial Condition

and Results of Operations” in Item 7, contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if
they never materialize or prove incorrect, could cause the results of MGT Capital Investments, Inc. and its consolidated subsidiaries (the
“Company”) to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of
historical fact are statements that could be deemed forward-looking statements, including any projections of revenue, gross margin, expenses,
earnings or losses from operations, synergies or other financial items; any statements of the plans, strategies and objectives of management for
future operations, including the rate of market development and acceptance of medical imaging technology and medical hardware devices; the
execution of restructuring plans; any statement concerning developments, performance or industry rankings relating to products or services;
any statements regarding future economic conditions or performance; any statements of expectation or belief; and any statements of
assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include the performance of contracts
by suppliers, customers and partners; employee management issues; the difficulty of aligning expense levels with revenue changes; and other
risks that are described herein, including but not limited to the specific risks areas discussed in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Item 7 of this report, and that are otherwise described from time to time in the Company’s
periodic disclosure statements and for reports filed with the Securities and Exchange Commission. The Company assumes no obligation and
does not intend to update these forward-looking statements.

The Company’s main operating currency is UK sterling (£).

Item 1 Business

PART I

MGT Capital Investments, Inc. (“MGT”, “the Company”, “the Group”, “we”, “us”) is a holding company. We currently have a

controlling interest in Medicsight ltd (“Medicsight”) and its subsidiaries Medicsight, Inc., Medicsight KK (Japan), Medicsight Pty Limited
(Australia), Medicsight FZE (UAE), MedicEndo Limited (UAE), MedicCO2lon Limited (UAE) and Medicsight UK Limited (UK). On
March 29, 2011 we disposed of our 49% holding in Moneygate Group Limited (“Moneygate”). On March 31, 2010 we disposed of our
controlling interest in Medicexchange Limited (“Medicexchange”) and various other investments. We also have wholly owned subsidiaries
MGT Capital Investments (UK) Limited, MGT Investments (Gibraltar) Limited, and Medicsight Nominees Limited.

· Medicsight and its wholly owned subsidiaries is a medical technology company focusing on medical imaging software

development and medical hardware devices. The Company develops and commercializes Computer-Aided Detection (“CAD”)
applications which analyze Computer Tomography (“CT”) scans to assist radiologists in the early detection and measurement of
colorectal polyps. The Company has also developed an automated carbon dioxide insufflation device (MedicCO2LON) which it
commercializes through a global distributor. The Company holds (53.85%) of the issued share capital of Medicsight.

· On January 31, 2011, we entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with Committed Capital

Nominees Limited (“Committed”). Pursuant to the Purchase Agreement, Committed agreed to purchase: (i) all 9,607,843 shares of
Moneygate which MGT owned, for consideration of £0.096 ($0.154); and (ii) to novate the benefit of a Facility Agreement dated
November 18, 2010, between the Company and Moneygate, for consideration of £250 ($401), resulting in a gain on sale of £51
($81).

The Company continues to explore all strategic alternatives with respect to its majority interest in Medicsight Limited.

The Company is also analyzing potential acquisition opportunities in healthcare marketing and technology, as well as various

intellectual property assets. There can be no assurance that any acquisitions will occur at all, or that any such acquisitions will be accretive to
earnings, book value and other financial metrics, or that any such acquisitions will generate positive returns for Company shareholders.
Furthermore, it is contemplated that any acquisitions may require the Company to raise additional capital; such capital may not be available on
terms acceptable to the Company, if at all.

Product development

ColonCAD

Medicsight’s core technology is the proprietary ColonCAD™ algorithm that is integrated (using application protocol interface

(“API”) technology) into visualization workstations for radiologists to use when reviewing a patient’s colon CT scan data.

The CAD algorithm assists the radiologist as they search for polyps in the CT scan image data. The radiologist uses the visualization

software to review the patient’s CT scan images on the screen and searches for polyps (potentially pre-cancerous lesions on the wall of the
colon). After a full review, the radiologist then activates the Medicsight ColonCAD™ software, which immediately displays “CAD marks”
on the images, drawing the radiologist’s attention to potential polyps and other regions of interest. The radiologist then assesses each marked
region in order to make the final decision as to the presence or absence of a polyp.

Clinical studies have demonstrated that radiologists assisted by Medicsight’s ColonCAD™ technology have a significantly higher

sensitivity for the detection of patients with polyps in CT colonography compared to unassisted reading (i.e. traditional reading without the use
of ColonCAD™).

Medicsight launched ColonCAD 4.0 in Europe in March 2009. This release significantly reduced the number of false-positive CAD

marks presented to a radiologist reviewing a patient data set. In early 2011, Medicsight further developed the ColonCAD technology by
releasing an enhanced version (ColonCAD 4.1) in Europe. In the United States, Medicsight received marketing clearance from the FDA in
May 2011 for an earlier version of ColonCAD (v. 3.5). Further improvements in sensitivity and reduction of false-positive CAD marks have
been in development; however there are no current plans to pursue regulatory approvals or commercialization of these newer versions.

In addition to currently approved products, Medicsight is continuing development of prone and supine registration technology.
Currently clinicians review two data sets for each patient, one in each body position of prone and supine. This registration project aims to
“register” the two data sets, including polyps and other regions of interest into one patient data set, thereby reducing clinical review time.

Medicsight’s ColonCAD™ has been developed and validated using a large database of CT scans from hospitals around the world

and has been assessed in many clinical studies, the results of which have been published in peer-reviewed publications and presented at
leading radiology conferences.

MedicCO2LON

In addition to the computer aided detection software applications, Medicsight has developed an automated CO2 insufflation device

called MedicCO2LON.

A patient undergoing a CT colon scan requires the colon to be insufflated (distended) with either CO2 gas or room air administered
prior to the acquisition of their CT colonography images. MedicCO2LON is designed to provide good quality insufflation, which is essential
for the acquisition of high quality images from the CT colonography examination.

Intellectual Property

Medicsight continues to develop its intellectual property portfolio to protect the core technology in its CAD and other

products. During 2011, no patents were granted. Medicsight currently has 12 patents granted and 25 pending in various territories.

Regulatory approvals and submissions

US Food and Drug Administration clearance

In November 2008, Medicsight submitted the ColonCAD™ 510(k) application to the Food and Drug Administration (“FDA”) for

clearance in the U.S. In December 2008, we received an Additional Information (“AI”) letter from the FDA and submitted our response to the
FDA’s inquires in March 2009. In May 2011, Medicsight received 510(k) marketing clearance by the FDA for its ColonCAD 3.5 software.
This clearance followed 30 months of formal and informal meetings and discussions with the FDA, and included the submission of data to
satisfy FDA requests for additional information.

Other regulatory territories

In 2010, we received regulatory approval of MedicRead 3.0 (our visualization workstation which includes version 4.0 of the

Medicsight ColonCAD API) from the Chinese State Food and Drug Administration (“SFDA”).

In March 2011 version 4.1 of the Medicsight ColonCAD API received the CE Mark in Europe, which certifies that the product has

met European Union health, safety, and environmental standards.

In July 2011, Medicsight was informally informed by the Japanese Ministry of Health Labor and Welfare (“MHLW”) that several

statistical data errors were encountered in their review of the application for approval of its MedicRead software for use in CT Colonography
procedures. Following informal guidance from MHLW in August 2011, the Company decided to withdraw the current submission and is
assessing the next course of action.

MedicCO2LON

In 2010 our MedicCO2LON automated CO2 insufflation device received the CE Mark in Europe.

In partnership with our distribution partner in 2010 we also submitted MedicCO2LON to the MHLW regulatory authorities in Japan

for approval. We are currently awaiting a decision from MHLW.

Clinical Activity

In 2011, Scientific presentations of Medicsight’s CAD research were made at the annual European Congress of Radiology the 21th

Annual Meeting of the European Society of Gastrointestinal and Abdominal Radiology “ESGAR”, and the annual Radiological Society of
North America “RSNA” conference.

In addition, Medicsight sponsored of a number of international CT colonography training workshops. Medicsight’s current clinical

development activities are very limited.

Commercial progress

Medicsight sells its ColonCad software through distribution partnerships with global advanced medical visualization companies,

Picture Achieving and Communication System (“PACS”), suppliers and other Original Equipment Manufacturers (“OEM”).

Medicsight currently has partnership agreements with Vital Images, Inc. (acquired by Toshiba in 2011), TeraRecon Inc., Viatronix

Inc., Toshiba Medical Visualization Systems (previously Barco NV), Infinitt, Qi Systems (formerly Ziosoft Inc.), Intrasense SAS, and Alma
IT Systems.

We support our existing partners with systems integration and to increase market awareness. In addition we continue to seek new

partners to bring the product to market.

In 2010, we signed a global distribution agreement with Medrad Inc. for our MedicCO2LON insufflation device and began
commercial sales. Insufflators are manufactured by a third party under contract from Medicsight and are generally produced upon receipt of
purchase orders from Medrad.

Revenue and Growth Strategy

Revenues remain limited. Medicsight recorded revenues of $536 in 2011 compared to $540 in 2010. Medicsight ended 2011 with net
assets of $3,409 including $3,123 of cash and short term deposits. At December 31, 2011 all of our liquid assets were held as short term cash
balances, mainly in US Dollars. Post year end, we continue to hold our surplus cash on short term deposit.

As we rely totally on third parties to sell our products, the Company cannot accurately estimate ColonCAD license sales or

MedicCO2LON device sales.

The Company continues to explore all strategic alternatives with respect to its majority interest in Medicsight Limited.

The Company is also analyzing potential acquisition opportunities in healthcare marketing and technology, as well as various

intellectual property assets. There can be no assurance that any acquisitions will occur at all, or that any such acquisitions will be accretive to
earnings, book value and other financial metrics, or that any such acquisitions will generate positive returns for Company shareholders.
Furthermore, it is contemplated that any acquisitions may require the Company to raise capital; such capital may not be available on terms
acceptable to the Company, if at all.

Competition

The Company faces many competitors ranging from large CT scanner manufacturers such as GE, Hitachi, Philips, Siemens and

Toshiba to smaller medical imaging and visualization companies, in addition to other independent CAD software providers. Moreover,
regulatory approvals received by competitors in the U.S. and Europe and the U.S. have intensified the competitive landscape over the past
year.

Patents and Trademarks

Protection of our proprietary technology and our rights over that technology, from copy or unchallenged and improper use, is

essential to our future success. Any challenges to, or disputes concerning, our core technology may result in great expense to us, delays in
bringing products to market and disruption of our focus on our core activities. They may also result in loss of rights over our technology or
the right to operate in particular markets due to adverse legal decisions against us.

Three patents have been granted in the US covering aspects of Medicsight CAD technology. In addition, Medicsight has filed several

patent applications in the United Kingdom, the United States, the European Patent Office, Japan, South Korea, Australia, Canada, and under
the International Patent Cooperation Treaty (which currently has approximately 144 member countries) covering our core technologies and
their applications.

Medicsight also has trademarked several business names in various jurisdictions. Failure to register appropriate patents, copyrights or
trademarks in any jurisdiction may impede our ability to create brand awareness in our products, result in expenses in pursuing our rights with
respect to our intellectual property, or result in lost revenues due to intellectual property disputes. We may be required to purchase licenses
from sellers with prior rights in any country with no assurance that such rights will be available at a commercially acceptable cost.

Employees

As of December 31, 2011 the Company and its subsidiaries had 9 employees, all of whom were full-time employees. Our

employees are not part of a union.

General

MGT was originally incorporated as a Utah corporation in 1977 and was re-incorporated in Delaware in 2000. At December 31,

2011 the Company’s authorized share capital was 75,000,000 shares of common stock, par value of $0.001.

In January 2007 the Company changed its name from Medicsight, Inc. to MGT Capital Investments, Inc.

As of February 29, 2012, 70,291,062 shares of our common stock are issued and all are outstanding.

Our principal executive office is located at 500 Mamaroneck Avenue, Suite 204, Harrison, NY 10528; telephone number (914) 630-

7431.

Our Internet address is www.mgtci.com. Information on our website is not included as a part of this Annual Report.

Available information

We will provide, upon request and free of charge, paper copies of our annual report on Form 10-K, quarterly reports on Form 10-Q
and current reports on Form 8-K, including any amendments to the foregoing reports, as soon as is reasonably practicable after such material
is electronically filed with, or furnished to, the Securities and Exchange Commission. These materials along with our Code of Business
Conduct and Ethics are also available through our corporate website at www.mgtci.com. A copy of this annual report on Form 10-K is located
at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the
operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The public may also download these
materials from the Securities and Exchange Commission’s website at http://www.sec.gov. Any amendments to, and waivers of, our Code of
Business Conduct and Ethics will be posted on our corporate website.

Item 1A Risk Factors

Discussion of our business and operations included in this Annual Report on Form 10-K should be read together with the risk

factors set forth below. They describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties,
together with other factors described elsewhere in this report, have the potential to affect our business, financial condition, results of
operations, cash flows, strategies or prospects in a material and adverse manner. New risks may emerge at any time, and we cannot predict
those risks or estimate the extent to which they may affect our financial performance. Each of the risks described below could adversely impact
the value of our securities. These statements, like all statements in this report, speak only as of the date of this report (unless another date is
indicated), and we undertake no obligation to update or revise the statements in light of future developments.

We cannot assure you that the Company will be successful in commercializing any of the Company’s products or if any of the

products are commercialized, that they will be profitable for the Company.

The Company has only had a limited operating history and has recently commenced generating revenue from operations upon which
an evaluation of its 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.

The Company has identified a number of specific risk areas that may affect the Company’s operations and results in the future:

Company specific risks

We may be unable to develop our existing or future technology.

Our Medicsight CAD system may not deliver the levels of accuracy and reliability needed to make it a successful product in the

market place. Additionally, the development of such accuracy and reliability may be indefinitely delayed or may never be achieved. Failure to
develop this or other technology could have an adverse material effect on the Company’s business, financial condition, results of operations
and future prospects.

The market for our technology may be slow to develop, if at all.

The market for the Medicsight CAD products may be slower to develop or smaller than estimated or it may be more difficult to build

the market than anticipated. The medical community may resist Medicsight CAD products or be slower to accept them than we
anticipate. Revenues from Medicsight CAD may be delayed or costs may be higher than anticipated which may result in the Company
requiring additional funding. Medicsight’s principal route to market is via commercial distribution partners. These arrangements are generally
non-exclusive and have no guaranteed sales volumes or commitments. The partners may be slower to sell our products than anticipated. Any
financial, operational or regulatory risks that affect our partners could also affect the sales of our products. In the current economic
environment, hospitals and clinical purchasing budgets that are reliant on external debt finance may result in purchasing decisions being
delayed. If any of these situations were to occur this could have a material adverse effect on the Company’s business, financial condition,
results of operations and future prospects.

We may be slow to receive required regulatory approvals from respective government regulators, if we receive them at all.

The Medicsight CAD system is subject to regulatory requirements in the USA, Europe, Japan, China and our other targeted

markets. Necessary regulatory approvals may not be obtained or may be delayed. We may incur substantial additional cost in obtaining
regulatory approvals for our products in our targeted markets. Any delays in obtaining the necessary regulatory approvals increase the risk that
our competitors’ products are approved before our own. The failure to obtain these approvals on a timely basis and/or the associated costs
could have a material adverse effect on the Company’s business, financial condition, results of operations and future prospects.

The medical imaging market we operate in is highly competitive.

There are a number of groups and organizations, such as software companies in the medical imaging field, MDCT scanner
manufacturers, screening companies and other healthcare providers that may develop a competitive offering to the Medicsight CAD
products. In addition, these competitors may have significantly greater resources than MGT. We cannot make any assurance that they will not
attempt to develop such offerings, that they will not be successful in developing such offerings or that any offerings they may develop will not
have a competitive edge over Medicsight CAD products. With delayed regulatory approvals and/or disputed clinical claims we may not have a
commercial or clinical advantage over competitors’ products. Should a superior offering come to market, this could have a material adverse
effect on the Company’s business, financial condition, results of operations and future prospects.

We are a developing company with limited revenues from operations.

We have incurred significant operating losses since inception and have only recently commenced generating revenues from
operations. As a result, we have generated negative cash flows from operations and have an accumulated deficit as of December 31,
2011. We are operating in a developing industry based on new technology and our primary source of funds to date has been through the
issuance of securities and borrowed funds. There can be no assurance that management’s efforts will be successful or that the products we
develop and market will be accepted by consumers. If our products are ultimately unsuccessful in the market, this could have a material
adverse effect on our business, financial condition, results of operations and future prospects.

We face financial risks as we are a developing company.

We have incurred significant operating losses since inception and have limited revenue from operations. As a result, we have

generated negative cash flows from operations and our cash balances continue to reduce. While we are optimistic and believe appropriate
actions are being taken to mitigate this, there can be no assurance that attempts to reduce cash outflows will be successful and this could have a
material adverse effect on our business, financial condition, results of operations.

Our current corporate structure may place us in an unfavourable market position vis-à-vis our competitors.

MGT’s corporate structure may make it more difficult or costly to take certain actions. We conduct our business through Medicsight

Ltd, a U.K. company which is 53.85% owned by MGT and through Medicsight’s subsidiaries in the U.K., the U.S., Japan and
Gibraltar. Although MGT and Medicsight share some directors and management, they are required to comply with corporate governance and
rules applicable to companies in the United Kingdom and the USA. Should MGT propose to take any action, such as a transfer or allocation
of assets or liabilities between MGT and its subsidiaries, MGT would have to take into consideration the potentially conflicting interests of
MGT’s stockholders and the non-controlling stockholders of Medicsight. This may deter MGT from taking such actions that might otherwise
be in the best interest of MGT or cause MGT to incur additional costs in taking such actions. The subsidiary companies would not be able to
pay dividends or make other distributions of profits or assets to MGT without making pro-rata payments or distributions to the respective
non-controlling stockholders. Although neither the subsidiary nor MGT has plans to pay dividends or make distributions to its shareholders,
MGT’s corporate structure may deter its subsidiary from doing so in the future. If at any point we are ultimately unable to resolve any of
these conflicts, this could have a material adverse effect on the Company’s business, financial condition, results of operations and future
prospects.

The protection of our intellectual property may be uncertain, and we may face possible claims of others.

Although we have received patents and have filed patent applications with respect to certain aspects of our technology, we generally
do not rely on patent protection with respect to our products and technologies. Instead, we rely primarily on a combination of trade secret and
copyright law, employee and third-party non-disclosure agreements and other protective measures to protect intellectual property rights
pertaining to our products and technologies. Such measures may not provide meaningful protection of our trade secrets, know-how or other
intellectual property in the event of any unauthorized use, misappropriation or disclosure. Others may independently develop similar
technologies or duplicate our technologies. In addition, to the extent that we apply for any patents, such applications may not result in issued
patents or, if issued, such patents may not be valid or of value. Third parties could, in the future, assert infringement or misappropriation
claims against us with respect to our current or future products and technologies, or we may need to assert claims of infringement against third
parties. Any infringement or misappropriation claim by us or against us could place significant strain on our financial resources, divert
management’s attention from our business and harm our reputation. The costs of prosecuting or defending an intellectual property claim could
be substantial and could adversely affect our business, even if we are ultimately successful in prosecuting or defending any such claims. If
our products or technologies are found to infringe the rights of a third party, we could be required to pay significant damages or license fees or
cease production, any of which could have a material adverse effect on our business. If a claim is brought against us, or we ultimately prove
unsuccessful on the claims on our merits, this could have a material adverse effect on the Company’s business, financial condition, results of
operations and future prospects.

We may fail to attract and retain qualified personnel.

There is intense competition from other companies, research and academic institutions, government entities and other organizations

for qualified personnel in the areas of our activities. If we fail to identify, attract, retain and motivate these highly skilled personnel, we may be
unable to continue our marketing and development activities, and this could have a material adverse effect on the Company’s business,
financial condition, results of operations and future prospects.

If we do not effectively manage changes in our business, these changes could place a significant strain on our management and operations.

To manage our growth successfully, we must continue to improve and expand our systems and infrastructure in a timely and efficient

manner. Our controls, systems, procedures and resources may not be adequate to support a changing and growing company. If our
management fails to respond effectively to changes and growth in our business, including acquisitions, this could have a material adverse
effect on the Company’s business, financial condition, results of operations and future prospects.

We face risks arising from foreign currency exchange.

As our main operating currency is U.K. sterling and its financial statements are reported in U.S. dollars, MGT’s assets and liabilities

and results of operations are affected by movements in the $:£ exchange rate. Should there be large or unexpected fluctuations in the $:£
exchange rate, this could have a material effect on the Company’s business, financial condition, results of operations and future prospects. We
currently do not engage in hedging activities to minimize the effect of adverse movements in the exchange rate.

General market risks

We may not be able to access credit.

We face the risk that we may not be able to access credit, either from lenders or suppliers, or have facilities reduced or
terminated. Failure to access credit from any of these sources could have a material adverse effect on the Company’s business, financial
condition, results of operations and future prospects.

Recent global economic trends could adversely affect our business, liquidity and financial results.

Recent global economic conditions, including disruption of financial markets, could adversely affect us, primarily through limiting

our access to capital and disrupting our clients’ businesses. In addition, continuation or worsening of general market conditions in economies
important to our businesses may adversely affect our clients’ level of spending and ability to obtain financing, leading to us being unable to
generate the levels of sales that we require. Current and continued disruption of financial markets could have a material adverse effect on the
Company’s business, financial condition, results of operations and future prospects.

We may not be able to maintain effective internal controls.

If we fail to maintain the adequacy of our internal accounting controls, as such standards are modified, supplemented or amended

from time to time, we may not be able to ensure that we can conclude on an on-going basis that we have effective internal controls over
financial reporting in accordance with Section 404. Failure to achieve and maintain an effective internal control environment could cause us to
face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have a material
adverse effect on the Company’s business, financial condition, results of operations and future prospects.

Securities market risks

Our stock price and trading volume may be volatile, which could result in losses for our stockholders.

The equity markets may experience periods of volatility, which could result in highly variable and unpredictable pricing of equity
securities. The market price of our common stock could change in ways that may or may not be related to our business, our industry or our
operating performance and financial condition and could negatively affect our share price or result in fluctuations in the price or trading volume
of our common stock. We cannot predict the potential impact of these periods of volatility on the price of our common stock. The Company
cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the future.

Current deficiency in the Listing Standards of the NYSE Amex Market.

The staff of NYSE-Amex LLC (the “Exchange”) has notified the Company that it is not in compliance with the following Exchange

continued listing standards: Section 1003(a)(i) of the Company Guide, resulting from stockholders' equity on March 31, 2011 of less than
$2.0 million and losses from continuing operations and/or net losses in two of its three most recent fiscal years; Section 1003(a)(ii) of the
Company Guide with stockholders' equity of less than $4.0 million and losses from continuing operations and/or net losses in three of its four
most recent fiscal years; and Section 1003(a)(iii) with stockholders' equity of less than $6.0 million and losses from continuing operations
and/or net losses in its five most recent fiscal years.

The Exchange further notified the Company that its common stock had fallen to a low trading price for a significant period of time

and that the Company was therefore not in compliance with Section 1003 (f)(v) of the Company Guide. The Company was given until
February 23, 2012 to comply with this Section. The Exchange noted that the Company could regain compliance by effectuating a reverse-split
of its common stock prior to February 23, 2012. On February 17, 2012 the Company received notice from the staff of the Exchange that the
Company was granted an extension until March 31, 2012 to comply with Section 1003 (f) (v) of the Exchange’s Company Guide. The
Company plans to effectuate a reverse split of its common stock at a special meeting of the stockholders to be held on March 20, 2012. There
can be no assurance that if approved by the Company’s stockholders and if effectuated by the Company’s board, that such reverse stock split
will bring the Company into compliance with the Exchange’s listing standards.

On January 3, 2012, the Company was notified that it is not in noncompliance with Section 704 of the Company Guide in that it

failed to hold an annual meeting of its stockholders during 2011 for the fiscal year ended December 31, 2010. The Company's plan of
compliance detailing actions which it had taken, or intended to take, to regain compliance with the continued listing standards was accepted by
the Exchange via letter dated January 26, 2012, granting the Company until July 3, 2012 to regain compliance with Section 704 of the
Exchange’s Company Guide.

The Company will be subject to periodic review by Exchange staff during the extension period and prior to compliance with Sections
704, 1003(a)(i), (ii), (iii) and (f)(v) of the Exchange’s Company Guide. Failure to make progress consistent with the plans of compliance or to
regain compliance with the continued listing standards by the end of the extension period could result in the Company being delisted from the
NYSE AMEX LLC.

If our common stock is delisted from the NYSE Amex Market, the Company would be subject to the risks relating to penny stocks.

If our common stock were to be delisted from trading on the Exchange and the trading price of the common stock were below $5.00
per share on the date the common stock were delisted, trading in our common stock would also be subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These rules require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a "penny stock" and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally institutions. These
additional requirements may discourage broker-dealers from effecting transactions in securities that are classified as penny stocks, which could
severely limit the market price and liquidity of such securities and the ability of purchasers to sell such securities in the secondary market. A
penny stock is defined generally as any non-exchange listed equity security that has a market price of less than $5.00 per share, subject to
certain exceptions.

Discovery of Potential Related Party Transactions

In July 2011, the Company became aware of certain alleged irregularities at the Company and Medicsight relating to the fiscal years

2010 and earlier. On July 11, 2011, the Company and Medicsight created special committees of their respective boards to investigate the
alleged irregularities. The investigation is on-going and to date has uncovered potential related party transactions that were previously
undisclosed. Based on the initial findings of the investigation, Medicsight’s CEO, Allan Rowley was suspended by the Board of Medicsight.
Mr. Rowley subsequently tendered, and the board of directors accepted, his resignation on July 26, 2011 as CEO and Director of Medicsight.
The Company has determined that despite the discovery of several transactions that would trigger out of period adjustments (“OPA”), when
taken either individually or cumulatively, the potential OPA’s would be immaterial from both a qualitative or quantitative point of view, and
the Company’s financial statements do not require restatement at this time. Management is confident that the Company’s financial statements
will not require a material restatement as a result of any additional irregularities that may be uncovered in the future; however, no assurance can
be made that the Company’s financial statements will not require restatement as a result of the discovery of additional irregularities. The
Company cannot predict with certainty when the investigation will be completed.

Item 1B Unresolved Staff Comments

Not applicable.

Item 2 Properties

Our principal executive office is located at 500 Mamaroneck Avenue, Suite 204, Harrison, NY 10528 where we occupy 2,718

square feet under a lease that expires on November 30, 2014. We also lease an additional satellite office in London, UK occupied by
Medicsight, Limited.

Our offices are in good condition and are sufficient to conduct our operations.

Item 3 Legal Proceedings

The Company is not engaged in any material legal proceedings at this time nor are we aware of any pending legal proceedings.

Item 4 Mine Safety Disclosures

Not Applicable.

PART II

Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer’s Purchases of Equity Securities.

Market information

The Company’s common stock is traded on the NYSE-Amex (the “Exchange”) stock exchange under the symbol “MGT”. The
following table sets forth the range of high and low sales prices per share of our common stock for each quarterly period during 2011 and
2010.

2011
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

2010
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

High

Low

0.09 $
0.20
0.40
0.54

0.29
0.33
0.44
0.37

0.04
0.04
0.17
0.25

0.20
0.15
0.21
0.23

On February 29, 2012 the Company’s common stock closed on the Exchange at $0.05 per share.

As of February 29, 2012 there were 695 holders of record of the Company’s common stock.

Dividends

The Company has never declared or paid cash dividends on its common stock. The Company currently intends to retain earnings, if

any, to support its growth strategy and does not anticipate paying cash dividends in the foreseeable future. Payment of future dividends, if
any, will be at the discretion of the Company’s Board of Directors after taking into account various factors, including the Company’s financial
condition, operating results, current and anticipated cash needs and plans for expansion.

Recent sales of unregistered securities

Not applicable.

Item 6 Selected Financial Data.

Not applicable.

Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive summary:

MGT is a holding company comprised of MGT, the parent company, and its wholly-owned subsidiaries: MGT Capital Investments

(U.K.) Limited, MGT Investments (Gibraltar) Limited, and Medicsight Nominees Limited. In addition we also have a controlling interest in
our operating subsidiary, Medicsight Limited, including its wholly owned subsidiaries.

Medicsight is a medical technology company focusing on medical imaging software development and medical hardware devices.

Medicsight develops and commercializes enterprise-wide Computer-Aided Detection (“CAD”) applications which analyze Computer
Tomography (“CT”) scans to assist radiologists in the early detection and measurement of colorectal polyps and lung lesions. The CAD
software received a CE Mark in 2009, which allows for sales in the European Union. On May 19, 2011, Medicsight’s software also received
clearance from the U.S. Food and Drug Administration (the “FDA”.) Revenue is presently limited as Medicsight attempts to commercialize
its recent U.S. approval. On December 31, 2011, the Company held 83.75 million shares (53.85%) of the 155.5 million issued share capital
of Medicsight.

In late July 2011, Medicsight was informally informed by the Japanese Ministry of Health, Labor and Welfare (“MHLW”) that

several statistical data errors were encountered in their review of the application for approval of its MedicRead software for use in CT
Colonography procedures. Following informal guidance from MHLW, during August 2011, the Company decided to withdraw the current
submission and is assessing the next course of action. In the meantime, the Board of Directors of Medicsight closed the Tokyo office as part
of an overall program of expense reduction and corporate simplification. In addition to closing the Tokyo office, management of Medicsight
has decided to close several other non-essential subsidiaries in Australia, China and the UAE citing the unjustifiably high legal, regulatory and
accounting costs of maintaining such entities. However, in order to better exploit the recent FDA approval of ColonCAD, Medicsight has
opened a U.S. subsidiary (Medicsight, Inc.) in New York. Medicsight has also developed an automated CO2 medical inflation device and
associated disposable tubing (MedicCO2LON) that is being commercialized via a global distributor.

In March 2011, the Company disposed of its 49% holding in Moneygate Group Limited, a United Kingdom based firm of

Independent Financial Advisors.

At the March 7, 2011 board meeting, the members of the Compensation and Nominations Committees approved the grant of 500,000
restricted shares of MGT common stock, with each independent director of the board receiving 100,000 restricted shares. The restricted shares
vest one-third each six months from date of issue. The unvested shares are subject to forfeiture if the applicable director is not a director of the
Company at the time the restricted shares are to vest.

On or about December 19, 2011, the Company was advised by NYSE-Amex (the “Exchange”) that approval of shareholders is

required in order to allow the issuance and listing of Restricted Shares, which were subject to the above- referenced grants. The Company and
the Exchange then agreed that the grants be rescinded. All previous restricted stock compensation has been reversed. The Company considered
the impact of these findings and deemed it immaterial to all prior quarters and the year end.

As a result of the settlement agreement entered into with D4D Limited (“D4D”) for prior executive services on April 12, 2011, 1.25

million shares of MDST common stock held by the Company were assigned to D4D (a related party) on April 28, 2011.

In May 2011 the Company disposed of 1.0 million shares of Medicsight via open market sales on London’s AIM Exchange,
generating approximately $110 in gross proceeds. The Company’s overall holding in Medicsight was reduced to 83.75 million shares
(53.85%) of the 155.5 million issued share capital of Medicsight.

On June 8, 2011 the Company received notice from the Exchange notifying that it is not in compliance with the following Exchange

As allowed by Exchange rules, the Company was given until July 8, 2011 to submit a plan to demonstrate its ability to regain
compliance with the listing standards within an 18 month remediation period. On July 8, 2011, the Exchange granted the Company a one week
extension until July 15, 2011 to file its plan of compliance; the Company filed its plan on that date.

On August 23, 2011, the Exchange accepted the Company’s plan of compliance submitted to the Exchange in response to the
deficiency letter. The Exchange granted the Company an extension until December 8, 2012 to regain compliance with Sections 1003(a) (i)-(iii)
of the Exchange’s Company Guide. The Exchange further notified the Company that its common stock had fallen to a low trading price for a
significant period of time and that the Company was therefore not in compliance with Section 1003 (f)(v) of the Company Guide. The
Exchange noted that the Company could regain compliance by effectuating a reverse-split of its common stock prior to February 23, 2012. On
February 17, 2012 the Company received notice from the staff of the Exchange that the Company was granted an extension until March 31,
2012 to comply with Section 1003 (f)(v) of the Exchange’s Company Guide. The Company plans to effectuate a reverse split of its common
stock at a special meeting of the stockholders to be held on March 20, 2012.

On January 3, 2012, the Company was notified that it is not in noncompliance with Section 704 of the Company Guide in that it

The Company's stock trading symbol remains MGT, but now includes ".BC" appendage to denote its noncompliance. The trading

symbol will continue to bear this additional indicator until the Company regains its compliance with the Exchange continued listing
requirements.

On July 11, 2011, the Company announced in a Current Report on Form 8-K that it had initiated an internal investigation through a
Special Committee regarding the potential misappropriation and/or misdirection of Company funds. The Special Committee has continued to
conduct this inquiry, however, the investigation is not yet complete and the Company cannot predict with certainty when the investigation will
be completed.

On July 8, 2011, due to the on-going internal investigations trading in Medicsight’s common stock was halted by the AIM market
and, as a consequence, trading in MGT’s common stock was also halted by the Exchange. On August 22, 2011 the Company issued a press
release based upon the substantially complete results of the investigation. The Company had concluded that no adjustments or restatements of
prior issued financial statements were required. Although the investigation remains on-going, management is confident that the Company’s
financial statements will not require a material restatement as a result of any additional irregularities that may be uncovered in the future. The
trading halt was lifted by the respective markets on August 22, 2011.

In the event the investigation results in any finding of wrongdoing, the Company plans, consistent with the best interests of the

Company and its stockholders, to pursue recovery and/or restitution to the fullest extent provided by law. However, in such an event, there
can be no assurance of any recovery, or that any recovery will exceed the costs of collection, the costs of any litigation (including settlements
as well as legal fees) relating to this matter, or any other costs associated with this matter, including but not limited to payment of taxes or
fines, and the findings of unreported claims on the Company’s assets.

On August 22, 2011, the Board of Directors of Medicsight had agreed to call a General Meeting of Stockholders on September 14,

2011 to cancel trading of Medicsight PLC’s Ordinary Shares. As a result of the meeting on September 14, 2011, the resolution was duly
passed and Medicsight’s shares were cancelled on The London Stock Exchange effective September 22, 2011. In addition on September 22,
2011 Medicsight PLC status changed to a limited company, now known as Medicsight ltd.

On December 27, 2011, MGT raised approximately $639 net of associated costs of $142, in a direct rights offering to its

shareholders. All 31,240,472 shares subject to the subscription rights were sold pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege described in the Prospectus, as filed with the Commission on November 22, 2011.

At December 31, 2011 Medicsight’s and MGT’s cash and cash equivalents were $3,123 and $581, respectively compared to $8,256
and $178 at December 31, 3010. The Company entered into a Revolving Line of Credit and Security Agreement with Laddcap Value Partners
III LLC (“Laddcap”) on April 12, 2011 for up to $500 for a fifteen month term. The Agreement encompasses a standby commitment fee of
two (2%) percent of the maximum loan amount along with an eight (8%) percent interest charge on any funds drawn. Laddcap is a related
party as the Managing Partner and beneficial owner of Laddcap is a shareholder, president and CEO of MGT. No funds have been drawn
against the facility as of the filing of Annual Report on Form 10-K.

Management believes that the current level of working capital will be sufficient to allow the Company to maintain its operations into

April 2013. The Company is also analyzing potential acquisition opportunities in healthcare marketing and technology, as well as various
intellectual property assets. There can be no assurance that any acquisitions will occur at all, or that any such acquisitions will be accretive to
earnings, book value and other financial metrics, or that any such acquisitions will generate positive returns for Company shareholders.
Furthermore, it is contemplated that any acquisitions may require the Company to raise capital; such capital may not be available on terms
acceptable to the Company, if at all.

The Company achieved the following results in the twelve months ended December 31, 2011:

Revenue from license and other sales was $536 compared to $540 in 2010. Gross profit on revenues was $432 compared with $424 in
2010.

Other operating expenses decreased 29% to $8,294 compared to $11,757 in 2010.

Net loss attributable to MGT Capital Investments, Inc. decreased 53% to $4,549 and resulted in a loss per share of $0.12 compared to
a net loss of $9,651 and net loss per share of $0.29 in 2010.

Revenue remains limited as Medicsight awaits commercial development in the U.S.

Critical accounting policies and estimates

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements,

which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The notes
to the consolidated financial statements contained in this Annual Report describe our significant accounting policies used in the preparation of
the consolidated 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 consolidated financial statements.

Principles of consolidation

The consolidated financial statements include the accounts of our Company plus wholly owned subsidiaries and our majority owned
subsidiary Medicsight. The functional currency of our majority owned subsidiary is their local currency, GBP. All intercompany transactions
and balances have been eliminated. All foreign currency translation gains and losses arising on consolidation were recorded in stockholders’
equity as a component of accumulated other comprehensive income/(loss). Non-controlling interest represents the minority equity investment
in any of the MGT group of companies, plus the minorities’ share of the net operating result and other components of equity relating to the
non-controlling interest.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States

of America requires management to make estimates and assumptions that affect the amount of assets and liabilities and disclosure of
contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers investments with original maturities of three months or less to be cash equivalents.

Revenue Recognition

Medicsight

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable

and earned when there is persuasive evidence of an arrangement and that the product has been shipped or the services have been provided to
the customer, the sales price is fixed or determinable and collectability is probable.

Software — License fee revenue is derived from the licensing of computer software. Maintenance revenue is derived from software

maintenance. Our software licenses are generally sold as part of an arrangement that includes maintenance and support.

The Company licenses software and sell maintenance through visualization solution partners and original equipment

manufacturers. The Company receives regular sales reporting detailing the number of licenses sold by original equipment manufacturers,
value-added resellers and independent distributors (collectively, “Resellers”) to end users. The Company generally offers terms that require
payment 30-45 days from invoicing. Provided the Reseller i) assumes all risk of the purchase, ii) has the ability and obligation to pay
regardless of receiving payment from the end user, and all other revenue recognition criteria are met, license revenue from Resellers is
recognized upon shipment of its product to vendors (“sell-in basis”).

Revenue from license fees is recognized when notification of shipment to the end user has occurred, there are no significant

Company obligations with regard to implementation and the Company’s services are not considered essential to the functionality of other
elements of the arrangement.

Services — Revenue from maintenance and support arrangements is deferred and recognized rateably over the term of the

maintenance and support arrangements.

Multiple-element arrangements — the Company enters into arrangements with resellers that include a combination of software
products, maintenance and support. For such arrangements, the Company recognizes revenue using the Multiple-Deliverable Revenue
Arrangements. The Company allocates the total arrangement fee among the various elements of the arrangement based on the fair value of each
of the undelivered elements. The fair value of maintenance and support services is established based on renewal rates.

Hardware — Revenue is derived from the sale of our MedicCO2LON product. This product is an automated CO2 insufflation

device, and is generally sold as part of an arrangement that includes a one year warranty. The risk of incurring warranty related expense is
mitigated by the warranty contractually agreed with the supplier. The Company reviews the risk of warranty liabilities on a regular basis, and
makes any and all appropriate provisions accordingly. At the present time, the Company feels that the warranty liability is insignificant and has
therefore not made any provision.

MedicCO2LON is sold exclusively through our distribution partner Medrad Inc. Revenue is recognized as orders are satisfied and

goods are delivered to our distribution partner. The Company generally offers terms which require payments within 30-45 days from
invoicing.

Equity-based compensation

The Company recognizes compensation expense for all equity-based payments. Under fair value recognition provisions, the

Company recognizes equity-based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares
expected to vest over the requisite service period of the award.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The Black-
Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected
stock volatility, the risk-free interest rate, the option’s expected life and the dividend yield on the underlying stock. Expected volatility is
calculated based on the historical volatility of our common stock over the expected option life and other appropriate factors. Risk-free interest
rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as
the Company has never paid or declared any cash dividends on our common stock and does not intend to pay dividends on our common stock
in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

Determining the appropriate fair value model and calculating the fair value of equity-based payment awards requires the input of the

subjective assumptions described above. The assumptions used in calculating the fair value of equity-based payment awards represent
management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors
change and the Company uses different assumptions, our equity-based compensation expense could be materially different in the future. In
addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If our
actual forfeiture rate is materially different from our estimate, the equity-based compensation expense could be significantly different from
what the Company has recorded in the current period.

Inventory

We account for inventory at the lower of cost (first-in, first-out) or market. Cost is determined to be purchased cost for the finished

MedicCO2LON product from the third party supplier. We perform full physical inventory counts to maintain controls and obtain accurate data.
The MedicCO2LON product is either (i) sold to our exclusive distributor or (ii) placed in an external third party secure warehouse facility and
remains our property. Once the units are shipped to the distributor it is deemed that the ownership is transferred to the distributor and the
goods are delivered. Reserves for slow-moving and obsolete inventories are provided based on historical experience and product demand.
Management evaluates the adequacy of these reserves periodically based on forecasted sales and market trends.

Research and development

The Company incurs costs in connection with the development of software products that are intended for sale. Costs incurred prior to
technological feasibility being established for the product are expensed as incurred. Technological feasibility is established upon completion of
a detail program design or, in its absence, completion of a working model. Thereafter, all software production costs are capitalized and
subsequently reported at the lower of unamortized cost or net realizable value. Capitalized costs are amortized based on current and future
revenue for each product with an annual minimum equal to the straight-line amortization over the remaining estimated economic life of the
product. Amortization commences when the product is available for general release to customers.

The Company concluded that capitalizing such expenditures on completion of a working model was inappropriate because the
Company did not incur any material software production costs and therefore have decided to expense all research and development costs. Our
research and development costs are comprised of staff, consultancy and other costs expensed on the Medicsight products.

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 two to five years. Leasehold improvements are depreciated over
the term of the lease.

Foreign currency translation

The accounts of the Company’s foreign subsidiaries are maintained using the local currency as the functional currency. For these

subsidiaries, assets and liabilities are translated into U.S. dollars at period-end exchange rates, and income and expense accounts are translated
at average monthly exchange rates. Net gains and losses from foreign currency translation are excluded from operating results and are
accumulated as a separate component of stockholders’ equity.

Gains and losses on foreign currency transactions are reflected in selling, general and administrative expenses in the income

statement.

Income taxes

The Company applies the elements of FASB ASC 740-10 “Income Taxes — Overall” regarding accounting for uncertainty in

income taxes. This clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax
position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of
December 31, 2011and 2010, the Company did not have any unrecognized tax benefits. The Company does not expect that the amount of
unrecognized tax benefits will significantly increase or decrease within the next twelve months. The Company’s policy is to recognize interest
and penalties related to tax matters in the income tax provision in the Consolidated Statements of Operations. There was no interest and
penalties for the years ended December 31, 2011 and 2010. Tax years beginning in 2008 are generally subject to examination by taxing
authorities, although net operating losses from all years are subject to examinations and adjustments for at least three years following the year
in which the attributes are used.

Deferred taxes are computed based on the tax liability or benefit in future years of the reversal of temporary differences in the
recognition of income or deduction of expenses between financial and tax reporting purposes. The net difference, if any, between the provision
for taxes and taxes currently payable is reflected in the balance sheet as deferred taxes. Deferred tax assets and/or liabilities, if any, are
classified as current and non-current based on the classification of the related asset or liability for financial reporting purposes, or based on the
expected reversal date for deferred taxes that are not related to an asset or liability. Valuation allowances are recorded to reduce deferred tax
assets to that amount which is more likely than not to be realized.

Loss per share

Basic loss per share is calculated by dividing net loss attributable to the ordinary shareholders by the weighted average number of

common shares outstanding during the period. Diluted loss per share is calculated by dividing the net loss attributable to the ordinary
shareholders by the sum of the weighted average number of common shares outstanding and the diluted potential ordinary shares.

The computation of diluted loss per share for the years ended December 31, 2011, and 2010 excludes all options because they are

anti-dilutive due to the loss. For the year ended December 31, 2011 there were 3,781,253 options excluded with a weighted average exercise
price of $0.18 per share. For the year ended December 31, 2010 there were 13,703,334 options excluded with a weighted average exercise
price of $0.20 per share.

Comprehensive income / (loss)

Comprehensive income/(loss) includes net income/(loss) and items defined as other comprehensive income/(loss). Items defined as
other comprehensive income/(loss), include foreign currency translation adjustments and are separately classified in the consolidated financial
statements. Such items are reported in the Condensed Consolidated Statement of Stockholders’ Equity as accumulated other comprehensive
income/(loss).

Segment reporting

The Company operates in one main operational segment, Medicsight, a medical imaging and device hardware company, with MGT

providing corporate management services.

Results of Operations

Fiscal Year Ended December 31, 2011 vs. Fiscal Year Ended December 31, 2010

Revenue and gross margin

The Company generated revenues of $536 and gross margin of $432 for the year ended December 31, 2011 compared to $540 and

$424 for same period in 2010.

In the year ending December 31, 2011, Medicsight sold CAD licenses primarily in Europe where it has regulatory approvals. Sales

of our CAD products decreased by 1% to $319 compared to $323 for the year ending December 31, 2010.

In the year ended December 31, 2011, additional revenue of $217 was recognized through MedicCO2LON sales, equal to $217 for

the same period in 2010.

Operating expenses

Our selling, general & administrative expenses were reduced to $7,150 in 2011 compared to $10,181 for the period ending December

31, 2010. Due to delays in receiving regulatory approvals in Japan and the USA management continued to reduce headcount and streamline
operations in 2011. The effects of these decisions will continue to be reflected in the statement of operations.

Research and development costs decreased to $1,144 compared to $1,576 in 2010, primarily due to the reduction of headcount.

Interest and other income was $28 for the year ended December 31, 2011 as a result of Medicsight’s lower cash balances versus $66

for the period ending December 31, 2010.

Income Tax

Our effective tax rate for fiscal year 2011 and 2010 was (2)% and (3)%, respectively. The difference in the Company’s effective tax

rate from the Federal statutory rate is primarily due to a 100% valuation allowance provided for all deferred tax assets.

Net loss and net loss per share

Net loss attributable to MGT was $4,549 for Fiscal 2011 compared to a net loss of $9,651 for Fiscal 2010. Net loss per share for

Fiscal 2011 was $0.12 (based on weighted average shares outstanding of 39,329,561), compared to $0.29 for Fiscal 2010 (based on weighted
average shares outstanding of 32,960,179).

Operational currency

The Company’s main operating currency is UK sterling (£). Medicsight’s results of operations are affected by changes in the $: £

rates used to translate the operational result. For Fiscal 2011 the average rate was $1.6061: £1.00 and for Fiscal 2010 the rate was $1.5430, an
increase of 4% in the value of the dollar against sterling.

Other investments

Other Investments: Moneygate Group Limited

On January 31, 2011, we entered into a Sale and Purchase Agreement with Committed whereby Committed agreed to purchase: (i)

all 9,607,843 shares of Moneygate which MGT owned, for consideration of £0.096 ($0.154); and (ii) to novate the benefit of a Facility
Agreement dated November 18, 2010, between the Company and Moneygate, for consideration of £250 ($401).

Effective March 22, 2011, Moneygate is no longer a related party as the Company no longer has significant influence over its

operations nor representation on the Company’s board of directors.

Other Investments: Eurindia Limited / XShares Group, Inc. / HipCricket Inc.

On March 31, 2010, we disposed of our investments in XShares Group Inc. (“XShares”), HipCricket, Inc. (“HipCricket”) and

Eurindia Limited (“Eurindia”).

Eurindia

XShares

On March 31, 2010, we disposed of all of our holding in Eurindia for $1.

In 2007 and 2008 we invested $3,000 in Series C preferred shares of XShares Group, Inc. (“XShares”), an investment advisor that
creates, issues and supports exchange traded funds with a particular healthcare specialty. In the year ended December 31, 2009 the Company
invested $2,000 in XShares convertible notes with a principal of $2,100. As of December 31, 2009 the equity investment and the convertible
notes had been fully impaired. On March 31, 2010 we disposed of all of our previously impaired equity holdings in XShares for $1 and the
convertible notes for $1 resulting in a total gain on sale of $2.

HipCricket

In Fiscal 2007 we invested $2,000 in HipCricket Inc., a company engaged in mobile marketing. In the year ended December 31,

2009 HipCricket Inc. was delisted from the AIM Market and we accounted for it as an investment held at cost. As of December 31, 2009 the
investment was held at a book value of $224. On March 31, 2010 we disposed of all of our holding in HipCricket for $205.

Liquidity and Capital Resources

Working Capital information

Working capital summary
Cash and cash equivalents
Current assets
Current liabilities
Working capital surplus

Cash flow summary
Cash (used in) provided by
Operating activities
Investing activities
Financing activities
Discontinued operations – operating activities
Effects of exchange rates on cash and cash equivalents
Net decrease in cash and cash equivalents

2011

2010

3,704 $
4,204
(786)
3,418 $

8,434
10,730
(1,550)
9,180

2011

2010

(7,635) $
1,968
639
—
298
(4,730) $

(10,481)
(3,287)
1,000
(226)
(737)
(13,731)

At December 31, 2011 Medicsight’s cash and cash equivalents were $3,123. The Company continues to monitor current expense

levels and the required expenditures to successfully launch its software in the U.S.

At December 31, 2011 MGT’s cash and cash equivalents were $581, excluding amounts attributable to Medicsight. On April 12,
2011 the Company entered into a Revolving Line of Credit and Security Agreement (“Agreement”) with Laddcap, a related party, for up to
$500 for a fifteen month term. The Agreement encompasses a standby commitment fee of two (2%) percent of the maximum loan amount
along with an eight (8%) percent interest charge on any funds drawn. No amounts have been drawn down against the facility on the date of the
filing of the Company’s Form 10-K for the year ended December 31, 2011.

Currently the Company anticipates it has sufficient cash on hand to continue operations into April 2013, at which point the Company

may need to seek additional sources of financing. There is no guarantee that additional sources of financing will be available or on terms
acceptable to the Company.

Operating Activities

Our cash and cash equivalents have decreased during 2011 predominantly because of the $(7,635) used in operating activities. Our
net cash used in operating activities differs from net loss predominantly because of various non-cash adjustments such as depreciation, stock-
based compensation and movements in working capital.

Investing Activities

Investment in Medicexchange

Medicexchange was sold during the fiscal year ended December 31, 2010 and $1,101 of cash was disposed of as part of this
transaction, also included within investing activities. For consideration of this sale along with other assets sold at the same time MGT was due
to receive £750 ($1,136). This consideration was deferred and paid in installments through March 2011. As of December 31, 2010 £506
($766) had been received. The final outstanding payment of £244 ($370) was received on March 25, 2011.

Investment in Moneygate

On January 31, 2011, we entered into a Sale and Purchase Agreement with Committed Capital Nominees Limited (“Committed”)

whereby Committed agreed to purchase: (i) all 9,607,843 shares of Moneygate which MGT owned, for consideration of £0.096 ($0.154); and
(ii) to novate the benefit of a Facility Agreement dated November 18, 2010, between the Company and Moneygate, for consideration of £250
($401).

Loan Receivable from Dunamis Capital

On September 6, 2010 Medicsight made a short-term loan of $1,100 (£686) to Dunamis, a related party, repayable by December 31,
2010, along with $36 (£22) of interest. Dunamis paid back the principal of $1,100 (£686) and interest of $48 (£30) on February 6, 2011 and
February 10, 2011 respectively. The funds were lent to Dunamis in order to achieve a higher rate of interest than we would have on deposit
with a financial institution and also to demonstrate Medicsight’s financial ability to co-invest with a joint venture in the region using one of its
UAE subsidiaries. Dunamis had provided the assets of the business as collateral against the loan made by Medicsight.

Sale of Medicsight’s stock

Following the settlement agreement entered into on April 12, 2011, 1.25 million shares of Medicsight common stock held by the
Company were transferred to a related party on April 28, 2011. The Company’s overall holding in Medicsight was further reduced by an
additional 1.0 million shares during the quarter ended June 30, 2011, as the Company disposed of shares via open market sales on London’s
AIM Exchange. These sales generated approximately $110 in net proceeds. As of December 31, 2011 MGT held 83,750,000 shares of the
155,524,904 issued share capital of Medicsight.

Financing Activities

On December 27, 2011, MGT raised $639 net of associated costs of $142, in a direct rights offering to its shareholders. All
31,240,472 shares subject to the subscription rights were sold pursuant to the Basic Subscription Privilege and the Oversubscription Privilege
described in the Prospectus, as filed with the Commission on November 22, 2011

On April 12, 2011 the Company entered into a Revolving Line of Credit and Security Agreement (“Agreement”) with Laddcap, a

related party, for up to $500 for a fifteen month term. The Agreement encompasses a standby commitment fee of two (2%) percent of the
maximum loan amount along with an eight (8%) percent interest charge on any funds drawn.

Other Liquidity Information

Investment in Medicsight

On February 10, 2011 the Company announced its decision to explore all alternatives with respect to maximizing the value of its

holding in Medicsight; this analysis is on-going. Our consolidated financial statements include the results and financial condition of our
subsidiary, Medicsight.

Medicsight was previously listed on the AIM Market of the London Stock Exchange through September 22, 2011, when its shares

were cancelled based on a duly passed shareholder resolution and Medicsight became private.

Risks and uncertainties related to our future capital requirements

To date we have primarily financed our operations through private placements of equity securities. To the extent that additional

capital is raised through the sale of equity or equity-related securities of the Company or its subsidiaries, the issuance of such securities could
result in dilution to our stockholders.

No assurance can be given, however, that we will have access to the capital markets in the future, or that financing will be available

on acceptable terms to satisfy our cash requirements to implement our business strategies.

If we are unable to access the capital markets or obtain acceptable financing, our results of operations and financial conditions could

be materially and adversely affected. We may be required to raise substantial additional funds through other means.

Our technology has not yet been regulated in all target territories and as a result commercial results have been limited and we have not

generated significant revenues. We cannot assure our stockholders that our technology and products will be commercialized successfully, or
that if so commercialized, that revenues will be sufficient to fund our operations.

If adequate funds are not available to us, we may be required to curtail operations significantly or to obtain funds through entering
into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies or products that
we would not otherwise relinquish.

On June 8, 2011 the Company received notice from the NYSE Amex (the "Exchange") notifying that it is not in compliance with the
following Exchange continued listing standards: Section 1003(a)(i) of the Company Guide, resulting from stockholders' equity on March 31,
2011 of less than $2.0 million and losses from continuing operations and/or net losses in two of its three most recent fiscal years; Section
1003(a)(ii) of the Company Guide with stockholders' equity of less than $4.0 million and losses from continuing operations and/or net losses
in three of its four most recent fiscal years; and Section 1003(a)(iii) with stockholders' equity of less than $6.0 million and losses from
continuing operations and/or net losses in its five most recent fiscal years.

As allowed by Exchange rules, the Company was given until July 8, 2011 to submit a plan to demonstrate its ability to regain

compliance with the listing standards within an 18 month remediation period. On July 8, 2011, the Exchange granted the Company a one
week extension until July 15, 2011 to file its plan of compliance; the Company filed its plan on that date.

On August 23, 2011, the Exchange accepted the Company’s plan of compliance submitted to the Exchange in response to the
deficiency letter. The Exchange granted the Company an extension until December 8, 2012 to regain compliance with Sections 1003(a) (i)-(iii)
of the Exchange’s Company Guide. The Exchange further notified the Company that its common stock had fallen to a low trading price for a
significant period of time and that the Company was therefore not in compliance with Section 1003 (f)(v) of the Company Guide. The
Company was given until February 23, 2012 to comply with this Section. The Exchange noted that the Company could regain compliance by
effectuating a reverse-split of its common stock prior to February 23, 2012. On February 17, 2012 the Company received notice from the staff
of the Exchange that the Company was granted an extension until March 31, 2012 to comply with Section 1003 (f) (v) of the Exchange’s
Company Guide. The Company plans to effectuate a reverse split of its common stock at a special meeting of the stockholders to be held on
March 20, 2012.

On January 3, 2012, the Company was notified that it is not in noncompliance with Section 704 of the Company Guide in that it

The Company's stock trading symbol remains MGT, but includes a ".BC" appendage to denote its noncompliance. The trading

symbol will bear this additional indicator until the Company regains its compliance with the exchange continued listing requirements.

On July 8, 2011 due to on-going investigations, trading in Medicsight's common stock was halted by the AIM market. As a

consequence, trading in MGT's common stock was also halted by the Exchange. Trading resumed for MGT on August 22, 2011.

Commitments

On August 25, 2006 we executed a 10-year agreement with Pirbright Holdings Limited, to lease 8,787 square feet of office space at

the Kensington Centre, 66 Hammersmith Road, London W14 8UD, United Kingdom. Under this lease agreement our U.K. property rent,
services and related costs are approximately £330 ($516) per annum, paid quarterly in advance. The Company has exercised its right to
terminate the lease upon completion of the fifth year (August 24, 2011) and has found an alternative UK office location with no long-term
lease commitment. This commitment will be on a month-to-month basis and began on August 1, 2011 with total monthly rental payments of
£8 ($13) along with a rental deposit of £16 ($25). In February, 2012, the Company moved to smaller office in the same location with monthly
rental payments of £2 ($4) with a rental deposit of £4 ($6). As such minimum rental payments subsequent to this date have not been included
in the schedule below.

On September 1, 2011 the Company entered into a three year lease agreement for office space located in Harrison, New York, United

States terminating on November 30, 2014. Under the agreement our total rental payments over the three year lease period are $240, which
includes three months of free rent totalling $17 and a refundable rental deposit of $39.

We had a satellite office in Tokyo, Japan, which was closed in January 2012 and the rental deposit of $128 was returned.

The following is a schedule of the future minimum rental payments required under operating leases that have initial or remaining non-

cancellable terms in excess of one year:

Contractual obligations

Operating lease obligations

Total

Payments due by period

Total

Less than 1 year

1-3 years

3-5 years

$
$

208 $
208 $

89 $
89 $

119 $
119 $

—
—

Item 7A Quantitative and Qualitative Disclosure about Market Risk

Not applicable.

Item 8 Financial Statements and Supplementary Data

See Financial Statements and Schedules attached hereto.

Item 9A Controls and Procedures

(a)

Evaluation of Disclosure Controls and Procedures.

The Company has established controls and procedures designed to ensure that information required to be disclosed in the reports that

the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in
the Commission’s rules and forms and is accumulated and communicated to management, including the principal executive officer and
principal financial officer, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of the
Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company conducted an
evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-
15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this
report (the “Evaluation Date”). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures,
including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective
disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on such evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and
procedures were effective to provide reasonable assurance that information required to be disclosed by the Company (including its combined
subsidiaries) in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the communication to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)

Management’s Annual Report on Internal Control over Financial Reporting

SEC rules implementing Section 404 of the Sarbanes-Oxley Act of 2002 require our 2011 Annual Report on Form 10-K to contain
management’s report regarding the effectiveness of internal control over financial reporting. As a basis for our report, we tested and evaluated
the design, documentation, and operating effectiveness of our internal control.

Management is responsible for establishing and maintaining effective internal control over financial reporting, as defined in Rule 13a-
15(f) under the Exchange Act, of MGT Capital Investments, Inc. and its subsidiaries. The Company’s internal control over financial reporting
consists of policies and procedures that are designed and operated to provide reasonable assurance about the reliability of the Company’s
financial reporting and its process for preparing financial statements in accordance with generally accepted accounting principles
(“GAAP”). There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and
the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurance with respect
to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

As discussed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2010 and our Quarterly Report on

Form 10-Q for during the nine months period ending September 30, 2011, respectively, we identified the following material weaknesses: The
Company did not properly identify and track matters requiring shareholder approval and notifications and the Company did not identify all
related party relationships.

As a result of the identification of the weaknesses, the Company worked with outside counsel and made changes to insure items

requiring board of director or shareholder approval are identified and tracked with corporate counsel. In addition, the Company implemented
procedures, as described below to remediate the disclosure control weakness. The Company believes the above-described actions have
remediated the material weakness in the control environment and will help ensure that similar situations do not arise in the future.

The financial statements included in this Annual Report on Form 10-K were prepared with particular attention to
the material weaknesses identified above. Accordingly, management believes that our Financial Statements and the accompanying notes
included in this Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the
periods presented.

We continually review our disclosure controls and procedures and make changes, as necessary, to ensure the quality of our financial
reporting. As detailed below, we have enhanced our controls in a manner that remediated the issues that arose with respect to
the material weaknesses.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in
the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management's assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls,
process documentation, accounting policies, and our overall control environment. Based on this evaluation, our management concluded that
our internal control over financial reporting was effective as of December 31, 2011.

This annual report does not include an attestation report of the Company’s independent public accounting firm regarding internal
control over financial reporting. Management’s report was not subject to attestation by the Company’s independent public accounting firm
pursuant to permanent rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this
annual report.

(c)

Changes in Internal Control Over Financial Reporting.

Management is committed to the continued improvement of our overall system of internal control over financial reporting.
Management implemented measures to remediate the material weaknesses in internal control over financial reporting described above.
Specifically, we enhanced internal procedures to track items requiring board and/or shareholder approval and distributed and reviewed an
Officer and Director Questionnaire to ascertain any potential related party relationships requiring attentions. As part of our fiscal 2011
assessment of internal control over financial reporting, management conducted sufficient testing and evaluation of the implemented controls to
ascertain that they were designed and operating effectively and concluded that the implemented controls remediated the material weaknesses
identified above. We will continue to assess the effectiveness of our remediation in connection with management’s future evaluations of
internal control over financial reporting.

Except as identified above, during the most recent fiscal quarter, there have been no changes in our internal control over financial

reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

Item 10 Directors, Executive Officers and Corporate Governance.

The following table sets forth the current officers and directors of MGT.

PART III

Name

Age

Position

Richard W. Cohen

Robert B. Ladd
Richard Taney

Robert P. Traversa
Neal Wyman

53
56

47
59

Independent Director, Audit and Nomination and Compensation
Committee Member

Director, Chief Executive Officer
Chairman, Independent Director, Audit Committee Chairman, Nomination

and Compensation Committee Member

Chief Financial Officer

Independent Director, Audit Committee Member, Nomination and
Compensation Committee Chairman

Directors are elected in accordance with the Company’s by-laws to serve until the next annual stockholders meeting and until their
successors are elected in their stead. Officers are appointed by the Board of Directors and hold office until their successors are chosen and
qualified, until their death or until they resign or have been removed from office. All corporate officers serve at the discretion of the Board of
Directors. There are no family relationships between any director or executive officer and any other director or executive officer of the
Company.

Richard W. Cohen, for more than the past five years has been President of Lowey Dannenberg Cohen & Hart P.C., a law firm which
devotes a substantial amount of its practice to representation of investors in public companies. Mr. Cohen is admitted to practice in New York
and Pennsylvania, and the bars of the U.S. Courts of Appeals for the 1st, 2nd, 3rd, 6th and 11th Circuits; the U.S. District Courts for the
Southern and Eastern Districts of New York, the Eastern District of Michigan and the Eastern District of Pennsylvania. Mr. Cohen is a
Graduate of Georgetown University (A.B. 1977) and the New York University School of Law (J.D. 1980). The board believes that Mr.
Cohen has the experience, qualifications, attributes and skills necessary to serve as director because of his years of representing investors in
public companies and his expertise with corporate governance matters.

Robert B. Ladd joined the Company on December 13, 2010 as a director. Mr. Ladd was appointed Interim Chief Executive Officer

on February 7, 2011, and appointed President and CEO on January 9, 2012. Mr. Ladd is the Managing Member of Laddcap Value Advisors,
LLC, which serves as the investment manager for various private partnerships, including Laddcap Value Partners LP. Prior to forming his
investment partnership in 2003, Mr. Ladd was a Managing Director at Neuberger Berman, a large international money management firm
catering to individuals and institutions. From 1992 through November 2002, Mr. Ladd was a portfolio manager for various high net worth
clients of Neuberger Berman. Prior to this experience, Mr. Ladd was a securities analyst at Neuberger from 1988 through 1992. Mr. Ladd is a
former Director of InFocus Systems, Inc. (NASDAQ: INFS, 2007 to 2009), and presently serves on the board of Delcath Systems, Inc.
(NASDAQ: DCTH, since 2006). Mr. Ladd has earned his designation as a Chartered Financial Analyst (1986). The board believes that Mr.
Ladd has the experience, qualifications, attributes and skills necessary to serve as director because of his years of experience in the securities
industries.

Richard Taney, was appointed an independent director of the Company on February 2, 2010, and was appointed Chairman of the

Company on March 2, 2011. Since October 2010, Mr. Taney has been the President and CEO and a member of the board of directors of
PalliaTech, Inc., a medical device and therapeutics company. Mr. Taney currently provides consulting services to Delcath Systems, Inc.
(NASDAQ: DCTH), a medical technology company that developed a patented system for the targeted delivery of ultra-high dose
chemotherapy to the liver for treatment of a variety of cancers. From December 2006 until July 2009, Mr. Taney was acting CEO and
subsequently CEO and President of Delcath Systems, Inc. Mr. Taney is also the founding member of T2 Capital Management, LLC, an
investment management company, and a founding partner of Sandpiper Capital Partners, an investment partnership focused on private equity
investments and advisory work for privately held companies involved in a variety of emerging technologies. In addition to having extensive
experience in healthcare, medical technology and financial services, Mr. Taney has spent 20 years advising, institutional and high net worth
clients at Salomon Brothers, Goldman Sachs and Banc of America Securities. He earned a Bachelor of Arts degree from Tufts University and
a JD from Temple University School of Law. The board believes that Mr. Taney has the experience, qualifications, attributes and skills
necessary to serve as a director because of his years of experience in the medical technology business and finance.

Robert P. Traversa joined the Company on March 1, 2011 as a senior advisor and was appointed as the Company’s Chief Financial
Officer, Principal Financial Officer, Principal Accounting Officer, Vice President, Treasurer, and Secretary on May 24, 2011. Prior to joining
the Company, he was a senior vice president at Neuberger Berman LLC, a large international money management firm catering to individuals
and institutions. He joined Neuberger Berman in 1994 and was most recently a senior member of an investment team within the Private Asset
Management Division. Mr. Traversa is a New York state certified public accountant. The board believes that Mr. Traversa has the experience,
qualifications, attributes and skills necessary to serve as chief financial officer because of his years of experience in the securities industries.

Neal Wyman trained as a Chartered Accountant with Coopers and Lybrand before moving to KPMG where he worked in the Far
East. He moved into the recruitment industry in London specializing in financial services, gaining experience with a diverse range of clients.
He entered executive search in 1981, initially specializing in the financial services industry before broadening into general appointments and
professional services. He now focuses on general management, finance and non-executive appointments in both private and quoted
companies, with particular focus on venture capital. He is a graduate of the London School of Economics. Mr. Wyman was appointed an
independent director of the Company in November 2004. The board believes that Mr. Wyman has the experience, qualifications, attributes
and skills necessary to serve as a director because of his years of experience in finance and business.

Arrangements relative to Appointment as Director

Under an Amended and Restated Securities Purchase Agreement dated December 9, 2010 (the “Purchase Agreement”) between the

Company and Laddcap Value Partners, LP (the “Purchaser”), the Purchaser agreed to purchase 6.5 million shares of the Company’s Common
Stock for $1,000 . The Company appointed Robert B. Ladd, as a director to fill the vacancy caused by the resignation of Tim Paterson-Brown.
The Purchase Agreement closed on December 13, 2010. On February 9, 2011, all 7,984,012 Common Shares held by the Purchaser were
transferred from the Purchaser to Laddcap Value Partners III LLC (“Laddcap”). Mr. Ladd is the managing member of the general partner of
Laddcap.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past ten years, none of the following occurred with respect to any director, director

nominee or executive officer:

(1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer

either at the time of the bankruptcy or within two years prior to that time;

(2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and

other minor offenses);

(3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of

competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of
business, securities or banking activities;

(4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading

Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated;

(5) being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not

subsequently reversed, suspended or vacated, relating to an alleged violation of:

(i)

(ii)

any federal or state securities or commodities law or regulation;

any law or regulation respecting financial institutions or insurance companies including, but not limited to, a
temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or
permanent cease-and-desist order, or removal or prohibition order; or

(iii)

any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

(6) being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-

regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in
Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a member. (covering stock, commodities or derivatives exchanges, or other
SROs).

Corporate Code of Ethics

On December 28, 2007 the Board of Directors adopted a new Code of Business Conduct and Ethics which applies to all directors

and employees including the Company’s principal executive officer, principal financial officer and principal accounting officer or persons
performing similar functions.

Prior to December 28, 2007 the Company’s employees were subject to the previous Code of Ethics adopted by the Board of

Directors on November 25, 2004.

On December 28, 2007, the Board of Directors adopted the MGT Share Dealing Code, an Anti-Fraud Policy, a Whistleblowing

Policy and a Fraud Response Plan.

Copies of the Code of Business Conduct and Ethics, the Anti-Fraud Policy, the Whistleblowing Policy and the MGT Share Dealing

Code can be obtained, without charge by writing to the Corporate Secretary at MGT Capital Investments, Inc., 500 Mamaroneck Avenue,
Suite 204, Harrison, NY 10528

Section 16(a) Beneficial Ownership Reporting Compliance

Under the securities laws of the United States, the Company’s directors, its executive officers, and any persons holding more than

five percent of the Company’s common stock are required to report their initial ownership of the Company’s common stock and any
subsequent changes in that ownership to the Securities and Exchange Commission (the “Commission”). Specific due dates for these reports
have been established and the Company is required to disclose any failure to file by these dates. Based solely upon a review of Forms
3 and 4 and amendments thereto furnished to the Company under 17 CFR 240.16a-3(e) during its most recent fiscal year and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent fiscal year, and any written representation referred to in
paragraph (b)(1) of Item 405 of Regulation S-K, the following persons subject to Section 16 of the Exchange Act failed to file the reports
required by Section 16(a) of the Exchange Act during the most recent fiscal year:

Reporting Person

Neal Wyman
Peter Venton
Robert B. Ladd
Richard Taney
Richard W. Cohen
Robert P. Traversa

Number of Late Reports
1
1
1
1
1
1

Number of Transactions not
Reported on a Timely Basis
2
2
4
1
1
1

Audit Committee and Audit Committee Financial Expert

On November 25, 2004 the Company’s Board of Directors established an Audit Committee to carry out its audit functions. At

December 31, 2011 the membership of the Audit Committee was Richard Taney as Chairman and Neal Wyman and Richard W. Cohen as
members.

The Company’s Board of Directors has determined that Richard Taney, an independent director, is the audit committee financial

expert, as defined in Regulation S-K promulgated under the Securities and Exchange Act of 1934, serving on its audit committee.

Item 11 Executive Compensation.

Summary Compensation Table

The following table summarizes Fiscal Years 2011 and 2010 compensation for services in all capacities of the Company’s named

executive officers and other individuals:

Name
Principal Position

Year

Salary

Bonus

Option
awards (6)

All other

Total

compensation compensation

Robert B. Ladd (1)
CEO and CEO of Medicsight

2011

216 $

Limited.

2010

— $

Robert P. Traversa (2)
CFO and COO of

Medicsight Limited

2011

209 $

2010

— $

Allan Rowley (3)
CEO, Medicsight Limited

2011
2010

$
$

187 $
309 $

Troy Robinson (4)
CFO and CFO, Medicsight

Limited

2011

161 $

2010

185 $

Kenichi Nakagawa (5)
Managing Director,
Medicsight Japan

2011

193 $

2010

239 $

— $

— $
— $

— $

— $
61 $

— $

74 $

— $

9 $

— $

10 $

— $

— $
— $

48 $

— $

25 $

— $

216

—

219

—

187
370

209

259

218

248

(1)

(2)

(3)

(4)

(5)
(6)

Robert B. Ladd was appointed Chief Executive Officer on February 7, 2011. Mr. Ladd was appointed Chief Executive Officer of
Medicsight Limited on July 8, 2011.
Robert P. Traversa was appointed Chief Executive Officer on May 24, 2011. Mr. Traversa was appointed Chief Operational Officer of
Medicsight Limited on September 22, 2011.
Allan Rowley was appointed Chief Financial Officer on August 4, 2006. Mr. Rowley resigned his position as Chief Financial Officer
and was appointed Chief Executive Officer on December 13, 2010. Mr. Rowley resigned his position as Chief Executive Officer on
February 7, 2011. Mr. Rowley resigned as Chief Financial Officer of Medicsight on July 26, 2011
Troy Robinson was appointed Chief Financial Officer on December 13, 2010 having previously served as Group Controller. Mr.
Robinson resigned from MGT on March 8, 2011. Mr. Robinson left Medicsight Limited on October 31, 2011.
Kenichi Nakagawa left Medicsight Japan on September 30, 2011.
This column discloses the dollar amount of the aggregate grant date fair value of options granted in the year.

Outstanding Equity Awards at December 31, 2011

Number of
securities
underlying
unexercised
options
exercisable

Number of securities
underlying
unexercised
unearned
options

Option exercise
price

Option expiration
dates

Name

Troy Robinson

Medicsight Limited
Medicsight Limited

Plan J
Plan M

201,000
200,000

—
—

£0.09 ($0.13 ) May 14, 2019
£0.05 ($0.08 ) December 13, 2020

Grants of plan-based awards

There were no grants of stock or option awards to our named executive officers under any plan for the year ending December 31,

2011.

Director Compensation for 2011

Name

Richard W. Cohen
Richard Taney (2)
Peter Venton (2)
Neal Wyman

Fees Earned or
Paid in Cash (1)

Option
Awards

All Other

Compensation

Total

$
$
$
$

27 $
63 $
67 $
30 $

— $
— $
— $
— $

10 $
10 $
— $
10 $

37
73
67
40

(1) As an employee of the Company, Robert B. Ladd, Director and CEO, received no directors’ fees from the Company during 2011 and

is not included in the table.

(2) Includes fees for services to the Company and to Medicsight.

All directors are reimbursed for their out-of-pocket expenses incurred in connection with the performance of Board duties.

Director Compensation for 2010

Name

Neal Wyman
Dr. L. Peter Fielding
Peter Venton (2)
Sir Christopher Paine
Dr. Allan Miller

Fees Earned or
Paid in Cash (1)

Option
Awards

All Other

Compensation

Total

$
$
$
$
$

65 $
8 $
111 $
20 $
5 $

— $
— $
— $
— $
— $

65
8
111
20
5

All directors are reimbursed for their out-of-pocket expenses incurred in connection with the performance of Board duties.

(1) As employees of the Company, Tim Paterson-Brown, the Chairman and CEO, and Allan Rowley, the Company’s CFO, received no

directors’ fees from the Company during 2010 and are not included in the table.

(2) Includes fees for services to the Company and to Medicsight.

Independent director compensation

Each independent director receives annual compensation of $20. In addition, independent directors, receive $10 as total

compensation for committee service. In fiscal 2010 Peter Venton and Neil Wyman also served on a special committee and received
compensation of $25.

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information regarding beneficial ownership of Common Stock as of February 29, 2012:

·
·
·

each person known by the Company to be the beneficial owner of more than 5% of the outstanding Common Stock;
each person serving as a director, a nominee for director, or executive officer of the Company; and
All executive officers and directors of the Company as a group.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In general, a person
who has voting power and/or investment power with respect to securities is treated as a beneficial owner of those securities. For purposes of
this table, shares subject to outstanding warrants and options exercisable within 60 days of the date of this Annual Report are considered as
beneficially owned by the person holding such securities. To our knowledge, except as set forth in this table, the persons named in this table
have sole voting and investment power with respect to the shares shown.

Percentage beneficially owned is based upon 70,291,062 shares of common stock issued and outstanding as of February 29, 2012.

Name of Beneficial Owner

5% Beneficial Owners
Joseph DiRenzo
Directors and Officers
Robert B. Ladd (1)
Neal Wyman
Richard Taney
Richard W. Cohen
Robert P. Traversa (2)
Allan Rowley (3)
Troy Robinson (4)

Total Current Officers and Directors as a Group (5 persons)

Number of Shares
Beneficially Owned Equity Beneficially Owned

Percentage of Common

3,600,000

21,477,746
—
—
—
5,033,550
—
—

26,511,296

5.1%

30.6%
—
—
—
7.2%
—
—

37.8%

Addresses for the above directors and officers are care of the Company at 500 Mamaroneck Avenue, Suite 204, Harrison, NY

10528.

(1) Mr. Ladd owns 750,000 shares of Common Stock directly. Mr. Ladd may also be deemed to be the beneficial owner of an

additional 20,727,746 shares of Common Stock held by Laddcap Value Partners III LLC, a Delaware limited liability company
(“Laddcap”), by virtue of his ability to vote or control the vote or dispose or control the disposition of the shares of Common
Stock held by Laddcap through his position as Managing Member of Laddcap. On February 9, 2011, all 7,984,012 shares of
Common Stock held by Laddcap Value Partners LP were transferred to Laddcap.

(2) Mr. Traversa owns 5,033,550 shares of Common Stock directly.

(3) Mr. Rowley resigned on February 7, 2011 and holds no Common Stock.

(4) Mr. Robinson resigned on March 8, 2011 and holds no Common Stock.

Item 13 Certain Relationships and Related Transactions and Director Independence.

Accsys Technologies

Tim Paterson-Brown, our former Chairman and Chief Executive Officer, was a non-executive director of Accsys Technologies plc
(“Accsys”), but resigned from this position on April 6, 2010. Accsys’ subsidiary, Titan Wood Limited (“Titan Wood”), rented space at 66
Hammersmith Road, London W14 8UD, United Kingdom. During the year ended December 31, 2011 and 2010 respectively, £55 ($89) and
£126 ($195) of office related costs were recharged to Titan Wood. At December 31, 2011, Titan Wood is no longer a related party and there
was nothing outstanding from Titan Wood.

Moneygate Group

In Fiscal 2009 we purchased 49% of the share capital of Moneygate. On acquisition we provided loan facilities of £250 ($387) for

working capital and £2,000 ($3,094) for acquisitions and subsequently entered into various transactions with Moneygate and other non-related
parties.

At December 31, 2010, and through to its disposal, Moneygate was a related party. It was considered that the Company had

significant influence over its operations and had representation on the board of directors. Due to this significant influence, we account for it
under the equity method. Since the investment was acquired at a nominal value, also its fair value, and had incurred losses since we made our
investment, it was recorded in the consolidated financial statements at a value of $nil at December 31, 2010.

On January 31, 2011, we entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with Committed Capital
Nominees Limited (“Committed”). Pursuant to the Purchase Agreement, Committed agreed to purchase: (i) all 9,607,843 shares of Moneygate
which MGT owned, for consideration of £0.096 ($0.154); and (ii) to novate the benefit of a Facility Agreement dated November 18, 2010,
between the Company and Moneygate, for consideration of £250 ($387), resulting in a gain on sale of £51 ($81). The consideration of £200
($321) was received by the Company on March 29, 2011.

Dunamis Capital

Allan Rowley, former Chief Executive Officer and former Chief Financial Officer of MGT and former Chief Executive Officer of
Medicsight, along with David Sumner, former Chairman of Medicsight, are both directors of Dunamis. Dunamis is a United Arab Emirates
(“UAE”) registered company regulated by the Dubai Financial Services Authority (“DFSA”). Dunamis is 100% owned by David Sumner and
was set up by Mr. Sumner with Allan Rowley’s financial consulting assistance, as a corporate financing and advisory firm. On September 6,
2010 Medicsight made a short-term loan of $1,100 (£711) to Dunamis. Dunamis paid back the principal of $1,100 (£711) and interest of $48
(£30) on February 6, 2011 and February 10, 2011 respectively.

In February 2011 the Company, following consultation with its nominated advisor noted that as a result of Mr Sumner’s

relationships with both Dunamis and Medicsight, the Loan constituted a related party transaction under Rule 13 of AIM Rules for Companies.
Rule 13 requires that an AIM company must issue notification without delay as soon as the terms of a transaction with a related party are
agreed. The independent directors, having consulted with the Company’s nominated adviser, considered the terms of the transaction fair and
reasonable insofar as shareholders were concerned. On February 18, 2011 the Company issued a notice detailing the terms of the transaction
with the related party.

Laddcap Value Partners III LLC (“Laddcap”)

On April 12, 2011 the Company entered into a Revolving Line of Credit and Security Agreement with Laddcap for up to $500 for a
fifteen month term. The Agreement encompasses a standby commitment fee of two (2%) percent of the maximum loan amount along with an
eight (8%) percent interest charge on any funds drawn. Laddcap is a related party as the Managing Partner and beneficial owner of Laddcap is
a shareholder and Chief Executive Officer of MGT. No amounts have been drawn down against the facility as of the date of the filing of the
Company’s Form 10-K for annual period ended December 31, 2011.

D4D Limited

Effective July 29, 2010, the Company entered into a service agreement with D4D Limited (“D4D”), a company that offers Executive

Services for small and mid-cap companies. D4D is owned by Tim Paterson-Brown and Allan Rowley, and pursuant to the agreement,
provided the services of Chairman, Chief Executive Officer and Chief Financial Officer to the Company. The D4D service agreement
provided the services of Tim Paterson-Brown and Allan Rowley on similar remuneration to their previous employment contracts with MGT.

On executing the contract with D4D on July 29, 2010, Tim Paterson-Brown and Allan Rowley terminated their employment

contracts with MGT, but still held the offices of Chairman and Chief Executive Officer and Chief Financial Officer, respectively.

On December 13, 2010 Tim Paterson-Brown resigned as Chairman and Chief Executive Officer of MGT. Effective December 13,

2010 and following the resignation of David Sumner on November 23, 2010, Tim Paterson-Brown became Chairman of Medicsight, the
Company’s significant subsidiary. As such, an agreement between Medicsight and D4D was entered into for the provision of the services of
an Executive Chairman. On February 18, 2011, Tim Paterson-Brown subsequently resigned as Chairman of Medicsight and was entitled to
receive, and has been paid on February 18, 2011, a severance amount of £144 ($223).

On December 13, 2010 Allan Rowley resigned as Chief Financial Officer and took up office of Chief Executive Officer for MGT.
Subsequently, Mr. Rowley resigned on February 7, 2011, to focus on the operations of Medicsight and held the position of Chief Executive
Officer of Medicsight until July 26, 2011, when he tendered and the board of directors accepted his resignation.

On April 12, 2011, the agreement with D4D was renegotiated and a settlement agreement between MGT and D4D, Tim Paterson-

Brown and Allan Rowley was executed and delivered. Under the settlement agreement, the following payments and assignments were agreed
to be made by the Company to D4D: £110 ($170) settlement fee, £80 ($124) recoverable local taxes, £17 ($25) estimated legal expense and
the assignment of 1.25 million shares of MDST common stock held by the Company to D4D. The common stock was delivered to D4D on
April 28, 2011 and had a fair value of $71 on the date of transfer. The parties, upon the terms and subject to the conditions of the settlement
agreement and to the extent permitted by law, settled all claims arising out of the D4D Agreement and the respective directorships and
employment arrangements with the Company and certain of its affiliates. The Company has fully accrued and expensed all related costs. As
of December 31, 2011 only the estimated legal expenses of £17 ($28) remain accrued and unpaid.

During the year ended December 31, 2011 MGT and Medicsight made payments to D4D, totalling $304 (2010: $511) and $315

($2010: $31) respectively.

Director independence

Each of the Company’s independent directors: Richard Taney, Richard W. Cohen and Neal Wyman are considered independent

under Section 803A of the Exchange’s rules according to which the Company must comply.

Item 14 Principal Accounting Fees and Services.

Fees for independent registered public accounting firm for 2011 and 2010

Set forth below are the aggregate fees billed for each of the last two fiscal years ended December 31, 2011 and December 31, 2010

for services rendered by EisnerAmper LLP and Amper, Politziner & Mattia, LLP.

Audit fees

Audit-related fees

Total Audit & Audit-related fees

Tax fees

Total fees

2011 2010

175 $

175

—

175 $

175

22 $

197 $

217

On August 18, 2010 the Audit Committee of the Company’s Board of Directors engaged EisnerAmper LLP to serve as the

Company’s new independent registered public accounting firm, after it was notified on August 16, 2010 that Amper, Politziner and Mattia,
LLP, an independent registered public accounting firm, would not be able to stand for re-appointment because it combined its practice on that
date with that of Eisner LLP to form EisnerAmper LLP, an independent registered public accounting firm. The Company previously filed
Form 8-K on August 19, 2010 acknowledging this change.

Audit fees consist of fees billed for services rendered for the audit of our financial statements and review of our financial statements
included in our quarterly reports on Form 10-Q. During 2011 and 2010, we incurred audit fees with Amper, Politziner, & Mattia, LLP in the
amount of $0 and $25, respectively. During 2011 and 2010, we incurred audit and audit-related fees with EisnerAmper LLP in the amount of
$175 and $150, respectively.

Tax fees consist of fees billed for professional services related to the preparation of our U.S. federal and state income tax returns and

tax advice. During 2011 and 2010, we incurred tax fees with Amper, Politziner, & Mattia, LLP in the amount of $0 and $9, respectively.
During 2011 and 2010, we incurred tax fees with EisnerAmper LLP in the amount of $22 and $33, respectively.

The Audit Committee pre-approved all Audit-related fees. After considering the provision of services encompassed within the above
disclosures about fees, the Audit Committee has determined that the provision of such services is compatible with maintaining EisnerAmper’s
independence.

Pre-approval policy of services performed by independent registered public accounting firm

The Audit Committee’s policy is to pre-approve all audit and non-audit related services, tax services and other services. Pre-approval

is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally
subject to a specific budget. The Audit Committee has delegated the pre-approval authority to its chairperson when expedition of services is
necessary. The independent registered public accounting firm and management are required to periodically report to the full Audit Committee
regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval and the
fees for the services performed to date.

Item 15 Exhibits and Financial Statement Schedules.

Financial Statements

PART IV

The consolidated financial statements of the Company for the fiscal years covered by this Annual Report are located on pages F-1 to

F-24 of this Annual Report.

Exhibits

Exhibit No.

Description

2.1
2.2
2.3
3.1
3.2
4.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13

10.14

10.15

10.16

10.17

10.18
21.1
31.1
31.2
32.1
32.2

(1)

(2)

Articles of Merger of Medicsight, Inc., a Utah corporation (1)
Certificate of Merger of Medicsight, Inc., a Delaware corporation (1)
Offering Document to acquire shares of Radical Technology plc. (2)
Certificate of Incorporation of Medicsight, Inc. and amendments thereto (1)
By-Laws of Medicsight, Inc. (1)
Loan Note issued by HTTP Insights, Limited to Nightingale Technologies Limited. (5)
Share Sale Agreement between Nightingale Technologies Limited and Medicsight, Inc. (3)
Letter Agreement between Asia IT Capital Investments, Limited. and Medicsight, Inc. (4)
Letter Agreement between Asia IT Capital Investments, Limited. and Medicsight plc (5)
Securities Purchase Agreement with XShares Group, Inc. (6)
Second Amended and Restated Certificate of Incorporation of XShares Group, Inc. (6)
Convertible Promissory Note between XShares Group, Inc. and MGT Capital Investments, Inc. (6)
First Amendment to Securities Purchase Agreement with XShares Group, Inc. (7)
Second Amendment to Securities Purchase Agreement with XShares Group, Inc. (7)
Convertible Promissory Note between XShares Group, Inc. and MGT Capital Investments, Inc. dated August 10, 2009. (7)
Subscription agreement between Moneygate Group Limited and MGT Capital Investments Limited (8)

Working capital facility agreement between MGT Capital Investments Limited and Moneygate Group Limited (8)

Facility agreement between MGT Capital Investments Limited and Moneygate Group Limited (8)
Agreement for the Purchase of Assets dated March 31, 2010 between MGT Capital Investments, Inc. and MGT Investments
Limited and Rivera Capital Management Limited(9).
Amended and Restated Securities Purchase Agreement dated December 9, 2010 between MGT Capital Investments, Inc. and
Laddcap Value Partners, LP (9).
Registration Rights Agreement dated December 9, 2010 between MGT Capital Investments, Inc. and Laddcap Value
Partners, LP (9).
Sale and Purchase Agreement dated January 31, 2011 between MGT Investments Limited and Committed Capital Nominees
Limited (9).
Form of Revolving Line of Credit and Security Agreement dated April , 2011 between MGT Capital Investments, Inc. and
Laddcap Value Partners, LP (9).
Form of Revolving Credit Note dated April , 2011 for the benefit of Laddcap Value Partners, LP (9).
Subsidiaries
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Principal Executive Officer*
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer*
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Executive Officer*
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer*

Filed herewith

Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on January 19, 2007.

Incorporated herein by reference to the Company’s Current Report on Form 8-K filed on May 23, 2000.

(3)

(4)

(5)

(6)

(7)

(8)

(9)

Incorporated herein by reference to the Company’s Current Report on Form 8-K filed March 7, 2001.

Incorporated herein by reference to the Company’s Registration Statement on Form SB-2, filed December 26, 2001.

Incorporated herein by reference to the Company’s Annual Report on Form 10-KSB, filed April 19, 2002.

Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, filed May 15, 2009

Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, filed August 14, 2009

Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q, filed November 12, 2009

Incorporated herein by reference to the Company’s Annual Report on Form 10-K filed April 15, 2011.

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the

undersigned, thereunto duly authorized.

SIGNATURES

March 1, 2012

MGT CAPITAL INVESTMENTS, INC

By:

/s/ ROBERT B. LADD
Robert B. Ladd
Chief Executive Officer (Principal Executive Officer)

By:

/s/ ROBERT P. TRAVERSA
Robert P. Traversa
Chief Financial Officer (Principal Financial Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in

the capacities and on the dates indicated.

Signature

/s/ RICHARD TANEY
Richard Taney

/s/ RICHARD W. COHEN
Richard W. Cohen

/s/ NEAL WYMAN
Neal Wyman

/s/ ROBERT B. LADD
Robert B. Ladd

Title

Director

Date

March 1, 2012

MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2011 and 2010

Consolidated Statements of Operations for the years ended December 31, 2011 and 2010

Consolidated Statements of Changes in Stockholders’ (Deficit)/Equity and Comprehensive Income/(Loss) for the years ended

December 31, 2011 and 2010

Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010

F-2

F-3

F-4

F-5

F-6

Notes to the Consolidated Financial Statements

F-7 to F-22

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
MGT Capital Investments, Inc.

We have audited the accompanying consolidated balance sheets of MGT Capital Investments, Inc. and Subsidiaries (the “Company”)

as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ (deficit) / equity and comprehensive
income / (loss) and cash flows for each of the years in the two-year period ended December 31, 2011. The financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of
MGT Capital Investments, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the consolidated results of their operations and their
cash flows for each of the years in the two-year period ended December 31, 2011, in conformity with accounting principles generally accepted
in the United States of America.

In connection with our audit of the consolidated financial statements referred to above, we also audited Schedule II – Valuation and

Qualifying Accounts for each of the years in the two-year period ended December 31, 2011. In our opinion, this financial schedule, when
considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information stated
therein.

/s/ EisnerAmper LLP

Edison, New Jersey
March 1, 2012

F-2

MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)

Assets
Current assets:

Cash and cash equivalents
Accounts receivable
Other receivables — related party
Prepaid expenses and other current assets
Inventory
Deferred consideration for sale of assets
Loan receivable — related party — current

Total current assets

Property and equipment, at cost, net
Security deposits
Loan receivable — related party — long term

Total assets

Liabilities
Current liabilities:

Accounts payable
Accrued expenses
Other payables

Total current liabilities

Commitments and contingencies

Stockholders’ (deficit) / equity

Common stock, $0.001 par value: 75,000,000 shares authorized; 70,291,062 shares issued and outstanding

as of December 31, 2011; and 39,050,590 shares issued and outstanding as of December 31, 2010

Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit

Total stockholders’ (deficit) / equity

Non-controlling interest

Total equity

December 31,

2011

2010

3,704 $
84
—
327
89
—
—
4,204

28
201
—
4,433 $

8,434
46
45
699
—
370
1,136
10,730

247
191
308
11,476

213 $
502
71
786

411
981
158
1,550

71
283,171
(4,861)
(280,027)
(1,646)
5,293
3,647

39
282,409
(5,005)
(275,478)
1,965
7,961
9,926

Total stockholders’ equity, liabilities and non-controlling interest

4,433 $

11,476

The accompanying notes are an integral part of these consolidated financial statements.

F-3

MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)

Revenues
Cost of revenue
Gross profit

Operating expenses
Selling, general and administrative
Research and development cost

Operating loss

Interest and other income/(expense), net
Gain on sale of Moneygate
Provision for loan receivable – related party

Net loss from continuing operations before income tax benefit

Income tax benefit

Net loss from continuing operations before non-controlling interest

Discontinued operations

Net loss from operations of Medicexchange, net of income tax benefit
Gain on sale of Medicexchange, net of income taxes

Net loss before non-controlling interest

Net loss attributable to non-controlling interest

Net loss attributable to MGT Capital Investments, Inc.

Per share data:

Basic and diluted loss per share from continuing operations
Basic and diluted loss per share from discontinued operations

For the Years Ended December 31,

2011

2010

536 $
(104)
432

7,150
1,144
8,294

540
(116)
424

10,181
1,576
11,757

(7,862)

(11,333)

28
81
—
109

66
—
(1,985)
(1,919)

(7,753)

(13,252)

198

336

(7,555)

(12,916)

—
—
—

(234)
149
(85)

(7,555)

(13,001)

3,006

3,350

(4,549) $

(9,651)

(0.12) $
—
(0.12) $

(0.29)
—
(0.29)

Weighted average number of common shares outstanding

39,329,561

32,960,179

The accompanying notes are an integral part of these consolidated financial statements.

F-4

MGT CAPITAL INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT)/EQUITY AND COMPREHENSIVE INCOME / (LOSS)
(In thousands)

Additional

Accumulated
other

Total

Non-

stockholders’
stock (deficit)/equity

controlling Total

BALANCE, JANUARY 1, 2010

Sale of stock in treasury
Sale of stock
Stock-based compensation
Disposal of Medicexchange
Net loss for the year
Translation adjustment
Total comprehensive loss

Common stock
Shares Amount
38,900
—
151
—
—
—
—

39
—
—
—
—
—
—

deficit

paid-in
capital
299,878
(17,935)
23
443
—
—
—

comprehensive Accumulated Treasury
income/(loss)
(4,549)
—
—
—
—
—
(456)

(265,827) (18,912)
— 18,912
—
—
—
—
—
—
—
(9,651)
—
—

BALANCE, DECEMBER 31, 2010 39,051 $

39 $ 282,409 $

(5,005) $

(275,478) $

— $

Sale of common stock, net of

expenses of $142

Stock-based compensation
Sale and assignment of Medicsight

Stock

Net loss for the year
Translation adjustment
Total comprehensive loss
BALANCE, DECEMBER 31,

31,240
—

—
—
—

32
—

—
—
—

607
134

21
—
—

—

55
—
89

—

—
(4,549)
—

—
—
—

10,629
977
23
443
—
(9,651)
(456)
(10,107)
1,965 $

639
134

76
(4,549)
89
(4,460)

interest

—
—
352
(233)

equity
11,404 22,033
977
23
795
(233)
(3,350) (13,001)
(668)
(3,562) (13,669)
9,926
7,961 $

(212)

113

639
247

97
(3,006)
128
(2,878)

173
(7,555)
217
(7,338)

2011

70,291 $

71 $ 283,171 $

(4,861) $

(280,027) $

— $

(1,646) $

5,293 $

3,647

In December 2011, the Company rescinded 500,000 restricted shares and reversed all previously expensed stock-based

compensation (see Note 12).

The accompanying notes are an integral part of these consolidated financial statements.

F-5

MGT CAPITAL INVESTMENTS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Cash flows from operating activities:

Net loss before non-controlling interest

Adjustments to reconcile net loss to net cash used in operating activities:

Loss from discontinued operations
Stock-based compensation expense
Depreciation
Loss on disposal of fixed assets
Loss on impairment of loans receivable – related party
Accrued interest receivable
Assignment of Medicsight stock to D4D
Gain on sale of loan receivable — related party
Profit on disposal of Medicexchange and other investments

(Increase)/decrease in assets

Accounts receivable
Other receivable — related party
Prepaid expenses and other current assets
Inventory

Increase/(decrease) in liabilities

Accounts payable
Accrued expenses
Other payables

Net cash used in operating activities

Cash flows from investing activities:

Issuance of Moneygate loans receivable
Issuance of Dunamis Capital loans receivable - related party
Cash in Medicexchange subsidiaries disposed of
Receipt of Dunamis loan repayment
Purchase of fixed assets
Receipts from sale of Moneygate
Receipts of deferred consideration for sale of assets
Receipts from sale of Medicsight stock

Net cash provided by/(used in) investing activities

Cash flows from financing activities:

Sale of common stock, net

Net cash provided by financing activities

Cash flows of discontinued operations:

Net cash used in Medicexchange operating activities

Net cash used in discontinued operations

Effects of exchange rates on cash and cash equivalents

Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

Supplemental disclosures of cash paid:

Interest paid
Taxes paid

For the Years Ended December 31,

2011

2010

(7,555) $

(13,001)

—
247
122
118
—
—
(4)
(81)
—

(40)
47
402
(89)

(296)
(421)
(85)
(7,635)

—
—
—
1,100
(13)
401
370
110
1,968

639
639

—
—

298

(4,730)
8,434
3,704 $

234
784
138
7
1,985
(39)
—
—
(201)

44
57
(45)
—

(170)
(233)
(41)
(10,481)

(1,756)
(1,100)
(1,101)
—
(96)
—
766
—
(3,287)

1,000
1,000

(226)
(226)

(737)

(13,731)
22,165
8,434

— $
— $

—
—

$
$

The accompanying notes are an integral part of these consolidated statements.

F-6

MGT CAPITAL INVESTMENTS, INC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share amounts)

Organization, basis of presentation and liquidity

MGT Capital Investments, Inc. (“MGT”, “the Company”, the “Group”, “we”, “us”) is a holding company. We currently have a

· Medicsight is a medical technology company focusing on medical imaging software development and medical hardware devices.
The Company develops and commercializes enterprise-wide Computer-Aided Detection (“CAD”) applications which analyze
Computer Tomography (“CT”) scans to assist radiologists in the early detection and measurement of colorectal polyps and lung
lesions. The CAD software received a CE Mark in 2009, which allows for sales in the European Union. On May 19, 2011,
Medicsight’s software also received clearance from the U. S. Food and Drug Administration. Revenue is presently limited as
Medicsight attempts to commercialize its recent U.S. approval. In late July 2011, Medicsight was informed by the Japanese
Ministry of Health, Labor and Welfare (“MHLW”) that several statistical data errors were encountered in their review of the
application for approval of its MedicRead software for use in CT Colonography procedures. Following informal guidance from
MHLW, during August 2011, the Company decided to withdraw the current submission and is assessing the next course of
action. In the meantime, the Board of Directors of Medicsight closed the Tokyo office as part of an overall program of expense
reduction and corporate simplification. In addition to closing the Tokyo office, management of Medicsight has decided to close
several non-essential subsidiaries in Australia, China and the UAE citing the unjustifiably high legal, regulatory and accounting
costs of maintaining such entities. However, in order to better exploit the recent FDA approval of ColonCAD, Medicsight has
opened a U.S. subsidiary (Medicsight, Inc.) in New York. Medicsight has also developed an automated CO2 medical inflation
device and associated disposable tubing (MedicCO2LON) that is being commercialized via a global distributor. As of December
31, 2011, the Company held 83.75 million shares (53.85%) of the 155.5 million issued share capital of Medicsight. Medicsight
was previously listed on the AIM market of the London Stock Exchange through September 22, 2011, when its shares were
cancelled based on a duly passed shareholder resolution and Medicsight became private.

The Company has incurred significant operating losses since inception and continues to generate losses from operations. As a result,

the Company has generated negative cash flows from operations and has an accumulated deficit of $280,027 at December 31, 2011. The
Company is operating in a developing industry based on new technology and its primary source of funds to date has been through the
issuance of securities. While the Company is optimistic and believes appropriate actions are being taken, there can be no assurance that
management’s efforts will be successful or that the products the Company develops and markets will be accepted by consumers.

At December 31, 2011 Medicsight’s cash and cash equivalents were $3,123.

At December 31, 2011 MGT’s Company only cash and cash equivalents were $571.

Management believes that the current level of working capital, will be sufficient to allow the Company to maintain its operations into

April 2013.

F-7

Summary of significant accounting policies:

Principles of consolidation

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States

Cash and cash equivalents

The Company considers investments with original maturities of three months or less to be cash equivalents.

Revenue Recognition

Medicsight

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable

Software — License fee revenue is derived from the licensing of computer software. Maintenance revenue is derived from software

maintenance. Our software licenses are generally sold as part of an arrangement that includes maintenance and support.

The Company licenses software and sell maintenance through visualization solution partners and original equipment

manufacturers. The Company receives regular sales reporting detailing the number of licenses sold by original equipment manufacturers,
value-added resellers and independent distributors (collectively, “Resellers”) to end users. The Company generally offers terms that require
payment 30-45 days from invoicing. Provided the Reseller (i) assumes all risk of the purchase, ii) has the ability and obligation to pay
regardless of receiving payment from the end user, and all other revenue recognition criteria are met, license revenue from Resellers is
recognized upon shipment of its product to vendors (“sell-in basis”).

Revenue from license fees is recognized when notification of shipment to the end user has occurred, there are no significant

Company obligations with regard to implementation and the Company’s services are not considered essential to the functionality of other
elements of the arrangement.

Services — Revenue from maintenance and support arrangements is deferred and recognized rateably over the term of the

maintenance and support arrangements.

Hardware — Revenue is derived from the sale of our MedicCO2LON product. This product is an automated CO2 insufflation

F-8

MedicCO2LON is sold exclusively through our distribution partner Medrad Inc. Revenue is recognized as orders are satisfied and

goods are delivered to our distribution partner. The Company generally offers terms which require payments within 30-45 days from
invoicing.

Equity-based compensation

The Company recognizes compensation expense for all equity-based payments. Under fair value recognition provisions, the

Determining the appropriate fair value model and calculating the fair value of equity-based payment awards requires the input of the

Inventory

We account for inventory at the lower of cost (first-in, first-out) or market. Cost is determined to be purchased cost for the finished

Research and development

Property and equipment

Foreign currency translation

The accounts of the Company’s foreign subsidiaries are maintained using the local currency as the functional currency. For these

F-9

Gains and losses on foreign currency transactions are reflected in selling, general and administrative expenses in the income

statement.

Income taxes

The Company applies the elements of FASB ASC 740-10 “Income Taxes — Overall” regarding accounting for uncertainty in

income taxes. This clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax
position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of
December 31, 2011 and 2010, the Company did not have any unrecognized tax benefits. The Company does not expect that the amount of
unrecognized tax benefits will significantly increase or decrease within the next twelve months. The Company’s policy is to recognize interest
and penalties related to tax matters in the income tax provision in the Consolidated Statements of Operations. There was no interest and
penalties for the years ended December 31, 2011 and 2010. Tax years beginning in 2008 are generally subject to examination by taxing
authorities, although net operating losses from all years are subject to examinations and adjustments for at least three years following the year
in which the attributes are used.

Loss per share

Basic loss per share is calculated by dividing net loss attributable to the ordinary shareholders by the weighted average number of

The computation of diluted loss per share for the years ended December 31, 2011, and 2010 excludes all options because they are

Comprehensive income / (loss)

Segment reporting

The Company operates in one main operational segment, Medicsight, a medical imaging and device hardware company, with MGT

Capital Investments Inc. providing corporate management services.

F-10

Divestment of investments and discontinued activities

On March 31, 2010 the Company sold its stock in Medicexchange and various non-core investments to an unrelated third party in

return for consideration of £750 ($1,136). This consideration was deferred and to be paid in instalments through March 2011. As of
December 31, 2010 £506 ($766) had been received. The final instalment of £244 ($370) was paid on March 29, 2011.

The investments disposed of and the related consideration is as follows:

Asset
Medicexchange Limited
Medicexchange Inc.
Hipcricket, Inc.
Eurindia Limited
XShares equity
XShares convertible notes
Total

Consideration
927
$
1
205
1
1
1
1,136

Eurindia Limited (“Eurindia”) and the XShares Group, Inc. (“XShares”) convertible notes and equity investment had been fully

impaired in previous periods so the consideration received of $3 represents the gain on sale recorded in the Consolidated Statement of
Operations. HipCricket had a carrying value of $224 when sold meaning a loss on sales of $19 was recorded.

Before their disposal, Medicexchange Limited and Medicexchange Inc. were consolidated into the MGT consolidated financial

statements. Consideration of $928 was allocated to Medicexchange and MGT recorded a profit on disposal of $149, net of tax. This gain on
sale has been recognized in discontinued operations. The operations of Medicexchange have been presented in discontinued operations
through the date of disposal, March 31, 2010.

Medicexchange’s operating results are as follows for the years ended December 31:

Revenue
Operating expenses
Net loss from operations

F-11

2011

2010

— $
—
—

15
(249)
(234)

Cash and cash equivalents

We invest our cash in short-term deposits with major banks. As of December 31, 2011 we held $3,704 of cash and cash equivalents.

Cash and cash equivalents consist of cash and temporary investments with maturities of 90 days or less when purchased.

Concentrations

The Company held $3,123 and $8,433 of its cash and cash equivalents at December 31, 2011 and December 31, 2010, respectively,

through Medicsight, its majority owned subsidiary, at financial institutions in Europe, United Arab Emirates (“UAE”) and Australia. Cash
held in foreign institutions is not insured by the Federal Deposit Insurance Corporation.

Property and equipment

Property and equipment consist of the following as of December 31:

Computer hardware and software
Leasehold improvements
Furniture and fixtures

Less: Accumulated depreciation

2011

2010

357 $
—
6

363
(335)
28 $

769
224
213

1,206
(959)
247

Depreciation of $122 was charged in 2011, compared to $138 charged in 2010.

Investment accounted for under the equity method

In Fiscal 2009 we purchased 49% of the share capital of Moneygate Group Limited (“Moneygate”). Moneygate is a related party as
we had significant influence over it and had representation on the board of directors (see note 15). On acquisition we provided loan facilities
of £250 ($387) for working capital and £2,000 ($3,094) for acquisitions and subsequently entered into various transactions with Moneygate
and other non-related parties (see note 16).

As we had significant influence over Moneygate we accounted for it under the equity method. The investment was acquired at a

nominal value, also its fair value, and incurred losses since our initial investment, it was recorded in the consolidated financial statements at a
value of $nil at December 31, 2010.

Moneygate was sold on March 29, 2011.

Inventory

At December 31, 2011MedicCO2LON Limited, a subsidiary of Medicsight, held finished goods inventory comprised of insufflation

devices and administration kits totalling $89. No inventory was held on December 31, 2010.

F-12

Accrued expenses

Professional fees
Suppliers
Rent, rates and property related
D4D severance payments
Non-executive directors’ fees
Other

Total

2011

2010

169 $
152
—
—
110
71

502 $

389
108
135
281
—
68

981

In the fourth quarter of 2010, the severance expenses relate to the service agreement between MGT and D4D Limited (see note 16).

Stockholders’ equity and non-controlling interest

On March 31, 2010 the Group disposed of all its investments in Medicexchange. During the quarter ended June 30, 2011 the
Company disposed of 1.0 million shares of Medicsight via open market sales on London’s AIM Exchange, generating approximately $110 in
gross proceeds. The Company’s overall holding in Medicsight were reduced to 83.75 million shares (53.85%) of the 155.5 million issued
share capital of Medicsight.

Non-controlling interest

The Company has non-controlling investors in Medicsight as follows:

Non-controlling interest at December 31, 2009
Less non-controlling interest share of net loss
Non-controlling interest share of stock-based compensation expense
Non-controlling interest share of other comprehensive income
Disposal of Medicexchange
Non-controlling interest at December 31, 2010

Less non-controlling interest share of net loss
Non-controlling interest share of stock-based compensation expense
Non-controlling interest share of other comprehensive income
Increase in non-controlling interest from sale and assignment of Medicsight stock
Non-controlling interest at December 31, 2011

F-13

Medicexchange
(discontinued
operations)

Total

Medicsight

11,150 $
(3,336)
349
(202)
-
7,961 $

(3,006)
113
128
97
5,293 $

254 $
(14)
3
(10)
(233)
— $

—
—
—
—
— $

11,404
(3,350)
352
(212)
(233)
7,961

(3,006)
113
128
97
5,293

The following schedule presents the effects of changes in MGT’s ownership interest in Medicsight on the equity attributable to

MGT:

Net loss attributable to MGT Capital Investments, Inc.
Transfers (to) from the non-controlling interest:

December 31,

2011

2010

(4,549) $

(9,651)

Increase in MGT’s paid in capital from the sale and assignment of Medicsight’s stock

—

Changes from the net loss attributable to MGT Capital Investments, Inc. and transfers to the non-

controlling interest

(4,528) $

(9,651)

10.

Interest and other income / (expense)

For the year-ending December 21, 2011, Interest and other income/(expense) was comprised of interest income of $12 and foreign

exchange gains of $16. For same period last year interest income and other income included interest income of $76, foreign exchange gains of
$6 and net loss on sale of investments of $16. These realized foreign exchange gains were made on translating U.S. dollars into sterling. As
the transaction were settled, the gain/(loss) is recognized in the Consolidated Statement of Operations.

11.

Comprehensive loss

Comprehensive losses for the years ended December 31, 2011 and 2010 are as follows:

Net loss as reported

Other comprehensive (loss)

Unrealized foreign exchange gain/(loss)
Total comprehensive loss
Total comprehensive loss attributable to non-controlling interest
Total comprehensive loss attributable to MGT Capital Investments, Inc.

2011

2010

(7,555) $ (13,001)

217
(668)
(7,338)
(13,669)
(3,562)
(2,878)
(4,460) $ (10,107)

The accumulated other comprehensive income / (loss) balances at December 31, 2011 and 2010 consist of foreign currency

translation adjustments.

F-14

12.

Stock-based compensation

The Company’s Stock Option Plans in Medicsight which had activity in the year ended December 31, 2011, are as follows:

Plan B — on August 15, 2005 we approved stock option plan “B” and between July 1, 2003 and March 31, 2005 we granted

options for 3,420,500 shares under this plan. At December 31, 2011 there were nil outstanding options.

Plan C - on August 15, 2005 we approved stock option plan “C” and between April 1, 2005 and June 30, 2006 we granted options

for 515,000 shares under this plan. Options issued under this plan vest in equal one-thirds after employees have been employed for 12, 24
and 36 months from date of grant. At December 31, 2011 there were 85,000 options outstanding, all of which were exercisable.

Plan E - on February 22, 2007 we approved and granted options for 5,900,000 shares under stock option plan “E”. Options under
this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months. At December 31, 2011 there were 190,000
options outstanding, all of which were exercisable.

Plan F — on May 16, 2007 we approved and subsequently granted options for 350,000 shares under stock option plan “F”. Options

under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months from the grant date. At December 31,
2011 there were nil outstanding options.

Plan G — on December 18, 2007 we approved and subsequently granted options for 3,025,000 shares under stock option plan

“G”. Options under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months from the grant date. At
December 31, 2011 there were nil outstanding options.

Plan I - on December 16, 2008 we approved and subsequently granted options for 1,805,000 shares under stock option plan “I”.

Options under this plan vest in equal one-thirds after employees have been employed for 12, 24 and 36 months from the grant date. At
December 31, 2011 100,000 options were outstanding, all of which were exercisable.

Plan J — on May 14, 2009 we approved and subsequently granted options for 7,848,750 shares under stock option plan
“J”. Options under this plan vest in equal one-sixths for each six months that employees have been employed for 6, 12, 18, 24, 30 and 36
months from the grant date. At December 31, 2011 there were 2,879,587 options outstanding, of which 2,522,100 were exercisable.

Plan K — on May 20, 2009 we approved and subsequently granted options for 300,000 shares under stock option plan

“K”. Options under this plan vested in three tranches in the period to December 31, 2009. At December 31, 2011 there were nil outstanding
options.

Plan L — on January 26, 2010 we approved and subsequently granted options for 100,000 shares under stock option plan “L”.

Options under this plan vest in equal one-sixths after employees have been employed for 6, 12, 18, 24, 30 and 36 months from the grant date.
At December 31, 2011there were 100,000 options outstanding, 50,002 of which were exercisable.

Plan M — on December 13, 2010 we approved and subsequently granted options for 5,375,000 shares under stock option plan

“M”. Options under this plan vest in equal one-sixths after employees have been employed for 6, 12, 18, 24, 30 and 36 months from the grant
date. At December 31, 2011 there were 426,666 options outstanding, of which 336,670 were exercisable.

F-15

The following table summarizes stock option activity for the two years ended December 31, 2011 and 2010 under all option plans:

Outstanding

Exercisable

Number of
Shares

Weighted-Average
Exercise Price

Number of
Shares

Weighted-Average
Exercise Price

Outstanding at January 1, 2010

11,503,359

£0.59 ($0.94) 4,605,890

£0.96 ($1.50)

Granted
Exercised
Forfeited
Voided option plan
Transferred with sale of Medicexchange

5,475,000
—

(900,025)
(1,975,000)
(400,000)

£0.05 ($0.08)

—

£0.39 ($0.60)
£2.39 ($3.69)
£0.63 ($0.97)

Outstanding at December 31, 2010

13,703,334

£0.13 ($0.20) 4,928,052

£0.24 ($0.37)

Granted
Exercised
Forfeited

—
—

(9,922,081)

£0.13 ($0.21)

Outstanding at December 31, 2011

3,781,253

£0.11 ($0.18) 3,283,772

£0.13 ($0.21)

The following weighted average assumptions were used to estimate the fair value of stock options granted in the years ended

December 31:

Dividend yield
Expected volatility
Risk-free interest rate
Expected life of options
Weighted average fair value of options granted
Weighted-average grant-date fair value — Medicsight Plan L
Weighted-average grant-date fair value — Medicsight Plan M

2011

2010

nil
0%
0%
—

—
—

nil

87.7% - 119.5%
3.84 - 3.96%

5.9 - 6.5 Years

£0.04 ($0.07)
£0.03 ($0.05)

The following is a summary of the status of stock options outstanding at December 31, 2011:

Medicsight Plan C
Medicsight Plan E
Medicsight Plan I
Medicsight Plan J
Medicsight Plan L
Medicsight Plan M

Outstanding Options

Remaining
Contractual Life
(years)

4.3
5.2
7.0
7.4
8.1
9.0

Number
85,000
190,000
100,000
2,879,587
100,000
426,666

Average
Exercise
Price

Number
85,000
£0.75 ($1.20)
190,000
£0.50 ($0.80)
£0.24 ($0.38)
100,000
£0.09 ($0.14) 2,522,100
50,002
£0.09 ($0.14)
336,670
£0.05 ($0.08)

Exercisable Options
Average
Exercise
price

£0.75 ($1.20)
£0.50 ($0.80)
£0.24 ($0.38)
£0.09 ($0.14)
£0.09 ($0.14)
£0.05 ($0.08)

On November 30, 2010, Mr. David Sumner, Chairman of Medicsight Limited, resigned from his position within the group.
Immediately after his resignation, a two year consultancy agreement was signed whereby Mr. Sumner would continue to assist the group in its
commercial needs. As part of this agreement, Mr. Sumner was to continue to vest in his existing Medicsight Plan J options throughout the
consultancy period. A modification of the 2,000,000 existing options has been accounted for, and is not considered to be material to the overall
financial statements. The Company is no longer receiving services under this consulting agreement. As such all expenses and related stock-
based compensation have been accelerated at December 31, 2011.

F-16

The Company has recorded the following amounts related to its share-based compensation expense in the accompanying

Consolidated Statements of Operations:

Selling, general and administrative
Research and development
Discontinued operations
Total

2011 2010
729
$
55
11
795

215 $
32
—
247 $

Of the $247 stock-based expense for the year-ended December 31, 2011, $113 was allocated to non-controlling interest

The aggregate intrinsic value for options outstanding and exercisable at December 31, 2011 and 2010 was $nil.

A summary of non-vested options at December 31, 2011 and the change during the years ended December 31, 2011 and 2010 is

presented below:

Nonvested options at January 1, 2010
Granted
Vested
Forfeited
Nonvested options at December 31, 2010
Granted
Vested
Forfeited
Nonvested options at December 31, 2011

Weighted
Average
Grant Date
Fair
Value
0.31 $
0.03 $
0.23 $
0.82 $
0.10 $
—
0.14 $
0.09 $
0.14 $

(0.49)
(0.05)
(0.35)
(1.26)
(0.16)
—
0.23
0.14
0.22

Options
6,897,469 £
5,475,000 £
(2,637,618) £
(959,569) £
8,775,282 £
—
(1,931,717) £
(6,346,084) £
497,481 £

As of December 31, 2011 there was $136 of total unrecognized compensation cost related to non-vested share-based compensation

arrangement granted under the option plans. That cost is expected to be recognized over a weighted average period of 1.03 years.

Restricted Shares Cancellation

At the March 7, 2011 board meeting, the members of the Compensation and Nominations Committee approved the grant of 500,000
restricted shares of MGT common stock, with each independent director of the board receiving 100,000 restricted shares. The restricted shares
vest one-third each six months from date of issue. The restricted shares were valued at their fair market value on date of issue, of which the
share-based compensation expense was to be recognized over their vesting period. On or about December 19, 2011, the Company was
advised that approval of shareholders was required in order to allow the issuance and listing of these Restricted Shares. The Company
rescinded all 500,000 restricted shares and reversed all previously expensed stock-based compensation. The cancellation of these shares is not
considered to be material to the overall financial statements.

F-17

13.

Income taxes

Significant components of deferred tax assets were as follows as of December 31:

Deferred Tax Assets
U.S. federal tax loss carry-forward
U.S. State tax loss carry-forward
Foreign tax loss carry-forward
U.S. federal capital loss carry-forward
Equity-based compensation, fixed assets and other
Total
Less: valuation Allowance
Net deferred tax asset

2011

2010

5,858 $
74
15,968
671
104
22,675
(22,675)
— $

4,166
—
15,394
733
3,295
23,588
(23,588)
—

As of December 31, 2011, the Company had the following tax attributes:

U.S. federal tax loss carry-forward
U.S. State tax loss carry-forward
Foreign tax loss carry-forward
U.S. federal capital loss carry-forward

Amount
$

Begins to
expire

17,303 Fiscal 2023
891 Fiscal 2031
417 Fiscal 2017
Indefinite

76,457

As it is not more likely than not that the resulting deferred tax benefits will be realized, a full valuation allowance has been recognized for
such deferred tax assets. Federal and state laws impose substantial restrictions on the utilization of tax attributes in the event of an “ownership
change,” as defined in Section 382 of the Internal Revenue Code. Currently, the Company does not expect the utilization of tax attributes in the
near term to be materially affected as no significant limitations are expected to be placed on these tax attributes as a result of previous
ownership changes. If an ownership change is deemed to have occurred as a result of equity ownership changes or offerings, potential near
term utilization of these assets could be reduced.

The provision for income tax differs from the amount computed by applying the statutory federal income tax rate to income before the

provision for income taxes. The sources and tax effects of the differences are as follows for the year ended December 31:

Income taxes at the federal statutory rates
Foreign rate differential
Change in valuation allowance
Effective rate of income tax

2011

2010

(35)%
45
(12)

(2)%

(35)%
6
26
(3)%

There was an income tax benefit of $198 and $336 recorded in the years ended December 31, 2011 and 2010, respectively, both of which

are comprised of current taxes.

The Company files income tax returns in the U.S. federal jurisdiction, New York State and various foreign jurisdictions. With few

exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years
before 2008.

F-18

14.

Operating leases, commitments and security deposit

On August 25, 2006 we executed a 10-year agreement with Pirbright Holdings Limited, to lease 8,787 square feet of office space at

the Kensington Centre, 66 Hammersmith Road, London W14 8UD, United Kingdom. Under this lease agreement our U.K. property rent,
services and related costs were approximately £330 ($516) per annum, paid quarterly in advance. The Company exercised its right to terminate
the lease upon completion of the fifth year (August 24, 2011) and has found an alternative UK office location with no long-term lease
commitment. This commitment was on a month-to-month basis and began on August 1, 2011 with total monthly rental payments of £8 ($13)
along with a rental deposit of £16 ($25). In February, 2012, the Company moved to a smaller office in the same location with month-to-month
rental payments of £2 ($4) and a rental deposit of £4 ($6).

On September 1, 2011 the Company entered into a three year lease agreement for office space located in Harrison, New York, United

States terminating on November 30, 2014. Under the agreement our total rental payments over the three year lease period are $240, which
includes three months of free rent and a refundable rental deposit of $39.

We had a satellite office in Tokyo, Japan, which was closed in January 2012 and the rental deposit of $128 was returned.

The following is a schedule of the future minimum rental payments required under operating leases that have initial or remaining non-

cancellable terms in excess of one year:

Year Ending

2012
2013
2014
Total

89
63
56
208

The total lease rental expense was $515 and $511 for the years ended December 31, 2011 and 2010 respectively.

F-19

15.

Related Party Transactions

Accsys Technologies

Tim Paterson-Brown, our former Chairman and Chief Executive Officer, was a non-executive director of Accsys Technologies plc
(“Accsys”), but resigned from this position on April 6, 2010. Accsys’ subsidiary, Titan Wood Limited (“Titan Wood”), rented space at 66
Hammersmith Road, London W14 8UD, United Kingdom. During the years ended December 31, 2011 and 2010 respectively, £55 ($89) and
£126 ($195) of office related costs were recharged to Titan Wood. At December 31, 2011, Titan Wood is no longer a related party and there
was nothing outstanding from Titan Wood.

Moneygate Group

In Fiscal 2009 we purchased 49% of the share capital of Moneygate. On acquisition we provided loan facilities of £250 ($387) for

working capital and £2,000 ($3,094) for acquisitions and subsequently entered into various transactions with Moneygate and other non-related
parties.

At December 31, 2010, and through to its disposal, Moneygate was a related party. It was considered that the Company had

On January 31, 2011, we entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with and Committed Capital

Nominees Limited (“Committed”). Pursuant to the Purchase Agreement, Committed agreed to purchase: (i) all 9,607,843 shares of Moneygate
which MGT owned, for consideration of £0.096 ($0.154); and (ii) to novate the benefit of a Facility Agreement dated November 18, 2010,
between the Company and Moneygate, for consideration of £250 ($387), resulting in a gain on sale of £51 ($81).

Dunamis Capital

In February 2011 the Company, following consultation with its nominated advisor noted that as a result of Mr. Sumner’s

Laddcap Value Partners III LLC (“Laddcap”)

On April 12, 2011 the Company entered into a Revolving Line of Credit and Security Agreement with Laddcap for up to $500 for a
fifteen month term. The Agreement encompasses a standby commitment fee of two (2%) percent of the maximum loan amount along with an
eight (8%) percent interest charge on any funds drawn. Laddcap is a related party as the Managing Partner and beneficial owner of Laddcap is
a shareholder and CEO of MGT. No amounts have been drawn down against the facility as of the date of the filing of the Company’s Form
10-K for the year ended December 31, 2011.

D4D Limited

Effective July 29, 2010, the Company entered into a service agreement with D4D Limited (“D4D”), a company that offers Executive

F-20

On executing the contract with D4D on July 29, 2010, Tim Paterson-Brown and Allan Rowley terminated their employment

contracts with MGT, but still held the offices of Chairman and Chief Executive Officer and Chief Financial Officer, respectively.

On December 13, 2010 Tim Paterson-Brown resigned as Chairman and Chief Executive Officer of MGT. Effective December 13,

2010 and following the resignation of David Sumner on November 23, 2010, Tim Paterson-Brown became Chairman of Medicsight, the
Company’s significant subsidiary. As such, an agreement between Medicsight and D4D was entered into for the provision of the services of
an Executive Chairman. On February 18, 2011, Tim Paterson-Brown subsequently resigned as Chairman of Medicsight and was entitled to
receive, and was paid on February 18, 2011, a severance amount of £144 ($223).

On April 12, 2011, the agreement with D4D was renegotiated and a settlement agreement between MGT and D4D, Tim Paterson-

During the year ended December 31, 2011 MGT and Medicsight made payments to D4D, totalling $304 (2010: $511) and $315

(2010: $31) respectively.

F-21

16.

Loans receivable — related party

Moneygate

In Fiscal 2009 we purchased 49% of the share capital of Moneygate. On acquisition we provided loan facilities of £250 ($398) for

working capital and £2,000 ($3,094) for acquisitions and subsequently entered into various transactions with Moneygate and other non-related
parties.

On December 31, 2010, the loan to Moneygate of £1,485 ($2,298) was impaired by £1,286 ($1,985) and had a carrying value of

£199 ($308), based on a valuation from an outside firm. Moneygate was sold on March 29, 2011 for a consideration of £250 ($387), giving a
gain on disposal of £51 ($81) (see note 6).

Dunamis

On September 6, 2010 Medicsight made a short-term loan of $1,100 (£711) to Dunamis repayable by December 31, 2010, along

with $36 (£23) of interest. Dunamis paid back the principal of $1,100 (£711) and interest of $48 (£31) on February 6, 2011 and February 10,
2011 respectively. The funds were lent to Dunamis in order to achieve a higher rate of interest than we would have on deposit with a financial
institution and also to demonstrate Medicsight’s financial ability to co-invest with a joint venture in the region using one of its UAE
subsidiaries. Dunamis had provided the assets of the business as collateral against the loan made by Medicsight. Dunamis was considered a
related party as two former directors of Medicsight were also directors of Dunamis Capital (see note 16).

17.

Line of credit facility

On April 12, 2011 the Company entered into a Revolving Line of Credit and Security Agreement with Laddcap for up to $500 for a
fifteen month term. The Agreement encompasses a standby commitment fee of two (2%) percent of the maximum loan amount along with an
eight (8%) percent interest charge on any funds drawn. The Company has fully accrued the commitment fee of $10 as of December 31, 2011
and expensed $6k associated to the facility in 2011. Laddcap is a related party as the Managing Partner and beneficial owner of LaddCap is a
shareholder and Chief Executive Officer of MGT. No amounts have been drawn down against the facility as of the date of the filing of the
Company’s Form 10-K for the year ended December 31, 2011.

18.

Subsequent events

On January 9, 2012, the Company granted $10,000 cash compensation to each of its independent directors in consideration of their

time, effort and expertise during the fiscal year ended December 31, 2011.

On January 9, 2012, the Company granted 10,000 cash compensation to Robert P. Traversa in consideration of his services rendered

as the Company’s CFO for the fiscal year ended December 31, 2011.

The Company filed a definitive proxy statement (DEF-14A) on February 22, 2012 and will hold a special meeting of the

stockholders on March 20, 2012 to approve a reverse/forward stock split.

F-22

Schedule II

MGT Capital Investments, Inc.

Valuation and Qualifying Accounts

Deferred Tax Valuation Allowance

Balance at
Beginning
of year

Additions

Balance at

Write-offs end of year

2010
2011

28,508 $
23,588

3,231 $
—

(8,151) $
(913)

23,588
22,675

The deferred tax valuation allowance applies to both operating loss carry-forwards and capital losses incurred by the Company and

other temporary timing differences.

SUBSIDIARIES OF MGT CAPITAL INVESTMENTS, INC.

Name of Subsidiary

Jurisdiction of Organization

Exhibit 21.1

MGT Capital Investments (UK) Limited
MGT Investments (Gibraltar) Limited
Medicsight ltd
Medicsight Nominees Limited

Subsidiaries of Medicsight ltd

Medicsight KK
Medicsight Pty Limited
Medicsight FZE
MedicEndo Limited
MedicCO2LON Limited
Medicsight UK Limited
Medicsight, Inc.

England and Wales
Gibraltar
England and Wales
England and Wales

Japan
Australia
UAE
UAE
UAE
UK
US

Subsidiaries of MGT Capital Investments (UK) Limited

MGT Capital Investments Limited

England and Wales

CERTIFICATION PURSUANT TO SARBANES-OXLEY ACT OF 2002

I, Robert B. Ladd, certify that:

1. I have reviewed this annual report on Form 10-K of MGT Capital Investments, Inc.;

Exhibit 31.1

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.

March 1, 2012

By: /s/ ROBERT B. LADD
Robert B. Ladd
President and Chief Executive Officer
(Principal Executive Officer)

CERTIFICATION PURSUANT TO SARBANES-OXLEY ACT OF 2002

I, Robert P. Traversa, certify that:

1. I have reviewed this annual report on Form 10-K of MGT Capital Investments, Inc.;

Exhibit 31.2

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.

March 1, 2012

By: /s/ ROBERT P. TRAVERSA
Robert P. Traversa
Chief Financial Officer
(Principal Financial Officer)

CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

I, Robert B. Ladd, President and Chief Executive Officer of MGT Capital Investments, Inc. (the “Company”), certify, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Annual Report on Form 10-K of the Company for the year ended December 31, 2011 (the “Report”) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.

March 1, 2012

By: /s/ ROBERT B. LADD
Robert B. Ladd
President and Chief Executive Officer
(Principal Executive Officer)

CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.2

I, Robert P. Traversa, Chief Financial Officer of MGT Capital Investments, Inc. (the “Company”), certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.

March 1, 2012

By: /s/ ROBERT P. TRAVERSA
Robert P. Traversa
Chief Financial Officer
(Principal Financial Officer)