Why is MGT stock down?
We believe that MGT’s stock is down over the past two days (September 19-20, 2016) due to the Company’s announcement that it had received a subpoena from the U.S. Securities and Exchange Commission (SEC), a regulatory body that governs securities transactions and activities of financial professionals. While the actions taken by the SEC do not point at MGT and its officers as the focus of an investigation, the Company is required to publicly disclose to shareholders that it received a subpoena. To clarify, MGT has merely received a standard subpoena, requesting documents, a very common occurrence.
MGT will always fully comply with any document requests from regulators if and when received. We look forward to sharing more information with our shareholders on this matter as soon as we are given clearance from the SEC. We feel this is the most responsible and transparent course of action.
The stock market rejects uncertainty more than “bad” news; MGT will provide additional comments when it knows something.
Do you know what the subpoena is about?
As the Company stated yesterday, September 19, in the normal course of business, the SEC does not provide details for why they issue subpoenas. The SEC must protect their requests for information and justifiably ask companies not to publicly compromise any such requests. We are, and will always be compliant with any document requests from regulators.
We look forward to sharing more information to shareholders on this matter as soon as we are given clearance from the SEC. We feel this is the most responsible and transparent course of action.
Is the New York Stock Exchange (NYSE) decision related to the U.S. Security and Exchange Commission’s subpoena?
No. MGT Capital, its employees, board members and corporate officers have no reason to believe these two events are related. The actions taken by the SEC do not point at MGT and its officers as the focus of an investigation. We issued a further clarification yesterday after the statement underwent legal review (here).
Why did you issue today’s release prior to having further information or additional options to share?
At 4:00 p.m. ET, the NYSE MKT mandated that our release be made public by the morning of Tuesday, September, 20th, less than 24 hours after the ruling. We have complied fully with their request.
Now that shares are blocked for D-Vasive, what options are there to retain to proceed with the acquisition? How will this impact the acquisition of Demonsaw and involvement of MGT’s Chief Technical Officer, Eric “Eijah” Anderson?
The New York Stock Exchange is not allowing us to issue shares to the sellers of D-Vasive. However, MGT still has fully proper and legal options to consummate the merger away from the NYSE. To be clear, their decision was not related to any securities regulations, but rather the NYSE’s own internal rulings.
The acquisitions have been approved by shareholders, the MGT board, and corporate officers. Considering this support for the acquisitions, MGT has stated unequivocally that it will still pursue closing the acquisition of D-Vasive, a provider of leading edge anti-spy software, and Demonsaw, a provider of a secure and anonymous file sharing software platform. Both products are critical to the success of MGT, and without which we cannot proceed with our Company’s vision.
Most importantly, Mr. McAfee and Mr. Anderson are fully committed to going forward and building our Company as Chief Executive Officer and Chief Technology Officer, respectively.
If MGT is confident to resolve issue, how about insiders buy stock on the open market to give shareholders confidence?
Given regulations on insider trading we cannot consider such course of action.
What happened with the shareholder vote?
Due to tabulation errors by professional third parties that administer the proxy voting process, MGT was forced to correct two errors in its September 9, 2016 press release (here). There was no immediate impact to the Company or its share count authorized by shareholders.
Why hasn’t the name of MGT been changed to John McAfee Global Technologies despite previous reports that shareholders approved of the name change?
As previously released, the proposal to ratify an amendment to the Company's restated certificate of incorporation to change its name to "John McAfee Global Technologies, Inc." was not approved at the shareholder meeting, even though the proposal garnered 99% of the votes cast. The specific reason in that the total number of votes did not reach the 50.1% of shares outstanding threshold as required by Delaware law. Furthermore, so-called "broker non-votes" were excluded from the tally. This is one of many obscure procedural and legal situations that many public companies encounter.
However, a name change by a Delaware Company does not require shareholder ratification. Given the overwhelming support by those shareholders that cast a vote for the meeting on this proposal, the Company's board of directors will proceed with such change. Further explanation was distributed in our September 14, 2016 press release (here).
Is John McAfee the CEO?
The shareholders voted to appoint John McAfee Chairman of the Board and to approve his employment contract as Chief Executive Officer. McAfee’s contract has a provision whereby he becomes CEO at the closing of D-Vasive deal.
Why did the NYSE MKT deny MGT’s share issuance?
The Exchange has not provided a specific, formal reason for this denial. The NYSE MKT reserves the right to unilaterally decide whether to approve the issuance of shares that will be listed on the New York Stock Exchange.
Several law firms have announced an alleged “investigation” into the SEC subpoena received by MGT. Should I be concerned?
MGT Capital advises all investors and shareholders to please Google the term, “ambulance chaser.” Again, MGT has merely received a standard subpoena, which is a very common occurrence. The actions taken by the SEC do not point at MGT and its officers as the focus of the investigation.
How will Clearskies be monetized and when will it launch?
Clearskies is powered by Demonsaw, which will always remain free, however Clearskies will be monetized through business licensing. As a revolutionary platform, Clearskies allows businesses to collaborate in real-time, synchronize and share files, audio and video chat, configure on-the-fly anonymous traffic routing networks similar to TOR, and secure applications that were previously vulnerable to hackers, such as clear-text email and web browsing.
Clearskies also enables businesses and individuals to break free from the cyber security limitations of Cloud data storage, empowering them to take back control of their future.
This provides significant privacy and security currently non-existent in the marketplace.
Clearskies is our Enterprise solution currently under rapid development with a phase 1 launch date of Spring 2017. We have a very aggressive and fast release timeline planned. You will see many new versions be released within mere months of each other.