MGT Capital Investments Inc Reports Operating Results (10-Q)
MGT Capital Investments is an investment company with two direct subsidiaries that focus solely on the dynamic and consolidating HCIT sector. The first subsidiary, Medicsight plc, is a leading developer of computer-aided detection and computer assisted reader software solutions that are tested using one of the world's largest databases of verified CT scan data. Medicsight's CAD and CAR products help clinicians identify, measure, and analyze suspicious pathology, such as colorectal polyps and lung lesions. MGT Capital Investments has invested in and controls a second subsidiary, Medicexchange plc, which operates Medicexchange.com, an online multi-vendor sales channel for diagnostic, treatment and surgery planning solutions for cardiac, thoracic, breast imaging, orthopedic, and gastro intestinal imaging. Medicexchange.com provides these solutions in a low-cost, on-demand and downloadable format, enhancing access to information and products for medical imaging professionals. Mgt Capital Investments Inc has a market cap of $15.3 million; its shares were traded at around $0.47 with and P/S ratio of 43.2. Highlight of Business Operations: · Net loss increased 113 % to $21,770 and resulted in a loss per share of $0.67 compared to a net loss of $10,215 and net loss per share of $0.28 in 2008.
Operating costs, excluding the goodwill impairment, have decreased by $7,363 due to a focus on reducing costs, a reduction in headcount in Medicsight and foreign exchange movements in the nine months ended September 30, 2009. A fall in the value of sterling from $1.95:£1.00 to $1.54:£1.00 has reduced reportable costs by approximately $3,200 using the average exchange rate for the nine months ended September 30, 2008 as the majority of our costs are incurred in sterling in Medicsight.
In the period between December 31, 2008 and March 31, 2009, the market value of Medicsight plc, as traded on the AIM Market of the London Stock Exchange, declined from $53,000 to $13,200. Following this decline in value we conducted an impairment test of goodwill as of March 31, 2009. Due to the uncertainties involved in using the unobservable inputs to estimate future cash flows, we used market price inputs as the basis of our impairment review. As a result of this test we determined that the carrying amount of Medicsight plc exceeded its fair value and recorded an impairment loss of $12,157 during the quarter ended March 31, 2009.
We have generated revenues of $183 and gross profit of $180 for the nine months ended September 30, 2009, compared to $257 and $141 for the nine months ended September 30, 2008. Medicsight increased revenues in the period and Medicexchanges decreased.
Interest and other (expense) income was an expense of $437 in the nine months ended September 30, 2009 compared to revenue of $5,610 in the same period in the prior year. The expense was made up of impairment losses in Eurindia ($176), HipCricket ($701) and XShares ($230) incurred in the nine months ended September 30, 2009. There were also realized losses on other investments of ($37). Interest income was $306, which included interest and arrangement fees from the XShares convertible notes. A further gain of $401 was made on currency movements due to the rising value of the dollar compared to sterling.
Net loss attributable to equity holders of MGT Capital Investments, Inc. was $2,595 for the three months ended September 30, 2009 compared to a net loss of $1,300 for the three months ended September 30, 2008. Net loss per share for the three months ended September 30, 2009 was $0.08 (based on weighted average shares outstanding of 32,550,590), compared to $0.04 for the three months ended September 30, 2008 (based on weighted average shares outstanding of 32,550,742).
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