MGT Capital Investments Provides Update on Recent Developments; Stock Is Halted
MGT Capital Investments, Inc. (NYSE: MGT) is providing the following update on recent developments at the Company and its majority-owned subsidiary Medicsight PLC. In addition, MGT is reporting a summary of its recently filed financial results (via SEC Form 10-Q on August 15, 2011) for the period ending June 30, 2011.
On July 8, 2011, both the Company and Medicsight announced the initiation of internal investigations through Special Committees of the Boards of Directors relating to the potential misappropriation and/or misdirection of corporate funds. Based upon the substantially complete results of the investigation, the Company has concluded that no adjustments or restatement of prior issued financial statements is required.
Although the investigation remains on-going, the Board is confident that the Company's financial statements will not require a material restatement as a result of any additional irregularities discovered in the future. Furthermore, the Company intends to seek all possible methods of recovery or restitution where appropriate and where the cost of doing so will not be greater than the expected outcome.
In late July 2011, Medicsight was informed by the Japanese Ministry of Health, Labor and Welfare 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, the Company has decided to withdraw the current submission and is assessing the next course of action. In the meantime, the Board of Directors of Medicsight has decided to close 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 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 U.S. Food and Drug Administration's approval of ColonCAD, the Company will open a U.S. subsidiary in New York.
On August 16, 2011 Peter Venton resigned from the Board of MGT. This action was taken to ensure that at least one Board member of MDST is independent of MGT. In light of the announcement of the proposal to cancel the AIM quotation, it was considered impracticable to recruit any further independent directors for MDST at the current time. However, should shareholders not pass the resolutions to effect the cancellation of the AIM quotation, the Board of Directors of MDST will take steps to supplement its current Board with an additional independent non-executive Director.
NYSE Amex LLC has halted trading in the common stock of MGT pending the restarting of trading of MDST shares on the AIM market in London. We anticipate that trading in MDST shares will resume as of the date of this press release and that shares of MGT will resume trading thereafter. There can be no guarantee that MDST stock will resume trading in London or that the NYSE Amex LLC will resume trading of MGT common stock upon the resumption of trading of MDST shares.
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