UPDATE: MGT's Response (In Full) to Holders Related to Questions on Proxy Statement

MGT Capital Investments, Inc. (NYSE MKT:

), as reported this past Friday, has announced the filing of the Preliminary Proxy Statement for its upcoming meeting of shareholders. The document can be accessed via the Company's website or at www.sec.gov. We have received many thoughtful questions from investors and prospective investors about the process and proposals contained in the Proxy Statement. As a public company, we take very seriously our responsibility for accurate and full disclosure. This press release will address several of the most frequently asked questions. DILUTION Since May, the market has known about the proposed issuances of 23.8 million shares to acquire D-Vasive, Inc. and 20.0 million shares to acquire Demonsaw LLC. Moreover, the stock has traded nearly a billion shares at these higher levels. Several biased investor websites and postings have attempted create the appearance that these proposed issuances were somehow never disclosed, resulting in potential confusion; this is simply not true. The negative economic impact of dilution comes from issuing shares for no or little value. However, the issuance of shares can increase the per share value of all shares if done wisely. MGT is issuing its shares for the two identified businesses, plus to incentivize the focused energy of a technology pioneer, John McAfee. In May, the board of directors of MGT determined that issuing 43.8 million shares (on an existing base of about 26 million) was a fair price for these transactions and, based on investor response, the stock market appeared to enthusiastically agree. Real world outcomes have confirmed this shared belief. MGT stock traded for about $0.25 prior to the public disclosure of the D-Vasive acquisition and the new relationship with John McAfee. Following the market's re-valuation to reflect that deal, the Company announced the terms of the Demonsaw deal, and the stock continued to trade at similar levels. The point here is that MGT's board didn't just wake up to a higher stock price and then decide to issue shares; the very transactions that improved its outlook require this issuance of stock; and the transactions were entirely and fully disclosed at that time. The fact that naysayers now say that this issuance was not expected is plain wrong and self-serving. Potential investors have had two months to raise this question -- and many rightfully did -- but the market has thus far valued the shares based on the fully disseminated information. Mr. McAfee, MGT's proposed Executive Chairman and Chief Executive Officer, stated, "Clearly the market has expectations for my success, but my job and goal is to exceed the current hopes by executing on a sound business plan using leading edge technologies. We will provide much more granular detail after the deal closes, but suffice to say that we will focus on profitable opportunities in the enterprise and government sectors of the cyber security industry." INCREASE IN AUTHORIZED SHARES The shares to be issued for the acquisitions, combined with shares needed for reserve under a newly proposed stock compensation plan will slightly exceed the 75 million currently authorized. That the Company is therefore asking for a larger number of authorized shares is a highly normal development. The Company believes this new number provides ample headroom for the next several years. First and foremost, all future share issuances are subject to board and stock exchange approval, and stockholder approval if greater than 20% of the outstanding shares. To clarify, MGT Capital Investments, Inc. as a company presently listed on NYSE MKT (or NYSE or NASDAQ if we up-list) cannot issue any shares without board or stock exchange approval. Further, with limited exceptions (relating to publicly offered sales of stock at a price higher than market price and stock splits), if the issuance exceeds 20% of the outstanding stock at the time, stockholder approval is required. Moreover, stock and stock options issued to executives must be part of an incentive plan having received prior stockholder approval. Please do not confuse a nationally listed security like MGT with "over-the-counter" or "bulletin board" stocks. Corporate governance standards are very strict for listed companies. It is standard practice for companies to use stock to acquire companies and technologies, for compensation, and to raise capital, in order to pursue the best interests of both the company and its shareholders. Also noteworthy is that if a company is very successful, it will often split its stock in order to make the share price more attractive to average investors. Some famous example of companies that waited a very long time for splits include Apple and Berkshire Hathaway. This type of stock split similarly requires that the company issues stock, and increasing the authorized shares in such cases is, again, a usual corporate governance activity. Clearly the market differentiates over time those companies that successfully pursue a capital strategy to enhance stockholder value versus those companies that fail. We hope that our shareholders will find MGT to be prudent in seeking to issue its shares only in transactions that create short term and long term value. Lastly, the shares being issued for the proposed transaction are unregistered shares, which means they cannot be sold on the open market for between six and twelve months after issuance, and then only pursuant to an approved legal exemption from registration. REVERSE SPLIT On the other hand, a reverse stock split is a process by which shares of corporate stock are effectively consolidated to form a smaller number of proportionally more valuable shares. Despite contrary notions, a reverse stock split has zero economic impact as an independent action. For example, under a reverse stock split, rather than 70 million shares at $4, MGT would have 35 million shares at $8. In each case, the market value is the same before and after. We expect to utilize a reverse split only if required to meet initial listing requirements of the New York Stock Exchange (NYSE) or NASDAQ. The NYSE (not the NYSE MKT, where MGT is currently traded) has a minimum share price standard of $5.00 for a new listing. (Already listed stocks need to maintain a per share value $1.00 to avoid de-listing). CONCLUSION "There is an expression 'the market has spoken.' But it will be up to me and my team at MGT to create not only the value accorded to us already, but to vastly exceed this number," stated proposed Executive Chairman and CEO John McAfee. "In my opinion, for the naysayers to promote disinformation that we have disclosed any unexpectedly new or unfavorable information in last week's proxy, is very disingenuous to say the least. They start with the specific argument that the to-be acquired assets and John McAfee have no value. That is not an argument, it is merely their opinion, and one that has cost them money. That in turn makes them angry, spicing up their valuation opinion with personal attacks. Notwithstanding our stockholders' desire to expose illegal shorting activity and the brokerage firms behind illegal stock lending, we plan to stay above the dirt. There's another old market saw, 'He who sells was isn't his'n buys it back or goes to prison.'"