MGT Capital Investment Limited (NASDAQ:MGT), a new generation growing entity, is among the slow performers in the industry. The company has been stepping towards making a base or foundation of the company as well as maximizing shareholders wealth gradually. The business growth of the company is yet to flourish though the management of MGT intends their effort to ensure business success. As we know, operational success of an entity is highly dependent on its revenue generation capacity and revenue generation is subject to a good number of factors to be favorable. In its way, MGT Capital Investment Limited (NASDAQ:MGT) needs to ensure a positive operational result for long term survival. The company has been operating in an industry where huge a possibility to show better performance is likely. However, operational success is a matter of a lot of factors, which needs to be ensured.
We will discuss the above success factors gradually and today we may discuss the capital structure of the company, because an optimum capital structure is very important to ensure long term solvency of an entity. As per SEC filling Form 8-K dated December 10, 2012 MGT has reshaped its balance sheet. The company has a debt free balance sheet which shows total stockholders’ equity of $6.8 million approx. The company has entered in 2013 with a cash balance of $5.5 million, outstanding common stocks 3.2 million and preferred stock of 1.4 million (preferred stock is convertible in to common stock on a one-for-one basis). In addition to the above, MGT has 4.0 million warrants which is exercisable at $3.64 per share. If the company fully exercises the warrants, it will collect $14.5 million. Success of the above will assist to build a solid balance sheet with around $20.00 million in cash and only 8.6 million diluted shares outstanding. If the company can successfully utilize its financial solvency, it can do more.