Marathon Patent Group Announces Second Quarter Financial Results

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Conference Call Scheduled Today at 4:30 p.m. Eastern Time

LOS ANGELES, CA -- (Marketwired) -- 08/14/17 -- Marathon Patent Group, Inc. (NASDAQ: MARA) ("Marathon" or "Company"), an IP licensing and commercialization company, today announced its operating results for the three months ended June 30, 2017, as published in its Quarterly Report on Form 10-Q filed today with the Securities and Exchange Commission.

Operating Results for the Quarter Ended June 30, 2017 / Subsequent Events

  • Total revenue of $369 thousand and $34.3 million for the three months ended June 30, 2017 and June 30, 2016, respectively.

  • Operating loss was approximately $2.9 million (including non-cash expenses) for the three months ended June 30, 2017 compared to operating income of $14.0 million for the three months ended June 30, 2016.

  • Our GAAP net loss was $(0.10) per basic and diluted share for the three months ended June 30, 2017, with 22,566,648 weighted average basic and diluted shares outstanding as of June 30, 2017, compared to GAAP income of $0.53 per basic share and $0.49 per diluted share for the three months ended June 30, 2016, with 14,994,697 weighted average basic shares and 16,031,564 weighted average diluted shares outstanding as of June 30, 2016, respectively.

  • On a per share basis, our Non-GAAP net loss was $(0.09) per basic and diluted share for the three months ended June 30, 2017, compared to Non-GAAP income of $1.10 per basic share and $1.03 per diluted share for the three months ended June 30, 2016, respectively.

  • Marathon entered into an agreement with DBD Credit Funding, LLC. whereby 100% of debt was cancelled, and the Company will receive a 45% residual revenue share once DBD recovers its costs and debt amounts in exchange for the assignment of three of the Company's portfolios to DBD.

Conference Call

Marathon will host a corresponding conference call to discuss the results with Chief Executive Officer Doug Croxall and Chief Financial Officer Frank Knuettel II on Monday August 14, 2017 at 4:30 PM ET/1:30 PM PT. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-0792 ten minutes prior to the scheduled start time. International calls should dial (201) 689-8263.

In addition, the call will be broadcast live over the Internet and can be accessed through the Investor Relations section of the Company's website at www.marathonpg.com. The broadcast will be archived online upon completion of the conference call. A telephonic replay of the conference call will also be available until 11:59 p.m. ET on Monday, August 28, 2017 by dialing (844) 512-2921 in the U.S. and Canada and (412) 317-6671 internationally and entering the pin number: 13668206.

About Marathon Patent Group

Marathon is an IP licensing and commercialization company. The Company acquires and manages IP rights from a variety of sources, including large and small corporations, universities and other IP owners. Marathon has a global focus on IP acquisition and management. The Company's commercialization division is focused on the full commercialization lifecycle which includes discovering opportunities, performing due diligence, providing capital, managing development, protecting and developing IP, assisting in execution of the business plan, and realizing shareholder value. To learn more about Marathon Patent Group, visit www.marathonpg.com.

Safe Harbor Statement

Certain statements in this press release constitute "forward-looking statements" within the meaning of the federal securities laws. Words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "predict," "forecast," "project," "plan," "intend" or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including without limitation those set forth in the Company's filings with the Securities and Exchange Commission (the "SEC"), not limited to Risk Factors relating to its patent business contained therein. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.

CONSOLIDATED BALANCE SHEETS
June 30, 2017 December 31, 2016
ASSETS
Current assets:
Cash $ 1,095,721 $ 4,998,314
Accounts receivable - net of allowance for bad debt of $387,976 as of June 30, 2017 and December 31, 2016 116,336 95,069
Bonds posted with courts 375,603 -
Note receivable 588,864 225,982
Prepaid expenses and other current assets, net of discounts of $2,659 for June 30, 2017 and $3,724 for December 31, 2016 128,718 202,067
Total current assets 2,305,242 5,521,432
Other assets:
Property and equipment, net of accumulated depreciation of $128,718 and $108,407 for June 30, 2017 and December 31, 2016 12,213 28,329
Intangible assets, net of accumulated amortization of $12,691,608 and $11,323,185 for June 30, 2017 and December 31, 2016 11,358,722 12,314,628
Deferred tax assets - -
Other non current assets, net of discounts of $0 for June 30, 2017 and $797 for December 31, 2016 200,000 201,203
Goodwill 224,353 222,843
Total other assets 11,795,288 12,767,003
Total Assets $ 14,100,530 $ 18,288,435
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 5,294,616 $ 7,217,078
Clouding IP earn out - current portion 81,930 81,930
Notes payable, net of discounts of $503,572 for June 30, 2017 and $852,404 for December 31, 2016 5,622,173 13,162,007
10,998,719 20,461,015
Long-term liabilities
Notes Payable, net of discount of $1,302,129 for June 30, 2017 and $57,763 for December 31, 2016 11,499,723 4,670,502
Clouding IP earn out 1,386,203 1,400,082
Deferred tax Liability - -
Revenue share liability 1,225,000 1,000,000
Other long term liability 39,853 43,978
Total long-term liabilities 14,150,779 7,114,562
Total liabilities 25,149,498 27,575,577
Stockholders' Deficit:
Preferred stock Series B, $.0001 par value, 100,000,000 shares authorized: 782,004 issued and outstanding at June 30, 2017 and December 31, 2016 78 78
Common stock, $.0001 par value; 200,000,000 shares authorized; 23,257,472 at June 30, 2017 and 18,552,472 at December 31, 2016 2,326 1,856
Additional paid-in capital 53,950,993 49,877,710
Accumulated other comprehensive (loss) (933,245) (1,060,390)
Accumulated deficit (63,749,987) (57,942,548)
Total Marathon Patent Group Stockholders' Deficit (10,729,834) (9,123,294)
Non-controlling Interests (319,134) (163,848)
Total Equity (11,048,968) (9,287,142)
Total liabilities and stockholders' equity $ 14,100,530 $ 18,288,435
The accompanying notes are an integral part to these audited consolidated financial statements.

MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
For The For The For The For The
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Revenues $ 368,800 $ 34,349,762 $ 446,937 $ 36,409,438
Expenses
Cost of revenues 1,024,078 15,467,763 1,479,486 18,107,740
Amortization of patents and website 639,887 1,961,411 1,345,846 3,987,310
Compensation and related taxes 760,542 1,120,924 1,846,088 2,154,270
Consulting fees 85,580 364,836 56,801 645,612
Professional fees 645,144 498,212 1,070,830 903,705
General and administrative 142,281 223,130 386,286 428,513
Goodwill impairment - 83,000 - 83,000
Patent impairment - 620,696 - 993,890
Total operating expenses 3,297,512 20,339,972 6,185,337 27,304,040
Operating income (loss) from operations (2,928,712 ) 14,009,790 (5,738,400 ) 9,105,398
Other income (expenses)
Other income (expense) 913,357 (17,745 ) 898,532 (31,532 )
Foreign exchange gain (loss) 102,913 (69,201 ) 17,050 (62,223 )
Change in fair value adjustment of Clouding IP earn out - 169,172 13,879 167,830
Warrant income (expense) 208,301 - (4,907 ) -
Interest income 621 931 1,862 1,862
Interest expense (564,680 ) (844,407 ) (1,133,499 ) (1,851,256 )
Total other income (expenses) 660,512 (761,250 ) (207,083 ) (1,775,319 )
Loss before benefit for income taxes (2,268,200 ) 13,248,540 (5,945,483 ) 7,330,079
Income tax expense (17,242 ) (5,345,983 ) (17,242 ) (3,320,935 )
Net income (loss) (2,285,442 ) 7,902,557 (5,962,725 ) 4,009,144
Net loss attributable to non-controlling interests 84,650 3,722 155,286 3,722
Net income (loss) attributable to common shareholders $ (2,200,792 ) $ 7,906,279 $ (5,807,439 ) $ 4,012,866
Income (loss) per common share:
Basic $ (0.10 ) $ 0.53 $ (0.28 ) $ 0.27
Fully Diluted $ (0.10 ) $ 0.49 $ (0.28 ) $ 0.25
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 22,566,648 14,994,697 20,822,791 14,980,919
Fully Diluted 22,566,648 16,031,564 20,822,791 16,017,786
Net loss $ (2,200,792 ) $ 7,906,279 $ (5,807,439 ) $ 4,012,866
Other Comprehensive Loss:
Unrealized gain (loss) on foreign currency translation 126,062 (150,171 ) 127,144 97,256
Comprehensive loss (2,074,730 ) 7,756,108 (5,680,295 ) 4,110,122
Less: comprehensive income related to non-controlling interest 84,650 3,722 155,286 3,722
Comprehensive loss attributable to Marathon Patent Group, Inc. $ (1,990,080 ) $ 7,759,830 $ (5,525,009 ) $ 4,113,844
The accompanying notes are an integral part to these audited consolidated financial statements.
MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Six For The Six
Months Ended Months Ended
June 30, 2017 June 30, 2016
Cash flows from operating activities:
Net loss $ (5,807,439 ) $ 4,012,866
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation 948 2,710
Amortization of patents and website 1,345,846 3,987,310
Deferred tax asset - 3,547,856
Deferred tax liability - (275,490 )
Impairment of intangible assets - 993,890
Impairment of goodwill - 83,000
Stock based compensation 183,356 1,062,200
Stock issued for services - 136,000
Non-cash interest, discount, and financing costs 59,607 664,182
Change in fair value of Clouding earn out (13,879 ) (167,830 )
Allowance for doubtful accounts - 12,226
Non-controlling interest (155,286 ) (3,722 )
Other non-cash adjustments (120,703 ) (104,899 )
Changes in operating assets and liabilities
Accounts receivable (21,267 ) (2,718 )
Bonds posted with courts (375,603 ) (518,455 )
Prepaid expenses and other assets (289,533 ) 165,301
Other non current assets 1,203 -
Accounts payable and accrued expenses (1,922,462 ) (469,660 )
Net cash provided by (used) in operating activities (7,115,212 ) 13,124,767
Cash flows from investing activities:
Acquisition of patents - (1,150,000 )
Purchase of property, equipment, and other intangible assets (4,194 ) (6,291 )
Net cash used in investing activities (4,194 ) (1,156,291 )
Cash flows from financing activities:
Payment on note payable in connection with the acquisition of Medtech and Orthophoenix - (2,953,779 )
Payment on Fortress note payable - (3,973,854 )
Payment on 3Dnano license note payable (100,000 ) -
Cash received upon issuance of equity (net of issuance costs) 3,753,063 -
Issuance of Warrants 137,334 -
Medtronic note payable 600,000 -
3Dnano convertible notes payable 50,000 -
Payments on Siemen's notes payable (1,000,000 ) -
Payments on notes payable to vendors (125,000 ) -
Payments on notes payable, net (103,000 ) (437,070 )
Net cash provided (used in) by financing activities 3,212,397 (7,364,703 )
Effect of exchange rate changes on cash 4,416 (145 )
Net decrease in cash (3,902,593 ) 4,603,628
Cash at beginning of period 4,998,314 2,555,151
Cash at end of period $ 1,095,721 $ 7,158,779
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest expense $ 456,917 1,187,074
Taxes paid $ 17,242 27,682
Loan fees $ - $ -
Cash invested in 3DNano $ - $ 115,000
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Revenue share liability incurred in conjunction with note payable $ 225,000 $ -
Warrant issued in conjunction with common stock issuance $ 257,957 $ -
Note payable issued in conjunction with the acquisition of Munitech patents $ - $ 1,750,000
Convertible debt warrant repricing $ - $ 6,425
The accompanying notes are an integral part to these audited consolidated financial statements.
Non-GAAP Reconciliation
For the Three Months Ended June 30, 2017 For the Three Months Ended June 30, 2016 For the Six Months Ended June 30, 2017 For the Six Months Ended June 30, 2016
Net income (loss) attributable to Common Shareholders $ (2,200,792) $ 7,906,279 $ (5,807,439) $ 4,012,866
Non-GAAP
Amortization of intangible assets & depreciation 640,364 1,961,411 1,346,794 3,987,310
Equity-based compensation 141,931 647,764 183,356 1,192,797
Impairment of intangible assets - 703,696 - 1,076,890
Change in the fair value of the clouding IP liability - (169,172) (13,879) (167,830)
Warrant < Income > Expense, net (208,301) - 4,907 -
Non-cash Other < Income > expense, net (913,357) - (898,532) -
Non-cash interest expense 449,998 58,492 685,209 664,182
Deferred tax benefit - 5,345,983 - 3,320,935
Other 1,526 13,284 2,535 14,936
Non-GAAP earnings (loss) $ (2,088,631) $ 16,467,737 $ (4,497,049) $ 14,108,086

Marathon Patent Group
Jason Assad
678-570-6791
Email Contact

Source: Marathon Patent Group

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