Marathon Patent Group Announces Third Quarter Financial Results

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Investor Update Conference Call Scheduled Monday November 27, 2017 at 4:30 pm Eastern Time

LOS ANGELES, Nov. 20, 2017 (GLOBE NEWSWIRE) -- Marathon Patent Group, Inc. (NASDAQ:MARA) ("Marathon" or "Company"), today announced its operating results for the three months ended September 30, 2017, as published in its Quarterly Report on Form 10-Q filed today with the Securities and Exchange Commission.

Operating Results for the Three Months Ended September 30, 2017

  • Total revenue of $163 thousand and $43 thousand for the three months ended September 30, 2017 and September 30, 2016, respectively.
  • Operating loss was approximately $3.9 million (including non-cash expenses) for the three months ended September 30, 2017 compared to an operating loss of $10.7 million for the three months ended September 30, 2016.
  • Our GAAP net loss was $(1.06) per basic and diluted share for the three months ended September 30, 2017, with 6,270,299 (all share numbers reflect the one for four reverse split completed on October 30, 2017) weighted average basic and diluted shares outstanding as of September 30, 2017, compared to a GAAP loss of $(1.67) per weighted average basic and diluted share for the three months ended September 30, 2016, with 3,761,786 weighted average basic and diluted shares outstanding as of September 30, 2016, respectively.
  • On a per share basis, our Non-GAAP net loss was $(0.23) per basic and diluted share for the three months ended September 30, 2017, compared to a Non-GAAP loss of $(0.86) per basic and diluted share for the three months ended September 30, 2017, respectively.

From a strategic perspective, Marathon entered into a definitive purchase agreement to acquire 100% ownership of Global Bit Ventures Inc. (“GBV”), a digital asset technology company that mines cryptocurrencies.  GBV has robust infrastructure in place with significant capability for expansion. The closing of the transaction is subject to obtaining requisite approvals. The Company intends to update investors more specifically on the transaction on November 27th, when we will be conducting an investor update conference call. 

Conference Call

Marathon will host an investor update conference call to with Chief Executive Officer Doug Croxall and Chief Financial Officer Frank Knuettel II on Monday November 27, 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 December 11, 2017 by dialing (844) 512-2921 in the U.S. and Canada and (412) 317-6671 internationally and entering the pin number: 13673885.

MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)

    September 30, 2017     December 31, 2016  
                 
ASSETS                
Current assets:                
Cash   $ 122,172     $ 4,998,314  
Restricted Cash     3,919,718       -  
Total cash     4,041,890       4,998,314  
Accounts receivable - net of allowance for bad debt of $387,976 and $387,976 for September 30, 2017 and December 31, 2016     123,630       95,069  
Note receivable     588,864       225,982  
Prepaid expenses and other current assets, net of discounts of $2,659 for September 30, 2017 and $3,724 for December 31, 2016     108,878       202,067  
Total current assets     4,863,262       5,521,432  
                 
Other assets:                
Property and equipment, net of accumulated depreciation of $133,224 and $108,407 for September 30, 2017 and December 31, 2016     9,803       28,329  
Intangible assets, net of accumulated amortization of $12,813,915 and $11,323,185 for September 30, 2017 and December 31, 2016     7,590,213       12,314,628  
Other non current assets, net of discounts of $797 for December 31, 2016     -       201,203  
Goodwill     228,401       222,843  
Total other assets     7,828,417       12,767,003  
                 
Total Assets   $ 12,691,679     $ 18,288,435  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
Accounts payable and accrued expenses   $ 1,954,836     $ 7,217,078  
Clouding IP earn out - current portion     32,637       81,930  
Revenue share liability     1,225,000       -  
Warrant liability     2,411,750       -  
Notes payable, net of discounts of $5,837,363 and $852,404 for September 30, 2017 and December 31, 2016     15,582,156       13,162,007  
      21,206,379       20,461,015  
                 
Long-term liabilities                
Notes Payable, net of discount of $57,763 for December 31, 2016     -       4,670,502  
Clouding IP earn out     681,175       1,400,082  
Revenue share liability     -       1,000,000  
Other long term liability     37,236       43,978  
Total long-term liabilities     718,411       7,114,562  
                 
Total liabilities     21,924,790       27,575,577  
                 
Stockholders' Deficit:                
Preferred stock Series B, $.0001 par value, 50,000,000 shares  authorized: 195,501 issued and outstanding at September 30, 2017 and December 31, 2016     78       78  
Common stock, $.0001 par value; 200,000,000 shares authorized; 7,776,016 and 4,638,118 at September 30, 2017 and December 31, 2016     3,111       1,856  
Additional paid-in capital     61,833,077       49,877,710  
Accumulated other comprehensive income (loss)     (450,623 )     (1,060,390 )
Accumulated deficit     (70,427,472 )     (57,942,548 )
                 
Total Marathon Patent Group stockholders' equity     (9,041,829 )     (9,123,294 )
                 
Noncontrolling interests     (191,282 )     (163,848 )
                 
Total deficit     (9,233,111 )     (9,287,142 )
                 
Total liabilities and stockholders' deficit   $ 12,691,679     $ 18,288,435  
                 

The accompanying notes are an integral part to these unaudited consolidated condensed financial statements.

MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)

    For the Three
Months Ended
30-Sep-17
    For the Three
Months Ended
30-Sep-16
    For the Nine
Months Ended
30-Sep-17
    For the Nine
Months Ended
30-Sep-16
 
                         
Revenues   $ 162,713     $ 43,113     $ 609,650     $ 36,452,551  
                                 
Expenses                                
Cost of revenues     64,836       1,094,378       1,544,322       19,202,118  
Amortization of patents and website     457,419       2,030,886       1,803,264       6,018,196  
Compensation and related taxes     1,871,946       1,252,571       3,718,034       3,406,841  
Consulting fees     133,018       257,420       189,819       903,032  
Professional fees     616,125       432,496       1,686,955       1,336,201  
General and administrative     213,130       183,771       599,416       612,284  
Goodwill impairment     -       -       -       83,000  
Patent impairment     723,218       5,531,383       723,218       6,525,273  
Total operating expenses     4,079,692       10,782,905       10,265,028       38,086,945  
                                 
Operating loss from continuing operations     (3,916,979 )     (10,739,792 )     (9,655,378 )     (1,634,394 )
                                 
Other income (expenses)                                
Other income (expense)     2,252,886       (37,116 )     3,151,418       (68,647 )
Foreign exchange (loss)     (480,240 )     (175,850 )     (463,191 )     (238,073 )
Loss on debt extinguishment     (283,237 )     -       (283,237 )     -  
Loss on sale of company     (1,519,875 )     -       (1,519,875 )     -  
Change in fair value adjustment of Clouding IP earn out     754,321       1,954,378       768,200       2,122,208  
Warrant income (expense)     (1,909,879 )     -       (1,914,786 )     -  
Interest income     931       931       2,793       2,793  
Interest expense     (1,283,223 )     (649,065 )     (2,416,722 )     (2,500,321 )
Total other income (expenses)     (2,468,316 )     1,093,278       (2,675,400 )     (682,040 )
                                 
Loss from continuing operations before benefit for income taxes     (6,385,295 )     (9,646,514 )     (12,330,778 )     (2,316,434 )
                                 
Income tax benefit (expense)     (12,191 )     3,347,909       (29,433 )     26,974  
                                 
Net Income (loss)     (6,397,486 )     (6,298,605 )     (12,360,211 )     (2,289,460 )
                                 
Net income (loss) attributable to Noncontrolling interests     (280,000 )     24,195       (124,714 )     27,918  
                                 
Net (loss) attributable to common shareholders   $ (6,677,486 )   $ (6,274,410 )   $ (12,484,925 )   $ (2,261,542 )
                                 
Income (loss) per common share:                                
Basic   $ (1.06 )   $ (1.67 )   $ (2.24 )   $ (0.61 )
Diluted                                
                                 
WEIGHTED AVERAGE
COMMON
SHARES OUTSTANDING:
                               
Basic     6,270,299       3,761,786       5,564,465       3,736,213  
                                 
Net loss   $ (6,677,486 )   $ (6,274,410 )   $ (12,484,925 )   $ (2,261,542 )
Other comprehensive loss:                                
Unrealized gain on foreign currency translation     482,622       209,159       609,768       306,411  
Comprehensive loss     (6,194,864 )     (6,065,251 )     (11,875,157 )     (1,955,131 )
Less: comprehensive income (loss) related to non-controlling interest     (280,000 )     24,195       (124,714 )     27,918  
Comprehensive loss attributable to Marathon Patent Group, Inc.   $ (6,474,864 )   $ (6,041,056 )   $ (11,999,871 )   $ (1,927,213 )
                                 

The accompanying notes are an integral part to these unaudited consolidated condensed financial statements.

MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

    For The
Nine Months
Ended
September 30,
2017
    For The
Nine Months
Ended
September 30,
2016
 
Cash flows from operating activities:                
Net loss   $ (12,484,924 )   $ (2,261,542 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
Depreciation     1,248       3,780  
Amortization of patents and website     1,803,264       6,018,196  
Deferred tax asset     -       531,757  
Deferred tax liability     -       (638,268 )
Loss on sale of companies     -       -  
Warrant liability     -       -  
Impairment of intangible assets     704,678       6,525,273  
Impairment of goodwill     -       83,000  
Stock based compensation     1,523,187       1,541,615  
Stock issued for services     -       136,000  
Non-cash interest, discount, and financing costs     (4,397,381 )     952,231  
Change in fair value of Clouding earnout     (768,200 )     (2,122,198 )
Allowance for doubtful accounts     -       12,226  
Beneficial conversion feature     4,017,729       -  
Noncontrolling interest     (27,435 )     (27,918 )
Other non-cash adjustments     182,024       96,996  
Changes in operating assets and liabilities                
Accounts receivable     (28,561 )     43,763  
Bonds posted with courts     -       883,695  
Prepaid expenses and other assets     (269,693 )     (6,652 )
Other non current assets     201,203       -  
Accounts payable and accrued expenses     (5,262,242 )     (557,832 )
                 
Net cash and restricted cash provided by (used in) operating activities     (14,805,103 )     11,214,122  
                 
Cash flows from investing activities:                
Acquisition of patents     -       (3,552,656 )
Disposal of patents     2,771,757       -  
Purchase of property, equipment, and other intangible assets     (6,291 )     (8,387 )
Net cash provided by (used in) investing activities     2,765,466       (3,561,043 )
                 
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     (63,286 )     (5,379,105 )
Payment on 3D Nano license note payable     (100,000 )     -  
Cash received upon issuance of equity (net of issuance costs)     5,158,906       -  
Issuance of warrants     2,549,084       -  
Issuance of convertible notes payable     5,500,000          
Medtronic note payable     600,000       -  
Payment of Medtronic note payable     (600,000 )        
Payments on Seimens notes payable     (1,750,000 )     -  
Payments on notes payable to vendors     (125,000 )     -  
Payments on notes payable, net     (103,000 )     (578,804 )
Net cash provided (used in) by financing activities     11,066,704       (8,911,688 )
                 
Effect of exchange rate changes on cash     16,509       (1,592 )
                 
Net decrease in cash     (956,424 )     (1,260,201 )
                 
Cash at beginning of period     4,998,314       2,555,151  
                 
Cash and restricted cash at end of period   $ 4,041,890     $ 1,294,950  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                
Cash paid for:                
Interest expense   $ 368,923     $ 1,187,074  
Taxes paid   $ 29,433     $ 27,682  
Cash invested in 3D Nano   $ -     $ 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   $ -     $ 1,755,635  
Note payable issued in conjunction with the acquisition of GE patent     -       1,000,000  
Note payable issued in conjunction with the acquisition of 3D Nano License     -       200,000  
                 

The accompanying notes are an integral part to these unaudited consolidated condensed financial statements.

             
    Non-GAAP Reconciliation     Non-GAAP Reconciliation  
    For the Quarter
Ended
September 30, 2017
    For the Quarter
Ended
September 30, 2016
    For the Nine Months
Ended
September 30, 2017
    For the Nine Months
Ended
September 30, 2016
 
Net income (loss) attributable to Common Shareholders   $ (6,677,486 )   $ (6,274,410 )   $ (12,484,925 )   $ (2,261,542 )
Non-GAAP                                
Amortization of intangible assets & depreciation     457,719       2,030,886       1,804,512       6,018,196  
Equity-based compensation     1,371,480       478,819       1,554,835       1,677,616  
Impairment of intangible assets     723,218       5,531,383       723,218       6,608,273  
Change in the fair value of the clouding IP liability     (754,320 )     (1,954,378 )     (768,199 )     (2,122,208 )
Loss on debt extinguishment     283,237       -       283,237       -  
Loss on sale of companies     1,519,875       -       1,519,875       -  
Warrant (Income) Expense, net     1,909,879       -       1,914,786       -  
Non-cash Other (Income) expense, net     (1,323,407 )     -       (2,221,939 )     -  
Non-cash interest expense     1,043,012       288,049       1,489,678       952,231  
Deferred tax benefit     -       (3,347,909 )     -       (26,974 )
Other     (1,486 )     12,468       (3,072 )     28,488  
Non-GAAP earnings (loss)   $ (1,448,278 )   $ (3,235,092 )   $ (6,187,993 )   $ 10,874,080  
                                 

The following table sets forth the computation of basic and diluted loss per share on a Non-GAAP basis:

             
    Non-GAAP Reconciliation     Non-GAAP Reconciliation  
    For the Quarter
Ended
September 30, 2017
    For the Quarter
Ended
September 30, 2016
    For the Nine Months
Ended
September 30, 2017
    For the Nine Months
Ended
September 30, 2016
 
Non-GAAP net income (loss)   $ (1,448,278 )   $ (3,235,092 )   $ (6,187,993 )   $ 10,874,080  
                                 
Denominator                                
Weighted average common shares - Basic     6,270,299       3,761,785       5,564,464       3,736,213  
Weighted average common shares - Diluted     6,270,299       3,761,785       5,564,464       3,996,067  
                                 
Non-GAAP earnings (loss) per common share:                                
Non-GAAP earnings (loss) - Basic   $ (0.23 )   $ (0.86 )   $ (1.11 )   $ 2.91  
Non-GAAP earnings (loss) - Diluted     NA        NA        NA        2.72  
                                 

About Marathon Patent Group

Marathon is formerly an IP licensing company. On November 2, 2017, the Company announced that it has entered into a definitive purchase agreement to acquire 100% ownership of Global Bit Ventures Inc. (“GBV”), a digital asset technology company that mines cryptocurrencies.  GBV has robust infrastructure in place with significant capability for expansion. The closing of the transaction is subject to obtaining requisite approvals. To learn more about Marathon Patent Group, visit www.marathonpg.com. To learn more about Global Bit Ventures, visit www.globalbitventures.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.

Contact Information

Marathon Patent Group
Jason Assad
678-570-6791
Jason@marathonpg.com

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