Marathon Patent Group Announces Third Quarter Financial Results and Provides Update on Patent Litigation with Amazon.com

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Year Over Year Revenues Increase 108% While Loss Per Share Decreases

LAS VEGAS, Nov. 13, 2018 (GLOBE NEWSWIRE) -- Marathon Patent Group, Inc. (NASDAQ:MARA) ("Marathon" or "Company"), today announced its operating results for the three months ended September 30, 2018, 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, 2018

  • Total revenue increased 108% to $338,673 for the three months ended September 30, 2018 compared to $162,713 for the three months ended September 30, 2017.

  • Operating loss improved to $1.5 million (including non-cash expenses) for the three months ended September 30, 2018 compared to an operating loss of $3.9 million for the three months ended September 30, 2017.

  • GAAP net loss improved to $(0.06) per basic and diluted share for the three months ended September 30, 2018 compared to $(1.06) for the three months ended September 30, 2017.

  • The Company had approximately $3.2 million of cash and cash equivalents as of September 30, 2018.

Minority Owned Special Purpose Entity/Plaintiff Files Suit Against Amazon.

As previously announced, Marathon transferred ownership of various patents to a special purpose entity in which it owns a 30% interest.  The transfers resulted in the cancellation of certain indebtedness owed to Fortress Investment Group, LLC.  According to various court filings in the case, plaintiffs filed an action was commenced against Amazon claiming that its Alexa software violates certain claims in the patents.  If plaintiffs are successful, and if the recoveries or settlement proceeds are sufficient following litigation expenses and recovery of amounts due in connection with the cancelled loan, the special purpose entity could be entitled to a portion of the net proceeds.  There can be no assurance that the plaintiff will be successful or that any recoveries will exceed amounts due under the debt settlement arrangements or that the Company’s 30% interest in the SPE will have any value even if the plaintiffs are successful in their case against Amazon.

Merrick Okamoto, Chief Executive Officer, stated, “We’re pleased to have shown financial improvement for the quarter, including doubling revenues and significantly reducing losses on a per share basis. Looking forward, our management is actively reviewing potential acquisition opportunities. If a successful agreement is reached with a targeted acquisition, we will promptly announce the terms and closing conditions to our shareholders.”      

Investor Notice

Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under "Risk Factors" in Item 1A of our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2017. If any of these risks were to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline, and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. See "Safe Harbor" below.

Forward-Looking Statements

Statements made in this press release include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue,” or comparable terminology. Such forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Risk Factors” in the Company's Annual Reports on Form 10-K, as may be supplemented or amended by the Company's Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.


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

           
     September 30,     December 31,   
    2018       2017    
     (Unaudited)       
   ASSETS         
   Current assets:         
  Cash and cash equivalents $   3,188,780     $   14,948,529    
  Accounts receivable - net of allowance for bad debt of $0 and $387,976 for September 30, 2018 and December 31, 2017,
respectively
    102,098         6,826    
  Prepaid expenses and other current assets     550,184         92,855    
   Total current assets      3,841,062         15,048,210    
           
   Other assets:         
  Property and equipment, net of accumulated depreciation of $1,517,694 and $134,513 for September 30, 2018 and
December 31, 2017, respectively
    3,855,812         10,011    
  Intangible assets, net of accumulated amortization of $47,451 for September 30, 2018     1,162,549         -     
   Total other assets      5,018,361         10,011    
   TOTAL ASSETS  $    8,859,423     $    15,058,221    
           
   LIABILITIES AND STOCKHOLDERS’ EQUITY         
           
   Current liabilities:         
  Accounts payable and accrued expenses $   1,329,165     $   1,961,784    
  Litigation liability     -          2,150,000    
  Warrant liability     145,124         1,794,396    
  Convertible notes payable, net of discounts of $2,290,028 for December 31, 2017         1,763,920    
           
   Total current liabilities      1,474,289         7,670,100    
           
           
   Long-term liabilities         
  Convertible notes payable, net of discounts of $0 for September 30, 2018     999,106         -     
   Total long-term liabilities      999,106         -     
   Total liabilities      2,473,395         7,670,100    
           
   Commitments and Contingencies         
           
   Stockholders' Equity:         
  Preferred stock, $0.0001 par value, 50,000,000 shares authorized, 0 and 5,513 issued and outstanding at September 30, 2018
and December 31, 2017, respectively
    -          1    
  Common stock, $0.0001 par value; 200,000,000 shares authorized; 25,519,940 and 12,477,781 issued and outstanding at
September 30, 2018 and December 31, 2017, respectively
    2,552         1,248    
  Additional paid-in capital     104,530,234         97,113,723    
  Accumulated other comprehensive loss     (450,719 )       (450,734 )  
  Accumulated deficit     (97,696,039 )       (89,276,117 )  
   Total stockholders’ equity      6,386,028         7,388,121    
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $    8,859,423     $    15,058,221    
           


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

                   
     For the three months ended     For the nine months ended   
     September 30,     September 30,   
      2018       2017       2018       2017    
   Revenues                 
   Cryptocurrency mining revenue  $   338,672     $   -      $   1,200,171     $   -     
   Other revenue      -          162,713         66,970         609,650    
   Total revenues      338,672         162,713         1,267,141         609,650    
                   
   Operating costs and expenses                 
   Cost of revenue      1,132,570         64,836         2,331,909         1,544,322    
   Amortization of patents      -          457,419         -          1,803,264    
   Compensation and related taxes      137,338         1,871,946         803,309         3,718,034    
   Consulting fees      347,500         133,018         573,286         189,819    
   Professional fees      126,446         616,125         1,157,246         1,686,955    
   General and administrative      89,859         213,130         1,212,469         599,416    
   Patent impairment      -          723,218         -          723,218    
   Break-up fee -  issuance of shares to GBV      -          -          2,850,000         -     
   Total operating expenses      1,833,713         4,079,692         8,928,219         10,265,028    
   Operating loss      (1,495,041 )       (3,916,979 )       (7,661,078 )       (9,655,378 )  
   Other income (expenses)                 
   Other income      125,125         2,252,886         108,670         3,151,418    
   Foreign exchange gain (loss)      (8,003 )       (480,240 )       (31,096 )       (463,191 )  
   Loss on debt extinguishment      -          (283,237 )       -          (283,237 )  
   Loss on sale of company      -          (1,519,875 )       -          (1,519,875 )  
   Realized gain (loss) on sale of digital currencies      8,760         -          (73,533 )       -     
   Change in fair value adjustment of Clouding IP earn out      -          754,321         -          768,200    
   Change in fair value of warrant liability      45,595         (1,909,879 )       1,593,481         (1,914,786 )  
   Amortization of debt discount      -          -          (2,290,028 )       -     
   Interest income      2,553         931         2,553         2,793    
   Interest expense      (19,446 )       (1,283,223 )       (68,891 )       (2,416,722 )  
   Loss before income taxes      (1,340,457 )       (6,385,295 )       (8,419,922 )       (12,330,778 )  
   Income tax expense      -          (12,191 )       -          (29,433 )  
   Net loss      (1,340,457 )       (6,397,486 )       (8,419,922 )       (12,360,211 )  
   Net loss attributable to non-controlling interests      -          (280,000 )       -          (124,714 )  
   Net loss attributable to common stockholders  $   (1,340,457 )   $   (6,677,486 )   $   (8,419,922 )   $   (12,484,925 )  
                   
   Net loss per share, basic and diluted:  $   (0.06 )   $   (1.06 )   $   (0.42 )   $   (2.24 )  
   Weighted average shares outstanding, basic and diluted:      24,321,788         6,270,299         19,893,901         5,564,465    
                   
                   
   Net loss attributable to common stockholders  $   (1,340,457 )   $   (6,677,486 )   $   (8,419,922 )   $   (12,484,925 )  
   Other comprehensive income:                 
   Unrealized gain on foreign currency translation      -          482,622         15         609,768    
   Comprehensive loss attributable to Marathon Patent Group, Inc.  $   (1,340,457 )   $   (6,194,864 )   $   (8,419,907 )   $   (11,875,157 )  
                   


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

           
     For the nine months ended   
     September 30,   
      2018       2017    
   CASH FLOWS FROM OPERATING ACTIVITIES         
   Net loss  $   (8,419,922 )   $   (12,484,925 )  
   Adjustments to reconcile net loss to net cash (used in) operating activities:         
   Depreciation      1,405,147         1,248    
   Amortization of patents and website      48,222         1,803,264    
   Realized loss on sale of digital currencies      73,533         -     
   Change in fair value of warrant liability      (1,593,481 )       4,017,729    
   Impairment of intangible assets      -          704,678    
   Stock based compensation      496,435         1,523,187    
   Amortization of debt discount      2,290,028         -     
   Bad debt allowance      6,826         -     
   Non-cash interest, discount, and financing costs      -          (4,397,381 )  
   Change in fair value of Clouding earnout      -          (768,200 )  
   Break-up fee -  issuance of shares to GBV      2,850,000         -     
   Non-controlling interest      -          (27,435 )  
   Other non-cash adjustments      -          182,024    
   Changes in operating assets and liabilities:         
   Accounts receivables      (102,098 )       (28,561 )  
   Digital currencies      (1,098,073 )       -     
   Proceeds from sale of digital currencies      1,024,540         -     
   Litigation liability      (2,150,000 )       -     
   Prepaid expenses and other assets      (457,329 )       (269,693 )  
   Other non current assets      -          201,203    
   Accounts payable and accrued expenses      (631,873 )       (5,262,242 )  
   Net cash used in operating activities      (6,258,045 )       (14,805,104 )  
   CASH FLOWS FROM INVESTING ACTIVITIES         
   Acquisition of patents      (250,000 )       -     
   Disposal of patents      -          2,771,757    
   Purchase of property and equipment      (5,251,719 )       (6,291 )  
   Net cash (used in) provided by investing activities      (5,501,719 )       2,765,466    
   CASH FLOWS FROM FINANCING ACTIVITIES         
   Payment on note payable      -          (2,741,286 )  
   Proceeds received on issuance of notes payable      -          6,100,000    
   Proceeds received on private placement      -          5,158,906    
   Proceeds received on exercise of warrants      -          2,549,084    
   Net cash provided by financing activities      -          11,066,704    
           
   Effect of foreign exchange rate changes      15         16,509    
           
   Net decrease  in cash and cash equivalents      (11,759,749 )       (956,425 )  
   Cash and cash equivalents — beginning of period      14,948,529         4,998,314    
   Cash and cash equivalents — end of period  $   3,188,780     $   4,041,889    
           
   SUPPLEMENTAL CASH FLOW INFORMATION         
   Cash paid for interest expense  $   -      $   368,923    
   Cash paid during the year for income taxes  $   -      $   29,433    
           
   Supplemental schedule of non-cash investing and financing activities:         
   Common stock issued for acquisition of patents  $   960,000     $   -     
   Conversion of Series E Preferred Stock to common stock  $   551     $   -     
   Common stock issued for note conversion  $   3,055,588     $   -     
   Restricted stock issuance  $   44     $   -     
   Revenue share liability incurred in conjunction with note payable  $   -      $   225,000    
   Warrant issued in conjunction with common stock issuance  $   -      $   257,957    
   Warrants exercised into common shares  $   55,791     $   -     
           

CONTACT INFORMATION

Name: Jason Assad
Phone: 678-570-6791
Email: Jason@marathonpg.com

Source: Marathon Patent Group, Inc. Share this: