Marathon Patent Group Reports Third Quarter 2019 Financial Results

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LAS VEGAS, Nov. 11, 2019 (GLOBE NEWSWIRE) -- Marathon Patent Group, Inc. (NASDAQ:MARA) ("Marathon" or "Company"), today reported its operating results for the three and nine months ended September 30, 2019, as published in its Form 10-Q filed on Friday, November 8th with the Securities and Exchange Commission.  Of particular note is the increase in our net shareholders’ equity on our balance sheet to $3,489,345, well in excess of the $2.5 million minimum requirement under Nasdaq rules.

Operating results for the third quarter ended September 30, 2019, compared to the second quarter ended June 30, 2019.

  • Consummated purchase of 6,000 S-9 Bitmain 13.5 TH/s Bitcoin Antminers for $4,086,250 or 2,335,000 shares of its common stock at a price of $1.75 per share increasing shareholder equity expecting to satisfy Nasdaq listing rule Rule 5550(b)(1).

  • Net equity in the third quarter improved to $3,489,345 from $1,722,607 in the second quarter, an improvement of over 100%.

  • Third quarter 2019 revenues decreased to $321,715 compared to second quarter 2019 revenues of $355,765.

  • Operating loss for the third quarter 2019 was $807,859 compared to an operating loss in the second quarter 2019 of 740,597 (inclusive of non-cash expenses)

  • GAAP net loss was $(0.12) per basic and diluted share for the third quarter 2019 compared to $(0.09) for the second quarter 2019.

  • Net cash used in operating activities in the third quarter was $650,764 compared to $657,972 during the second quarter 2019.

  • The Company had approximately $1.3 million of cash and cash equivalents as of September 30, 2019.

Operating Results for the For the Three and Nine Months Ended September 30, 2019 and 2018

  • Revenues of $321,716 and $908,175 during the three and nine months ended September 30, 2019 as compared to $338,672 and $1.3 million during the three and nine months ended September 30, 2018.
     
  • operating loss from continuing operations of $807,859 and $2.5 million for the three and nine months ended September 30, 2019 and operating loss of $1.5 million and $7.7 million for the three and nine months ended September 30, 2018.
     
  • Net loss of $0.8 million and $2.4 million for the three and nine months ended September 30, 2019 and net loss of $1.3 million and $8.4 million for the three and nine months ended September 30, 2018.

Merrick Okamoto, Chief Executive Officer, stated, “While revenues remained relatively consistent with recent quarters, we are pleased to have recently consummated the purchase of 6,000 S-9 Bitmain 13.5 TH/s Bitcoin Antminers positioning us for what we expect to be sizeable growth in both top and bottom line results going forward.

The company began the installation of our 7,200 miners over the last two weeks. We anticipate the completion of the remaining miners over the next 6 to 8 weeks. Once the full deployment is completed, Marathon will have 7,200 miners in production and will increase our HashRate production level nearly seven-fold from 14 PH/s to approximately 100 PH/s, making us one of the largest publicly traded Bitcoin Mining companies in North America.”

Okamoto added, “Importantly, we believe this recent acquisition should evidence compliance with Nasdaq stockholders’ equity requirement for continued listing. We previously reported that on May 21, 2019, we received notice from the Nasdaq Capital Market that the Company had failed to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing as required under Listing Rule 5550(b)(1) as its Form 10-Q for the period ended March 31, 2019 reported stockholders’ equity of $2,158,192. With this transaction, net shareholders’ equity in the third quarter improved to $3,489,345.”

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, 2018. 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.

CONTACT INFORMATION

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

 
MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
       
  September 30,   December 31,
2019   2018
  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 1,342,985     $ 2,551,171  
Digital currencies   2,881       -  
Prepaid expenses and other current assets   209,935       464,006  
Total current assets   1,555,801       3,015,177  
       
Other assets:      
Property and equipment, net of accumulated depreciation and impairment charges of $4,751,014 and $4,338,931 for September 30, 2019 and December 31, 2018, respectively   4,713,966       1,034,575  
Right-of-use assets   318,881       -  
Intangible assets, net of accumulated amortization of $118,627 and $65,245 for September 30, 2019 and December 31, 2018, respectively   1,091,373       1,144,755  
Total other assets   6,124,220       2,179,330  
TOTAL ASSETS $ 7,680,021     $ 5,194,507  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
       
Current liabilities:      
Accounts payable and accrued expenses $ 1,071,621     $ 1,235,444  
Mining servers payable   1,852,477       -  
Current portion of lease liability   85,689       -  
Warrant liability   46,836       39,083  
Convertible notes payable   999,106       999,106  
Total current liabilities   4,055,729       2,273,633  
Long-term liabilities      
Lease liability   134,947       -  
Total long-term liabilities   134,947       -  
Total liabilities   4,190,676       2,273,633  
       
Commitments and Contingencies      
       
Stockholders' Equity:      
Preferred stock, $0.0001 par value, 50,000,000 shares authorized, no shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively   -       -  
Common stock, $0.0001 par value; 200,000,000 shares authorized; 7,703,461 and 6,379,992 issued and outstanding at September 30, 2019 and December 31, 2018, respectively   771       638  
Additional paid-in capital   108,394,883       105,461,396  
Accumulated other comprehensive loss   (450,719 )     (450,719 )
Accumulated deficit   (104,455,590 )     (102,090,441 )
Total stockholders’ equity   3,489,345       2,920,874  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,680,021     $ 5,194,507  
       


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,
  2019   2018   2019   2018
Revenues              
Cryptocurrency mining revenue $ 321,716     $ 338,672     $ 908,175     $ 1,200,171  
Other revenue   -       -       -       66,970  
Total revenues   321,716       338,672       908,175       1,267,141  
               
Operating costs and expenses              
Cost of revenue   478,811       1,132,570       1,486,039       2,331,909  
Compensation and related taxes   409,609       137,338       1,224,900       803,309  
Consulting fees   34,000       347,500       84,000       573,286  
Professional fees   91,908       126,446       287,282       1,157,246  
General and administrative   115,247       89,859       359,319       1,212,469  
Break-up fee - issuance of shares to GBV   -       -       -       2,850,000  
Total operating expenses   1,129,575       1,833,713       3,441,540       8,928,219  
Operating loss   (807,859 )     (1,495,041 )     (2,533,365 )     (7,661,078 )
Other income (expenses)              
Other income   300       125,125       181,195       108,670  
Foreign exchange loss   -       (8,003 )     (11,873 )     (31,096 )
Realized income (loss) on sale of digital currencies   (11,236 )     8,760       13,208       (73,533 )
Change in fair value of warrant liability   68,551       45,595       (7,753 )     1,593,481  
Amortization of debt discount   -       -       -       (2,290,028 )
Interest income   8,428       2,553       30,802       2,553  
Interest expense   (12,591 )     (19,446 )     (37,363 )     (68,891 )
Total other income (expenses)   53,452       154,584       168,216       (758,844 )
Net loss $ (754,407 )   $ (1,340,457 )   $ (2,365,149 )   $ (8,419,922 )
               
Net loss per share, basic and diluted: $ (0.12 )   $ (0.22 )   $ (0.37 )   $ (1.69 )
Weighted average shares outstanding, basic and diluted:   6,372,061       6,080,447       6,353,643       4,973,475  
               
               
Net loss $ (754,407 )   $ (1,340,457 )   $ (2,365,149 )   $ (8,419,922 )
Other comprehensive income:              
Unrealized gain on foreign currency translation   -       -       -       15  
Comprehensive loss attributable to Marathon Patent Group, Inc. $ (754,407 )   $ (1,340,457 )   $ (2,365,149 )   $ (8,419,907 )
               


MARATHON PATENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
       
  For the nine months ended
  September 30,
  2019   2018
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss $ (2,365,149 )   $ (8,419,922 )
Adjustments to reconcile net loss to net cash (used in) operating activities:      
Depreciation   412,083       1,405,147  
Amortization of patents and website   53,382       48,222  
Realized (gain) loss on sale of digital currencies   (13,208 )     73,533  
Change in fair value of warrant liability   7,753       (1,593,481 )
Stock based compensation   620,030       496,435  
Amortization of debt discount   -       2,290,028  
Amortization of right-of-use assets   67,602       -  
Bad debt allowance   -       6,826  
Break-up fee - issuance of shares to GBV   -       2,850,000  
Changes in operating assets and liabilities:      
Accounts receivables       (102,098 )
Digital currencies   (908,175 )     (1,098,073 )
Lease liability   (66,707 )     -  
Litigation liability   -       (2,150,000 )
Prepaid expenses and other assets   154,930       (457,329 )
Accounts payable and accrued expenses   (163,822 )     (631,873 )
Net cash used in operating activities   (2,201,281 )     (7,282,585 )
CASH FLOWS FROM INVESTING ACTIVITIES      
Sale of digital currencies   918,502       1,024,540  
Acquisition of patents   -       (250,000 )
Purchase of property and equipment   (5,224 )     (5,251,719 )
Net cash provided by (used in) investing activities   913,278       (4,477,179 )
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from issuance of common stock/At-the-market offering   83,453       -  
Offering costs for the issuance of common stock/At-the-market offering   (3,636 )     -  
Net cash provided by financing activities   79,817       -  
       
Effect of foreign exchange rate changes   -       15  
       
Net decrease in cash and cash equivalents   (1,208,186 )     (11,759,749 )
Cash and cash equivalents — beginning of period   2,551,171       14,948,529  
Cash and cash equivalents — end of period $ 1,342,985     $ 3,188,780  
       
Supplemental schedule of non-cash investing and financing activities:      
Par value adjustment due to reverse split $ 1     $ -  
Conversion of Series E Preferred Stock to common stock $ -     $ 551  
Common stock issued for acquisition of patents $ -     $ 960,000  
Common stock issued for purchase of assets $ 2,233,773     $ -  
Common stock issued for note conversion $ -     $ 3,055,588  
Restricted stock issuance $ -     $ 44  
Mining servers payable $ 1,852,477     $ -  
Warrants exercised into common shares $ -     $ 55,791  
       

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