Marathon Patent Group Announces Third Quarter Financial Results
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
Released November 20, 2017